Skip Navigation

Calvin B. Taylor Bankshares, Inc. Reports Second-Quarter 2021 Financial Results

 

Berlin, Maryland - (NewMediaWire) - August 2, 2021 - Calvin B. Taylor Bankshares, Inc. (the “Company”) (OTCQX: TYCB), parent company of Calvin B. Taylor Bank, today reported net income of $2.07 million for the second quarter ended June 30, 2021 (“2Q21”), as compared to $2.03 million for the second quarter ended June 30, 2020 (“2Q20”) and $2.60 million for the first quarter ended March 31, 2021 (“1Q21”).  Net income for the six months ended June 30, 2021 was $4.67 million, as compared to $3.94 million for the six months ended June 30, 2020.  Highlights of the company’s financial results are noted below and included in the following tables.

  • The provision for loan losses in 2Q21 decreased $310 thousand, as compared to 2Q20 and decreased $125 thousand, as compared to 1Q21 as economic conditions related to the COVID-19 pandemic have improved.
  • Organic asset growth continued in 2Q21 as assets grew to $839.0 million at June 30, 2021, a 30.1% increase compared to June 30, 2020, and annualized growth of 35.7% compared to December 31, 2020.
  • Organic loan growth continued in 2Q21 but was partially offset by repayments of Paycheck Protection Program (“PPP”) loans by the Small Business Administration (“SBA”) associated with loan forgiveness.  Annualized loan growth, excluding PPP loans, was 6.6% since June 30, 2020 and 7.9% since December 31, 2020. 
  • Net interest margin was 2.78% in 2Q21, as compared to 3.58% in 2Q20 and 3.05% in 1Q21.  Continued deposit and asset growth from changes in customer behavior and government economic stimulus programs associated with the COVID-19 pandemic continued downward pressure on net interest margin.

Quarterly Results of Operations

Loan interest revenue, including fees, increased to $4.93 million in 2Q21, as compared to $4.64 million in 2Q20, as the result of continued organic loan growth and funding of SBA PPP loans.  Upon repayment of a PPP loan by the SBA associated with loan forgiveness, unamortized net loan fees are recognized and reported as loan interest revenue.  SBA PPP loan interest revenue, including fees, was $341 thousand in 2Q21, as compared to $156 thousand in 2Q20 and $458 thousand in 1Q21.  Unamortized net loan fees related to SBA PPP loans were $1.8 million as of June 30, 2021 compared to $946 thousand as of June 30, 2020 and $1.7 million as of March 31, 2021.  The yield on loans was 4.31% in 2Q21, as compared to 4.65% in 2Q20 and 4.58% in 1Q21.  The decrease in loan yields in 2Q21, as compared to 1Q21, is primarily due to fewer SBA PPP loan repayments in 2Q21.    

Net interest income increased to $5.13 million in 2Q21, as compared to $4.96 million in 2Q20 and $5.08 million in 1Q21.  Increases in loan interest revenue, as noted above, were partially offset by lower yields on other earning assets as interest rates remain historically low.  Net interest margin decreased to 2.78% in 2Q21, as compared to 3.58% in 2Q20 and 3.05% in 1Q21.  Average deposits increased in 2Q21 by $184.2 million, or 36.6%, as compared to 2Q20, and was the primary reason for the lower net interest margin.

A provision for loan losses was not recorded in 2Q21, as compared to $310 thousand recorded in 2Q20.  Net charge offs were $7 thousand in 2Q21 which primarily relate to overdraft deposit accounts, as compared to net recoveries of $68 thousand in 2Q20.  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 a reduction in government economic stimulus has prevented a reduction in the allowance for loan losses at this time.    

Noninterest income increased to $785 thousand in 2Q21, as compared to $756 thousand in 2Q20.  The increase in noninterest income in 2Q21, as compared to 2Q20, is primarily the result of improving consumer spending as COVID-19 pandemic restrictions were removed which has resulted in higher debit card interchange income in 2Q21.  Higher debit card interchange income was partially offset by a reduction in gains on disposition of investment securities.

