Berlin, Maryland - (NewMediaWire) - May 20, 2020 - Calvin B. Taylor Bankshares, Inc. (the “Company”) (OTCQX: TYCB), parent company of Calvin B. Taylor Bank, today reported unaudited financial results for the quarter ending March 31, 2020.  Net income was $1.9 million, or $0.69 per share, for the first quarter ended March 31, 2020 (“1Q20”), as compared to $2.0 million, or $0.72 per share, for the first quarter ended March 31, 2019 (“1Q19”).  Additional highlights of the company’s financial results for the first quarter ended March 31, 2020 are included below.

Calvin B. Taylor Bankshares, Inc. and Subsidiary  
Financial Highlights - Unaudited   
    
 Three Months Ended 
 March 31,%
Results of Operations20202019Change
Net interest income $  4,963,552 $  4,799,5833.4%
Net income $  1,911,308 $  2,007,070-4.8%
Net income per share $  0.69 $  0.72-4.2%
Dividend per share $  0.26 $  0.254.0%
Dividend payout ratio37.74%34.74% 
    
Average assets $  544,076,794 $  517,949,1325.0%
Average loans $  369,907,305 $  337,157,3719.7%
Average deposits $  450,993,182 $  430,926,2474.7%
Average loans to average deposits82.02%78.24% 
Average stockholders' equity $  91,023,635 $  86,054,4225.8%
Average stockholders' equity to average assets16.73%16.61% 
    
Ratios   
Net interest margin3.93%4.04% 
Return on average assets1.41%1.55% 
Return on average stockholders' equity8.40%9.33% 
Efficiency ratio50.24%49.43% 
    
Stock Repurchased   
Number of shares  380  - 0.0%
Repurchase amount $  12,008 $  - 0.0%
Average price per share $  31.60 $  - 0.0%
    
 March 31,December 31,%
Financial Condition20202019Change
Assets $  545,342,222 $  548,004,110-0.5%
Loans $  370,901,684 $  363,242,3322.1%
Deposits $  451,478,843 $  453,681,281-0.5%
Stockholders' equity $  91,657,497 $  89,992,5601.9%
Common stock - shares outstanding  2,774,546  2,774,9260.0%
Book value per share $  33.04 $  32.431.9%
Loans to deposits82.15%80.07% 
Equity to assets16.81%16.42% 

Results of Operations

Net interest income in 1Q20 was $5.0 million, as compared to $4.8 million in 1Q19, an increase of 3.4%.  Continued organic loan growth contributed to higher net interest income but was partially offset by decreases in the federal funds interest rate.  Loan interest revenue increased $323 thousand, or 7.7%, in 1Q20 as compared to 1Q19.  Average loans in 1Q20 were $370.0 million compared to $337.1 in 1Q19, an increase of $32.7 million, or 9.7%.  Net interest margin decreased to 3.93% in 1Q20 compared to 4.04% in 1Q19 due primarily to decreases in the federal funds interest rate and lower yields on loans.  As compared to 4Q19, the net interest margin in 1Q20 increased by 0.05% due to a $17.2 million increase in average loans in the same period.                

The provision for loan losses increased $150 thousand in 1Q20, as compared to 1Q19, and contributed in an increase to the allowance for loan losses of $191 thousand since December 31, 2019.  The higher provision for loan losses in 1Q20 was primarily attributable to adjustments to qualitative factors used to estimate the allowance for loan losses.  Qualitative factors were adjusted due to the economic uncertainty associated with the COVID-19 pandemic.  Net charge-offs were $27 thousand in 1Q20 compared to a net recovery of $9 thousand in 1Q19.  The allowance for loan losses represents 0.28% of gross loans as of March 31, 2020, as compared to 0.23% as of December 31, 2019.   

