Calvin B. Taylor Bankshares, Inc. (OTCQX

TYCB), Parent Company of Calvin B. Taylor Bank, Reports Financial Results for the Fourth Quarter and Year Ended December 31, 2020

Berlin, Maryland, Feb. 22, 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 fourth quarter and year ended December 31, 2020.  Net income was $7.27 million, or $2.62 per share, for the year ended December 31, 2020 (“FY20”), as compared to $8.33 million, or $2.99 per share, for the year ended December 31, 2019 (“FY19”).  Net income was $1.41 million, or $0.51 per share, for the fourth quarter ended December 31, 2020 (“4Q20”), as compared to $1.71 million, or $0.61 per share, for the fourth quarter ended December 31, 2019 (“4Q19”) and $1.91 million, or $0.69 per share, for the third quarter ended September 30, 2020 (“3Q20”).  Additional highlights of the company’s financial results for the fourth quarter and year ended December 31, 2020 are included below.

	Three Months Ended				Twelve Months Ended
	December 31,		%		December 31,		%
Results of Operations	2020	2019	Change		2020	2019	Change
Net interest income	$        4,961,837	$        5,036,961	-1.5%		$     19,775,842	$     19,980,009	-1.0%
Provision for loan losses	$           165,000	$             75,000	120.0%		$           965,000	$           270,000	257.4%
Noninterest income	$           774,876	$           698,744	10.9%		$        2,873,476	$        2,817,260	2.0%
Noninterest expense	$        3,761,079	$        3,382,977	11.2%		$     12,063,304	$     11,460,210	5.3%
Net income	$        1,413,634	$        1,710,728	-17.4%		$        7,268,014	$        8,330,059	-12.7%
Net income per share	$                  0.51	$                  0.61	-17.0%		$                  2.62	$                  2.99	-12.4%
Dividend per share	$                  0.29	$                  0.31	-6.5%		$                  1.10	$                  1.06	3.8%
Dividend payout ratio	56.89%	50.28%			41.98%	35.39%
Average assets	$   704,175,818	$   551,956,033	27.6%		$   629,497,297	$   534,148,634	17.9%
Average loans	$   419,211,495	$   352,834,890	18.8%		$   402,298,573	$   348,458,440	15.5%
Average deposits	$   608,449,556	$   460,369,767	32.2%		$   534,995,652	$   444,701,320	20.3%
Average loans to average deposits	68.90%	76.64%			75.20%	78.36%
Average stockholders' equity	$     94,308,170	$     90,043,047	4.7%		$     92,746,273	$     88,155,464	5.2%
Average stockholders' equity to average assets	13.39%	16.31%			14.73%	16.50%
Ratios
Net interest margin	2.99%	3.88%			3.36%	4.02%
Return on average assets	0.80%	1.24%			1.15%	1.56%
Return on average stockholders' equity	6.00%	7.60%			7.84%	9.45%
Efficiency ratio	65.72%	59.24%			53.66%	50.36%
Stock Repurchased
Number of shares	700	-			1,994	14,000	-85.8%
Repurchase amount	$             23,933	$                       -			$             63,337	$           450,240	-85.9%
Average price per share	$                34.19	$                       -			$                31.76	$                32.16	-1.2%
	December 31,	December 31,	%		December 31,	September 30,	%
Financial Condition	2020	2019	Change		2020	2020	Change
Assets	$   711,791,004	$   548,004,110	29.9%		$   711,791,004	$   699,803,646	1.7%
Loans	$   423,467,766	$   363,242,332	16.6%		$   423,467,766	$   419,855,455	0.9%
Deposits	$   614,437,080	$   453,681,281	35.4%		$   614,437,080	$   603,337,234	1.8%
Stockholders' equity	$     94,785,130	$     89,992,560	5.3%		$     94,785,130	$     94,276,510	0.5%
Common stock - shares outstanding	2,772,932	2,774,926	-0.1%		2,772,932	2,773,632	0.0%
Book value per share	$                34.18	$                32.43	5.4%		$                34.18	$                33.99	0.6%
Loans to deposits	68.92%	80.07%			68.92%	69.59%
Equity to assets	13.32%	16.42%			13.32%	13.47%

