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Calvin B. Taylor Bankshares, Inc. (OTCQX: TYCB) reported strong first-quarter results for 2021, with net income rising 35.8% to $2.60 million compared to Q1 2020. This marks an 83.6% increase from Q4 2020. The company saw organic asset growth of 5.6%, with total assets reaching $751.4 million. Loans increased 22.9% year-over-year, driven by a rise in SBA PPP loans and strong demand for commercial and residential loans. Noninterest income jumped 122.2% to $1.34 million, boosted by nonrecurring income from bank-owned life insurance. However, net interest margin declined to 3.05% from 3.93% a year prior.
Positive
Net income increased 35.8% to $2.60 million in Q1 2021 compared to Q1 2020.
Organic asset growth of 5.6% since Q4 2020, reaching total assets of $751.4 million.
Loans increased by 22.9% year-over-year, reaching $455.7 million.
Noninterest income surged 122.2% to $1.34 million in Q1 2021.
Dividends declared remained steady at $0.29 per share for Q1 2021.
Negative
Net interest margin decreased to 3.05% in Q1 2021 from 3.93% in Q1 2020.
Berlin, Maryland, May 06, 2021 (GLOBE NEWSWIRE) -- via NewMediaWire -- Calvin B. Taylor Bankshares, Inc. (the “Company”) (OTCQX: TYCB), parent company of Calvin B. Taylor Bank, today reported unaudited financial results for the first-quarter ended March 31, 2021. Highlights of the company’s financial results for the first-quarter ended March 31, 2021 (“1Q21”) as compared to the first-quarter ended March 31, 2020 (“1Q20”) and the fourth-quarter ended December 31, 2020 (“4Q20”) are noted below and included in the following tables.
· Net income increased $684 thousand to $2.60 million in 1Q21, a 35.8% increase compared to 1Q20
· Net income increased $1.18 million in 1Q21 compared to 4Q20, a 83.6% increase
· Nonrecurring and nontaxable income of $618 thousand related to bank owned life insurance death proceeds was recognized in 1Q21
· Organic asset growth continued in 1Q21 with assets growing $39.6 million, or 5.6%, since December 31, 2020
· Organic loan growth continued in 1Q21 with loans growing $32.2 million, or 7.6%, since December 31, 2020
· Small Business Administration Paycheck Protection Program (“SBA PPP”) loans originated in 1Q21 totaled $29.2 million
· Net interest margin improved from 2.99% in 4Q20 to 3.05% in 1Q21
· Provision for loan losses decreased 43.2% to $125 thousand in 1Q21 as compared to $220 thousand in 1Q20 and decreased 24.2% compared to the $165 thousand recorded in 4Q20
Quarterly Results of Operations
Loan interest revenue, including fees, increased to $4.96 million in 1Q21, as compared to $4.50 million in 1Q20 and $4.81 million in 4Q20, as the result of continued organic loan growth and funding of Small Business Administration Paycheck Protection Program (“SBA PPP”) loans. SBA PPP loan balances increased in 1Q21 as new loan origination activity associated with 2nd draw SBA PPP loans exceeded loan repayments by the SBA associated with loan forgiveness of existing 1st draw SBA PPP loans. Upon repayment by the SBA, unamortized net loan fees are recognized and reported as loan interest revenue which resulted in an increase in loan interest revenue in 1Q21 as compared to 4Q20. SBA PPP loan interest revenue increased from $335 thousand in Q420 to $458 thousand in 1Q21. SBA PPP loan originations in 1Q21 resulted in an increase in unamortized net loan fees from $756 thousand as of December 31, 2020 to $1.9 million as of March 31, 2021.
