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Calvin B. Taylor Bankshares, Inc. (OTCQX: TYCB), Parent Company of Calvin B. Taylor Bank, Reports Financial Results for the Fourth Quarter and Year Ended December 31, 2020

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Calvin B. Taylor Bankshares, Inc.
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Berlin, Maryland, Feb. 22, 2021 (GLOBE NEWSWIRE) -- via NewMediaWire -- Calvin B. Taylor Bankshares, Inc. (the “Company”) (OTCQX: TYCB), parent company of Calvin B. Taylor Bank, today reported unaudited financial results for the fourth quarter and year ended December 31, 2020. Net income was $7.27 million, or $2.62 per share, for the year ended December 31, 2020 (“FY20”), as compared to $8.33 million, or $2.99 per share, for the year ended December 31, 2019 (“FY19”). Net income was $1.41 million, or $0.51 per share, for the fourth quarter ended December 31, 2020 (“4Q20”), as compared to $1.71 million, or $0.61 per share, for the fourth quarter ended December 31, 2019 (“4Q19”) and $1.91 million, or $0.69 per share, for the third quarter ended September 30, 2020 (“3Q20”). Additional highlights of the company’s financial results for the fourth quarter and year ended December 31, 2020 are included below.

Three Months Ended

Twelve Months Ended

December 31,

%

December 31,

%

Results of Operations

2020

2019

Change

2020

2019

Change

Net interest income

$ 4,961,837

$ 5,036,961

-1.5%

$ 19,775,842

$ 19,980,009

-1.0%

Provision for loan losses

$ 165,000

$ 75,000

120.0%

$ 965,000

$ 270,000

257.4%

Noninterest income

$ 774,876

$ 698,744

10.9%

$ 2,873,476

$ 2,817,260

2.0%

Noninterest expense

$ 3,761,079

$ 3,382,977

11.2%

$ 12,063,304

$ 11,460,210

5.3%

Net income

$ 1,413,634

$ 1,710,728

-17.4%

$ 7,268,014

$ 8,330,059

-12.7%

Net income per share

$ 0.51

$ 0.61

-17.0%

$ 2.62

$ 2.99

-12.4%

Dividend per share

$ 0.29

$ 0.31

-6.5%

$ 1.10

$ 1.06

3.8%

Dividend payout ratio

56.89%

50.28%

41.98%

35.39%

Average assets

$ 704,175,818

$ 551,956,033

27.6%

$ 629,497,297

$ 534,148,634

17.9%

Average loans

$ 419,211,495

$ 352,834,890

18.8%

$ 402,298,573

$ 348,458,440

15.5%

Average deposits

$ 608,449,556

$ 460,369,767

32.2%

$ 534,995,652

$ 444,701,320

20.3%

Average loans to average deposits

68.90%

76.64%

75.20%

78.36%

Average stockholders' equity

$ 94,308,170

$ 90,043,047

4.7%

$ 92,746,273

$ 88,155,464

5.2%

Average stockholders' equity to average assets

13.39%

16.31%

14.73%

16.50%

Ratios

Net interest margin

2.99%

3.88%

3.36%

4.02%

Return on average assets

0.80%

1.24%

1.15%

1.56%

Return on average stockholders' equity

6.00%

7.60%

7.84%

9.45%

Efficiency ratio

65.72%

59.24%

53.66%

50.36%

Stock Repurchased

Number of shares

700

-

1,994

14,000

-85.8%

Repurchase amount

$ 23,933

$ -

$ 63,337

$ 450,240

-85.9%

Average price per share

$ 34.19

$ -

$ 31.76

$ 32.16

-1.2%

December 31,

December 31,

%

December 31,

September 30,

%

Financial Condition

2020

2019

Change

2020

2020

Change

Assets

$ 711,791,004

$ 548,004,110

29.9%

$ 711,791,004

$ 699,803,646

1.7%

Loans

$ 423,467,766

$ 363,242,332

16.6%

$ 423,467,766

$ 419,855,455

0.9%

Deposits

$ 614,437,080

$ 453,681,281

35.4%

$ 614,437,080

$ 603,337,234

1.8%

Stockholders' equity

$ 94,785,130

$ 89,992,560

5.3%

$ 94,785,130

$ 94,276,510

0.5%

Common stock - shares outstanding

2,772,932

2,774,926

-0.1%

2,772,932

2,773,632

0.0%

Book value per share

$ 34.18

$ 32.43

5.4%

$ 34.18

$ 33.99

0.6%

Loans to deposits

68.92%

80.07%

68.92%

69.59%

Equity to assets

13.32%

16.42%

13.32%

13.47%

Annual Results of Operations

Loan interest revenue, including fees, grew 6.5% to $18.63 million in FY20, as compared to $17.50 million in FY19, as the result of continued organic loan growth and funding of Small Business Administration Paycheck Protection Program (“SBA PPP”) loans. Net interest income decreased 1.0% to $19.78 million in FY20, as compared to $19.98 million in FY19, due to decreases in the federal funds interest rate and lower yields on investments which offset interest revenue growth from loans. Net interest margin decreased to 3.36% in FY20, as compared to 4.02% in FY19, which is attributable to significant increases in average deposits from customer behavior changes and government economic stimulus programs related to the COVID-19 pandemic. Average deposits increased in FY20 by $90.29 million, or 20.3%, as compared to FY19.

