Town and Country Financial Corporation Reports Record Fourth Quarter 2020 Financial Results; Increases Quarterly Dividend nearly 43%

Rhea-AI Summary

Town and Country Financial Corporation (OTC Pink: TWCF) reported record fourth quarter 2020 net income of $2.9 million, with net revenue of $11.8 million, driven by strong mortgage activities. Full-year net income was $7.1 million, down from $7.7 million in 2019, primarily due to a $3.6 million increase in loan loss provisions. The board declared a 43% increase in quarterly dividend to $0.10 per share. Total assets grew by 10.3% to $898.7 million. Noninterest income surged by 40% year-over-year, driven by increased mortgage banking fees.

Positive

• Record fourth quarter net income of $2.9 million ($1.03 per share).
• Full-year 2020 net income of $7.1 million despite increased loan loss provisions.
• Net revenue increased to $11.8 million in Q4 2020, driven by strong mortgage volumes.
• Increased quarterly dividend by 43% to $0.10 per share.
• Total assets grew 10.3% to $898.7 million year-over-year.

Negative

• Full-year net income decreased from $7.7 million in 2019 to $7.1 million in 2020.
• Provision for loan losses increased by $3.6 million year-over-year.

SPRINGFIELD, Ill., Feb. 01, 2021 (GLOBE NEWSWIRE) -- Town and Country Financial Corporation (the “Company”) (OTC Pink: TWCF) today announced record financial results for the fourth quarter of 2020.

Key highlights included:

• Record fourth quarter 2020 net income of $2.9 million, after a quarterly provision for loan losses of $1 million and Paycheck Protection Program (“PPP”) fee income of $427 thousand.
• Net revenue of $11.8 million, driven primarily by strong mortgage volumes in addition to continued growth in net interest income.
• Mortgage banking fees of $4.4 million in the fourth quarter of 2020.
• Full-year 2020 net income of $7.1 million, after provision for loan losses of $5 million and PPP fee income of $827 thousand.
• Record 2020 pre-tax, pre-provision profit of $14.2 million.
• Full-year 2020 Return on Equity ratio exceeding 10% for the fifth year in a row.

Micah R. Bartlett, President and Chief Executive Officer, noted, “It is gratifying for our company to end 2020 on such a strong note after all that our people and our customers had to work through this year. During 2020, we closed a record number of mortgage loans, posted record revenue for the year, posted record profits for the third and fourth quarters, achieved a record level of full-year pre-tax, pre-provision profits, and recorded an ROE ratio exceeding 10% for the fifth year in a row. In addition, we increased our allowance for loan losses from $5.9 million at December 31, 2019 to $10.1 million at December 31, 2020 to cover potential loan losses as a result of the COVID-19 pandemic. Based on our performance, our board of directors has increased the quarterly per share dividend by nearly 43% from $0.07 to $0.10 per quarter.”

Bartlett continued, “Our company’s strong financial performance, particularly in the second half of 2020, is a testament to our employees who worked harder than ever to make sure we deeply engaged with our customers to meet their needs. I am extremely proud of our employees—our mortgage originators and staff for producing record results, our commercial bankers and staff for handling PPP loans and client engagement, and all employees for working hard and embracing our core values to help each other and our customers during the pandemic.”

The Company reported a record fourth quarter 2020 net income of $2.9 million ($1.03 per share), compared to $2.1 million ($0.72 per share) in the fourth quarter of 2019. Net income for the year ending December 31, 2020 was $7.1 million, compared to $7.7 million for the year ending December 31, 2019. The decrease in year-to-date net income was largely a result of an increase in the provision for loan losses of $3.6 million. The company posted record pre-tax, pre-provision profits of $14.2 million compared to $11.2 million in 2019.

The Company recorded $1 million in provision for loan losses in the fourth quarter 2020 compared to $300 thousand in the fourth quarter 2019.   The additional provision increased the allowance for loan losses to $10.1 million as of December 31, 2020 and was in response to the possible impact of the economic environment surrounding the COVID-19 pandemic. For the year ending December 31, 2020, the provision for loan losses was $5.0 million, compared to $1.375 million for the year ending December 31, 2019. The carrying value of mortgage servicing rights was also reduced by $1.3 million in the fourth quarter 2020, bringing the year-to-date 2020 total valuation adjustment to $4.3 million.   

