Town and Country Financial Corporation Reports Strong Second Quarter 2022 Financial Results

Rhea-AI Summary

Town and Country Financial Corporation (TWCF) reported a second quarter 2022 net income of $2.6 million or $0.93 per share, showing a slight decrease from $2.8 million or $0.99 per share in Q2 2021. The company's return on average assets (ROA) stood at 1.19% with a return on tangible common equity (ROTCE) of 13.87%. Despite low housing activity affecting mortgage revenue, net interest margin expanded to 3.47%. A cash dividend of $0.14 per share was declared, payable September 15, 2022.

Positive

• Q2 2022 net income adjusted for PPP fees shows a 7.3% increase year-over-year.
• Net interest margin increased to 3.47% from 3.34% in Q1 2022.
• Nonperforming loans decreased to 0.71% from 1.07% year-over-year.

Negative

• Year-over-year net income decreased from $2.8 million to $2.6 million.
• Noninterest income dropped to $2.9 million, down $1.3 million from Q2 2021.
• Total deposits decreased by $42.1 million compared to December 31, 2021.

Key highlights:

• Second quarter 2022 net income of $2.6 million or $0.93 per share, return on average assets (ROA) of 1.19% and Return on Tangible Common Equity (ROTCE) of 13.87%.
• Dividend declared of $0.14 per share.

SPRINGFIELD, Ill., Aug. 02, 2022 (GLOBE NEWSWIRE) -- Town and Country Financial Corporation (the “Company”) (OTC Pink: TWCF) today announced financial results for the second quarter of 2022 with continued strong net income.

The Company recorded second quarter 2022 net income of $2.6 million ($0.93 per share), compared to $2.8 million ($0.99 per share) in the second quarter of 2021. The second quarter 2021 results were $2.4 million or $0.86 per share before the impact of Paycheck Protection Program (“PPP) fee income during 2021.

Micah R. Bartlett, President and Chief Executive Officer, noted, “We are pleased to report another solid quarter. When adjusting for PPP fees, our second quarter 2022 profits represented a record for our company and were up 7.3% over the record set in the second quarter of 2021. Our net interest margin expanded during the quarter to 3.47% from 3.34% in the first quarter of 2022. Economic issues and rate markets are certainly creating both challenges and opportunities for our bank and across the industry. We have continued to position our already strong balance sheet to withstand the various risks in our economy. We continue to emphasize our core focus of commercial banking and mortgage lending, supported by conservative loan underwriting and strong core deposits. We are pleased that our balanced business model continues to deliver solid results despite very low housing activity and mortgage origination volumes. All of this allows us to continue to deliver solid value to our shareholders.”

Total assets at June 30, 2022 were $876.2 million, roughly flat when compared to $876.7 million as of June 30, 2021. Total loans were $625.8 million at June 30, 2022, an increase of $9.4 million from June 30, 2021. Investments were $176.5 million at June 30, 2022, an increase of $43.7 million reflecting the deployment of cash and other liquid assets into higher yielding investment instruments.

Total deposits were $737.9 million at June 30, 2022, a decrease of $9.2 million from June 30, 2021, and a decrease of $42.1 million when compared to December 31, 2021. The year-over-year decrease was driven by deposit growth in demand, money market and savings deposits, offset by reductions in time and brokered deposits.

Net interest income was $6.9 million for the quarter ending June 30, 2022, roughly flat with the quarter ending June 30, 2021. The net interest margin for the second quarter of 2022 was 3.47%, unchanged from the second quarter of 2021. When adjusted for PPP fees, second quarter 2022 net interest income is $6.8 million compared to $6.4 million for the second quarter of 2021, an increase of 6.7%.

Second quarter 2022 net income includes a negative provision for loan losses of $250 thousand ($179 thousand after tax), compared to a zero provision for loan losses in second quarter 2021.

Noninterest income was $2.9 million in the second quarter of 2022, a decrease of $1.3 million when compared to $4.1 million in the second quarter of 2021. Noninterest income was impacted by a decrease in mortgage revenue due to a reduction in mortgage origination activity because of the slowdown in sales in the housing market. The second quarter 2022 noninterest expense of $6.5 million was down $0.8 million from $7.3 million for the second quarter 2021, also due to a decrease in mortgage-related expenses.

The Company’s nonperforming loans as a percentage of total loans were 0.71% as of June 30, 2022, compared to 1.07% as of June 30, 2021. When these ratios are adjusted for nonperforming loans that have a government guarantee, the ratios are 0.32% as of June 30, 2022 and 0.46% as of June 30, 2021.

Town and Country Bank maintains solid capital levels, with a tier 1 leverage ratio of 10.99% and a total risk-based ratio of 15.56% as of June 30, 2022. The tier 1 leverage ratio was 9.89% and the total risked-based ratio was 14.65% as of June 30, 2021.

On July 28, 2022, the board of directors declared a $0.14 per share cash dividend payable September 15, 2022, to shareholders of record as of September 1, 2022. The company’s book value per share was $27.95 at June 30, 2022, down from $29.93 as of December 31, 2021. Tangible book value per share was $25.67 at June 30, 2022, compared to $27.60 at December 31, 2021, a 7% decrease due to the change in unrealized market value of the investment portfolio.