Annual Results of Operations

Loan interest revenue, including fees, grew 6.5% to $18.63 million in FY20, as compared to $17.50 million in FY19, as the result of continued organic loan growth and funding of Small Business Administration Paycheck Protection Program (“SBA PPP”) loans.  Net interest income decreased 1.0% to $19.78 million in FY20, as compared to $19.98 million in FY19, due to decreases in the federal funds interest rate and lower yields on investments which offset interest revenue growth from loans.  Net interest margin decreased to 3.36% in FY20, as compared to 4.02% in FY19, which 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 FY20 by $90.29 million, or 20.3%, as compared to FY19.       

The provision for loan losses was $965 thousand in FY20, as compared to $270 thousand in FY19.  The increase in the provision for loan losses in 2020 was attributable to adjustments of qualitative factors used to estimate the allowance for loan losses.  Qualitative factors were adjusted due to the continued economic uncertainty associated with the COVID-19 pandemic.  Net recoveries of $18 thousand were recognized in FY20, as compared to net charge offs of $35 thousand recognized in FY19.  Excluding SBA PPP loans, the allowance for loan losses represents 0.46% of gross loans as of December 31, 2020, as compared to 0.23% as of December 31, 2019.   

Noninterest income increased to $2.87 million in FY20, as compared to $2.82 million in FY19.  Several sources of noninterest income have been negatively impacted by the COVID-19 pandemic including merchant payment processing fees and certain deposit account and placement fees.  Noninterest income in 2020 included nonrecurring gains on the disposition of investment securities of $169 thousand which helped offset decreases in noninterest income related to the COVID-19 pandemic.           

Noninterest expense increased 5.3% to $12.06 million in FY20, as compared to $11.46 million in FY19.  Increases in noninterest expense are primarily related to opening a new branch in Onley, Virginia in July 2020 and costs to purchase personal protective equipment, cleaning supplies, and cleaning services associated with the COVID-19 pandemic.  A reduction in net interest income accompanied by higher noninterest expense in FY20, as compared to FY19, increased the efficiency ratio from 50.36% in FY19 to 53.66% in FY20.       

Net income decreased to $7.27 million in FY20, as compared to $8.33 million in FY19, and is primarily attributable to the increase in provision for loan losses in FY20 associated with the COVID-19 pandemic and lower interest revenue due to decreases in the federal funds interest rate and lower yields on investments.  A decrease in net income accompanied by a significant increase in average assets in FY20, as compared to FY19, resulted in a decrease in the Return on Average Assets (“ROA”) from 1.56% in FY19 to 1.15% in FY20.  Average assets were $95.35 million, or 17.9%, higher in FY20, as compared to FY19.  A decrease in net income accompanied by higher average equity in FY20, as compared to FY19, resulted in a reduction in Return on Average Stockholders’ Equity (“ROE”) from 9.45% in FY19 to 7.84% in FY20.  Dividends declared in FY20 were $1.10 per share, as compared to $1.06 per share in FY19, resulting in dividend payout ratios of 41.98% for FY20 and 35.39% in FY19.      

Quarterly Results of Operations

Loan interest revenue, including fees, increased to $4.81 million in 4Q20, as compared to $4.41 million in 4Q19 and $4.67 million in 3Q20, as the result of continued organic loan growth and funding of Small Business Administration Paycheck Protection Program (“SBA PPP”) loans.  SBA PPP loan balances decreased in 4Q20 as borrowers received loan forgiveness and related loans were repaid by the SBA.  Upon repayment, unamortized net loan fees are recognized and reported as loan interest revenue which resulted in an increase in loan interest revenue in Q420 as compared to 3Q20.  SBA loan interest revenue increased from $138 thousand in Q320 to $335 thousand in Q420.  As of December 31, 2020, unamortized net loan fees related to SBA PPP loans were $641 thousand. 

