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Calvin B. Taylor Bankshares, Inc. Reports Fourth Quarter and Year End Financial Results for 2021

Berlin, MD – (NewMediaWire) – February 21, 2022 – Calvin B. Taylor Bankshares, Inc. (the “Company”) (OTCQX: TYCB), parent company of Calvin B. Taylor Bank, today reported net income of $9.48 million for the twelve months ended December 31, 2021, as compared to $7.27 million for the twelve months ended December 31, 2020.  Net income was $2.14 million for the fourth quarter ended December 31, 2021 (“4Q21”), as compared to $1.41 million for the fourth quarter ended December 31, 2020 (“4Q20”) and $2.67 million for the third quarter ended September 30, 2021 (“3Q21”). 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 were $15.6 million in 4Q21 and was partially offset by growth in non-PPP loans of $4.7 million. Loan growth, excluding PPP loans, was $29.5 million or 7.4% since December 31, 2020 which is attributable to strong residential and commercial real estate loan demand. 
  • Net interest income increased $759 thousand or 15.3% in 4Q21, as compared to 4Q20, including a $399 thousand increase in PPP interest revenue, including fees.  Net interest income increased $1.90 million in 2021 as compared to 2020 which was primarily due to a $1.76 million increase in PPP interest revenue, including fees. 
  • The provision for loan losses in 4Q21 decreased $165 thousand, as compared to 4Q20, and decreased $840 thousand in 2021 as compared to 2020, as economic conditions related to the COVID-19 pandemic have improved. 
  • Total assets decreased to $904.5 million at December 31, 2021, a 4.2% decrease compared to September 30, 2021, as the result of seasonal deposit outflows but were partially offset by continued organic growth in core deposits. Total assets increased by $192.7 million or 27.1% since December 31, 2020 and 2021 average assets increased $195.9 million or 31.1% compared to 2020 average assets. 
  • Net interest margin was 2.79% in 2021 and 3.36% in 2020.  The decrease in net interest margin is 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.    
  • Dividends declared were $1.16 per share in the twelve months ended December 31, 2021 compared to $1.10 per share for the same period in 2020, an increase of 5.5%.   

Quarterly Results of Operations

Loan interest revenue, including fees, increased to $5.37 million in 4Q21, as compared to $4.81 million in 4Q20, 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 $734 thousand in 4Q21, as compared to $335 thousand in 4Q20 and $852 thousand in 3Q21. Unamortized net loan fees related to SBA PPP loans were $290 thousand as of December 31, 2021, as compared to $641 thousand as of December 31, 2020 and $994 thousand as of September 30, 2021. The yield on loans was 4.90% in 4Q21, as compared to 4.56% in 4Q20 and 4.81% in 3Q21. The increase in loan yields in 4Q21 is primarily due to the increase in SBA PPP loan interest revenue, including fees, recognized in 4Q21 as a result of SBA PPP loan repayments.    

Net interest income increased to $5.72 million in 4Q21, as compared to $4.96 million in 4Q20 and was $5.76 million in 3Q21. 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 4Q21 due to growth in the underlying balances.  Net interest margin decreased to 2.63% in 4Q21, as compared to 2.99% in 4Q20 and 2.76% in 3Q21.  Average deposits increased in 4Q21 by $201.9 million, or 33.2%, as compared to 4Q20, and was the primary reason for the decrease in net interest margin. Net interest margin decreased in 4Q21, as compared to the prior quarter, due to higher average deposits balances in 4Q21.            

A provision for loan losses was not recorded in 4Q21, as compared to $165 thousand recorded in 4Q20.  Net charge offs in 4Q21 were $11 thousand, as compared to net charge offs of $16 thousand recognized in 4Q20 and were primarily related to overdraft deposit accounts.  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 was $888 thousand in 4Q21, as compared to $775 thousand in 4Q20 and $1.03 million in 3Q21. The increase in noninterest income in 4Q21 over 4Q20 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 2.4% to $3.85 million in 4Q21, as compared to $3.76 million in 4Q20, due to higher costs of employee salary and benefits, marketing, and data processing. The increases in net interest income and noninterest income exceeded the increases in noninterest expense which resulted in the efficiency ratio decreasing from 65.72% in 4Q20 to 58.21% in 4Q21. Noninterest expense increased $673 thousand in 4Q21 compared to 3Q21 which primarily relates to year end discretionary bonuses and 401K contributions.

