Berlin, MD, Nov. 03, 2021 (GLOBE NEWSWIRE) — via�NewMediaWire — Calvin B. Taylor Bankshares, Inc. (the Company) (OTCQX: TYCB), parent company of Calvin B. Taylor Bank, today reported net income of $2.67 million for the third quarter ended September 30, 2021 (3Q21), as compared to $1.91 million for the third quarter ended September 30, 2020 (3Q20) and $2.07 million for the second quarter ended June 30, 2021 (2Q21). Net income for the nine months ended September 30, 2021 was $7.34 million, as compared to $5.85 million for the nine months ended September 30, 2020. Highlights of the companys financial results are noted below and included in the following tables.
Quarterly Results of Operations
Loan interest revenue, including fees, increased to $5.48 million in 3Q21, as compared to $4.67 million in 3Q20, as the result of continued organic loan growth and repayment of SBA PPP loans. Upon repayment of a PPP loan by the SBA, unamortized net loan fees are recognized and reported as loan interest revenue. SBA PPP loan interest revenue, including fees, was $852 thousand in 3Q21, as compared to $138 thousand in 3Q20 and $341 thousand in 2Q21. Unamortized net loan fees related to SBA PPP loans were $994 thousand as of September 30, 2021, as compared to $902 thousand as of September 30, 2020 and $1.75 million as of June 30, 2021. The yield on loans was 4.81% in 3Q21, as compared to 4.45% in 2Q20 and 4.31% in 2Q21. The increase in loan yields in 3Q21 is primarily due to the increase in SBA PPP loan interest revenue, including fees, recognized in 3Q21 as a result of SBA PPP loan repayments.
Net interest income increased to $5.76 million in 3Q21, as compared to $4.89 million in 3Q20 and $5.13 million in 2Q21. Increases in loan interest revenue related to PPP loans, as noted above, was the primary contributor to the growth in net interest income. Interest revenue associated with debt securities and other earning assets also increased due to growth in underlying balances. Interest expense associated with customer deposits is slightly higher in 3Q21 due to growth in the underlying balances. Net interest margin decreased to 2.76% in 3Q21, as compared to 3.12% in 3Q20 and 2.78% in 2Q21. Average deposits increased in 3Q21 by $201.8 million, or 35.0%, as compared to 3Q20, and was the primary reason for the decrease in net interest margin. Net interest margin in 3Q21 was relatively the same as 2Q21 as higher loan interest revenue in 3Q21 offset the increase in average deposits in the same period.
A provision for loan losses was not recorded in 3Q21, as compared to $270 thousand recorded in 3Q20. The resolution of an impaired real estate loan in 3Q21 led to net recoveries of $62 thousand, as compared to net charge offs of $5 thousand recognized in 3Q20. Government economic stimulus payments, PPP loans, foreclosure moratoriums, and increasing residential real estate prices have mitigated charge offs related to the COVID-19 pandemic. However, uncertainty about borrowers ability to repay and real estate values subsequent to the pandemic and a reduction in government economic stimulus has prevented a reduction in the allowance for loan losses at this time.
Noninterest income increased to $1.03 million in 3Q21, as compared to $738 thousand in 3Q20 and $785 thousand in 2Q21. The increase in noninterest income in 3Q21 is primarily related to higher noninterest income from debit card interchange fees and merchant payment processing fees. The improvements in both revenue sources can be attributed to increased consumer spending as COVID-19 pandemic restrictions were removed and consumers resumed spending.
Noninterest expense increased to $3.18 million in 3Q21, as compared to $2.83 million in 3Q20, due to higher employee salary and benefits costs and an increase in other operating expenses related to increased charitable donations. The increases in net interest income and noninterest income exceeded the increases in noninterest expense which resulted in the efficiency ratio decreasing from 50.16% in 3Q20 to 46.81% in 3Q21. Noninterest expense in 3Q21 was relatively unchanged as compared to 2Q21.