Net interest income increased 2.3% to $5.08 million in 1Q21, as compared to $4.96 million in 1Q20 and 4Q20. Increases in loan interest revenue, as noted above, were partially offset by lower yields on other earning assets as interest rates remain historically low. Net interest margin decreased to 3.05% in 1Q21, as compared to 3.93% in 1Q20, and is attributable to significant increases in average deposits from customer behavior changes and government economic stimulus programs related to the COVID-19 pandemic. Average deposits increased in 1Q21 by $174.9 million, or 38.8%, when compared to 1Q20 and increased $17.5 million, or 2.9%, as compared to 4Q20. SBA PPP loan originations of $29.2 million and additional government economic stimulus payments in 1Q21 was a primary factor in the continued growth in average deposits when compared to 4Q20.
The provision for loan losses was $125 thousand in 1Q21, as compared to $220 thousand in 1Q20 and $165 thousand in 4Q20. The provision for loan losses recorded in 1Q21 was primarily attributable to loan portfolio growth and further adjustments to qualitative factors used to estimate the allowance for loan losses. Qualitative factors were adjusted due to the continued uncertainty associated with the economic recovery from the COVID-19 pandemic. Net charge offs were $6 thousand in 1Q21, as compared to $29 thousand in 1Q20 and $15 thousand in 4Q20. 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 $1.34 million in 1Q21, as compared to $605 thousand in 1Q20 and $775 thousand in 4Q20. The increase in noninterest income is primarily attributable to nonrecurring income recognized in 1Q21 related to income from 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. Noninterest income also increased as a result of improving consumer spending as COVID-19 pandemic restrictions are removed which has resulted in higher debit card interchange income in 1Q21 as compared to 1Q20 and 4Q20. Other sources of noninterest income have been negatively impacted by the COVID-19 pandemic including certain deposit account and placement fees, but were offset by higher interchange and overdraft fees in 1Q21.
Noninterest expense increased to $3.04 million in 1Q21, as compared to $2.79 million in 1Q20, which can be attributed to the opening of a new branch in Onley, Virginia in July 2020, costs to purchase personal protective equipment, cleaning supplies, and cleaning services associated with the COVID-19 pandemic, increases in employee benefits expense and higher FDIC deposit insurance premiums due to significant deposit growth. The increases in noninterest expense were offset by increases in net interest income and noninterest income, which decreased the efficiency ratio from 50.24% in 1Q20 to 47.80% in 1Q21. Noninterest expense decreased in 1Q21 to $3.04 million, as compared to $3.76 million in 4Q20, which primarily relates to higher salaries expense associated with yearend discretionary bonuses and 401K contributions recorded in 4Q20. A reduction in noninterest expense accompanied by increases in net interest income and noninterest income decreased the efficiency ratio to 47.80% in 1Q21, as compared to 65.72% in 4Q20.
Net income increased 35.8% to $2.60 million in 1Q21, as compared to $1.91 million in 1Q20, and is primarily attributable to nonrecurring and nontaxable income of $618 thousand recorded in 1Q21 related to income from bank owned life insurance death proceeds. Average assets had a comparable increase of 32.8% in 1Q21, as compared to 1Q20, which resulted in a modest increase to Return on Average Assets (“ROA”) from 1.41% in 1Q20 to 1.44% in 1Q21. Average equity increased 4.5% to $95.15 million in 1Q21, as compared to 1Q20, but net income growth of 35.8% during the same period increased the Return on Average Stockholders’ Equity (“ROE”) from 8.40% in 1Q20 to 10.91% in 1Q21.
Net income increased 83.6% to $2.60 million in 1Q21, as compared to $1.41 million in 4Q20, due to nonrecurring and nontaxable income of $618 thousand recorded in 1Q21 related to income from bank owned life insurance death proceeds and higher noninterest expense in 4Q20 related to year end discretionary bonuses and 401K contributions. Average assets continued their recent pattern of growth and increased 2.6% in 1Q21 as compared to 4Q20 and was primarily the result of additional government economic stimulus including 2nd draw SBA PPP loans. Average equity also increased during 1Q21, and was 0.9% higher than 4Q20. The significant growth in net income compared to the modest increases in average assets and average equity resulted in an increase in ROA from 0.80% in 4Q20 to 1.44% in 1Q21 and an increase in ROE from 6.00% in 4Q20 to 10.91% in 1Q21. Dividends declared were $0.29 per share in 1Q21 and 4Q20, and $0.26 per share in 1Q20. Dividend payout ratios were 30.90% for 1Q21, 37.74% for 1Q20, and 56.89% for 4Q20.