Total assets at December 31, 2020 were $898.7 million, up $84 million (10.3%), when compared to $814.7 million as of December 31, 2019. The increase, in part, was due to loan portfolio growth of $47.6 million (8.0%) over that period of time, driven by commercial and PPP loans. Balances held in correspondent banks were also larger at the year ended 2020, $77.7 million compared to $16.8 million as of December 31, 2019, with the increase due to investment cashflows and higher customer deposit balances.

Total deposits were $727 million at December 31, 2020, an increase of $71.9 million from December 31, 2019. The increase over that time period was driven by deposit growth in demand, money market and savings deposits, partially offset by reductions in time and brokered deposits.

Net interest income was $6.9 million for the quarter ending December 31, 2020, compared to $6.1 million for the quarter ending December 31, 2019. Net interest income was $26.1 million for the year-to-date period ending December 31, 2020, up $1.6 million (6.6%) when compared to $24.4 million for 2019.  The quarter and year-to-date numbers include PPP fees. The net interest margin for the year ending December 31, 2020 was 3.34% compared to 3.44% for the year ending December 31, 2019. The lower margin ratio was due to lower asset yields as a result of decreased interest rates.

Noninterest income was $4.9 million in the fourth quarter of 2020, an increase of $2 million (68.6%) compared to $2.9 million in the fourth quarter of 2019.  For the year, noninterest income increased $4.7 million (40%) between 2020 ($16.5 million) and 2019 ($11.8 million). The primary reason for this increase was higher fees on mortgage banking activities which totaled $11.9 million for the year ending December 31, 2020. Due to the continued heavy mortgage loan volumes, noninterest expense also increased when comparing the fourth quarter and year-to-date numbers. As of December 31, 2020, the year-to-date noninterest expense was $28.5 million, up $3.3 million (13.3%), when compared to $25.1 million for the prior year. Fourth quarter 2020 noninterest expense was up $746 thousand, or 12.2%, when compared to fourth quarter 2019.

The Company’s nonperforming loans as a percentage of total loans were 0.93% as of December 31, 2020 compared to 0.80% as of December 31, 2019. When these ratios are adjusted for nonperforming loans that have a government guarantee, the ratios are 0.50% as of December 31, 2020 and 0.35% as of December 31, 2019.

Town and Country Bank maintains solid capital levels, with a tier 1 leverage ratio of 9.36% and a total risk-based ratio of 13.51% as of December 31, 2020. The tier 1 leverage ratio was 9.66% as of December 31, 2019 and the total risked-based ratio was 13.00% as of December 31, 2019.

On January 28, 2021, the board of directors declared a $0.10 per share cash dividend payable March 15, 2021, to shareholders of record as of March 1, 2021. This is nearly a 43% increase from the prior quarterly dividend of $0.07. The company’s book value per share was $26.62 at December 31, 2020 up from $23.94 the prior year-end. Tangible book value per share increased nearly 13% for 2020, to $24.20 per share at December 31, 2020 compared to $21.43 at December 31, 2019.

Town and Country Financial Corporation is the parent holding company for Town and Country Bank and Town and Country Banc Mortgage Services, Inc. with offices in Bloomington, Buffalo, Decatur, Edwardsville, Fairview Heights, Jacksonville, Lincoln, Mt. Zion, Springfield, and Quincy. The Quincy branch operates under the name of Peoples Prosperity Bank. Town and Country Financial Corporation shares are quoted under the symbol TWCF.

Contact:                
Denise Skiles, Vice President and Controller
dskiles@townandcountrybank.com
217-321-3425