Net interest income decreased to $4.96 million in 4Q20, as compared to $5.04 million in 4Q19, due to decreases in the federal funds interest rate and lower yields on loans and investments.  Net interest income increased slightly in 4Q20, as compared to $4.89 million in 3Q20, and was attributable to SBA PPP loan forgiveness as discussed above.  Net interest margin decreased to 2.99% in 4Q20, as compared to 3.88% in 4Q19 and 3.12% in 3Q20, 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 $148.1 million, or 32.2%, when compared to 4Q19 and increased $32.0 million or 5.5%, when compared to 3Q20.      

The provision for loan losses was $165 thousand in 4Q20, as compared to $75 thousand in 4Q19 and $270 thousand in 3Q20.  The provision for loan losses recorded in 4Q20 was primarily attributable to further adjustments to qualitative factors used to estimate the allowance for loan losses.  Qualitative factors were adjusted due to the continued economic uncertainty associated with the COVID-19 pandemic.  Net charge offs were $15 thousand in 4Q20, as compared to net recoveries of $25 thousand in 4Q19, and net charge offs of $5 thousand in 3Q20.    

Noninterest income increased to $775 thousand in 4Q20, as compared to $699 thousand in 4Q19 and $738 thousand in 3Q20.  The increase is primarily attributable to higher levels of consumer spending in 4Q20 which increased both debit card interchange income and overdraft fees.  Other sources of noninterest income have been negatively impacted by the COVID-19 pandemic including merchant payment processing fees and certain deposit account and placement fees, but were offset by higher interchange and overdraft fees in Q420.                  

Noninterest expense increased to $3.76 million in 4Q20, as compared to $3.38 million in 4Q19, 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 salaries expense and higher FDIC deposit insurance premiums.  Noninterest expense increased in 4Q20 to $3.76 million, as compared to $2.83 million in 3Q20, which primarily relates to year end discretionary bonuses and 401K contributions.  A reduction in net interest income accompanied by higher noninterest expense in Q420, as compared to Q419, increased the efficiency ratio from 59.24% in Q419 to 65.72% in Q420.  Due to year end discretionary bonuses and 401K contributions recorded in 4Q20, the efficiency ratio increased to 65.72%, as compared to 50.16% in 3Q20.     

Net income in 4Q20 decreased to $1.41 million, as compared to $1.71 million in 4Q19, and is primarily attributable to higher noninterest expense associated with the opening of a new branch in Onley, Virginia in July 2020 and lower net interest income due to lower yields on investments and loans.  Net income in 4Q20 decreased to $1.41 million, as compared to $1.91 million in 3Q20, due to higher noninterest expense related to year end discretionary bonuses and 401K contributions awarded in 4Q20.  A decrease in net income accompanied by a significant increase in average assets in 4Q20, as compared to 4Q19, resulted in a decrease in the Return on Average Assets (“ROA”) from 1.24% in 4Q19 to 0.80% in 4Q20.  Average assets were $152.2 million, or 27.6%, higher in 4Q20, as compared to 4Q19.  A decrease in net income accompanied by higher average equity in 4Q20, as compared to 4Q19, resulted in a reduction in Return on Average Stockholders’ Equity (“ROE”) from 7.60% in 4Q19 to 6.00% in 4Q20.  Similarly, decreases in net income and increases in average assets in 4Q20, as compared to 3Q20, resulted in a decrease in ROA from 1.14% in 3Q20 to 0.80% in 4Q20.  Average assets were $32.7 million, or 4.9%, higher in 4Q20, as compared to 3Q20.  Dividends declared in 4Q20 were $0.29 per share, as compared to $0.31 per share in 4Q19 and $0.29 per share in 3Q20.  Dividend payout ratios were 56.89% for 4Q20, 50.28% for 4Q19, and 42.08% for 3Q20. 