Financial Condition
Total assets were $751.4 million as of March 31, 2021, as compared to $545.3 million as of March 31, 2020 and $711.8 million as of December 31, 2020. 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 $653.5 million as of March 31, 2021, as compared to $451.5 million as of March 31, 2020 and $614.4 million as of December 31, 2020. A portion of deposit growth since March 31, 2020 was utilized to fund loan originations including $62.7 million of SBA PPP loans. SBA PPP loans, net of unamortized loans fees, were $41.9 million as of March 31, 2021 as compared to $24.1 million as of December 31, 2020. SBA PPP loan balances increased in 1Q21 as new loan origination activity associated with 2nd draw SBA PPP loans exceeded loan repayments by the SBA associated with loan forgiveness of existing 1st draw SBA PPP loans. Total loans as of March 31, 2021 were $455.7 million as compared to $370.9 million as of March 31, 2020 which represents growth of $84.8 million, or 22.9%. The growth in loans since March 31, 2020 is attributable to $41.9 million in SBA PPP loans and $42.9 million of organic loan growth attributable to strong commercial and residential real estate loan demand in our markets. Loans increased $32.2 million, or 7.6%, since December 31, 2020 which can be attributed to $17.8 million in SBA PPP loan growth and $14.4 million of organic loan growth attributable to continued strong demand in commercial and residential real estate loans in our markets. The loans to deposits ratio as of March 31, 2021 was 69.7%, as compared to 82.2% as of March 31, 2020 and 68.9% as of December 31, 2020.
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 March 31, 2021, loans past due 30 days or more totaled $2.3 million which includes $459 thousand of loans that previously received temporary payment deferral.
Average assets grew by 32.8% to $722.3 million in 1Q21, as compared to $544.1 million in 1Q20. 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 loans grew 19.1% to $440.4 million in 1Q21, as compared to $369.9 million in 1Q20. SBA PPP loans contributed to $32.2 million of the increase in average loans while the remaining $38.3 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 70.4% in 1Q21, as compared to 82.0% in 1Q20, and relates to significant growth in average deposits associated with the COVID-19 pandemic.
Three Months Ended
Three Months Ended
March 31,
%
March 31,
December 31,
%
Results of Operations
2021
2020
Change
2021
2020
Change
Net interest income
$ 5,076,193
$ 4,963,552
2.3%
$ 5,076,193
$ 4,961,837
2.3%
Provision for loan losses
$ 125,000
$ 220,000
-43.2%
$ 125,000
$ 165,000
-24.2%
Noninterest income
$ 1,344,561
$ 605,150
122.2%
$ 1,344,561
$ 774,876
73.5%
Noninterest expense
$ 3,040,326
$ 2,786,894
9.1%
$ 3,040,326
$ 3,761,079
-19.2%
Net income
$ 2,595,428
$ 1,911,308
35.8%
$ 2,595,428
$ 1,413,634
83.6%
Net income per share
$ 0.94
$ 0.69
36.0%
$ 0.94
$ 0.51
83.8%
Dividend per share
$ 0.29
$ 0.26
11.5%
$ 0.29
$ 0.29
0.0%
Dividend payout ratio
30.90%
37.74%
30.90%
56.89%
Average assets
$ 722,291,769
$ 544,076,794
32.8%
$ 722,291,769
$ 704,175,818
2.6%
Average loans
$ 440,383,147
$ 369,907,305
19.1%
$ 440,383,147
$ 419,211,495
5.1%
Average deposits
$ 625,914,322