Financial Highlights
(Unaudited)
CONSOLIDATED STATEMENT OF CONDITION
As of the dates indicated:									December 31, 2020				December 31, 2019
ASSETS
Cash and due from banks									$		77,730,790		$		16,789,844
Investments											117,415,852				143,621,663
Loans held for sale											11,659,187				6,353,640
Loans											641,507,187				593,889,042
Less: Allowance for loan losses											(10,115,197	)			(5,863,740	)
Net loans											631,391,990				588,025,302
Other assets											60,471,720				59,876,478
Total assets									$		898,669,539		$		814,666,927
LIABILITIES & EQUITY
Deposits									$		726,977,699		$		655,098,329
Borrowed money											70,608,000				70,825,000
Other liabilities											11,280,655				6,521,077
Total liabilities											808,866,354				732,444,406
Jr. subordinated debt of unconsolidated subsidiaries											14,083,745				14,031,039
Equity capital											75,719,440				68,191,482
Total liabilities & equity									$		898,669,539		$		814,666,927
CONSOLIDATED INCOME STATEMENT
	Three Months Ended								Twelve Months Ended
	December 31,								December 31,
	2020				2019						2020				2019
Interest income	$		7,861,669		$		8,006,120		$		31,378,087		$		31,995,453
Interest expense			968,267				1,858,301				5,324,371				7,547,900
Net interest income			6,893,402				6,147,819				26,053,716				24,447,553
Provision for loan losses			1,000,000				300,000				5,000,000				1,375,000
Noninterest income			4,900,357				2,906,797				16,560,938				11,829,815
Noninterest expense			6,854,012				6,108,088				28,452,062				25,120,962
Income before income taxes			3,939,747				2,646,528				9,162,592				9,781,406
Income taxes			1,016,390				594,149				2,095,930				2,117,768
Net income	$		2,923,357		$		2,052,379		$		7,066,662		$		7,663,638
Financial Highlights
(Unaudited)
Selected Highlights:
	Three Months Ended								Twelve Months Ended
	December 31,								December 31,
	2020				2019						2020				2019
Basic earnings per share		$	1.03			$	0.72			$	2.48			$	2.69
Net charge offs to average loans less HFS			0.04	%			0.13	%			0.12	%			0.22	%
Net revenue (in 000s)		$	11,794			$	9,055			$	42,615			$	36,277
Net interest margin			3.43	%			3.38	%			3.34	%			3.44	%
Fees from mortgage banking activities (in 000s)		$	4,363			$	1,515			$	11,915			$	6,245
Return on common equity			15.72	%			12.26	%			10.06	%			12.11	%
Return on assets			1.30	%			1.00	%			0.81	%			0.95	%
Balance Sheet Ratios
(Dollars in thousands, except per share data) AS of the dates indicated:									December 31, 2020				December 31, 2019
Book value per common share									$		26.62		$		23.94
Tangible book value per common share									$		24.20		$		21.43
Tier 1 leverage ratio (Bank only)											9.36	%			9.66	%
Total risk-based capital ratio (Bank only)											13.51	%			13.00	%
Nonperforming loans, excluding government guarantee											0.50	%			0.35	%
Delinquent loans, excluding nonperforming											0.28	%			0.55	%
Allowance for loan loss											1.58	%			0.99	%
Coverage ratio (allowance to NPLs)											170	%			123	%
Mortgage loans sold with servicing retained (in 000s)									$		862,944		$		725,207
Trust assets under management (in 000s)									$		166,775		$		156,454
HOLDING COMPANY ONLY STATEMENT OF CONDITION
As of the dates indicated:									December 31, 2020				December 31, 2019
ASSETS
Cash and other assets									$		5,788,746		$		4,859,465
Investment in Town and Country Bank											91,610,013				85,201,380
Total assets									$		97,398,759		$		90,060,845
LIABILITIES & EQUITY
Other liabilities									$		1,230,574		$		538,324
Borrowings											6,365,000				7,300,000
Jr. subordinated debt of unconsolidated subsidiaries											14,083,745				14,031,039
Equity capital											75,719,440				68,191,482
Total liabilities & equity									$		97,398,759		$		90,060,845

FAQ

What were the financial highlights for TWCF in Q4 2020?

In Q4 2020, TWCF reported a net income of $2.9 million, net revenue of $11.8 million, and mortgage banking fees of $4.4 million.

How did TWCF's full-year 2020 performance compare to 2019?

TWCF's full-year 2020 net income was $7.1 million, down from $7.7 million in 2019, primarily due to increased loan loss provisions.

What is the dividend declared by TWCF in 2021?

TWCF declared a quarterly cash dividend of $0.10 per share in 2021, a nearly 43% increase from the previous $0.07 per share.

How did total assets of TWCF change in 2020?

TWCF's total assets increased by 10.3% to $898.7 million as of December 31, 2020.