Town and Country Financial Corporation Reports Second Quarter 2020 Financial Results

SPRINGFIELD, Ill., Aug. 05, 2020 (GLOBE NEWSWIRE) -- Town and Country Financial Corporation (the “Company”) (OTC Pink: TWCF) today announced financial results for the second quarter of 2020.

Key highlights included:

• Profit was $1.1 million in the second quarter of 2020, after a $1.25 million valuation adjustment in mortgage servicing rights and $2 million in provisions for loan losses.
• Deposits, excluding brokered deposits, increased over $100 million (17%) year-over-year.
• Commercial loans increased over $85 million (18%) year-over-year, including $44.8 million in Paycheck Protection Plan (“PPP”) loans.
• Mortgage banking fees increased by $983,000 (54%) in the second quarter of 2020 compared to the second quarter of 2019.

In announcing the results, President and Chief Executive Officer, Micah R. Bartlett, stated, “I am extremely proud of the Town and Country employees for their hard work and dedication during 2020.  They have set the health, safety, and well-being of our customers and each other as their top priority.  Our mission has never been more timely:  “To empower the financial well-being of our communities, one person at a time.”  From a financial perspective, we have been able to help many customers, families, businesses, friends, and neighbors through the Paycheck Protection Program, our various mortgage programs, our COVID-related loan programs, and many other measures.  Our team is bringing our mission to life every day.”

Bartlett continued, “Despite significant economic and interest-rate challenges facing the industry, our company was able to perform very well in the second quarter.  After setting aside $2 million for possible credit risk and adjusting the carrying amount of Mortgage Servicing Rights by $1.25 million, the company still produced a second quarter profit of $1.1 million.  But for the higher provision for loan losses, the second quarter earnings would have been a record for the company.  Compared to June 2019, commercial loans, deposits, and mortgage banking revenue all achieved double-digit growth.  We are proud and grateful for both the financial strength of our company and the culture that our people have instilled.”

The Company adjusted management estimates to reflect the economic and interest rate environment surrounding the COVID-19 pandemic. The second quarter 2020 provision for loan losses of $2 million reflected the potential increased credit risk, bringing the provision to $2.5 million in the six months ended June 30, 2020. The Company also reduced the value of mortgage servicing rights by $1.25 million in the second quarter and $1.98 million in the six months ended June 30, 2020.

Net income was $1.1 million ($0.37 per share) in the second quarter of 2020, compared to $1.9 million ($0.67 per share) in the second quarter of 2019. Net income was $2.1 million in the six months ended June 30, 2020, compared to $3.6 million in the six months ended June 30, 2019. The decline in net income in the second quarter and the first half resulted from the increased provision for loan losses.

Net revenue increased to $18.7 million in the first half of 2020 compared to $17.7 million in the first half of 2019, an increase of $1 million, or 6%. Net revenue was $10.6 million in the second quarter of 2020 compared to $9.3 million in the second quarter of 2019, an increase of $1.3 million, or 14%.

Total loans, excluding loans held for sale, were $657 million as of June 30, 2020, compared to $594 million as of December 31, 2019, an increase of $63.7 million (10.7%). Total loans increased by $63.3 million from June 30, 2019, to June 30, 2020.

Commercial loans were $557 million as of June 30, 2020, including $44.8 million in PPP loans, an increase of $73.5 million, or 15%, compared to $483 million as of December 31, 2019. Exclusive of PPP loans, other commercial loans increased $28.7 million, or 6%, in the first half of 2020.

Funding for new loans resulted from deposit growth, reallocation of investments, and, to a lesser extent, higher borrowing. Deposits grew to $712 million as of June 30, 2020, compared to $655 million as of December 31, 2019. Borrowed money was $97 million as of June 30, 2020, compared to $92 million as of June 30, 2019. The investment portfolio declined $12 million in the second quarter of 2020, to $132 million, from $144 million as of December 31, 2019.

Net interest income was $6.5 million in the second quarter of 2020, compared to $6.2 million in the second quarter of 2019. The net interest margin was 3.26% in the second quarter of 2020, and 3.48% in the second quarter of 2019. Net interest income was $12.5 million in the first half of 2020, compared to $12.1 million in the first half of 2019. The net interest margin was 3.29% in the first half of 2020, and 3.48% in the first half of 2019.

Noninterest income was $4.1 million in the second quarter of 2020, an increase of $1 million  (33%) compared to $3.1 million in the second quarter of 2019. Noninterest income increased $602,000 (11%), to $6.1 million in the first half of 2020, compared to the first half of 2019. Mortgage revenue increases were the primary reason for the increase in noninterest income. Mortgage banking fees increased $769,000 (27%) in the first half of 2020, compared to the first half of 2019, and increased $983,000 (54%) in the second quarter of 2020, compared to the second quarter of 2019. Mortgage revenue includes MSR valuation adjustments. Noninterest expense was $7.3 million in the second quarter of 2020, compared to $6.5 million in the second quarter of 2019. Most of the increase is the result of increased mortgage activity.

Nonperforming loans as a percent of total loans were 0.84% as of June 30, 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 0.51% as of June 30, 2020, and 0.35% as of December 31, 2019.