The provision for loan losses was $965 thousand in FY20, as compared to $270 thousand in FY19. The increase in the provision for loan losses in 2020 was attributable to adjustments of qualitative factors used to estimate the allowance for loan losses. Qualitative factors were adjusted due to the continued economic uncertainty associated with the COVID-19 pandemic. Net recoveries of $18 thousand were recognized in FY20, as compared to net charge offs of $35 thousand recognized in FY19. Excluding SBA PPP loans, the allowance for loan losses represents 0.46% of gross loans as of December 31, 2020, as compared to 0.23% as of December 31, 2019.

Noninterest income increased to $2.87 million in FY20, as compared to $2.82 million in FY19. Several sources of noninterest income have been negatively impacted by the COVID-19 pandemic including merchant payment processing fees and certain deposit account and placement fees. Noninterest income in 2020 included nonrecurring gains on the disposition of investment securities of $169 thousand which helped offset decreases in noninterest income related to the COVID-19 pandemic.

Noninterest expense increased 5.3% to $12.06 million in FY20, as compared to $11.46 million in FY19. Increases in noninterest expense are primarily related to opening a new branch in Onley, Virginia in July 2020 and costs to purchase personal protective equipment, cleaning supplies, and cleaning services associated with the COVID-19 pandemic. A reduction in net interest income accompanied by higher noninterest expense in FY20, as compared to FY19, increased the efficiency ratio from 50.36% in FY19 to 53.66% in FY20.

Net income decreased to $7.27 million in FY20, as compared to $8.33 million in FY19, and is primarily attributable to the increase in provision for loan losses in FY20 associated with the COVID-19 pandemic and lower interest revenue due to decreases in the federal funds interest rate and lower yields on investments. A decrease in net income accompanied by a significant increase in average assets in FY20, as compared to FY19, resulted in a decrease in the Return on Average Assets (“ROA”) from 1.56% in FY19 to 1.15% in FY20. Average assets were $95.35 million, or 17.9%, higher in FY20, as compared to FY19. A decrease in net income accompanied by higher average equity in FY20, as compared to FY19, resulted in a reduction in Return on Average Stockholders’ Equity (“ROE”) from 9.45% in FY19 to 7.84% in FY20. Dividends declared in FY20 were $1.10 per share, as compared to $1.06 per share in FY19, resulting in dividend payout ratios of 41.98% for FY20 and 35.39% in FY19.

Quarterly Results of Operations

Loan interest revenue, including fees, increased to $4.81 million in 4Q20, as compared to $4.41 million in 4Q19 and $4.67 million in 3Q20, as the result of continued organic loan growth and funding of Small Business Administration Paycheck Protection Program (“SBA PPP”) loans. SBA PPP loan balances decreased in 4Q20 as borrowers received loan forgiveness and related loans were repaid by the SBA. Upon repayment, unamortized net loan fees are recognized and reported as loan interest revenue which resulted in an increase in loan interest revenue in Q420 as compared to 3Q20. SBA loan interest revenue increased from $138 thousand in Q320 to $335 thousand in Q420. As of December 31, 2020, unamortized net loan fees related to SBA PPP loans were $641 thousand.

Net interest income decreased to $4.96 million in 4Q20, as compared to $5.04 million in 4Q19, due to decreases in the federal funds interest rate and lower yields on loans and investments. Net interest income increased slightly in 4Q20, as compared to $4.89 million in 3Q20, and was attributable to SBA PPP loan forgiveness as discussed above. Net interest margin decreased to 2.99% in 4Q20, as compared to 3.88% in 4Q19 and 3.12% in 3Q20, and is attributable to significant increases in average deposits from customer behavior changes and government economic stimulus programs related to the COVID-19 pandemic. Average deposits increased $148.1 million, or 32.2%, when compared to 4Q19 and increased $32.0 million or 5.5%, when compared to 3Q20.