$ 450,993,182
38.8%
$ 625,914,322
$ 608,449,556
2.9%
Average loans to average deposits
70.36%
82.02%
70.36%
68.90%
Average stockholders' equity
$ 95,153,292
$ 91,023,635
4.5%
$ 95,153,292
$ 94,308,170
0.9%
Average stockholders' equity to average assets
13.17%
16.73%
13.17%
13.39%
Ratios
Net interest margin
3.05%
3.93%
3.05%
2.99%
Return on average assets
1.44%
1.41%
1.44%
0.80%
Return on average stockholders' equity
10.91%
8.40%
10.91%
6.00%
Efficiency ratio
47.80%
50.24%
47.80%
65.72%
Stock Repurchased
Number of shares
7,480
380
1868.4%
7,480
700
968.6%
Repurchase amount
$ 253,572
$ 12,008
2011.7%
$ 253,572
$ 23,933
959.5%
Average price per share
$ 33.90
$ 31.60
7.3%
$ 33.90
$ 34.19
-0.8%
March 31,
March 31,
%
March 31,
December 31,
%
Financial Condition
2021
2020
Change
2021
2020
Change
Assets
$ 751,416,895
$ 545,342,222
37.8%
$ 751,416,895
$ 711,791,004
5.6%
Loans
$ 455,677,254
$ 370,901,684
22.9%
$ 455,677,254
$ 423,467,766
7.6%
Deposits
$ 653,484,299
$ 451,478,843
44.7%
$ 653,484,299
$ 614,437,080
6.4%
Stockholders' equity
$ 95,735,742
$ 91,657,497
4.4%
$ 95,735,742
$ 94,785,130
1.0%
Common stock - shares outstanding
2,765,452
2,774,546
-0.3%
2,765,452
2,772,932
-0.3%
Book value per share
$ 34.62
$ 33.04
4.8%
$ 34.62
$ 34.18
1.3%
Loans to deposits
69.73%
82.15%
69.73%
68.92%
Equity to assets
12.74%
16.81%
12.74%
13.32%
(unaudited)
(unaudited)
March 31,
December 31,
March 31,
Balance Sheet
2021
2020
2020
Assets
Cash and cash equivalents
Cash and due from banks
$ 10,759,131
$ 14,398,578
$ 10,613,174
Federal funds sold and interest bearing deposits
164,416,904
156,706,746
45,495,801
Total cash and cash equivalents
175,176,035
171,105,324
56,108,975
Time deposits in other financial institutions
8,732,396
8,733,754
20,524,375
Debt securities available for sale, at fair value
78,437,955
72,166,997
60,680,486
Debt securities held to maturity, at amortized cost
3,515,601
5,994,955
10,337,668
Equity securities, at cost
1,103,733
1,240,233
1,240,233
Loans
455,677,254
423,467,766
370,901,684
Less: allowance for loan losses
(1,955,434)
(1,836,451)
(1,044,056)
Net loans
453,721,820
421,631,315
369,857,628
Accrued interest receivable
2,123,934
2,402,222
1,320,664
Prepaid expenses
521,291
612,188
421,812
Other real estate owned
-
-
-
Premises and equipment, net
12,827,221
12,951,511
11,166,811
Computer software
365,169
389,236
297,543
Bank owned life insurance
13,491,712
13,405,779
13,035,405
Other assets
1,400,028
1,157,490
350,622
Total assets
$ 751,416,895
$ 711,791,004
$ 545,342,222
Liabilities and Stockholders' Equity
Deposits
Non-interest bearing
$ 232,686,437
$ 211,945,179
$ 153,876,312
Interest bearing
420,797,862
402,491,901
297,602,531
Total deposits
653,484,299
614,437,080
451,478,843
Accrued interest payable
26,079
26,837
26,822
Dividends payable
801,981
804,150
721,382
Accrued expenses
249,640
602,027
110,009
Non-qualified deferred compensation
519,539
485,626
301,386
Deferred income taxes
534,278
601,057
620,878
Other liabilities
65,337
49,097
425,405
Total liabilities
655,681,153
617,005,874
453,684,725
Stockholders' equity
Common stock, par value $1 per share;
authorized 10,000,000 shares; issued and outstanding
2,765,452
2,772,932
2,774,546
Additional paid-in capital
2,562,103
2,808,195
2,857,911