Noninterest expense increased to $3.14 million in 2Q21, as compared to $2.69 million in 2Q20, which can be attributed to the opening of a new branch in Onley, Virginia in July 2020 and a decrease in the amount of salaries expense deferred for loan origination activities.  PPP loan originations in 2Q21 were significantly lower than 2Q20 which reduced the amount of salaries expense that was deferred.  In addition, FDIC deposit insurance premiums were higher in 2Q21, as compared to 2Q20, due to Small Bank Assessment Credits received in 2020 that offset the quarterly insurance assessment by the FDIC.  Increases in deposits related to the COVID-19 pandemic have also increased FDIC deposit insurance premiums.  The increases in noninterest expense exceeded the increases in net interest income and noninterest income which caused the efficiency ratio to increase from 48.23% in 2Q20 to 53.15% in 2Q21.  

Net income increased 2.0% to $2.07 million in 2Q21, as compared to $2.03 million in 2Q20, and is primarily attributable to a decrease in the provision for loan losses of $310 thousand which was partially offset by an increase in noninterest expense as noted above.  Sustained growth in deposits in the last 12 months associated with the COVID-19 pandemic resulted in an increase in average assets of 31.3% from 2Q20 to 2Q21 which resulted in a decrease to Return on Average Assets (“ROA”) from 1.36% in 2Q20 to 1.06% in 2Q21.  Return on Average Stockholders’ Equity (“ROE”) decreased from 8.81% in 2Q20 to 8.58% in 2Q21 due to an increase in average equity of 4.7%, as compared to a 2.0% increase in net income.  Dividends declared were $0.29 per share in 2Q21 compared to $0.26 per share in 2Q20.  Dividend payout ratios were 38.71% for 2Q21 and 35.50% for 2Q20. 

Year to Date Results of Operations

Loan interest revenue, including fees, was $9.89 million for the six months ended June 30, 2021, as compared to $9.15 million for the six months ended June 30, 2020, which is the result of continued organic loan growth and funding 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 $799 thousand for the six months ended June 30, 2021, as compared to $156 thousand for the six months ended June 30, 2020. 

Net interest income increased to $10.20 million for the six months ended June 30, 2021, as compared to $9.92 million for the six months ended June 30, 2020.  Increases in loan interest revenue, as noted above, were partially offset by lower yields on other earning assets as interest rates remain historically low.  Net interest margin decreased to 2.88% for the six months ended June 30, 2021, as compared to 3.74% for the six months ended June 30, 2020.  Average deposits for the six months ended June 30, 2021 increased by $179.40 million, or 29.5%, when compared to the same period in 2020, and was the primary reason for the lower net interest margin.  SBA PPP loan origination, changes in consumer behavior, and additional government economic stimulus payments contributed to the growth in average deposits.

Provision for loan losses was $125 thousand for the six months ended June 30, 2021, as compared to $530 thousand for the six months ended June 30, 2020.  Net charge offs were $13 thousand in six months ended June 30, 2021 which primarily relate to overdraft deposit accounts, as compared to net recoveries of $39 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 by $769 thousand to $2.13 million for the six months ended June 30, 2021, as compared to $1.36 million for the six months ended June 30, 2020, due to nonrecurring and nontaxable income of $618 thousand recognized in 1Q21 related to income from death proceeds of bank owned life insurance policies.  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.

Noninterest expense increased from $5.48 million for the six months ended June 30, 2020 to $6.18 million for the six months ended June 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 $94 thousand in the six months ending June 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 six months ended June 30, 2021 was 50.38% for the six months ended June 30, 2021, as compared to 49.23% for same period in 2020.

