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

Rhea-AI Summary

In the third quarter of 2022, Town and Country Financial Corporation (TWCF) reported a net income of $2.4 million, equivalent to $0.83 per share, while adjusted net income was $2.7 million ($0.93 per share), reflecting continued strong results despite economic uncertainties. The company achieved commercial loan growth of $27.5 million since June 30, 2022. Total assets increased to $896.3 million, with total loans reaching $653.6 million. However, noninterest income declined to $3.1 million from $4.4 million year-over-year. A dividend of $0.14 per share was also declared.

Positive

• Adjusted net income of $2.7 million ($0.93 per share), up from $2.4 million ($0.83 per share) year-over-year.
• Commercial loan growth of $27.5 million since June 30, 2022.
• Total assets increased to $896.3 million, up $3.7 million from prior year.

Negative

• Reported net income decreased from $2.9 million ($1.04 per share) in Q3 2021 to $2.4 million ($0.83 per share) in Q3 2022.
• Noninterest income fell to $3.1 million from $4.4 million year-over-year.
• Book value per share decreased to $26.90 from $29.93 at year-end 2021.

Third Quarter highlights:

• Reported net income of $2.4 million or $0.83 per share.
• Adjusted net income of $2.7 million or $0.93 per share, return on average assets (ROA) of 1.19% and Return on Tangible Common Equity (ROTCE) of 14.31% (adjusted to exclude merger-related costs and PPP fees).  
• Commercial loan growth of $27.5 million since June 30, 2022
• Dividend declared of $0.14 per share.

SPRINGFIELD, Ill., Oct. 31, 2022 (GLOBE NEWSWIRE) -- Town and Country Financial Corporation (the “Company”) (OTC Pink: TWCF) today announced financial results for the third quarter of 2022 with continued strong net income.

The Company recorded adjusted third quarter 2022 net income of $2.7 million ($0.93 per share), adjusted for $357 thousand ($287 thousand after tax) of merger-related expenses and Paycheck Protection Program (“PPP”) fee income. This compares to adjusted third quarter 2021 net income of $2.4 million ($0.83 per share), adjusted for $820 thousand ($586 thousand after tax) of PPP fee income. The reported third quarter 2022 net income was $2.4 million ($0.83 per shares) compared to third quarter 2021 reported net income of $2.9 million ($1.04 per share).

Micah R. Bartlett, President and Chief Executive Officer, noted, “We are pleased with our third quarter financial results and the hard work of our dedicated employees during a very busy quarter. We continue to see significant headwinds in our mortgage banking business based on interest rates and the housing market, offset somewhat by the increased value in mortgage servicing. And yet despite significant economic uncertainties, we grew our commercial loan portfolio by $27.5 million since June 30, 2022. We also saw an increase in our net interest income and net interest margin, particularly when excluding PPP fees. We also continued to maintain strong asset quality statistics. On August 23, 2022, we announced the signing of a definitive agreement pursuant to which HBT Financial, Inc. (“HBT”) will merge with Town and Country Financial Corporation. We are proud to continue to deliver strong financial results as we prepare to join the HBT team and merge our two high-performing banks.”   

Total assets at September 30, 2022 were $896.3 million, up $3.7 million (0.4%), when compared to $892.6 million as of September 30, 2021. Total loans were $653.6 million at September 30, 2022, an increase of $55.2 million from September 30, 2021. Investments were $165.4 million at September 30, 2022, an increase of $31.1 million when compared to September 30, 2021, reflecting the deployment of cash and other liquid assets into higher yielding investment instruments.

Total deposits were $741.4 million at September 30, 2022, a decrease of $26.3 million from September 30, 2021, and a decrease of $38.7 million when compared to December 31, 2021. The year-over-year decrease was driven by growth in demand, money market and savings deposits, offset by reductions in time and brokered deposits.  

Net interest income was $7.2 million for the quarter ended September 30, 2022, roughly flat with the quarter ended September 30, 2021, but up $0.9 million when adjusting for PPP fees in both quarters. The net interest margin for the third quarter of 2022 was 3.60%, up slightly from the third quarter of 2021. Net interest income for the nine month period ended September 30, 2022 ($20.8 million) is flat compared to the same time period ended September 30, 2021 ($20.8 million), but up $1.6 million, or 8.6%, when adjusting for PPP fees.

Noninterest income was $3.1 million in the third quarter of 2022, a decrease of $1.2 million when compared to $4.4 million in the third quarter of 2021. Noninterest income included a positive valuation adjustment to the carrying amount of mortgage servicing rights of $750,000 which partially offset the decrease in mortgage revenue due to the continued reduction in mortgage origination activity. The third quarter 2022 noninterest expense of $7.2 million was down slightly from $7.5 million for the third quarter 2021, also due to a decrease in mortgage-related expenses partially offset by expenses related to the merger.