Net income was $2.14 million in 4Q21, as compared to $1.41 million in 4Q20 and $2.67 million in 3Q21.  Sustained growth in deposits in the last 12 months associated with the COVID-19 pandemic resulted in an increase in average assets of 29.7% from 4Q20 to 4Q21. Net income increased by 51.4% during the same period which resulted in an increase to Return on Average Assets (“ROA”) from 0.80% in 4Q20 to 0.94% in 4Q21. Return on Average Stockholders’ Equity (“ROE”) increased from 6.00% in 4Q20 to 8.58% in 4Q21 due to an increase in average equity of 5.9%, as compared to a 51.4% increase in net income. Dividends declared were $0.29 per share in 4Q21 and 4Q20 which resulted in dividend payout ratios of 37.4% for 4Q21 and 56.9% for 4Q20.  

Year to Date Results of Operations

Loan interest revenue, including fees, increased 11.3% to $20.7 million for the twelve months ended December 31, 2021, as compared to $18.6 million for the twelve months ended December 31, 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 $2.39 million for the twelve months ended December 31, 2021, as compared to $629 thousand for the twelve months ended December 31, 2020.  

Net interest income increased 9.6% to $21.7 million for the twelve months ended December 31, 2021, as compared to $19.8 million for the twelve months ended December 31, 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 2.79% for the twelve months ended December 31, 2021, as compared to 3.36% for the twelve months ended December 31, 2020.  Average deposits for the twelve months ended December 31, 2021 increased by $195.9 million, or 31.1%, 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 twelve months ended December 31, 2021, as compared to $965 thousand for the twelve months ended December 31, 2020.  Net recoveries were $37 thousand for the twelve months ended December 31, 2021, as compared to net recoveries of $18 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 $4.0 million for the twelve months ended December 31, 2021, as compared to $2.9 million for the twelve months ended December 31, 2020, and was primarily due to nonrecurring and nontaxable income of $622 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 $566 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 $12.1 million for the twelve months ended December 31, 2020 to $13.2 million for the twelve months ended December 31, 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 $122 thousand for the twelve months ended December 31, 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 twelve months ended December 31, 2021 was 51.46%, as compared to 53.66% for the same period in 2020. 

Net income increased 30.4% to $9.5 million for the twelve months ended December 31, 2021, as compared to $7.3 million for the twelve months ended December 31, 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 31.1% for the twelve months ended December 31, 2021, as compared to the same period in 2020.  Growth in net income and average assets were approximately the same which resulted in an ROA of 1.15% for the twelve months ended December 31, 2021 and December 31, 2020.  ROE increased from 7.84% for the twelve months ended December 31, 2020 to 9.73% for the twelve months ended December 31, 2021 due to an increase in average equity of 5.0%, as compared to an increase in net income of 30.4%.  Dividends declared were $1.16 per share in the twelve months ended December 31, 2021 compared to $1.10 per share for the same period in 2020, an increase of 5.5%.  Dividend payout ratios were 33.8% for the twelve months ended December 31, 2021 and 42.0% for the same period in 2020. 

Financial Condition

Total assets were $904.5 million as of December 31, 2021, as compared to $711.8 million as of December 31, 2020 and $914.0 million as of September 30, 2021.  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 $803.2 million as of December 31, 2021, as compared to $614.4 million as of December 31, 2020 and $807.9 million as of September 30, 2021.  Total loans as of December 31, 2021 were $434.9 million, as compared to $423.5 million as of December 31, 2020 which represents growth of $11.4 million, or 2.7%.  Loan growth since December 31, 2020 is the result of $29.5 million of organic loan growth attributable to strong commercial and residential real estate loan demand in our markets.  This growth was offset by an $18.1 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 decreased $11.0 million since September 30, 2021 which can be attributed to $15.6 million decrease in PPP loans that was partially offset by $4.6 million in organic loan growth.  PPP loans, net of unamortized loans fees, were $6.0 million as of December 31, 2021, as compared to $24.2 million as of December 31, 2020 and $21.7 million as of September 30, 2021.  The loans to deposits ratio as of December 31, 2021 was 54.1%, as compared to 68.9% as of December 31, 2020 and 55.2% as of September 30, 2021.              

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 December 31, 2021, loans past due 30 days or more totaled $1.99 million which includes $458 thousand of loans that previously received temporary payment deferral.  