Net income increased from $3.94 million for the six months ended June 30, 2020 to $4.67 million for the six months ended June 30, 2021 and is primarily due to nonrecurring and nontaxable income of $618 thousand recorded in 1Q21 related to income from bank owned life insurance death proceeds.  Sustained growth in deposits associated with the COVID-19 pandemic resulted in an increase in average assets of 32.1% for the six months ended June 30, 2021, as compared to the same period in 2020, which resulted in ROA decreasing from 1.38% for the six months ended June 30, 2020 to 1.24% for the same period in 2021.  ROE increased from 8.61% for the six months ended June 30, 2020 to 9.71% for the six months ended June 30, 2021 due to an increase in average equity of 5.0%, as compared to an 18.4% increase in net income.  Dividends declared were $0.58 per share in six months ended June 30, 2021 compared to $0.52 per share for the same period in 2020.  Dividend payout ratios were 34.4% for the six months ended June 30, 2021 and 36.6% for the same period in 2020.

Financial Condition

Total assets were $839.0 million as of June 30, 2021, as compared to $644.7 million as of June 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 $739.8 million as of June 30, 2021, as compared to $548.3 million as of June 30, 2020 and $614.4 million as of December 31, 2020.  Total loans as of June 30, 2021 were $457.3 million, as compared to $421.1 million as of June 30, 2020 which represents growth of $36.2 million, or 8.6%.  The growth in loans since June 30, 2020 is attributable to $10.5 million increase in SBA PPP loans and $25.7 million of organic loan growth attributable to strong commercial and residential real estate loan demand in our markets.  Loans increased $33.9 million since December 31, 2020 which can be attributed to $18.1 million in PPP loan growth and $15.8 million of continued organic loan growth.  PPP loans, net of unamortized loans fees, were $42.3 million as of June 30, 2021, as compared to $31.7 million as of June 30, 2020 and $24.2 million as of December 31, 2020.  PPP loan balances increased in 2Q21 as new loan origination activity associated with 2nd draw PPP loans exceeded loan repayments by the SBA associated with loan forgiveness of existing 1st draw PPP loans.  The loans to deposits ratio as of June 30, 2021 was 61.8%, as compared to 76.8% as of June 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 June 30, 2021, loans past due 30 days or more totaled $994 thousand which includes $459 thousand of loans that previously received temporary payment deferral. 

Average assets grew by 32.1% to $755.0 million for the six months ended June 30, 2021, as compared to $571.3 million for the six months ended June 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 37.6% for the six months ended June 30, 2021, as compared to same period in 2020, while average loans grew 16.6% to $450.0 million for the six months ended June 30, 2021, as compared to $386.0 million for the six months ended June 30, 2020.  SBA PPP loans contributed to $29.6 million of the increase in average loans while the remaining $34.4 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 68.5% for the six months ended June 30, 2021, as compared to 80.9% 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     Six Months Ended  
  June 30, %   June 30, %
Results of Operations 2021 2020 Change   2021 2020 Change
Net interest income  $        5,126,373  $        4,956,062 3.4%    $     10,202,566  $        9,919,614 2.9%
Provision for loan losses  $                       -    $           310,000 -100.0%    $           125,000  $           530,000 -76.4%
Noninterest income  $           784,970  $           755,726 3.9%    $        2,129,531  $        1,360,876 56.5%
Noninterest expense  $        3,143,954  $        2,690,146 16.9%    $        6,184,280  $        5,477,040 12.9%
Net income  $        2,071,889  $        2,031,642 2.0%    $        4,667,317  $        3,942,950 18.4%
Net income per share  $                  0.75  $                  0.73 2.3%    $                  1.69  $                  1.42 18.6%
Dividend per share  $                  0.29  $                  0.26 11.5%    $                  0.58  $                  0.52 11.5%
Dividend payout ratio 38.71% 35.50%     34.37% 36.58%  
               
Average assets  $   785,085,477  $   598,105,213 31.3%    $   754,970,089  $   571,318,361 32.1%
Average loans  $   459,147,814  $   402,111,052 14.2%    $   449,950,541  $   386,009,179 16.6%
Average deposits  $   687,038,885  $   502,798,635 36.6%    $   656,712,880  $   477,315,335 37.6%
Average loans to average deposits 66.83% 79.97%     68.52% 80.87%  
Average stockholders' equity  $     96,562,487  $     92,206,259 4.7%    $     96,168,130  $     91,614,947 5.0%
Average stockholders' equity to average assets 12.30% 15.42%     12.74% 16.04%  
               
