Town and Country Financial Corporation Reports First Quarter 2020 Financial Results

SPRINGFIELD, Ill., May 07, 2020 (GLOBE NEWSWIRE) -- Town and Country Financial Corporation (the “Company”) (OTC Pink: TWCF) today announced financial results for the first quarter of 2020.

Key highlights included:

• Total deposits, excluding brokered deposits, increased by 7%, year-over-year.
• Commercial loans increased by 11%, year-over-year.
• Net income for the quarter was $1 million, after recording a valuation adjustment to mortgage servicing rights of $725,000, and a provision for loan losses of $500,000.

The Company adjusted management estimates to reflect the economic environment surrounding the COVID-19 pandemic. First, the first quarter 2020 provision for loan losses of $500,000 reflected the potential for increased credit risk. Second, as highlighted above, the Company reduced the mortgage servicing rights asset by $725,000 as a result of the sharp decline in interest rates. Net income was $1.0 million ($0.36 per share) in the first quarter of 2020, compared to $1.6 million ($0.58 per share) in the first quarter of 2019.

In announcing the financial results, President and Chief Executive Officer, Micah R. Bartlett said, “In this extraordinary time, we are highly focused on the health and well-being of our employees, our customers, and the communities we serve. While taking appropriate safety precautions, we remain open for business and continue to serve our customers’ financial needs.  We started off 2020 with good results both in terms of growth and profitability.  Obviously, our reported first-quarter numbers were impacted by the provision for loan losses and adjustments to the carrying amount of mortgage servicing rights as a result of the COVID-19 situation, along with the related rate market and economic fallout.”

Mr. Bartlett continued, “I’m pleased to add a big ‘thank you’ to our employees.  The willingness to help each other, in many cases stepping into unfamiliar roles or designing new processes for the changed operating environment, has been nothing short of impressive.  Our employees have also been extremely busy processing loans under the Paycheck Protection Program, as well as a large pipeline of residential mortgage applications.  At the same time, we have quickly implemented new technology to help us and our customers adjust to our current reality.   I’m honored to work with each and every one of our employees.”

Total loans, excluding loans held for sale, were $615 million as of March 31, 2020, compared to $594 million as of December 31, 2019, an increase of $21 million. Total loans increased by $40 million from March 31, 2019, to March 31, 2020. Commercial loan growth, including commercial real estate, was the primary reason for the increase. Commercial loans were $506 million as of March 31, 2020, an increase of $23 million (5%) compared to $483 million as of December 31, 2019, and an increase of $48 million (11%) compared to commercial loans as of March 31, 2019.

Loan growth was funded with deposits, borrowed funds, and reallocations from the investment portfolio. Deposits grew to $678 million as of March 31, 2020, compared to $655 million as of December 31, 2019. Borrowed money was $79 million as of March 31, 2020, compared to $71 million as of December 31, 2019. The investment portfolio declined $8 million in the first quarter of 2020, to $135 million, from $143 million as of December 31, 2019, and the funds were used to fund loan growth.

Net interest income was $6.1 million in the first quarter of 2020, compared to $5.9 million in the first quarter of 2019. The net interest margin was 3.33% in the first quarter of 2020, and 3.48% in the first quarter of 2019.

Noninterest income was $2.0 million in the first quarter of 2020 and $2.4 million in the first quarter of 2019. Mortgage banking fees were $852,000 in the first quarter of 2020 and $1.1 million in the first quarter of 2019. The mortgage servicing rights valuation adjustment reduced mortgage banking net revenue, included in noninterest income, by $725,000.

Noninterest expense was $6.3 million in the first quarter of 2020, compared to $6.0 million in the first quarter of 2019. Most of the increase is the result of increased mortgage banking expenses related to increased mortgage activity.

Nonperforming loans as a percent of total loans were 0.74% as of March 31, 2020, compared to 0.80% as of December 31, 2019. Some of these loans have government guarantees. Excluding the guaranteed portions, the adjusted ratio was 0.42% as of March 31, 2020, and 0.35% as of December 31, 2019.