Net income increased to $2.67 million in 3Q21, as compared to $1.91 million in 3Q20 and $2.07 million in 2Q21. Sustained growth in deposits in the last 12 months associated with the COVID-19 pandemic resulted in an increase in average assets of 30.6% from 3Q20 to 3Q21. Net income increased by 39.8% during the same period which resulted in an increase to Return on Average Assets (ROA) from 1.14% in 3Q20 to 1.22% in 3Q21. Return on Average Stockholders Equity (ROE) increased from 8.18% in 3Q20 to 10.90% in 3Q21 due to an increase in average equity of 5.0%, as compared to a 39.8% increase in net income. Dividends declared were $0.29 per share in 3Q21 and 3Q20 which resulted in dividend payout ratios of 30.0% for 3Q21 and 42.1% for 3Q20.
Year to Date Results of Operations
Loan interest revenue, including fees, increased 11.2% to $15.37 million for the nine months ended September 30, 2021, as compared to $13.82 million for the nine months ended September 30, 2020, which is the result of continued organic loan growth and repayment of SBA PPP loans. Upon repayment of a PPP loan by the SBA, unamortized net loan fees are recognized and reported as loan interest revenue. PPP loan interest revenue, including fees, was $1.65 million for the nine months ended September 30, 2021, as compared to $293 thousand for the nine months ended September 30, 2020.
Net interest income increased 7.7% to $15.96 million for the nine months ended September 30, 2021, as compared to $14.81 million for the nine months ended September 30, 2020. Increases in loan interest revenue, as noted above, were partially offset by lower yields on debt securities and other earning assets as interest rates remain historically low. Net interest margin decreased to 2.84% for the nine months ended September 30, 2021, as compared to 3.51% for the nine months ended September 30, 2020. Average deposits for the nine months ended September 30, 2021 increased by $187.2 million, or 36.7%, as compared to the same period in 2020, and was the primary reason for the lower net interest margin. SBA PPP loan originations, changes in consumer behavior, and additional government economic stimulus payments have contributed to the growth in average deposits.
Provision for loan losses was $125 thousand for the nine months ended September 30, 2021, as compared to $800 thousand for the nine months ended September 30, 2020. Net recoveries were $49 thousand for the nine months ended September 30, 2021, as compared to net recoveries of $34 thousand in the same period in 2020. Government economic stimulus payments, PPP loans, foreclosure moratoriums, and increasing residential real estate prices have mitigated charge offs during the COVID-19 pandemic. However, uncertainty about borrowers ability to repay and real estate values subsequent to the pandemic and related reduction in government economic stimulus has prevented a reduction in the allowance for loan losses at this time.
Noninterest income increased to $3.16 million for the nine months ended September 30, 2021, as compared to $2.10 million for the nine months ended September 30, 2020, and was primarily due to nonrecurring and nontaxable income of $618 thousand recognized in 1Q21 related to income from death proceeds of bank owned life insurance. While income from the increase in cash surrender value of bank owned life insurance is generally consistent and recurring income, the income from death proceeds is not, and is triggered upon the death of an insured employee or former employee. Bank owned life insurance investments are used to recover present and long term costs of employee benefits and compensation. The remaining increase in noninterest income was related to a $462 thousand increase in noninterest income from debit card interchange fees and merchant payment processing fees which can be attributed to increased consumer spending as COVID-19 pandemic restrictions were removed and consumers resumed spending.
Noninterest expense increased from $8.30 million for the nine months ended September 30, 2020 to $9.36 million for the nine months ended September 30, 2021, and was primarily attributable to the opening of a new branch in Onley, Virginia in July 2020 and a decrease in the amount of salaries expense deferred due to lower origination costs for 2nd round PPP loans originated in 2021. In addition, FDIC deposit insurance premiums increased $100 thousand in the nine months ending September 30, 2021, as compared to the same period in 2020, due to Small Bank Assessment Credits received in 2020 that offset the quarterly expense assessed by the FDIC. The efficiency ratio for the nine months ended September 30, 2021 was 49.11%, as compared to 49.54% for same period in 2020.
