Berlin, Maryland - 
(NewMediaWire) - May 16, 2022 - Calvin B. Taylor Bankshares, Inc. (the “Company”) (OTCQX: TYCB), parent company of Calvin B. Taylor Bank, today reported net income of $2.29 million for the first quarter ended March 31, 2022 (“1Q22”), as compared to $2.60 million for the first quarter ended March 31, 2021 (“1Q21”) and $2.14 million for the fourth quarter ended December 31, 2021 (“4Q21”). President and Chief Executive Officer Raymond M. Thompson remarked, “The Company experienced strong commercial and residential organic loan growth in 1Q22 as borrowers moved to consummate credit needs ahead of a forecasted, and realized, Federal Reserve interest rate increase during the quarter. The Federal Reserve’s March 2022 rate increase constituted the first interest rate increase since December 2018. The Company’s balance sheet is well-positioned for continued tightening of monetary policy in response to record inflation.” Highlights of the company’s financial results are noted below and included in the following tables.
Organic loan growth continued in 1Q22 with loans growing $29.5 million, or 6.8%, since December 31, 2021.
Repayments of Paycheck Protection Program (“PPP”) loans by the Small Business Administration (“SBA”) associated with loan forgiveness were $3.5 million in 1Q22 and $40.8 million in the twelve months ended March 31, 2022.
Loans, excluding SBA PPP loans, have increased $47.9 million, or 11.6%, in the twelve months ended March 31, 2022.
Net interest income increased in 1Q22 by $197 thousand, or 3.9%, as compared to 1Q21.
Organic deposit growth during the previous 12 months resulted in total assets growing by $153.8 million, or 20.5%, since March 31, 2021.
Nontaxable income related to bank owned life insurance death proceeds decreased by $346 thousand in 1Q22 as compared to 1Q21.
Net interest margin was 2.50% in 1Q22, as compared to 3.05% in 1Q21 and 2.63% in 4Q21. Decreases in net interest margin are attributable to growth in deposits and assets associated with the COVID-19 pandemic and decreases in loan interest revenue from SBA PPP loans.
Quarterly dividend increased 3.45% in 1Q22, as compared to 4Q21.
Quarterly Results of Operations
Loan interest revenue, including fees, decreased to $4.83 million in 1Q22, as compared to $4.96 million in 1Q21 and $5.37 million in 4Q21, as the result of a decrease in interest revenue from SBA PPP loans. SBA PPP loan interest revenue decreased to $147 thousand in 1Q22, as compared to $458 thousand in 1Q21 and $734 thousand in Q421. Remaining SBA PPP loan balances were $2.81 million as of March 31, 2022 and related unamortized net loan fees were $152 thousand. The yield on loans was 4.43% in 1Q22, as compared to 4.58% in 1Q21 and 4.90% in 4Q21. The higher loan yields in 1Q21 and 4Q21 are primarily due to SBA PPP loan interest revenue, including fees, recognized as a result of SBA PPP loan repayments.
Net interest income increased 3.9% to $5.27 million in 1Q22, as compared to $5.08 million in 1Q21. Decreases in loan interest revenue, as noted above, were offset by increases in interest revenue from debt securities and interest bearing deposits.
Increases in underlying balances and higher market interest rates in 1Q22 contributed to an increase in interest revenue on debt securities and interest bearing deposits. Net interest income decreased 7.8% in 1Q22, as compared to 4Q21, due primarily to a $588 thousand decrease in SBA PPP loan interest revenue.
The provision for loan losses was $75 thousand in 1Q22, as compared to $125 thousand in 1Q21. No provision was recorded in 4Q21. The provision for loan losses recorded in 1Q22 was the result of growth in the loan portfolio since December 31, 2021. The provision for loan losses recorded in 1Q21 was attributable to loan portfolio growth and further adjustments to qualitative factors used to estimate the allowance for loan losses. Qualitative factors were adjusted in 1Q21 due to the continued uncertainty associated with the economic recovery from the COVID-19 pandemic. Net charge offs were $21 thousand in 1Q22, as compared to $6 thousand in 1Q21 and $11 thousand in 4Q21. 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 $1.04 million in 1Q22, as compared to $1.34 million in 1Q21 and $888 thousand in 4Q21. Noninterest income declined in 1Q22, as compared to 1Q21, due to a $346 thousand decrease in income from death proceeds of bank owned life insurance policies. No income was recognized in 4Q21 related to death proceeds of bank owned life insurance policies. While income from increases 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. Other sources of noninterest income including debit card interchange fees, merchant payment processing fees, and overdraft fees increased in 1Q22, as compared to 1Q21. The improvements in these revenue sources can be attributed to increased consumer spending as COVID-19 pandemic restrictions were removed and consumers resumed spending.