Town and Country Financial Corporation, headquartered in Springfield, Illinois, operates as the parent holding company for Town and Country Bank including the Bank's subsidiary, Town and Country Banc Mortgage Services, Inc. (TCBMSI), with locations throughout the central, west-central, and metro-east areas of Illinois. While the Company specializes in commercial banking and mortgage lending, additional products and services offered through its 10 branch offices include retail banking, affordable housing finance options, Small Business Administration 504 and 7(a) loan programs, trust and investments, and agricultural banking. The Company, under TCBMSI, operates Community Mortgage Partners as a third-party provider for residential mortgages to other financial institutions throughout the United States. 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:					June 30, 2022				December 31, 2021				June 30, 2021
ASSETS
Cash and due from banks					$		13,808,275		$		70,154,840		$		72,717,544
Investments							176,485,297				151,703,226				132,827,719
Loans held for sale							2,119,440				2,840,208				5,808,509
Loans							625,795,416				631,820,690				616,398,186
Less: Allowance for loan losses							(9,432,816	)			(10,183,297	)			(10,815,415	)
Net loans							616,362,600				621,637,393				605,582,771
Other assets							67,439,709				60,691,674				59,734,247
Total assets					$		876,215,321		$		907,027,341		$		876,670,790
LIABILITIES & EQUITY
Deposits					$		737,944,574		$		780,014,371		$		747,138,521
Borrowed money							38,608,241				21,903,136				28,848,000
Other liabilities							6,042,466				5,901,105				5,584,208
Total liabilities							782,595,281				807,818,612				781,570,729
Jr. subordinated debt of unconsolidated subsidiaries							14,162,803				14,136,451				14,110,098
Equity capital							79,457,237				85,072,278				80,989,963
Total liabilities & equity					$		876,215,321		$		907,027,341		$		876,670,790
CONSOLIDATED INCOME STATEMENT
	Three Months Ended								Six Months Ended
	June 30,								June 30,
			2022				2021				2022				2021
Interest income	$		7,319,174		$		7,433,371		$		14,397,162		$		14,881,303
Interest expense			449,030				511,304				839,517				1,240,019
Net interest income			6,870,144				6,922,067				13,557,645				13,641,284
Provision for loan losses			(250,000	)			-				(750,000	)			600,000
Noninterest income			2,878,579				4,134,722				7,985,493				8,846,199
Noninterest expense			6,464,655				7,291,594				13,481,144				14,352,823
Income before income taxes			3,534,068				3,765,195				8,811,994				7,534,660
Income taxes			884,350				952,000				2,279,360				1,913,150
Net income	$		2,649,718		$		2,813,195		$		6,532,634		$		5,621,510
Financial Highlights
(Unaudited)
Selected Highlights:
	Three Months Ended								Six Months Ended
	June 30,								June 30,
			2022				2021				2022				2021
Basic earnings per share		$	0.93			$	0.99			$	2.30			$	1.98
Net charge offs to average loans less HFS			0.00	%			-0.01	%			0.00	%			-0.02	%
Net revenue (in 000s)		$	9,749			$	11,057			$	21,543			$	22,487
Net interest margin			3.47	%			3.47	%			3.41	%			3.44	%
Fees from mortgage banking activities (in 000s)		$	1,525			$	3,349			$	5,065			$	6,853
Return on common equity			12.56	%			14.56	%			15.61	%			14.56	%
Return on tangible common equity			13.87	%			15.63	%			16.93	%			15.96	%
Return on assets			1.19	%			1.25	%			1.47	%			1.27	%
Balance Sheet Ratios
(Dollars in thousands, except per share data) As of the dates indicated:					June 30, 2022				December 31, 2021				June 30, 2021
Book value per common share					$		27.95		$		29.93		$		28.47
Tangible book value per common share					$		25.67		$		27.60		$		26.10
Tangible Equity Capital Ratio							8.39	%			8.71	%			8.53	%
Tier 1 leverage ratio (Bank only)							10.99	%			10.07	%			9.89	%
Total risk-based capital ratio (Bank only)							15.56	%			14.69	%			14.65	%
Nonperforming loans, excluding government guarantee							0.32	%			0.36	%			0.46	%
Delinquent loans, excluding nonperforming							0.22	%			0.33	%			0.06	%
Allowance for loan loss							1.51	%			1.61	%			1.74	%
Coverage ratio (allowance to NPLs)							213	%			206	%			163	%
Mortgage loans sold with servicing retained (in 000s)					$		853,728		$		868,966		$		860,933
Trust assets under management (in 000s)					$		155,421		$		170,209		$		178,325
HOLDING COMPANY ONLY STATEMENT OF CONDITION
As of the dates indicated:					June 30, 2022				December 31, 2021				June 30, 2021
ASSETS
Cash and other assets					$		7,924,662		$		7,244,031		$		5,686,251
Investment in Town and Country Bank							91,476,312				98,343,923				96,121,950
Total assets					$		99,400,974		$		105,587,954		$		101,808,201
LIABILITIES & EQUITY
Other liabilities					$		420,934		$		684,225		$		678,140
Borrowings							5,360,000				5,695,000				6,030,000
Jr. subordinated debt of unconsolidated subsidiaries							14,162,803				14,136,451				14,110,098
Equity capital							79,457,237				85,072,278				80,989,963
Total liabilities & equity					$		99,400,974		$		105,587,954		$		101,808,201

FAQ

What were the financial results for Town and Country Financial Corporation (TWCF) in Q2 2022?

TWCF reported a net income of $2.6 million or $0.93 per share in Q2 2022.

How much was the dividend declared by Town and Country Financial Corporation (TWCF) for Q2 2022?

A cash dividend of $0.14 per share was declared, payable September 15, 2022.

What is the return on average assets (ROA) for TWCF in Q2 2022?

The return on average assets (ROA) for Q2 2022 was 1.19%.

What challenges did TWCF mention in their Q2 2022 earnings report?

TWCF noted economic issues and rate markets as challenges, impacting mortgage origination volumes.

How did TWCF perform in terms of net interest margin in Q2 2022?

The net interest margin for the second quarter of 2022 was 3.47%, an increase from 3.34% in Q1 2022.