Average assets grew by 31.1% to $825.4 million for the twelve months ended December 31, 2021, as compared to $629.5 million for the twelve months ended December 31, 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 35.7% for the twelve months ended December 31, 2021, as compared to same period in 2020, while average loans grew by 11.1%.  Average loans increased $44.5 million and were $446.8 million for the twelve months ended December 31, 2021, as compared to $402.3 million for the twelve months ended December 31, 2020.  SBA PPP loans contributed to $8.9 million of the increase in average loans while the remaining $35.6 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 61.5% for the twelve months ended December 31, 2021, as compared to 75.2% 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     Twelve Months Ended    
  December 31, %   December 31, %  
Results of Operations 2021 2020 Change   2021 2020 Change  
Net interest income  $5,721,130   $4,961,837  15.3%    $21,680,227  $19,775,842 9.6%  
Provision for loan losses  $ –     $165,000  -100.0%    $125,000   $965,000  -87.0%  
Noninterest income  $888,386   $774,876  14.6%    $4,049,613   $2,873,476  40.9%  
Noninterest expense  $3,850,768   $3,761,079  2.4%    $13,213,173  $12,063,304 9.5%  
Net income  $2,140,748   $1,413,634  51.4%    $9,480,667   $7,268,014  30.4%  
Net income per share  $0.78   $0.51  52.1%    $3.43   $2.62  30.8%  
Dividend per share  $0.29   $0.29  0.0%    $1.16   $1.10  5.5%  
Dividend payout ratio 37.40% 56.89%     33.82% 41.98%    
                 
Average assets  $913,335,154   $704,175,818  29.7%    $825,408,616   $629,497,297  31.1%  
Average loans  $435,123,740   $419,211,495  3.8%    $446,813,318   $402,298,573  11.1%  
Average deposits  $810,312,556   $608,449,556  33.2%    $726,035,888   $534,995,652  35.7%  
Average loans to average deposits 53.70% 68.90%     61.54% 75.20%    
Average stockholders’ equity  $99,849,273  $94,308,170 5.9%    $97,425,334  $92,746,273 5.0%  
Average stockholders’ equity to average assets 10.93% 13.39%     11.80% 14.73%    
                 
Ratios                
Net interest margin 2.63% 2.99%     2.79% 3.36%    
Return on average assets 0.94% 0.80%     1.15% 1.15%    
Return on average stockholders’ equity 8.58% 6.00%     9.73% 7.84%    
Efficiency ratio 58.21% 65.72%     51.46% 53.66%    
                 
Stock Repurchased                
Number of shares  4,404   700  529.1%    12,172   1,994  510.4%  
Repurchase amount  $158,254   $23,933  561.2%    $421,834   $63,337  566.0%  
Average price per share  $35.93   $34.19  5.1%    $34.66   $31.76  9.1%  
                 
  December 31, December 31, %   December 31, September 30, % Change  
Financial Condition 2021 2020 Change   2021 2021 Annualized  
Assets  $904,478,786   $711,795,304  27.1%    $904,478,786   $914,014,070  -4.2%  
Loans  $434,866,477   $423,467,766  2.7%    $434,866,477   $445,837,961  -9.8%  
Deposits  $803,245,622   $614,437,080  30.7%    $803,245,622   $807,902,713  -2.3%  
Stockholders’ equity  $99,088,916  $94,785,130 4.5%    $99,088,916  $98,753,483 1.4%  
Common stock – shares outstanding  2,760,760   2,772,932  -0.4%    2,760,760   2,765,164  -0.6%  
Book value per share  $35.89   $34.18  5.0%    $35.89   $35.71  2.0%  
Loans to deposits 54.14% 68.92%     54.14% 55.18%    
Equity to assets 10.96% 13.32%     10.96% 10.80%    
                 
                 
Calvin B. Taylor Bankshares, Inc. and Subsidiary
Consolidated Balance Sheets      
   (unaudited)     
   December 31,     December 31, 
  2021   2020
Assets      
Cash and cash equivalents      
Cash and due from banks  $9,931,724     $14,392,359 
Federal funds sold and interest bearing deposits  280,331,067     156,712,965 
Total cash and cash equivalents  290,262,791     171,105,324 
Time deposits in other financial institutions  3,478,221     8,733,754 
Debt securities available for sale, at fair value  128,654,564     72,166,997 
Debt securities held to maturity, at amortized cost  13,967,244     5,994,955 
Equity securities, at cost  1,103,833     1,240,233 
Loans  434,866,477     423,467,766 
Less: allowance for loan losses  (1,998,728)    (1,836,451)
Net loans  432,867,749     421,631,315 
Accrued interest receivable  1,701,446     2,402,222 
Prepaid expenses  645,725     612,188 
Other real estate owned  –       –   
Premises and equipment, net  12,904,446     12,951,511 
Computer software  342,148     389,236 
Bank owned life insurance  18,223,348     13,405,779 
Other assets  327,271     1,161,790 
Total assets  $904,478,786     $711,795,304 
       