Noninterest expense increased to $3.27 million in 1Q22, as compared to $3.04 million in 1Q21, which can be attributed to increases in salaries, marketing, and data processing expenses. Salaries expense was lower in 1Q21, as compared to 1Q22, due to increased loan origination volumes associated with SBA PPP loans in 1Q21. Salaries expense directly attributable to loan originations is deferred and amortized over the life of the underlying loan and is recorded as a reduction to interest revenue. The
Company’s efficiency ratio increased to 51.87% in 1Q22, as compared to 47.80% in 1Q21, due primarily to higher noninterest expenses. Noninterest expense decreased in 1Q22 to $3.27 million, as compared to $3.85 million in 4Q21, which primarily relates to higher salaries expense associated with yearend discretionary bonuses and 401K contributions recorded in 4Q21. The Company’s efficiency ratio decreased to 51.87% in 1Q22, as compared to 58.21% in 4Q21, due primarily to lower noninterest expenses.
Net income decreased 11.8% to $2.29 million in 1Q22, as compared to $2.60 million in 1Q21, and is primarily attributable to a decrease in income from bank owned life insurance death proceeds of $346 thousand. Average assets increased 24.4% in 1Q22, as compared to 1Q21, which combined with the decrease in net income resulted in a decrease in Return on Average Assets (“ROA”) from 1.44% in 1Q21 to 1.02% in 1Q22. Average equity increased 2.9% to $98.6 million in 1Q22, as compared to 1Q21, but a decrease in net income of 11.8% during the same period resulted in a decrease to the Return on Average Stockholders’ Equity (“ROE”) from 10.84% in 1Q21 to 9.29% in 1Q22.
Net income increased 6.9% to $2.29 million in 1Q22, as compared to $2.14 million in 4Q21, due to income from bank owned life insurance death proceeds of $272 thousand recorded in 1Q22 and higher noninterest expense in 4Q21 related to year end discretionary bonuses and 401K contributions. Average assets declined by 1.5% in 1Q22 as compared to 4Q21 which is typical due to seasonal deposit outflows. Average equity decreased during 1Q22, and was 0.9% lower than 4Q21 due to unrealized losses on available for sale debt securities recorded within equity which are the result of increases in market interest rates during 1Q22. The growth in net income compared to the modest changes in average assets and average equity resulted in an increase in ROA from 0.94% in 4Q21 to 1.02% in 1Q22 and an increase in ROE from 8.58% in 4Q21 to 9.29% in 1Q22. Dividends declared were $0.30 per share in 1Q22 and $0.29 per share in 1Q21 and 4Q21. Dividend payout ratios were 36.18% for 1Q22, 30.90% for 1Q21, and 37.40% for 4Q21.
Financial Condition
Total assets were $905.2 million as of March 31, 2022, as compared to $751.4 million as of March 31, 2021 and $904.5 million as of December 31, 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 $806.5 million as of March 31, 2022, as compared to $653.5 million as of March 31, 2021 and $803.2 million as of December 31, 2021. Total loans as of March 31, 2022 were $464.4 million, as compared to $455.7 million as of March 31, 2021 which represents growth of $8.7 million, or 1.9%. The growth in loans since March 31, 2021 is attributable to $47.9 million of organic loan growth resulting from strong commercial and residential real estate loan demand in our markets. This growth was offset by a $39.2 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 $29.5 million since December 31, 2021 which can be attributed to $32.9 million of continued organic loan growth that was partially offset by $3.4 million decrease in PPP loans. PPP loans, net of unamortized loan fees, were $2.7 million as of March 31, 2022, as compared to $41.9 million as of March 31, 2021 and $6.0 million as of December 31, 2021. The loans to deposits ratio as of March 31, 2022 was 57.6%, as compared to 69.7% as of March 31, 2021 and 54.1% as of December 31, 2021.