Net income increased 25.4% to $7.34 million for the nine months ended September 30, 2021, as compared to $5.85 million for the nine months ended September 30, 2020. Interest revenue from PPP loans and noninterest income from bank owned life insurance, debit card interchange fees, and merchant payment processing fees outpaced growth in noninterest expense resulting in an increase to net income. Sustained growth in deposits associated with the COVID-19 pandemic resulted in an increase in average assets of 31.5% for the nine months ended September 30, 2021, as compared to the same period in 2020. Average asset growth outpaced net income growth which resulted in a decrease in ROA from 1.29% for the nine months ended September 30, 2020 to 1.23% for the same period in 2021. ROE increased from 8.46% for the nine months ended September 30, 2020 to 10.13% for the nine months ended September 30, 2021 due to an increase in average equity of 4.7%, as compared to an increase in net income of 25.4%. Dividends declared were $0.87 per share in nine months ended September 30, 2021 compared to $0.81 per share for the same period in 2020, an increase of 7.4%. Dividend payout ratios were 32.8% for the nine months ended September 30, 2021 and 38.4% for the same period in 2020.
Financial Condition
Total assets were $914.0 million as of September 30, 2021, as compared to $699.8 million as of September 30, 2020 and $711.8 million as of December 31, 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 $807.9 million as of September 30, 2021, as compared to $603.3 million as of September 30, 2020 and $614.4 million as of December 31, 2020. Total loans as of September 30, 2021 were $445.8 million, as compared to $419.9 million as of September 30, 2020 which represents growth of $25.9 million, or 6.2%. The growth in loans since September 30, 2020 is attributable to $36.5 of organic loan growth attributable to strong commercial and residential real estate loan demand in our markets. This growth was offset by a $10.6 million decrease in PPP loans in the last 12 months as a result of ongoing repayments by the SBA as customers receive forgiveness of their PPP loans. Loans increased $22.4 million since December 31, 2020 which can be attributed to $24.9 million of continued organic loan growth that was partially offset by $2.5 million decrease in PPP loans. PPP loans, net of unamortized loans fees, were $21.7 million as of September 30, 2021, as compared to $32.3 million as of September 30, 2020 and $24.2 million as of December 31, 2020. The loans to deposits ratio as of September 30, 2021 was 55.2%, as compared to 69.6% as of September 30, 2020 and 68.9% as of December 31, 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 the 2nd quarter of 2020 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 4th quarter of 2020. 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 were restored and resumed contractual payments. As of September 30, 2021, loans past due 30 days or more totaled $1.66 million which includes $511 thousand of loans that previously received temporary payment deferral.
Average assets grew by 31.5% to $796.0 million for the nine months ended September 30, 2021, as compared to $605.3 million for the nine months ended September 30, 2020. 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 deposits increased 36.7% for the nine months ended September 30, 2021, as compared to same period in 2020, while average loans grew by 13.7%. Average loans increased $54.4 million and were $451.0 million for the nine months ended September 30, 2021, as compared to $396.5 million for the nine months ended September 30, 2020. SBA PPP loans contributed to $36.0 million of the increase in average loans while the remaining $18.4 million increase in average loans was attributable to strong commercial and residential real estate loan demand in the last 12 months. The average loans to average deposits ratio decreased to 64.7% for the nine months ended September 30, 2021, as compared to 77.7% for the same period in 2020, and relates to significant growth in average deposits associated with the COVID-19 pandemic.