The provision for loan losses was $165 thousand in 4Q20, as compared to $75 thousand in 4Q19 and $270 thousand in 3Q20. The provision for loan losses recorded in 4Q20 was primarily attributable to further adjustments to qualitative factors used to estimate the allowance for loan losses. Qualitative factors were adjusted due to the continued economic uncertainty associated with the COVID-19 pandemic. Net charge offs were $15 thousand in 4Q20, as compared to net recoveries of $25 thousand in 4Q19, and net charge offs of $5 thousand in 3Q20.

Noninterest income increased to $775 thousand in 4Q20, as compared to $699 thousand in 4Q19 and $738 thousand in 3Q20. The increase is primarily attributable to higher levels of consumer spending in 4Q20 which increased both debit card interchange income and overdraft fees. Other sources of noninterest income have been negatively impacted by the COVID-19 pandemic including merchant payment processing fees and certain deposit account and placement fees, but were offset by higher interchange and overdraft fees in Q420.

Noninterest expense increased to $3.76 million in 4Q20, as compared to $3.38 million in 4Q19, which can be attributed to the opening of a new branch in Onley, Virginia in July 2020, costs to purchase personal protective equipment, cleaning supplies, and cleaning services associated with the COVID-19 pandemic, increases in salaries expense and higher FDIC deposit insurance premiums. Noninterest expense increased in 4Q20 to $3.76 million, as compared to $2.83 million in 3Q20, which primarily relates to year end discretionary bonuses and 401K contributions. A reduction in net interest income accompanied by higher noninterest expense in Q420, as compared to Q419, increased the efficiency ratio from 59.24% in Q419 to 65.72% in Q420. Due to year end discretionary bonuses and 401K contributions recorded in 4Q20, the efficiency ratio increased to 65.72%, as compared to 50.16% in 3Q20.

Net income in 4Q20 decreased to $1.41 million, as compared to $1.71 million in 4Q19, and is primarily attributable to higher noninterest expense associated with the opening of a new branch in Onley, Virginia in July 2020 and lower net interest income due to lower yields on investments and loans. Net income in 4Q20 decreased to $1.41 million, as compared to $1.91 million in 3Q20, due to higher noninterest expense related to year end discretionary bonuses and 401K contributions awarded in 4Q20. A decrease in net income accompanied by a significant increase in average assets in 4Q20, as compared to 4Q19, resulted in a decrease in the Return on Average Assets (“ROA”) from 1.24% in 4Q19 to 0.80% in 4Q20. Average assets were $152.2 million, or 27.6%, higher in 4Q20, as compared to 4Q19. A decrease in net income accompanied by higher average equity in 4Q20, as compared to 4Q19, resulted in a reduction in Return on Average Stockholders’ Equity (“ROE”) from 7.60% in 4Q19 to 6.00% in 4Q20. Similarly, decreases in net income and increases in average assets in 4Q20, as compared to 3Q20, resulted in a decrease in ROA from 1.14% in 3Q20 to 0.80% in 4Q20. Average assets were $32.7 million, or 4.9%, higher in 4Q20, as compared to 3Q20. Dividends declared in 4Q20 were $0.29 per share, as compared to $0.31 per share in 4Q19 and $0.29 per share in 3Q20. Dividend payout ratios were 56.89% for 4Q20, 50.28% for 4Q19, and 42.08% for 3Q20.