Nonaccrual loans and loans past due 30 days or more totaled $1.96 million as of March 31, 2022, as compared to $2.52 million as of March 31, 2021 and $2.10 million as of December 31, 2021. A temporary loan payment deferral program was established in the 2nd quarter of 2020 as a result of the COVID-19 pandemic. Past due loans that also received temporary payment deferral were $457 thousand as of March 31, 2022 and $459 thousand as of March 31, 2021 and December 31, 2021.
Average assets grew by 24.4% to $899.2 million for the three months ended March 31, 2022, as compared to $723.1 million for the three months ended March 31, 2021. 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 27.3% for the three months ended March 31, 2022, as compared to same period in 2021, while average loans grew by 0.4%. Average loans increased $1.8 million and were $442.2 million for the three months ended March 31, 2022, as compared to $440.4 million for the three months ended March 31, 2021. The increase in average loans is attributable to strong commercial and residential real estate loan demand in the last 12 months. Average loans, excluding SBA PPP loans, grew by $30.7 million, or 7.5%. The average balance of SBA PPP loans decreased by $28.9 million in 1Q22, as compared to 1Q21. The average loans to average deposits ratio decreased to 55.5% for the three months ended March 31, 2022, as compared to 70.4% for the same period in 2021, 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 | Three Months Ended | ||||||||||||||||||||||
March 31, | % | March 31, | December 31, | % | |||||||||||||||||||
Results of Operations | 2022 | 2021 | Change | 2022 | 2021 | Change | |||||||||||||||||
Net interest income | $ | 5,272,960 | $ | 5,076,193 | 3.9 | % | $ | 5,272,960 | $ | 5,721,130 | -7.8 | % | |||||||||||
Provision for loan losses | $ | 75,000 | $ | 125,000 | -40.0 | % | $ | 75,000 | $ | - | #DIV/0! | ||||||||||||
Noninterest income | $ | 1,039,798 | $ | 1,344,561 | -22.7 | % | $ | 1,039,798 | $ | 888,386 | 17.0 | % | |||||||||||
Noninterest expense | $ | 3,274,382 | $ | 3,040,326 | 7.7 | % | $ | 3,274,382 | $ | 3,850,768 | -15.0 | % | |||||||||||
Net income | $ | 2,288,876 | $ | 2,595,428 | -11.8 | % | $ | 2,288,876 | $ | 2,140,748 | 6.9 | % | |||||||||||
Net income per share | $ | 0.83 | $ | 0.94 | -11.4 | % | $ | 0.83 | $ | 0.78 | 6.3 | % | |||||||||||
Dividend per share | $ | 0.30 | $ | 0.29 | 3.4 | % | $ | 0.30 | $ | 0.29 | 3.4 | % | |||||||||||
Dividend payout ratio | 36.18 | % | 30.90% | 36.18 | % | 37.40 | % | ||||||||||||||||
Average assets | $ | 899,241,664 | $ | 723,070,974 | 24.4 | % | $ | 899,243,294 | $ | 912,897,726 | -1.5 | % | |||||||||||
Average loans | $ | 442,185,321 | $ | 440,383,147 | 0.4 | % | $ | 442,185,321 | $ | 435,123,740 | 1.6 | % | |||||||||||
Average deposits | $ | 796,738,068 | $ | 625,914,322 | 27.3 | % | $ | 796,738,068 | $ | 810,312,556 | -1.7 | % | |||||||||||
Average loans to average deposits | 55.50 | % | 70.36% | 55.50 | % | 53.70 | % | ||||||||||||||||
Average stockholders' equity | $ | 98,602,948 | $ | 95,784,422 | 2.9 | % | $ | 98,604,578 | $ | 99,523,881 | -0.9 | % | |||||||||||
Average stockholders' equity to average assets | 10.97 | % | 13.25% | 10.97 | % | 10.90 | % | ||||||||||||||||
Ratios | |||||||||||||||||||||||
Net interest margin | 2.50 | % | 3.05% | 2.50 | % | 2.63 | % | ||||||||||||||||
Return on average assets | 1.02 | % | 1.44% | 1.02 | % | 0.94 | % | ||||||||||||||||