| Calvin B. Taylor Bankshares, Inc. & Subsidiary | ||||||||
| Financial Highlights | ||||||||
| Three Months Ended | Nine Months Ended | |||||||
| Sept 30, | % | Sept 30, | % | |||||
| Results of Operations | 2021 | 2020 | Change | 2021 | 2020 | Change | ||
| Net interest income | $5,756,531 | $4,894,391 | 17.6% | $15,959,097 | $14,814,005 | 7.7% | ||
| Provision for loan losses | $- | $270,000 | -100.0% | $125,000 | $800,000 | -84.4% | ||
| Noninterest income | $1,031,696 | $737,724 | 39.8% | $3,161,227 | $2,098,600 | 50.6% | ||
| Noninterest expense | $3,178,125 | $2,825,185 | 12.5% | $9,362,405 | $8,302,225 | 12.8% | ||
| Net income | $2,672,602 | $1,911,430 | 39.8% | $7,339,919 | $5,854,380 | 25.4% | ||
| Net income per share | $0.97 | $0.69 | 40.2% | $2.65 | $2.11 | 25.7% | ||
| Dividend per share | $0.29 | $0.29 | 0.0% | $0.87 | $0.81 | 7.4% | ||
| Dividend payout ratio | 30.00% | 42.08% | 32.78% | 38.38% | ||||
| Average assets | $879,324,606 | $673,207,091 | 30.6% | $796,032,921 | $605,281,271 | 31.5% | ||
| Average loans | $452,592,856 | $417,610,324 | 8.4% | $450,975,929 | $396,542,894 | 13.7% | ||
| Average deposits | $778,277,360 | $576,478,199 | 35.0% | $697,311,266 | $510,090,005 | 36.7% | ||
| Average loans to average deposits | 58.15% | 72.44% | 64.67% | 77.74% | ||||
| Average stockholders’ equity | $98,077,512 | $93,422,435 | 5.0% | $96,597,763 | $92,217,443 | 4.7% | ||
| Average stockholders’ equity to average assets | 11.15% | 13.88% | 12.13% | 15.24% | ||||
| Ratios | ||||||||
| Net interest margin | 2.76% | 3.12% | 2.84% | 3.51% | ||||
| Return on average assets | 1.22% | 1.14% | 1.23% | 1.29% | ||||
| Return on average stockholders’ equity | 10.90% | 8.18% | 10.13% | 8.46% | ||||
| Efficiency ratio | 46.81% | 50.16% | 49.11% | 49.54% | ||||
| Stock Repurchased | ||||||||
| Number of shares | 288 | - | – | 7,768 | 1,294 | 500.3% | ||
| Repurchase amount | $10,008 | $- | – | $263,580 | $39,404 | 568.9% | ||
| Average price per share | $34.75 | $- | – | $33.93 | $30.45 | 11.4% | ||
| Sept 30, | Sept 30, | % | Sept 30, | December 31, | % Change | |||
| Financial Condition | 2021 | 2020 | Change | 2021 | 2020 | Annualized | ||
| Assets | $914,014,070 | $699,803,647 | 30.6% | $914,014,070 | $711,791,004 | 37.9% | ||
| Loans | $445,837,961 | $419,855,455 | 6.2% | $445,837,961 | $423,467,766 | 7.0% | ||
| Deposits | $807,902,713 | $603,337,234 | 33.9% | $807,902,713 | $614,437,080 | 42.0% | ||
| Stockholders’ equity | $98,753,483 | $94,276,510 | 4.7% | $98,753,483 | $94,785,130 | 5.6% | ||
| Common stock – shares outstanding | 2,765,164 | 2,773,632 | -0.3% | 2,765,164 | 2,772,932 | -0.4% | ||
| Book value per share | $35.71 | $33.99 | 5.1% | $35.71 | $34.18 | 6.0% | ||
| Loans to deposits | 55.18% | 69.59% | 55.18% | 68.92% | ||||
| Equity to assets | 10.80% | 13.47% | 10.80% | 13.32% | ||||
| Calvin B. Taylor Bankshares, Inc. and Subsidiary | |||||
| Consolidated Balance Sheets | |||||
| (unaudited) | (unaudited) | ||||
| Sept 30, | December 31, | Sept 30, | |||
| 2021 | 2020 | 2020 | |||
| Assets | |||||
| Cash and cash equivalents | |||||