Financial Condition

Total assets were $711.8 million as of December 31, 2020, as compared to $548.0 million as of December 31, 2019 and $699.8 million as of September 30, 2020. Significant asset growth was primarily the result of customer behavior changes and government economic stimulus programs related to the COVID-19 pandemic which resulted in a significant increase in customer deposits. Deposits totaled $614.4 million as of December 31, 2020, as compared to $453.7 million as of December 31, 2019 and $603.3 million as of September 30, 2020. A significant portion of the deposit growth was utilized to fund loan originations including $33.2 million of SBA PPP loans representing 546 customers. SBA PPP loans, net of unamortized loans fees, were $24.1 million as of December 31, 2020. Total loans as of December 31, 2020 were $423.5 million as compared to $363.2 million as of December 31, 2019 and $419.9 million as of September 30, 2020, which represents growth of 16.6% since December 31, 2019 and 0.9% since September 30, 2020. Strong loan demand in FY20, excluding SBA PPP loans, contributed to $36.1 million, or 9.9%, of loan portfolio growth since December 31, 2019. During 4Q20, SBA PPP loans decreased $8.1 million, or 25.2%, as borrowers received loan forgiveness and related loans were repaid by the SBA. The decrease in the loan portfolio from SBA PPP payoffs in 4Q20 was offset by continued organic loan growth in other portfolios which grew by $11.8 million in Q420, which equals an annualized growth rate of 12.2%. The loans to deposits ratio as of December 31, 2020 was 68.9%, as compared to 80.1% as of December 31, 2019 and 69.6% as of September 30, 2020.

As a result of the COVID-19 pandemic and related economic uncertainty in our markets, a temporary loan payment deferral program was established in 2Q20 for both commercial and consumer borrowers impacted by the pandemic. The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) provided financial institutions the ability to provide loan payment accommodations and short-term modifications without requiring the loans to be reported and accounted for as Troubled Debt Restructurings. The majority of borrowers in the program received 6 month payment deferral periods and the related deferral period expired in 4Q20. Certain borrowers voluntarily resumed their contractual payments prior to the end of the deferral period. As of December 31, 2020, all loans in the temporary payment deferral program have been restored and have resumed contractual payments. As of September 30, 2020, the temporary loan payment deferral program included 189 loans with an outstanding principal balance of $134.3 million and accrued interest of $2.0 million. Loans in the temporary payment deferral program represented 32.0% of total loans outstanding as of September 30, 2020.

Average assets grew by 17.9% to $629.5 million in FY20, as compared to $534.1 million in FY19. Significant average asset growth was primarily the result of customer behavior changes and government economic stimulus programs related to the COVID-19 pandemic which resulted in a significant increase in average deposits. Average loans grew 15.5% to $402.3 million in FY20, as compared to $348.5 million in FY19. SBA PPP loans contributed to $21.2 million of the $53.8 million increase in average loans in FY20, as compared to FY19, while the remaining $32.6 million increase in average loans was attributable to strong loan demand in FY20. The average loans to average deposits ratio decreased to 75.2% in FY20, as compared to 78.4% in FY19, and relates to significant growth in average deposits associated with the COVID-19 pandemic.

Calvin B. Taylor Bankshares, Inc. and Subsidiary

Consolidated Balance Sheets

(unaudited)

(unaudited)

December 31,

December 31,

September 30,

2020

2019

2020

Assets

Cash and cash equivalents

Cash and due from banks

$ 14,398,578

$ 12,022,238

$ 11,708,285

Federal funds sold and interest bearing deposits

156,706,746

53,111,059

150,087,731

Total cash and cash equivalents

171,105,324

65,133,297

161,796,016

Time deposits in other financial institutions

8,733,754

25,509,040

13,037,522

Debt securities available for sale, at fair value

72,166,997

54,424,907

65,016,339

Debt securities held to maturity, at amortized cost

5,994,955

13,318,100

9,485,601

Equity securities, at cost

1,240,233

1,215,433

1,240,233

Loans

423,467,766

363,242,332

419,855,455

Less: allowance for loan losses

(1,836,451)

(853,329)

(1,687,175)

Net loans

421,631,315

362,389,003

418,168,280

Accrued interest receivable

2,402,222

1,176,816

3,114,471

Prepaid expenses

612,188

529,966

497,091

Other real estate owned

-

-

-

Premises and equipment, net

12,951,511

10,681,615

12,971,768

Computer software

389,236

240,287

340,648

Bank owned life insurance

13,405,779

13,004,699

13,291,112

Other assets

1,157,490

380,947

844,565

Total assets

$ 711,791,004

$ 548,004,110

$ 699,803,646

Liabilities and Stockholders' Equity

Deposits

Non-interest bearing

$ 211,945,179

$ 157,736,204

$ 223,337,161

Interest bearing

402,491,901

295,945,077

380,000,073

Total deposits

614,437,080

453,681,281

603,337,234

Accrued interest payable

26,837

31,069

26,481

Dividends payable

804,150

860,227

804,353

Debt securities payable

-

2,048,821

-

Accrued expenses

602,027

497,138

180,687

Non-qualified deferred compensation

485,626

347,387

433,836

Deferred income taxes

601,057

452,046

687,551

Other liabilities

49,097

93,581

56,994

Total liabilities

617,005,874

458,011,550

605,527,136

Stockholders' equity

Common stock, par value $1 per share;