Return on average stockholders' equity | 9.29 | % | 10.84% | 9.29 | % | 8.58 | % | ||||||||||||||||
Efficiency ratio | 51.87 | % | 47.80% | 51.87 | % | 58.21 | % | ||||||||||||||||
Stock Repurchased | |||||||||||||||||||||||
Number of shares | - | 7,480 | -100.0 | % | - | 4,404 | -100.0 | % | |||||||||||||||
Repurchase amount | $ | - | $ | 253,572 | -100.0 | % | $ | - | $ | 158,254 | -100.0 | % | |||||||||||
Average price per share | $ | - | $ | 33.90 | -100.0 | % | $ | - | $ | 35.93 | -100.0 | % | |||||||||||
March 31, | March 31, | % | March 31, | December 31, | % | ||||||||||||||||||
Financial Condition | 2022 | 2021 | Change | 2022 | 2021 | Change | |||||||||||||||||
Assets | $ | 905,246,571 | $ | 751,416,895 | 20.5 | % | $ | 905,246,571 | $ | 904,478,786 | 0.1 | % | |||||||||||
Loans | $ | 464,355,936 | $ | 455,677,254 | 1.9 | % | $ | 464,355,936 | $ | 434,866,477 | 6.8 | % | |||||||||||
Deposits | $ | 806,461,546 | $ | 653,484,299 | 23.4 | % | $ | 806,461,546 | $ | 803,245,622 | 0.4 | % | |||||||||||
Stockholders' equity | $ | 94,533,066 | $ | 95,735,742 | -1.3 | % | $ | 94,533,066 | $ | 99,088,916 | -4.6 | % | |||||||||||
Common stock - shares outstanding | 2,760,760 | 2,765,452 | -0.2 | % | 2,760,760 | 2,760,760 | 0.0 | % | |||||||||||||||
Book value per share | $ | 34.24 | $ | 34.62 | -1.1 | % | $ | 34.24 | $ | 35.89 | -4.6 | % | |||||||||||
Loans to deposits | 57.58 | % | 69.73% | 57.58 | % | 54.14 | % | ||||||||||||||||
Equity to assets | 10.44 | % | 12.74% | 10.44 | % | 10.96 | % | ||||||||||||||||
Calvin B. Taylor Bankshares, Inc. and Subsidiary | |||||
Consolidated Balance Sheets | |||||
(unaudited) | (unaudited) | ||||
March 31, | December 31, | March 31, | |||
2022 | 2021 | 2021 | |||
Assets | |||||
Cash and cash equivalents | |||||
Cash and due from banks | $11,076,452 | $9,931,724 | $10,759,131 | ||
Federal funds sold and interest bearing deposits | 210,292,063 | 280,331,067 | 164,416,904 | ||
Total cash and cash equivalents | 221,368,515 | 290,262,791 | 175,176,035 | ||
Time deposits in other financial institutions | 2,476,920 | 3,478,221 | 8,732,396 | ||
Debt securities available for sale, at fair value | 149,860,671 | 128,654,564 | 78,437,955 | ||
Debt securities held to maturity, at amortized cost | 28,376,618 | 13,967,244 | 3,515,601 | ||
Equity securities, at cost | 1,212,533 | 1,103,833 | 1,103,733 | ||
Loans | 464,355,936 | 434,866,477 | 455,677,254 | ||
Less: allowance for loan losses | (2,052,567) | (1,998,728) | (1,955,434) | ||
Net loans | 462,303,369 | 432,867,749 | 453,721,820 | ||
Accrued interest receivable | 1,609,199 | 1,701,446 | 2,123,934 | ||
Prepaid expenses | 486,050 | 645,725 | 521,291 | ||
Other real estate owned | - | - | - | ||
Premises and equipment, net | 12,822,077 | 12,904,446 | 12,827,221 | ||
Computer software | 314,486 | 342,148 | 365,169 | ||
Deferred income taxes | 2,079,257 | - | - | ||
Bank owned life insurance and annuities | 21,491,536 | 18,223,348 | 13,491,712 | ||
Other assets | 845,340 | 327,271 | 1,400,028 | ||
Total assets | $905,246,571 | $904,478,786 | $751,416,895 | ||
Liabilities and Stockholders' Equity | |||||
Deposits | |||||
Non-interest bearing | $278,898,126 | $283,096,833 | $232,686,437 | ||
Interest bearing | 527,563,420 | 520,148,789 | 420,797,862 | ||
Total deposits | 806,461,546 | 803,245,622 | 653,484,299 | ||
Accrued interest payable | 26,202 | 26,029 | 26,079 | ||