Ratios              
Net interest margin 2.78% 3.58%     2.88% 3.74%  
Return on average assets 1.06% 1.36%     1.24% 1.38%  
Return on average stockholders' equity 8.58% 8.81%     9.71% 8.61%  
Efficiency ratio 53.15% 48.23%     50.38% 49.23%  
               
Stock Repurchased              
Number of shares                           -                         914 -100.0%                      7,480                    1,294 478.1%
Repurchase amount  $                       -    $             27,396 -100.0%    $           253,572  $             39,404 543.5%
Average price per share  $                       -    $                29.97 -100.0%    $                33.90  $                30.45 11.3%
               
  June 30, June 30,     June 30, December 31, % Change
Financial Condition 2021 2020 % Change   2021 2020 Annualized
Assets  $   839,010,222  $   644,666,536 30.1%    $   839,010,222  $   711,791,004 35.7%
Loans  $   457,348,554  $   421,087,244 8.6%    $   457,348,554  $   423,467,766 16.0%
Deposits  $   739,844,239  $   548,275,849 34.9%    $   739,844,239  $   614,437,080 40.8%
Stockholders' equity  $     97,124,149  $     93,231,411 4.2%    $     97,124,149  $     94,785,130 4.9%
Common stock - shares outstanding            2,765,452            2,773,632 -0.3%              2,765,452            2,772,932 -0.5%
Book value per share  $                35.12  $                33.61 4.5%    $                35.12  $                34.18 5.5%
Loans to deposits 61.82% 76.80%     61.82% 68.92%  
Equity to assets 11.58% 14.46%     11.58% 13.32%  

 

Calvin B. Taylor Bankshares, Inc. and Subsidiary    
Consolidated Balance Sheets          
   (unaudited)         (unaudited) 
   June 30,     December 31,     June 30, 
  2021   2020   2020
Assets          
Cash and cash equivalents          
Cash and due from banks  $    17,240,944    $    14,398,578    $    13,234,177
Federal funds sold and interest bearing deposits      221,200,232        156,706,746           97,696,589
Total cash and cash equivalents      238,441,176        171,105,324        110,930,766
Time deposits in other financial institutions           6,981,022             8,733,754           14,281,230
Debt securities available for sale, at fair value         99,345,642           72,166,997           57,515,065
Debt securities held to maturity, at amortized cost           3,509,644             5,994,955           10,353,991
Equity securities, at cost           1,103,733             1,240,233             1,240,233
Loans      457,348,554        423,467,766        421,087,244
Less: allowance for loan losses         (1,948,398)           (1,836,451)           (1,427,122)
Net loans      455,400,156        421,631,315        419,660,122
Accrued interest receivable           2,077,867             2,402,222             2,761,121
Prepaid expenses              601,955                612,188                445,833
Other real estate owned                          -                              -                              -  
Premises and equipment, net         12,672,886           12,951,511           12,151,821
Computer software              350,877                389,236                291,802
Bank owned life insurance         17,940,582           13,405,779           13,146,379
SBA PPP loan fee receivable              130,083                     8,819             1,391,040
Other assets              454,599             1,148,671                497,133
Total assets  $  839,010,222    $  711,791,004    $  644,666,536
           