Town and Country Bank’s capital levels were solid as of June 30, 2020, with a tier 1 leverage ratio of 8.96% and a total risked-based ratio of 12.97%. The tier 1 leverage ratio was 9.66% as of December 31, 2019, and 9.38% as of June 30, 2019. The total risked-based ratio was 13.00% as of December 31, 2019, and 12.71% as of June 30, 2019.

After considering factors including the Company’s financial results and the current economic environment, on July 30, 2020, the board of directors declared a $0.07 per share cash dividend payable September 15, 2020, to shareholders of record as of September 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
As of the dates indicated:					June 30, 2020				December 31, 2019				June 30, 2019
ASSETS
Cash and due from banks					$		47,590,869		$		16,789,844		$		13,095,576
Investments							131,629,512				143,621,663				149,262,437
Loans held for sale							14,362,765				6,353,640				1,389,059
Loans							657,232,590				593,889,042				593,552,115
Less: Allowance for loan losses							(7,882,521	)			(5,863,740	)			(6,015,619	)
Net loans							649,350,069				588,025,302				587,536,496
Other assets							62,101,339				59,876,478				62,074,288
Total assets					$		905,034,554		$		814,666,927		$		813,357,856
LIABILITIES & EQUITY
Deposits					$		711,759,572		$		655,098,329		$		637,132,312
Borrowed money							96,613,000				70,825,000				91,225,000
Other liabilities							12,040,204				6,521,077				7,213,144
Total liabilities							820,412,776				732,444,406				735,570,456
Jr. subordinated debt of unconsolidated subsidiaries							14,057,392				14,031,039				14,004,686
Equity capital							70,564,386				68,191,482				63,782,714
Total liabilities & equity					$		905,034,554		$		814,666,927		$		813,357,856
CONSOLIDATED INCOME STATEMENT
	Three Months Ended								Six Months Ended
	June 30,								June 30,
	2020				2019						2020				2019
Interest income	$		7,891,619		$		8,109,370		$		15,742,342		$		15,763,132
Interest expense			1,422,246				1,925,388				3,213,908				3,646,729
Net interest income			6,469,373				6,183,982				12,528,434				12,116,403
Provision for loan losses			2,000,000				375,000				2,500,000				675,000
Noninterest income			4,121,826				3,097,178				6,134,472				5,532,578
Noninterest expense			7,320,422				6,506,793				13,648,350				12,499,428
Income before income taxes			1,270,777				2,399,367				2,514,556				4,474,553
Income taxes			213,020				494,938				437,150				924,197
Net income	$		1,057,757		$		1,904,429		$		2,077,406		$		3,550,356
Financial Highlights
(Unaudited)
Selected Highlights:
	Three Months Ended								Six Months Ended
	June 30,								June 30,
	2020				2019						2020				2019
Basic earnings per share		$	0.37			$	0.67			$	0.73			$	1.25
Net charge offs to average loans less HFS			0.07	%			0.04	%			0.08	%			0.08	%
Net revenue (in 000s)		$	10,591			$	9,281			$	18,663			$	17,649
Net interest margin			3.26	%			3.48	%			3.29	%			3.48	%
Fees from mortgage banking activities (in 000s)		$	2,791			$	1,808			$	3,644			$	2,875
Return on common equity			6.37	%			12.35	%			6.13	%			11.58	%
Return on assets			0.48	%			0.95	%			0.49	%			0.89	%
Balance Sheet Ratios
(Dollars in thousands, except per share data) AS of the dates indicated:					June 30, 2020				December 31, 2019				June 30, 2019
Book value per common share					$		24.77		$		23.94		$		22.39
Tier 1 leverage ratio (Bank only)							8.96	%			9.66	%			9.38	%
Total risk-based capital ratio (Bank only)							12.97	%			13.00	%			12.71	%
Nonperforming loans							0.84	%			0.80	%			0.61	%
Delinquent loans, excluding nonperforming							0.55	%			0.55	%			0.97	%
Allowance for loan loss							1.20	%			0.99	%			1.02	%
Coverage ratio (allowance to NPLs)							144	%			123	%			168	%
Mortgage loans sold with servicing retained (in 000s)					$		762,082		$		725,207		$		693,064
Trust assets under management (in 000s)					$		150,387		$		156,454		$		161,378
HOLDING COMPANY ONLY STATEMENT OF CONDITION
As of the dates indicated:					June 30, 2020				December 31, 2019				June 30, 2019
ASSETS
Cash and other assets					$		5,814,129		$		4,859,465		$		5,327,507
Investment in Town and Country Bank							87,116,742				85,201,380				81,771,321
Total assets					$		92,930,871		$		90,060,845		$		87,098,828
LIABILITIES & EQUITY
Other liabilities					$		1,609,093		$		538,324		$		336,428
Borrowings							6,700,000				7,300,000				8,975,000
Jr. subordinated debt of unconsolidated subsidiaries							14,057,392				14,031,039				14,004,686
Equity capital							70,564,386				68,191,482				63,782,714
Total liabilities & equity					$		92,930,871		$		90,060,845		$		87,098,828