Financial Condition

Total assets were $711.8 million as of December 31, 2020, as compared to $548.0 million as of December 31, 2019 and $699.8 million as of September 30, 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 $614.4 million as of December 31, 2020, as compared to $453.7 million as of December 31, 2019 and $603.3 million as of September 30, 2020.  A significant portion of the deposit growth was utilized to fund loan originations including $33.2 million of SBA PPP loans representing 546 customers.  SBA PPP loans, net of unamortized loans fees, were $24.1 million as of December 31, 2020.  Total loans as of December 31, 2020 were $423.5 million as compared to $363.2 million as of December 31, 2019 and $419.9 million as of September 30, 2020, which represents growth of 16.6% since December 31, 2019 and 0.9% since September 30, 2020.  Strong loan demand in FY20, excluding SBA PPP loans, contributed to $36.1 million, or 9.9%, of loan portfolio growth since December 31, 2019.  During 4Q20, SBA PPP loans decreased $8.1 million, or 25.2%, as borrowers received loan forgiveness and related loans were repaid by the SBA.  The decrease in the loan portfolio from SBA PPP payoffs in 4Q20 was offset by continued organic loan growth in other portfolios which grew by $11.8 million in Q420, which equals an annualized growth rate of 12.2%.  The loans to deposits ratio as of December 31, 2020 was 68.9%, as compared to 80.1% as of December 31, 2019 and 69.6% as of September 30, 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 2Q20 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 4Q20.  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 have been restored and have resumed contractual payments.  As of September 30, 2020, the temporary loan payment deferral program included 189 loans with an outstanding principal balance of $134.3 million and accrued interest of $2.0 million.  Loans in the temporary payment deferral program represented 32.0% of total loans outstanding as of September 30, 2020.                  

Average assets grew by 17.9% to $629.5 million in FY20, as compared to $534.1 million in FY19.  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 15.5% to $402.3 million in FY20, as compared to $348.5 million in FY19.  SBA PPP loans contributed to $21.2 million of the $53.8 million increase in average loans in FY20, as compared to FY19, while the remaining $32.6 million increase in average loans was attributable to strong loan demand in FY20.  The average loans to average deposits ratio decreased to 75.2% in FY20, as compared to 78.4% in FY19, and relates to significant growth in average deposits associated with the COVID-19 pandemic. 

Calvin B. Taylor Bankshares, Inc. and Subsidiary
Consolidated Balance Sheets
	(unaudited)				(unaudited)
	December 31,		December 31,		September 30,
	2020		2019		2020
Assets
Cash and cash equivalents
Cash and due from banks	$    14,398,578		$    12,022,238		$    11,708,285
Federal funds sold and interest bearing deposits	156,706,746		53,111,059		150,087,731
Total cash and cash equivalents	171,105,324		65,133,297		161,796,016
Time deposits in other financial institutions	8,733,754		25,509,040		13,037,522
Debt securities available for sale, at fair value	72,166,997		54,424,907		65,016,339
Debt securities held to maturity, at amortized cost	5,994,955		13,318,100		9,485,601
Equity securities, at cost	1,240,233		1,215,433		1,240,233
Loans	423,467,766		363,242,332		419,855,455
Less: allowance for loan losses	(1,836,451)		(853,329)		(1,687,175)
Net loans	421,631,315		362,389,003		418,168,280
Accrued interest receivable	2,402,222		1,176,816		3,114,471
Prepaid expenses	612,188		529,966		497,091
Other real estate owned	-		-		-
Premises and equipment, net	12,951,511		10,681,615		12,971,768
Computer software	389,236		240,287		340,648
Bank owned life insurance	13,405,779		13,004,699		13,291,112
Other assets	1,157,490		380,947		844,565
Total assets	$  711,791,004		$  548,004,110		$  699,803,646
Liabilities and Stockholders' Equity
Deposits
Non-interest bearing	$  211,945,179		$  157,736,204		$  223,337,161
Interest bearing	402,491,901		295,945,077		380,000,073
Total deposits	614,437,080		453,681,281		603,337,234
Accrued interest payable	26,837		31,069		26,481
Dividends payable	804,150		860,227		804,353
Debt securities payable	-		2,048,821		-
Accrued expenses	602,027		497,138		180,687
Non-qualified deferred compensation	485,626		347,387		433,836
Deferred income taxes	601,057		452,046		687,551
Other liabilities	49,097		93,581		56,994
Total liabilities	617,005,874		458,011,550		605,527,136
Stockholders' equity
Common stock, par value $1 per share;
authorized 10,000,000 shares; issued and outstanding	2,772,932		2,774,926		2,773,632
Additional paid-in capital	2,808,195		2,869,539		2,831,428
Retained earnings	88,396,800		84,179,816		87,787,316
Accumulated other comprehensive income, net of tax	807,203		168,279		884,134
Total stockholders' equity	94,785,130		89,992,560		94,276,510
Total liabilities and stockholders' equity	$  711,791,004		$  548,004,110		$  699,803,646