Noninterest income increased 0.9% in 1Q20, as compared to 1Q19, and was related to increases in service charges on deposits accounts and realized gains on callable investment securities.  These increases in noninterest income were partially offset by decreases in bank owned life insurance income during 1Q20.  A portion of bank owned life insurance is utilized to fund a nonqualified deferred executive compensation plan in which underlying investments are matched to investments selected by the plan participant.  Declines in the value of the underlying investment securities within the plan resulted in a $46 thousand reduction in bank owned life insurance income in 1Q20.  The related nonqualified deferred executive compensation liability owed to the participant was also reduced in 1Q20 which reduced salary expense by $52 thousand.            

Noninterest expense increased in 1Q20 by $118 thousand, or 4.4%, as compared to 1Q19, and is attributable to higher salaries, ATM and debit card processing expenses, and other operating costs.  These increases in noninterest expenses were partially offset by reductions in employee benefits expense due to lower health insurance claims and a decrease in deposit insurance premiums expense due to use of FDIC small bank assessment credits in 1Q20.  The increase in noninterest expense in 1Q20, as compared to 1Q19, exceeded growth in net interest income and noninterest income during the same period, which resulted in an increase in the efficiency ratio to 50.2% for 1Q20 as compared to 49.4% for 1Q19. 

Net income in 1Q20 decreased by $96 thousand, or 4.8%, as compared to 1Q19.  The decrease in net income accompanied by an increase in average assets and average equity, resulted in a decrease in the Return on Average Assets from 1.55% in 1Q19 to 1.41% in 1Q20 and a reduction in Return on Average Stockholders’ Equity from 9.33% in 1Q19 to 8.40% in 1Q20.  Dividends declared in 1Q20 were $0.26 as compared to $0.25 per share in 1Q19 which resulted in a dividend payout ratio of 37.7% for 1Q20 and 34.7% for 1Q19. 

Financial Condition

Total assets were $545.3 million as of March 31, 2020, which is a decrease of $2.7 million, or 0.5%, since December 31, 2019.  The primary decrease in assets in 1Q20 was a $9.0 million, or 13.9%, decrease in cash and cash equivalents which was utilized to fund growth in the loan portfolio which increased $7.7 million to $370.9 million as of March 31, 2020.  Annualized loan growth was 8.4% in 1Q20 as compared to 20.0% in 1Q19.  The decrease in the annualized loan growth rate is primarily attributable to a large commercial real estate loan payoff in 1Q20.  Deposits totaled $451.5 million as of March 31, 2020, a decrease of $2.2 million, or 0.5%, since December 31, 2019. This compares to a decrease in deposits of $14.0 million, or 3.1%, in 1Q19.  Seasonal deposit outflows typically result in decreases in deposits during the first quarter, but significant deposit inflows were experienced in 1Q20 which is likely attributable to the economic uncertainty from the COVID-19 pandemic.  Debt securities payable decreased by $2.0 million in 1Q20 upon settlement of the related debt security purchased in Q419.  Offsetting these decreases in liabilities was an increase in stockholders equity of $1.7 million in 1Q20, which resulted from an increase in undivided profits of $1.2 million and a $487 thousand increase in unrealized gains on available for sale debt securities, net of income taxes.  Loan growth accompanied by a modest decrease in deposits resulted in an increase in the loans to deposit ratio from 80.1% as of December 31, 2019 to 82.2% as of March 31, 2020.              

Average assets in 1Q20 were $26.1 million, or 5.0%, higher as compared to 1Q19 and is primarily the result of continued organic loan growth.  Average loans were $32.7 million, or 9.7%, higher in 1Q20, as compared to 1Q19.  The increase in average loans was primarily funded by increases in average deposits which were $20.1 million, or 4.7%, higher in 1Q20, as compared to 1Q19.  The average loans to average deposits ratio increased from 78.2% in 1Q19 to 82.0% in 1Q20. 

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 11 banking locations within the eastern coastal area of the Delmarva Peninsula including Worcester County, Maryland, Sussex County, Delaware and Accomack County, Virginia.  There is also a loan production office located in Onley, Virginia.

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