Dividends payable | 828,228 | 800,620 | 801,981 | ||
Securities purchase payable | 1,922,575 | - | - | ||
Accrued expenses | 274,570 | 623,132 | 249,640 | ||
Non-qualified deferred compensation | 636,316 | 645,716 | 519,539 | ||
Deferred income taxes | - | 6,759 | 534,278 | ||
Other liabilities | 564,068 | 41,992 | 65,337 | ||
Total liabilities | 810,713,505 | 805,389,870 | 655,681,153 | ||
Stockholders' equity | |||||
Common stock, par value $1 per share; | |||||
authorized 10,000,000 shares; issued and outstanding | 2,760,760 | 2,760,760 | 2,765,452 | ||
Additional paid-in capital | 2,398,533 | 2,398,533 | 2,562,103 | ||
Retained earnings | 96,131,635 | 94,670,987 | 90,190,247 | ||
Accumulated other comprehensive income (loss), net of tax | (6,757,862) | (741,364) | 217,940 | ||
Total stockholders' equity | 94,533,066 | 99,088,916 | 95,735,742 | ||
Total liabilities and stockholders' equity | $905,246,571 | $904,478,786 | $751,416,895 | ||
Calvin B. Taylor Bankshares, Inc. and Subsidiary | |||
Consolidated Statements of Comprehensive Income (unaudited) | |||
For the three months ended | |||
March 31, 2022 | March 31, 2021 | ||
Interest revenue | |||
Loans, including fees | $4,829,421 | $4,957,754 | |
U. S. Treasury and government agency debt securities | 141,407 | 57,228 | |
Mortgage-backed debt securities | 327,605 | 116,772 | |
State and municipal debt securities | 79,636 | 51,003 | |
Federal funds sold and interest bearing deposits | 95,490 | 35,932 | |
Time deposits in other financial institutions | 12,161 | 44,674 | |
Total interest revenue | 5,485,720 | 5,263,363 | |
Interest expense | |||
Deposits | 212,760 | 187,170 | |
Net interest income | 5,272,960 | 5,076,193 | |
Provision for loan losses | 75,000 | 125,000 | |
Net interest income after provision for loan losses | 5,197,960 | 4,951,193 | |
Noninterest income | |||
Debit card and ATM | 345,659 | 316,116 | |
Service charges on deposit accounts | 215,453 | 179,087 | |
Merchant payment processing | 56,317 | 13,517 | |
Increase in cash surrender value of bank owned life insurance | 73,279 | 85,933 | |
Income from bank owned life insurance death proceeds | 272,111 | 618,463 | |
Dividends | 3,310 | 4,595 | |
Gain on disposition of debt securities | 645 | 60,453 | |
Loss on disposition of fixed assets | - | (4,931) | |
Miscellaneous | 73,024 | 71,328 | |
Total noninterest income | 1,039,798 | 1,344,561 | |
Noninterest expenses | |||
Salaries | 1,359,240 | 1,248,957 | |
Employee benefits | 338,327 | 399,265 | |
Occupancy | 240,760 | 227,368 | |
Furniture and equipment | 220,793 | 203,685 | |
Data processing | 213,985 | 166,115 | |
ATM and debit card | 141,123 | 112,250 | |
Marketing | 86,536 | 35,614 | |
Directors fees | 80,150 | 75,100 | |
Telecommunication services | 86,663 | 82,145 | |
Deposit insurance premiums | 59,543 | 49,895 | |
Other operating | 447,262 | 439,932 | |
Total noninterest expenses | 3,274,382 | 3,040,326 | |
Income before income taxes | 2,963,376 | 3,255,428 | |
Income taxes | 674,500 | 660,000 | |
Net income | 2,288,876 | 2,595,428 | |
Other comprehensive loss, net of tax | |||
Unrealized losses on available for sale debt securities | |||
arising during the period, net of tax | (6,016,498) | (589,263) | |
Comprehensive income | $(3,727,622) | $2,006,165 | |
Earnings per common share - basic and diluted | $0.83 | $0.94 | |
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