Calvin B. Taylor Bankshares, Inc. and Subsidiary
Consolidated Statements of Comprehensive Income (unaudited)
	For the three months ended				For the twelve months ended
	Dec 31, 2020		Dec 31, 2019		Dec 31, 2020		Dec 31, 2019
Interest revenue
Loans, including fees	$  4,808,154		$  4,407,603		$ 18,629,385		$ 17,495,750
U. S. Treasury and government agency debt securities	104,428		183,622		494,008		834,936
Mortgage-backed debt securities	83,045		117,922		518,458		376,082
State and municipal debt securities	51,762		44,094		213,978		179,029
Federal funds sold and interest bearing deposits	46,137		313,193		251,653		1,168,383
Time deposits in other financial institutions	66,243		154,542		383,376		613,513
Total interest revenue	5,159,769		5,220,976		20,490,858		20,667,693
Interest expense
Deposits	197,932		184,015		715,016		687,684
Net interest income	4,961,837		5,036,961		19,775,842		19,980,009
Provision for loan losses	165,000		75,000		965,000		270,000
Net interest income after provision for loan losses	4,796,837		4,961,961		18,810,842		19,710,009
Noninterest income
Debit card and ATM	295,411		243,613		1,060,624		1,015,183
Service charges on deposit accounts	190,551		164,261		674,955		643,180
Merchant payment processing	42,259		46,224		223,101		275,188
Increase in cash surrender value of bank owned life insurance	114,667		92,962		344,049		354,427
Dividends	41,382		42,502		65,993		48,334
Gain on disposition of investment securities	13,916		24,811		169,229		41,235
Gain (loss) on disposition of fixed assets	-		25		1,400		(2,906)
Loan swap referral fees	-		-		-		85,505
Miscellaneous	76,690		84,346		334,125		357,114
Total noninterest income	774,876		698,744		2,873,476		2,817,260
Noninterest expenses
Salaries	1,687,638		1,490,104		5,224,862		5,124,635
Employee benefits	641,100		663,386		1,750,621		1,765,443
Occupancy	255,955		234,619		877,435		791,122
Furniture and equipment	196,976		156,481		714,354		610,308
Data processing	148,183		129,602		557,725		502,102
ATM and debit card	132,311		101,129		457,494		379,997
Marketing	70,294		57,458		347,190		314,494
Directors fees	82,100		73,700		321,950		298,100
Telecommunication services	80,466		69,320		320,428		251,519
Deposit insurance premiums	37,880		-		95,255		67,624
Other operating	428,176		407,178		1,395,990		1,354,866
Total noninterest expenses	3,761,079		3,382,977		12,063,304		11,460,210
Income before income taxes	1,810,634		2,277,728		9,621,014		11,067,059
Income taxes	397,000		567,000		2,353,000		2,737,000
Net income	1,413,634		1,710,728		7,268,014		8,330,059
Other comprehensive income, net of tax
Unrealized gains (losses) on available for sale debt securities
arising during the period, net of tax	(76,931)		(23,734)		638,924		272,347
Comprehensive income	$  1,336,703		$  1,686,994		$   7,906,938		$   8,602,406
Earnings per common share - basic and diluted	$             0.51		$             0.61		$             2.62		$             2.99

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