Liabilities and Stockholders’ Equity      
Deposits      
Non-interest bearing  $283,096,833     $211,945,179 
Interest bearing  520,148,789     402,491,901 
Total deposits  803,245,622     614,437,080 
Accrued interest payable  26,029     26,837 
Dividends payable  800,620     804,150 
Accrued expenses  623,132     602,027 
Non-qualified deferred compensation  645,716     485,626 
Deferred income taxes  6,759     605,357 
Other liabilities  41,992     49,097 
Total liabilities  805,389,870     617,010,174 
Stockholders’ equity      
Common stock, par value $1 per share;      
authorized 10,000,000 shares; issued and outstanding  2,760,760     2,772,932 
Additional paid-in capital  2,398,533     2,808,195 
Retained earnings  94,670,987     88,396,800 
Accumulated other comprehensive income (loss), net of tax  (741,364)    807,203 
Total stockholders’ equity  99,088,916     94,785,130 
Total liabilities and stockholders’ equity  $904,478,786     $711,795,304 
       
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, 2021     Dec 31, 2020     Dec 31, 2021     Dec 31, 2020 
Interest revenue              
Loans, including fees  $5,370,705     $4,808,154     $20,743,244     $18,629,385 
U. S. Treasury and government agency debt securities  107,108     104,428     316,116     494,008 
Mortgage-backed debt securities  253,779     83,045     763,388     518,458 
State and municipal debt securities  57,812     51,762     204,809     213,978 
Federal funds sold and interest bearing deposits  118,048     46,137     296,319     251,653 
Time deposits in other financial institutions  24,421     66,243     139,461     383,376 
Total interest revenue  5,931,873     5,159,769     22,463,337     20,490,858 
               
Interest expense              
Deposits  210,743     197,932     783,110     715,016 
Net interest income  5,721,130     4,961,837     21,680,227     19,775,842 
Provision for loan losses  –       165,000     125,000     965,000 
Net interest income after provision for loan losses  5,721,130     4,796,837     21,555,227     18,810,842 
               
Noninterest income              
Debit card and ATM  351,665     295,411     1,394,789     1,060,624 
Service charges on deposit accounts  220,951     190,551     776,076     674,955 
Merchant payment processing  90,453     42,259     454,985     223,101 
Increase in cash surrender value of bank owned life insurance  83,854     114,667     362,890     344,049 
Income from bank owned life insurance death proceeds  –       –       622,455     –   
Dividends  39,780     41,382     57,746   –     65,993 
Gain (loss) on disposition of debt securities  (5,456)    13,444     50,869     168,757 
Gain (loss) on disposition of fixed assets  (13,875)    –       (24,564)    1,400 
Miscellaneous  121,014     77,162     354,367     334,597 
Total noninterest income  888,386     774,876     4,049,613     2,873,476 
               
Noninterest expenses              
Salaries  1,768,257     1,687,638     5,751,045     5,224,862 
Employee benefits  654,364     641,100     1,856,256     1,750,621 
Occupancy   238,192     255,955     925,648     877,435 
Furniture and equipment   188,168     196,976     777,574     714,354 
Data processing  178,358     148,183     727,825     557,725 
ATM and debit card  157,161     132,311     545,657     457,494 
Marketing  105,901     70,294     304,173     347,190 
Directors fees  68,100     82,100     311,650     321,950 
Telecommunication services  81,915     80,466     328,468     320,428 
Deposit insurance premiums  60,300     37,880     217,306     95,255 
Other operating  350,052     428,176     1,467,571     1,395,990 
Total noninterest expenses  3,850,768     3,761,079     13,213,173     12,063,304 
Income before income taxes   2,758,748     1,810,634     12,391,667     9,621,014 
Income taxes  618,000     397,000     2,911,000     2,353,000 
Net income  2,140,748     1,413,634     9,480,667     7,268,014 
               
Other comprehensive income, net of tax              
Unrealized gains (losses) on available for sale debt securities              
arising during the period, net of tax  (846,440)    (76,931)    (1,548,567)    638,924 
Comprehensive income  $1,294,308     $1,336,703     $7,932,100     $7,906,938 
               
Earnings per common share – basic and diluted  $0.78     $0.51     $3.43     $2.62 
               

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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