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Calvin B. Taylor Bankshares, Inc. Reports Fourth Quarter and Year End Financial Results for 2019

/EIN News/ -- BERLIN, Md., Feb. 12, 2020 (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 fourth quarter and year ended December 31, 2019.  Net income was $8.3 million, or $2.99 per share, for the year ended December 31, 2019 (“FY19”), as compared to $7.4 million, or $2.64 per share, for the year ended December 31, 2018 (“FY18”).  Net income was $1.7 million, or $0.62 per share, for the fourth quarter ended December 31, 2019 (“4Q19”), as compared to $1.9 million, or $0.67 per share, for the fourth quarter ended December 31, 2018 (“4Q18”).  Additional highlights of the company’s financial results for the fourth quarter and year ended December 31, 2019 are included below.



Calvin B. Taylor Bankshares, Inc. and Subsidiary          
Financial Highlights - Unaudited            
               
  Twelve Months Ended     Three Months Ended  
  December 31, %   December 31, %
Results of Operations   2019     2018   Change     2019     2018   Change
Net interest income $ 19,980,009   $ 18,099,117   10.4 %   $ 5,036,961   $ 4,778,431   5.4 %
Net income $ 8,330,059   $ 7,402,096   12.5 %   $ 1,710,728   $ 1,902,735   -10.1 %
Net income per share $ 2.99   $ 2.64   13.3 %   $ 0.62   $ 0.67   -7.5 %
Dividend per share $ 1.06   $ 1.24   -14.5 %   $ 0.31   $ 0.99   -68.7 %
Dividend payout ratio   35.39 %   46.81 %       50.28 %   145.11 %  
               
Average assets $ 534,151,371   $ 527,635,610   1.2 %   $ 551,956,034   $ 537,111,991   2.8 %
Average loans $ 348,458,440   $ 310,652,044   12.2 %   $ 352,834,890   $ 323,088,616   9.2 %
Average deposits $ 444,701,320   $ 442,314,575   0.5 %   $ 460,369,769   $ 449,474,324   2.4 %
Average loans to average deposits   78.36 %   70.23 %       76.64 %   71.88 %  
Average stockholders' equity $ 88,155,464   $ 84,584,990   4.2 %   $ 90,043,047   $ 86,626,058   3.9 %
Average stockholders' equity to average assets   16.50 %   16.03 %       16.31 %   16.13 %  
               
Ratios              
Net interest margin   4.02 %   3.69 %       3.88 %   3.78 %  
Return on average assets   1.56 %   1.40 %       1.24 %   1.42 %  
Return on average stockholders' equity   9.45 %   8.75 %       7.60 %   8.79 %  
Efficiency ratio   50.27 %   54.07 %       58.99 %   53.74 %  
               
Stock Repurchased              
Number of shares   14,000     25,314   -44.7 %     -     -   0.0 %
Repurchase amount $ 450,240   $ 757,395   -40.6 %   $ -   $ -   0.0 %
Average price per share $ 32.16   $ 29.92   7.5 %   $ -   $ -   0.0 %
               
  December 31, December 31, %   December 31, September 30, %
Financial Condition   2019     2018   Change     2019     2019   Change
Assets $ 548,004,110   $ 531,909,554   3.0 %   $ 548,004,110   $ 557,000,844   -1.6 %
Loans $ 363,242,332   $ 327,861,211   10.8 %   $ 363,242,332   $ 352,734,996   3.0 %
Deposits $ 453,681,281   $ 446,132,305   1.7 %   $ 453,681,281   $ 466,010,504   -2.6 %
Stockholders' equity $ 89,992,560   $ 84,788,815   6.1 %   $ 89,992,560   $ 89,166,512   0.9 %
Common stock - shares outstanding   2,774,926     2,788,926   -0.5 %     2,774,926     2,774,926   0.0 %
Book value per share $ 32.43   $ 30.40   6.7 %   $ 32.43   $ 32.13   0.9 %
Loans to deposits   80.07 %   73.49 %       80.07 %   75.69 %  
Equity to assets   16.42 %   15.94 %       16.42 %   16.01 %  
               


Results of Operations

Net interest income for FY19 was $20.0 million compared to $18.1 million for FY18, an increase of 10.4%.  A combination of organic loan growth, higher investment yields and an increase in the average federal funds interest rate contributed to higher net interest income in FY19 and expansion of the net interest margin from 3.69% in FY18 to 4.02% in FY19.  Average loans in FY19 grew by $37.8 million, or 12.2%, as compared to FY18.  Yields on investments including debt securities and time deposits in other banks increased 56 bps in FY19 as compared to FY18.  Net interest income in 4Q19 was $5.0 million compared to $4.8 million in 4Q18, an increase of 5.4%.  Decreases in the federal funds interest rate in the 2nd half of 2019 contributed to slower net interest income growth during 4Q19 and a reduction in the net interest margin to 3.88% in the same period.  Average loans in 4Q19 were $29.7 million, or 9.2%, higher than 4Q18.        

The provision for loan losses increased $225 thousand in FY19 as compared to FY18 and contributed in an increase to the allowance for loan losses of $235 thousand in FY19.  The higher provision for loan losses in FY19 was primarily attributable to growth in the loan portfolio which increased 10.8% in FY19 as compared to FY18.  Net charge-offs were $35 thousand in FY19 compared to $219 thousand in FY18.   

Noninterest income in FY19 increased $137 thousand, or 5.1%, as compared to FY18, and was primarily the result of a reduction in losses in from other real estate owned of $140 thousand and a reduction in losses from other than temporary impairment of equity securities of $103 thousand.  Increases in debit card and ATM revenue of $94 thousand and loan swap referral fees of $86 thousand also contributed to the increase in noninterest income in FY19 as compared to FY18.  The aforementioned increases in noninterest income in FY19 were partially offset by a $348 thousand reduction in gains on disposition of investments securities in FY19, as compared to FY18.  Noninterest income increased $161 thousand in 4Q19 as compared to 4Q18, and was also the result of reductions in losses from other real estate owned and other than temporary impairment of equity securities.           