The Company’s nonperforming loans as a percentage of total loans were 0.69% as of September 30, 2022, compared to 0.91% as of September 30, 2021. When these ratios are adjusted for nonperforming loans that have a government guarantee, the ratios are 0.34% as of September 30, 2022 and 0.41% as of September 30, 2021.

Town and Country Bank maintains solid capital levels, with a tier 1 leverage ratio of 10.91% and a total risk-based ratio of 14.47% as of September 30, 2022. The tier 1 leverage ratio was 10.17% and the total risk-based ratio was 15.29% as of September 30, 2021.

On August 23, 2022, the Company signed a merger agreement with HBT Financial, Inc. During the third quarter of 2022, the Company recognized $382 thousand ($305 thousand after tax) of expenses associated with the merger.

On October 27, 2022, the board of directors declared a $0.14 per share cash dividend payable December 15, 2022, to shareholders of record as of December 1, 2022. The company’s book value per share was $26.90 at September 30, 2022, down from $29.93 as of December 31, 2021. Tangible book value per share was $24.64 at September 30, 2022, compared to $27.60 at December 31, 2021, an 11% 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
	Executive Vice President and Chief Financial Officer
	dskiles@townandcountrybank.com
	217-321-3425

Important Information and Where to Find It

In connection with the proposed merger transaction, HBT filed with the Securities and Exchange Commission (the “SEC”) a Registration Statement on Form S-4 that includes a proxy statement of the Company and prospectus of HBT. The Registration Statement has not yet been declared effective. After the Registration Statement is declared effective by the SEC, HBT and the Company intend to mail a definitive proxy statement/prospectus to the stockholders of the Company. This communication is not a substitute for the proxy statement/prospectus or the Registration Statement or for any other document that HBT or the Company may file with the SEC and send to the Company’s stockholders in connection with the proposed transaction. THE COMPANY’S STOCKHOLDERS ARE URGED TO CAREFULLY AND THOROUGHLY READ THE PROXY STATEMENT/PROSPECTUS AND THE REGISTRATION STATEMENT, AS MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME, AND OTHER RELEVANT DOCUMENTS FILED BY HBT OR THE COMPANY WITH THE SEC, WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT HBT, THE COMPANY, THE PROPOSED TRANSACTION, THE RISKS RELATED THERETO AND RELATED MATTERS.

Investors will be able to obtain free copies of the Registration Statement and proxy statement/prospectus, as each may be amended from time to time, and other relevant documents filed by HBT and the Company with the SEC (when they become available) through the website maintained by the SEC at www.sec.gov. Copies of documents filed with the SEC by HBT will be available free of charge from HBT’s website at https://ir.hbtfinancial.com or by contacting HBT’s Investor Relations Department at HBTIR@hbtbank.com.

Participants in the Proxy Solicitation

HBT, the Company and their respective directors and certain of their executive officers and other members of management and employees may be deemed, under SEC rules, to be participants in the solicitation of proxies from the Company’s stockholders in connection with the proposed transaction. Information regarding the executive officers and directors of HBT is included in its definitive proxy statement for its 2022 annual meeting filed with the SEC on April 5, 2022. Information regarding the executive officers and directors of the Company and additional information regarding the persons who may be deemed participants and their direct and indirect interests, by security holdings or otherwise, will be set forth in the Registration Statement and proxy statement/prospectus and other materials when they are filed with the SEC in connection with the proposed transaction. Free copies of these documents may be obtained as described in the paragraphs above.

No Offer or Solicitation

This communication does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy any securities or a solicitation of any vote or approval with respect to the proposed transaction or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