authorized 10,000,000 shares; issued and outstanding

2,772,932

2,774,926

2,773,632

Additional paid-in capital

2,808,195

2,869,539

2,831,428

Retained earnings

88,396,800

84,179,816

87,787,316

Accumulated other comprehensive income, net of tax

807,203

168,279

884,134

Total stockholders' equity

94,785,130

89,992,560

94,276,510

Total liabilities and stockholders' equity

$ 711,791,004

$ 548,004,110

$ 699,803,646


Calvin B. Taylor Bankshares, Inc. and Subsidiary

Consolidated Statements of Comprehensive Income (unaudited)

For the three months ended

For the twelve months ended

Dec 31, 2020

Dec 31, 2019

Dec 31, 2020

Dec 31, 2019

Interest revenue

Loans, including fees

$ 4,808,154

$ 4,407,603

$ 18,629,385

$ 17,495,750

U. S. Treasury and government agency debt securities

104,428

183,622

494,008

834,936

Mortgage-backed debt securities

83,045

117,922

518,458

376,082

State and municipal debt securities

51,762

44,094

213,978

179,029

Federal funds sold and interest bearing deposits

46,137

313,193

251,653

1,168,383

Time deposits in other financial institutions

66,243

154,542

383,376

613,513

Total interest revenue

5,159,769

5,220,976

20,490,858

20,667,693

Interest expense

Deposits

197,932

184,015

715,016

687,684

Net interest income

4,961,837

5,036,961

19,775,842

19,980,009

Provision for loan losses

165,000

75,000

965,000

270,000

Net interest income after provision for loan losses

4,796,837

4,961,961

18,810,842

19,710,009

Noninterest income

Debit card and ATM

295,411

243,613

1,060,624

1,015,183

Service charges on deposit accounts

190,551

164,261

674,955

643,180

Merchant payment processing

42,259

46,224

223,101

275,188

Increase in cash surrender value of bank owned life insurance

114,667

92,962

344,049

354,427

Dividends

41,382

42,502

65,993

48,334

Gain on disposition of investment securities

13,916

24,811

169,229

41,235

Gain (loss) on disposition of fixed assets

-

25

1,400

(2,906)

Loan swap referral fees

-

-

-

85,505

Miscellaneous

76,690

84,346

334,125

357,114

Total noninterest income

774,876

698,744

2,873,476

2,817,260

Noninterest expenses

Salaries

1,687,638

1,490,104

5,224,862

5,124,635

Employee benefits

641,100

663,386

1,750,621

1,765,443

Occupancy

255,955

234,619

877,435

791,122

Furniture and equipment

196,976

156,481

714,354

610,308

Data processing

148,183

129,602

557,725

502,102

ATM and debit card

132,311

101,129

457,494

379,997

Marketing

70,294

57,458

347,190

314,494

Directors fees

82,100

73,700

321,950

298,100

Telecommunication services

80,466

69,320

320,428

251,519

Deposit insurance premiums

37,880

-

95,255

67,624

Other operating

428,176

407,178

1,395,990

1,354,866

Total noninterest expenses

3,761,079

3,382,977

12,063,304

11,460,210

Income before income taxes

1,810,634

2,277,728

9,621,014

11,067,059

Income taxes

397,000

567,000

2,353,000

2,737,000

Net income

1,413,634

1,710,728

7,268,014

8,330,059

Other comprehensive income, net of tax

Unrealized gains (losses) on available for sale debt securities

arising during the period, net of tax

(76,931)

(23,734)

638,924

272,347

Comprehensive income

$ 1,336,703

$ 1,686,994

$ 7,906,938

$ 8,602,406

Earnings per common share - basic and diluted

$ 0.51

$ 0.61

$ 2.62

$ 2.99



About Calvin B. Taylor Banking Company

Calvin B. Taylor Banking Company, the bank subsidiary of Calvin B. Taylor Bankshares, Inc. (OTCQX: TYCB), founded in 1890, offers a wide range of loan, deposit, and ancillary banking services through both physical and digital delivery channels. The Company has 12 banking locations within the eastern coastal area of the Delmarva Peninsula including Worcester County, Maryland, Sussex County, Delaware and Accomack County, Virginia.

Contact
M. Dean Lewis, Vice President and Chief Financial Officer
410-641-1700, taylorbank.com