Liabilities and Stockholders' Equity          
Deposits          
Non-interest bearing  $  284,870,586    $  211,945,179    $  202,106,787
Interest bearing      454,973,653        402,491,901        346,169,062
Total deposits      739,844,239        614,437,080        548,275,849
Accrued interest payable                 26,483                   26,837                   24,660
Dividends payable              801,981                804,150                721,144
Accrued expenses              156,095                602,027                193,593
Non-qualified deferred compensation              553,488                485,626                349,160
Deferred income taxes              447,841                601,057                709,612
Other liabilities                 55,946                   49,097             1,161,107
Total liabilities      741,886,073        617,005,874        551,435,125
Stockholders' equity          
Common stock, par value $1 per share;          
authorized 10,000,000 shares; issued and outstanding           2,765,452             2,772,932             2,773,632
Additional paid-in capital           2,562,103             2,808,195             2,831,428
Retained earnings         91,460,155           88,396,800           86,680,141
Accumulated other comprehensive income, net of tax              336,439                807,203                946,210
Total stockholders' equity         97,124,149           94,785,130           93,231,411
Total liabilities and stockholders' equity  $  839,010,222    $  711,791,004    $  644,666,536

 

Calvin B. Taylor Bankshares, Inc. and Subsidiary        
Consolidated Statements of Comprehensive Income (unaudited)            
               
  For the three months ended   For the six months ended
   Jun 30, 2021     Jun 30, 2020     Jun 30, 2021     June 30, 2020 
Interest revenue              
Loans, including fees  $  4,930,082    $  4,644,935    $   9,887,836    $   9,147,108
U. S. Treasury and government agency debt securities            69,005            123,915             126,233             270,641
Mortgage-backed debt securities          172,651            161,280             289,423             317,114
State and municipal debt securities            47,506              58,089               98,509             107,291
Federal funds sold and interest bearing deposits            53,200              23,396               89,132             175,902
Time deposits in other financial institutions            40,630            104,350               85,304             238,856
Total interest revenue       5,313,074         5,115,965       10,576,437       10,256,912
               
Interest expense              
Deposits          186,701            159,903             373,871             337,298
Net interest income       5,126,373         4,956,062       10,202,566         9,919,614
Provision for loan losses                      -              310,000             125,000             530,000
Net interest income after provision for loan losses       5,126,373         4,646,062       10,077,566         9,389,614
               
Noninterest income              
Debit card and ATM          358,110            234,320             674,226             469,167
Service charges on deposit accounts          177,268            142,937             356,355             327,264
Merchant payment processing            58,739              32,158               72,256               67,518
Increase in cash surrender value of bank owned life insurance            99,825            110,974             185,758             141,680
Income from bank owned life insurance death proceeds                      -                          -               618,463                        -  
Dividends            10,124              12,292               14,719               19,267
Gain on disposition of investment securities             (3,652)            133,829               56,801             155,313
Gain (loss) on disposition of fixed assets             (2,583)                        -                  (7,514)                 1,400
Miscellaneous            87,139              89,216             158,467             179,267
Total noninterest income          784,970            755,726         2,129,531         1,360,876
               
Noninterest expenses              
Salaries       1,371,866         1,005,214         2,620,823         2,259,112
Employee benefits          449,571            483,329             848,836             800,793
Occupancy           222,492            187,138             449,860             388,907
Furniture and equipment           197,159            169,236             400,844             338,260
Data processing          193,382            131,770             359,497             263,248
ATM and debit card          129,836            101,206             242,086             212,556
Marketing            85,331              95,719             120,945             158,878
Directors fees            86,100              85,950             161,200             161,650
Telecommunication services            81,541              77,774             163,686             158,401
Deposit insurance premiums            43,774                        -                 93,669                        -  
Other operating          282,902            352,810             722,834             735,235
Total noninterest expenses       3,143,954         2,690,146         6,184,280         5,477,040
Income before income taxes        2,767,389         2,711,642         6,022,817         5,273,450
Income taxes          695,500            680,000         1,355,500         1,330,500
Net income       2,071,889         2,031,642         4,667,317         3,942,950
               
Other comprehensive income, net of tax              
Unrealized gains (losses) on available for sale debt securities            
arising during the period, net of tax          118,499            290,912           (470,764)             777,931
Comprehensive income  $  2,190,388    $  2,322,554    $   4,196,553    $   4,720,881
               
Earnings per common share - basic and diluted  $             0.75    $             0.73    $             1.69    $             1.42

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