Financial Highlights
(Unaudited)
CONSOLIDATED STATEMENT OF CONDITION
As of the dates indicated:					September 30, 2022				December 31, 2021				September 30, 2021
ASSETS
Cash and due from banks					$		12,969,534		$		70,154,840		$		105,450,016
Investments							165,397,869				151,703,226				134,303,652
Loans held for sale							1,517,570				2,840,208				4,554,054
Loans							653,648,333				631,820,690				598,468,836
Less: Allowance for loan losses							(9,389,890	)			(10,183,297	)			(10,789,717	)
Net loans							644,258,443				621,637,393				587,679,119
Other assets							72,166,152				60,691,674				60,596,852
Total assets					$		896,309,568		$		907,027,341		$		892,583,693
LIABILITIES & EQUITY
Deposits					$		741,351,808		$		780,014,371		$		767,633,283
Borrowed money							56,440,741				21,903,136				21,326,000
Other liabilities							7,877,197				5,901,105				6,058,817
Total liabilities							805,669,746				807,818,612				795,018,100
Jr. subordinated debt of unconsolidated subsidiaries							14,175,980				14,136,451				14,123,274
Equity capital							76,463,842				85,072,278				83,442,319
Total liabilities & equity					$		896,309,568		$		907,027,341		$		892,583,693
CONSOLIDATED INCOME STATEMENT
	Three Months Ended								Nine Months Ended
	September 30,								September 30,
			2022				2021				2022				2021
Interest income	$		8,067,838		$		7,571,323		$		22,465,000		$		22,452,626
Interest expense			845,076				458,208				1,684,593				1,698,227
Net interest income			7,222,762				7,113,115				20,780,407				20,754,399
Provision for loan losses			-				-				(750,000	)			600,000
Noninterest income			3,140,550				4,383,535				11,126,043				13,229,734
Noninterest expense			7,214,166				7,532,781				20,695,310				21,885,604
Income before income taxes			3,149,146				3,963,869				11,961,140				11,498,529
Income taxes			780,330				1,020,460				3,059,690				2,933,610
Net income	$		2,368,816		$		2,943,409		$		8,901,450		$		8,564,919
Financial Highlights
(Unaudited)
Selected Highlights:
	Three Months Ended								Nine Months Ended
	September 30,								September 30,
			2022				2021				2022				2021
Basic earnings per share		$	0.83			$	1.04			$	3.13			$	3.01
Net charge offs to average loans less HFS			0.01	%			0.00	%			0.01	%			-0.01	%
Net revenue (in 000s)		$	10,363			$	11,497			$	31,906			$	33,984
Net interest margin			3.60	%			3.53	%			3.47	%			3.58	%
Fees from mortgage banking activities (in 000s)		$	1,775			$	3,053			$	6,841			$	9,906
Return on common equity			11.74	%			14.26	%			14.35	%			14.45	%
Return on tangible common equity			12.77	%			15.54	%			15.58	%			15.81	%
Return on assets			1.07	%			1.31	%			1.33	%			1.28	%
Balance Sheet Ratios
(Dollars in thousands, except per share data) AS of the dates indicated:					September 30, 2022				December 31, 2021				September 30, 2021
Book value per common share					$		26.90		$		29.93		$		29.35
Tangible book value per common share					$		24.64		$		27.60		$		27.00
Tangible Equity Capital Ratio							7.86	%			8.71	%			8.66	%
Tier 1 leverage ratio (Bank only)							10.91	%			10.07	%			10.17	%
Total risk-based capital ratio (Bank only)							14.47	%			14.69	%			15.29	%
Nonperforming loans, excluding government guarantee							0.34	%			0.36	%			0.41	%
Delinquent loans, excluding nonperforming							0.22	%			0.33	%			0.08	%
Allowance for loan loss							1.44	%			1.61	%			1.80	%
Coverage ratio (allowance to NPLs)							209	%			206	%			198	%
Mortgage loans sold with servicing retained (in 000s)					$		844,402		$		868,966		$		877,107
Trust assets under management (in 000s)					$		142,816		$		170,209		$		177,483
HOLDING COMPANY ONLY STATEMENT OF CONDITION
As of the dates indicated:					September 30, 2022				December 31, 2021				September 30, 2021
ASSETS
Cash and other assets					$		7,842,292		$		7,244,031		$		5,807,898
Investment in Town and Country Bank							88,243,819				98,343,923				98,321,946
Total assets					$		96,086,111		$		105,587,954		$		104,129,844
LIABILITIES & EQUITY
Other liabilities					$		253,789		$		684,225		$		701,751
Borrowings							5,192,500				5,695,000				5,862,500
Jr. subordinated debt of unconsolidated subsidiaries							14,175,980				14,136,451				14,123,274
Equity capital							76,463,842				85,072,278				83,442,319
Total liabilities & equity					$		96,086,111		$		105,587,954		$		104,129,844

FAQ

What were the Q3 2022 earnings for Town and Country Financial Corporation (TWCF)?

Town and Country Financial Corporation reported a net income of $2.4 million for Q3 2022, or $0.83 per share.

How did Town and Country Financial Corporation's commercial loans perform in Q3 2022?

The company achieved a commercial loan growth of $27.5 million since June 30, 2022.

What dividend was declared by Town and Country Financial Corporation in October 2022?

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

What was the noninterest income for Q3 2022 for TWCF?

Noninterest income for Q3 2022 decreased to $3.1 million from $4.4 million in Q3 2021.