| Cash and due from banks | $16,926,370 | $14,398,578 | $11,708,285 | ||
| Federal funds sold and interest bearing deposits | 285,246,313 | 156,706,746 | 150,087,731 | ||
| Total cash and cash equivalents | 302,172,683 | 171,105,324 | 161,796,016 | ||
| Time deposits in other financial institutions | 5,479,633 | 8,733,754 | 13,037,522 | ||
| Debt securities available for sale, at fair value | 124,857,941 | 72,166,997 | 65,016,339 | ||
| Debt securities held to maturity, at amortized cost | 3,003,102 | 5,994,955 | 9,485,601 | ||
| Equity securities, at cost | 1,103,733 | 1,240,233 | 1,240,233 | ||
| Loans | 445,837,961 | 423,467,766 | 419,855,455 | ||
| Less: allowance for loan losses | (2,010,014) | (1,836,451) | (1,687,175) | ||
| Net loans | 443,827,947 | 421,631,315 | 418,168,280 | ||
| Accrued interest receivable | 1,760,744 | 2,402,222 | 3,114,471 | ||
| Prepaid expenses | 571,414 | 612,188 | 497,091 | ||
| Other real estate owned | - | - | - | ||
| Premises and equipment, net | 12,509,904 | 12,951,511 | 12,971,768 | ||
| Computer software | 361,781 | 389,236 | 340,648 | ||
| Bank owned life insurance | 18,094,883 | 13,405,779 | 13,291,112 | ||
| SBA PPP loan fee receivable | - | 8,819 | - | ||
| Other assets | 270,305 | 1,148,671 | 844,566 | ||
| Total assets | $914,014,070 | $711,791,004 | $699,803,647 | ||
| Liabilities and Stockholders’ Equity | |||||
| Deposits | |||||
| Non-interest bearing | $306,704,120 | $211,945,179 | $223,337,161 | ||
| Interest bearing | 501,198,593 | 402,491,901 | 380,000,073 | ||
| Total deposits | 807,902,713 | 614,437,080 | 603,337,234 | ||
| Accrued interest payable | 26,830 | 26,837 | 26,481 | ||
| Dividends payable | 801,898 | 804,150 | 804,353 | ||
| Accrued expenses | 170,805 | 602,027 | 180,687 | ||
| Non-qualified deferred compensation | 613,558 | 485,626 | 433,836 | ||
| Deferred income taxes | 369,778 | 601,057 | 687,551 | ||
| Debt securities payable | 5,331,629 | - | - | ||
| Other liabilities | 43,376 | 49,097 | 56,994 | ||
| Total liabilities | 815,260,587 | 617,005,874 | 605,527,136 | ||
| Stockholders’ equity | |||||
| Common stock, par value $1 per share; | |||||
| authorized 10,000,000 shares; issued and outstanding | 2,765,164 | 2,772,932 | 2,773,632 | ||
| Additional paid-in capital | 2,552,383 | 2,808,195 | 2,831,428 | ||
| Retained earnings | 93,330,860 | 88,396,800 | 87,787,316 | ||
| Accumulated other comprehensive income, net of tax | 105,076 | 807,203 | 884,134 | ||
| Total stockholders’ equity | 98,753,483 | 94,785,130 | 94,276,510 | ||
| Total liabilities and stockholders’ equity | $914,014,070 | $711,791,004 | $699,803,646 | ||
| Calvin B. Taylor Bankshares, Inc. and Subsidiary | |||||||
| Consolidated Statements of Comprehensive Income (unaudited) | |||||||
| For the three months ended | For the nine months ended | ||||||
| Sept 30, 2021 | Sept 30, 2020 | Sept 30, 2021 | Sept 30, 2020 | ||||
| Interest revenue | |||||||
| Loans, including fees | $5,484,703 | $4,674,123 | $15,372,539 | $13,821,231 | |||
| U. S. Treasury and government agency debt securities | 82,775 | 118,939 | 209,008 | 389,580 | |||
| Mortgage-backed debt securities | 220,186 | 118,299 | 509,609 | 435,413 | |||