Retained earnings
90,190,247
88,396,800
85,369,742
Accumulated other comprehensive income, net of tax
217,940
807,203
655,298
Total stockholders' equity
95,735,742
94,785,130
91,657,497
Total liabilities and stockholders' equity
$ 751,416,895
$ 711,791,004
$ 545,342,222
For the three months ended
Statement of Comprehensive Income (unaudited)
Mar 31, 2021
Mar 31, 2020
Interest revenue
Loans, including fees
$ 4,957,754
$ 4,502,173
U. S. Treasury and government agency debt securities
57,228
146,726
Mortgage-backed debt securities
116,772
155,834
State and municipal debt securities
51,003
49,202
Federal funds sold and interest bearing deposits
35,932
152,506
Time deposits in other financial institutions
44,674
134,506
Total interest revenue
5,263,363
5,140,947
Interest expense
Deposits
187,170
177,395
Net interest income
5,076,193
4,963,552
Provision for loan losses
125,000
220,000
Net interest income after provision for loan losses
4,951,193
4,743,552
Noninterest income
Debit card and ATM
316,116
234,847
Service charges on deposit accounts
179,087
184,327
Merchant payment processing
13,517
35,360
Increase in cash surrender value of bank owned life insurance
85,933
30,706
Income from bank owned life insurance death proceeds
618,463
-
Dividends
4,595
6,975
Gain on disposition of investment securities
60,453
21,484
Gain (loss) on disposition of fixed assets
(4,931)
1,400
Miscellaneous
71,328
90,051
Total noninterest income
1,344,561
605,150
Noninterest expenses
Salaries
1,248,957
1,253,898
Employee benefits
399,265
317,464
Occupancy
227,368
201,769
Furniture and equipment
203,685
169,024
Data processing
166,115
131,478
ATM and debit card
112,250
111,350
Marketing
35,614
63,159
Directors fees
75,100
75,700
Telecommunication services
82,145
80,627
Deposit insurance premiums
49,895
-
Other operating
439,932
382,425
Total noninterest expenses
3,040,326
2,786,894
Income before income taxes
3,255,428
2,561,808
Income taxes
660,000
650,500
Net income
2,595,428
1,911,308
Other comprehensive income, net of tax
Unrealized gains (losses) on available for sale debt securities
arising during the period, net of tax
(589,263)
487,019
Comprehensive income
$ 2,006,165
$ 2,398,327
Earnings per common share - basic and diluted
$ 0.94
$ 0.69
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, Vice President and Chief Financial Officer 410-641-1700, taylorbank.com
FAQ
What were the financial highlights for TYCB in Q1 2021?
Calvin B. Taylor Bankshares, Inc. reported a net income of $2.60 million, a 35.8% increase from Q1 2020, and total assets of $751.4 million.
What contributed to the loan growth for TYCB in Q1 2021?
Loan growth of 22.9% was driven by an increase in SBA PPP loans and strong demand for commercial and residential loans.
How did the noninterest income for TYCB perform in Q1 2021?
Noninterest income increased significantly by 122.2% to $1.34 million due to nonrecurring income from bank-owned life insurance.
What was the dividend declared for TYCB in Q1 2021?
Calvin B. Taylor Bankshares declared a dividend of $0.29 per share in Q1 2021.
What is the outlook on TYCB's net interest margin?
The net interest margin declined to 3.05% in Q1 2021 from 3.93% in Q1 2020, indicating pressures on interest income.
