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Press release content from Globe Newswire. The AP news staff was not involved in its creation.
PRESS RELEASE: Paid content from Globe Newswire
Press release content from Globe Newswire. The AP news staff was not involved in its creation.

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

November 3, 2021 GMT

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 company’s financial results are noted below and included in the following tables.

  •  Repayments of Paycheck Protection Program (“PPP”) loans by the Small Business Administration (“SBA”) associated with loan forgiveness was $20.6 million in 3Q21 and was partially offset by growth in non-PPP loans of $9.1 million.  Annualized loan growth, excluding PPP loans, was 9.5% since September 30, 2020 and 8.3% since December 31, 2020. 
  •  Net interest income increased 17.6% in 3Q21, as compared to 3Q20, as repayment of PPP loans in 3Q21 increased PPP loan interest revenue, including fees, by $715 thousand.  PPP interest revenue, including fees, was $1.7 million for the nine months ended September 30, 2021, as compared to $293 thousand for the nine months ended September 30, 2020.
  •  The provision for loan losses in 3Q21 decreased $270 thousand, as compared to 3Q20 and decreased $675 thousand for the nine months ended September 30, 2021, as compared to the same period in 2020 as economic conditions related to the COVID-19 pandemic have improved.
  •  Organic asset growth continued in 3Q21 as assets grew to $914.0 million at September 30, 2021, a 30.6% increase compared to September 30, 2020, and annualized growth of 37.9% compared to December 31, 2020.
  •  Net interest margin was 2.76% in 3Q21, as compared to 3.12% in 3Q20 and 2.78% in 2Q21. Decreases in net interest margin are attributable to the continued growth in deposits and assets resulting from changes in customer behavior and government economic stimulus programs associated with the COVID-19 pandemic.   

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Quarterly Results of Operations

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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 Operations20212020Change 20212020Change 
Net interest income $5,756,531  $4,894,391 17.6%  $15,959,097 $14,814,0057.7% 
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 ratio30.00%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 deposits58.15%72.44%  64.67%77.74%  
Average stockholders' equity $98,077,512 $93,422,4355.0%  $96,597,763 $92,217,4434.7% 
Average stockholders' equity to average assets11.15%13.88%  12.13%15.24%  
         
Ratios        
Net interest margin2.76%3.12%  2.84%3.51%  
Return on average assets1.22%1.14%  1.23%1.29%  
Return on average stockholders' equity10.90%8.18%  10.13%8.46%  
Efficiency ratio46.81%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 Condition20212020Change 20212020Annualized 
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 $94,276,5104.7%  $98,753,483 $94,785,1305.6% 
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 deposits55.18%69.59%  55.18%68.92%  
Equity to assets10.80%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