| State and municipal debt securities | 48,488 | 54,925 | 146,997 | 162,216 | |||
| Federal funds sold and interest bearing deposits | 89,139 | 29,614 | 178,271 | 205,516 | |||
| Time deposits in other financial institutions | 29,736 | 78,277 | 115,040 | 317,133 | |||
| Total interest revenue | 5,955,027 | 5,074,177 | 16,531,464 | 15,331,089 | |||
| Interest expense | |||||||
| Deposits | 198,496 | 179,786 | 572,367 | 517,084 | |||
| Net interest income | 5,756,531 | 4,894,391 | 15,959,097 | 14,814,005 | |||
| Provision for loan losses | - | 270,000 | 125,000 | 800,000 | |||
| Net interest income after provision for loan losses | 5,756,531 | 4,624,391 | 15,834,097 | 14,014,005 | |||
| Noninterest income | |||||||
| Debit card and ATM | 368,898 | 296,046 | 1,043,124 | 765,213 | |||
| Service charges on deposit accounts | 198,770 | 157,140 | 555,125 | 484,404 | |||
| Merchant payment processing | 292,276 | 113,324 | 364,532 | 180,842 | |||
| Increase in cash surrender value of life insurance | 97,270 | 87,702 | 283,028 | 229,382 | |||
| Income from bank owned life insurance death proceeds | - | - | 618,463 | - | |||
| Dividends | 3,247 | 5,344 | 17,966 | - | 24,611 | ||
| Gain (loss) on disposition of debt securities | (476) | - | 56,325 | 155,313 | |||
| Gain (loss) on disposition of fixed assets | (3,175) | - | (10,689) | 1,400 | |||
| Miscellaneous | 74,886 | 78,168 | 233,353 | 257,435 | |||
| Total noninterest income | 1,031,696 | 737,724 | 3,161,227 | 2,098,600 | |||
| Noninterest expenses | |||||||
| Salaries | 1,361,965 | 1,278,112 | 3,982,788 | 3,537,224 | |||
| Employee benefits | 353,056 | 308,728 | 1,201,892 | 1,109,521 | |||
| Occupancy | 237,596 | 232,573 | 687,456 | 621,480 | |||
| Furniture and equipment | 188,562 | 179,118 | 589,406 | 517,378 | |||
| Data processing | 189,970 | 146,294 | 549,467 | 409,542 | |||
| ATM and debit card | 146,410 | 112,627 | 388,496 | 325,183 | |||
| Marketing | 77,327 | 118,018 | 198,272 | 276,896 | |||
| Directors fees | 82,350 | 78,200 | 243,550 | 239,850 | |||
| Telecommunication services | 82,867 | 81,561 | 246,553 | 239,962 | |||
| Deposit insurance premiums | 63,337 | 57,375 | 157,006 | 57,375 | |||
| Other operating | 394,685 | 232,579 | 1,117,519 | 967,814 | |||
| Total noninterest expenses | 3,178,125 | 2,825,185 | 9,362,405 | 8,302,225 | |||
| Income before income taxes | 3,610,102 | 2,536,930 | 9,632,919 | 7,810,380 | |||
| Income taxes | 937,500 | 625,500 | 2,293,000 | 1,956,000 | |||
| Net income | 2,672,602 | 1,911,430 | 7,339,919 | 5,854,380 | |||
| Other comprehensive income, net of tax | |||||||
| Unrealized gains (losses) on available for sale debt | |||||||
| securities arising during the period, net of tax | (231,363) | (62,076) | (702,127) | 715,855 | |||
| Comprehensive income | $2,441,239 | $1,849,354 | $6,637,792 | $6,570,235 | |||
| Earnings per common share – basic and diluted | $0.97 | $0.69 | $2.65 | $2.11 | |||
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, Senior Vice President and Chief Financial Officer
410-641-1700, taylorbank.com
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