Town and Country Bank’s capital levels remained solid as of March 31, 2020, with a tier 1 leverage ratio of 9.55% and a total risked-based ratio of 12.70%. The tier 1 leverage ratio was 9.66% as of December 31, 2019, and 9.34% as of March 31, 2019. The total risked-based ratio was 13.00% as of December 31, 2019, and 12.57% as of March 31, 2019.

After considering factors including the Company’s financial results and the current economic environment, on April 30, 2020, the board of directors declared a $0.07 per share cash dividend payable June 15, 2020, to shareholders of record as of June 1, 2020.

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:		Doug Cheatham Executive Vice President and Chief Financial Officer [e-mail] [phone]

Financial Highlights
(Unaudited)
CONSOLIDATED STATEMENT OF CONDITION
	March 31,			December 31,
As of the dates indicated:	2020			2019
ASSETS
Cash and due from banks	$	35,473,638		$	16,789,844
Investments		135,267,641			143,663,549
Loans held for sale		5,917,397			6,353,640
Loans		615,225,732			593,889,042
Less: Allowance for loan losses		6,294,184			5,863,740
Net loans		608,931,548			588,025,302
Other assets		58,979,089			59,834,592
Total assets	$	837,258,547		$	814,666,927
LIABILITIES & EQUITY
Deposits	$	677,688,774		$	655,098,329
Borrowed money		78,993,000			70,825,000
Other liabilities		7,901,393			6,521,077
Total liabilities		757,272,401			732,444,406
Jr. subordinated debt of unconsolidated subsidiaries		14,044,215			14,031,039
Equity capital		65,941,931			68,191,482
Total liabilities & equity	$	837,258,547		$	814,666,927
CONSOLIDATED INCOME STATEMENT
	Three Months Ended
	March 31,
	2020			2019
Interest income	$	7,850,723		$	7,653,762
Interest expense		1,791,662			1,721,341
Net interest income		6,059,061			5,932,421
Provision for loan losses		500,000			300,000
Noninterest income		2,012,646			2,435,400
Noninterest expense		6,327,928			5,992,635
Income before income taxes		1,243,779			2,075,186
Income taxes		224,130			429,259
Net income	$	1,019,649		$	1,645,927
Financial Highlights
(Unaudited)
Selected Highlights:
	Three Months Ended
	March 31,
	2020			2019
Basic earnings per share	$	0.36		$	0.58
Net charge offs to average loans less HFS		0.01	%		0.04	%
Net revenue (in 000s)	$	8,072		$	8,368
Net interest margin		3.33	%		3.48	%
Fees from mortgage banking activities (in 000s)	$	852		$	1,075
Return on common equity		5.99	%		11.13	%
Return on assets		0.50	%		0.85	%
Balance Sheet Ratios
	March 31,			December 31,
As of the dates indicated:	2020			2019
Book value per common share	$	23.15		$	23.94
Tier 1 leverage ratio (Bank only)		9.55	%		9.66	%
Total risk-based capital ratio (Bank only)		12.70	%		13.00	%
Nonperforming loans		0.74	%		0.80	%
Delinquent loans, excluding nonperforming		0.70	%		0.55	%
Allowance for loan loss		1.02	%		0.99	%
Coverage ratio (allowance to NPLs)		138	%		123	%
Mortgage loans sold with servicing retained (in 000s)	$	728,305		$	725,207
Trust assets under management (in 000s)	$	139,286		$	156,454
HOLDING COMPANY ONLY STATEMENT OF CONDITION
	March 31,			December 31,
As of the dates indicated:	2020			2019
ASSETS
Cash and other assets	$	5,694,177		$	4,859,465
Investment in Town and Country Bank		82,857,300			85,201,380
Total assets	$	88,551,477		$	90,060,845
LIABILITIES & EQUITY
Other liabilities	$	685,331		$	538,324
Borrowings		7,880,000			7,300,000
Jr. subordinated debt of unconsolidated subsidiaries		14,044,215			14,031,039
Equity capital		65,941,931			68,191,482
Total liabilities & equity	$	88,551,477		$	90,060,845