Noninterest expenses in FY19 increased $379 thousand, or 3.4%, as compared to FY18.  The increase in non-interest expense is primarily attributable to increased salaries, employee benefits and data processing costs.  Salaries increased in FY19 by $494 thousand, or 10.7%, as compared to FY18, which results from annual salary increases, increased headcount as a result of branch expansion, and a one-time bonus paid to all employees in FY19.  Employee benefits costs increased in FY19 by $116 thousand, or 7.0%, as compared to FY18, due to higher payroll taxes as a result of higher salaries and increased non-qualified deferred compensation costs.  The aforementioned increases in noninterest expense were partially offset by a reduction in unauthorized wire transfer losses in FY19, as compared to FY18.  Growth in net interest income and noninterest income exceeded increases in noninterest expense which caused a decrease in the Company’s efficiency ratio to 50.3% for FY19 as compared to 54.1% in FY18.  Noninterest expense increased in FY19 by $508 thousand, or 17.7%, as compared to 4Q18, and is also attributable to higher salaries and employee benefits costs resulting from increases to year-end discretionary bonuses, employer 401(k) contributions, and health insurance claims in 4Q19.  The increase in noninterest expense in 4Q19, as compared to 4Q18, exceeded growth in net interest income and noninterest income during the same period, which resulted in an increase in the efficiency ratio to 59.0% for 4Q19 as compared to 53.7% for 4Q18. 

Net income increased in FY19 by $928 thousand, or 12.5%, as compared to FY18.  The growth in net income outpaced growth in average assets and average equity during the same period.  This resulted in an increase in Return on Average Assets (“ROA”) from 1.40% in FY18 to 1.56% in FY19 and an increase in Return on Average Equity (“ROE”) from 8.75% in FY18 to 9.45% in FY19.  Net income in 4Q19 decreased by $192 thousand, or 10.1%, as compared to 4Q18.  The decrease in net income in 4Q19, as compared to 4Q18, accompanied by an increase in average assets and average equity during the same period, resulted in a decrease in ROA from 1.42% in 4Q18 to 1.24% in 4Q19 and a decrease in ROE from 8.79% in 4Q18 to 7.60% in 4Q19.      

Dividends declared in FY19 were $1.06 per share as compared to $1.24 per share in FY18.  Dividends declared in FY18 included a $0.25 per share special dividend declared in the 2nd quarter of 2018 as a result of U.S. corporate income tax reform.  Excluding the special dividend, the regular dividend increased $0.07 per share, or 7.1%, in FY19 as compared to FY18.  Prior to FY19, regular dividends were declared and paid annually in the 4th quarter, thus quarterly dividends declared in 4Q19 and 4Q18 are not comparable.

Financial Condition

Total assets were $548.0 million at December 31, 2019, which is an increase of $16.1 million, or 3.0%, since December 31, 2018.  The increase in total assets during this period is partially attributable to growth in deposits which increased to $453.7 million as of December 31, 2019, an increase of $7.6 million, or 1.7%, since December 31, 2018.  The remaining increase in total assets relates to undistributed FY19 earnings which increased stockholders’ equity to $90.0 million as of December 31, 2019, an increase of $5.2 million, or 6.1%, since December 31, 2018.  The Company continued to experience organic growth in loans which increased $35.4 million, or 10.8%, since December 31, 2018 and totaled $363.2 million as of December 31, 2019.  Loan growth in FY19 was primarily funded by maturing investments including time deposits in other financial institutions and debt securities.  Total investments including time deposits in other financial institutions and debt securities decreased by $19.6 million, or 17.4%, since December 31, 2018 and totaled $93.3 million as of December 31, 2019.  Loan growth exceeded deposit growth in 2019 which resulted in an increase in the loans to deposit ratio from 73.5% as of December 31, 2018 to 80.1% as of December 31, 2019.              

Average assets increased in FY19 by $6.5 million, or 1.2%, as compared to FY18, and was primarily the result of undistributed FY19 earnings which corresponded to an increase in average equity of $3.6 million, or 4.2%.  Average deposits increased in FY19 by $2.4 million, or 0.5%, as compared to FY18, which is lower than the growth of 1.7% in deposits since December 31, 2018.  Average deposit growth was lower due to large temporary deposits made by several customers for an extended period during FY18.  Continued organic loan growth contributed to an increase in average loans in FY19 of $37.8 million, or 12.2%, as compared to FY18.  The aforementioned growth in average loans resulted in an increase in the average loans to average deposits ratio from 70.2% in FY18 to 78.4% in FY19.

Total assets decreased from $557.0 million as of September 30, 2019 to $548.0 million as of December 31, 2019, a decrease of $9.0 million, or 1.6%.  The decrease in total assets during 4Q19 was primarily attributable to seasonal deposit outflows which decreased deposits in 4Q19 by $12.3 million, or 2.7%.  Annualized loan growth was 11.9% in 4Q19 as loans increased by $10.5 million to $363.2 million as of December 31, 2019.  Deposit outflows and loan growth during 4Q19 were funded by a $22.3 million, or 25.5%, decrease in cash and cash equivalents during the same period.     

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 11 banking locations within the eastern coastal area of the Delmarva Peninsula including Worcester County, Maryland, Sussex County, Delaware and Accomack County, Virginia.  There is also a loan production office located in Onley, Virginia.

Contact
M. Dean Lewis, Vice President and Chief Financial Officer
410-641-1700, taylorbank.com

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