Town and Country Financial Corporation Reports Second-Quarter 2019 Net Income

Town and Country Financial Corporation (the “Company”), (OTC Pink: TWCF), today announced financial results for second quarter of 2019.

Key highlights included:

  • Record core net income, growth of 40% from second quarter 2018 to second quarter 2019;
  • Total assets exceeded $800 million for the first time, ending the quarter at $810 million;
  • Commercial loan growth of $57 million (14%) from June 30, 2018 to June 30, 2019;
  • Deposits grew $25.6 million from June 30, 2018 to June 30, 2019;
  • Strong credit quality, with nonperforming loans net of government guarantees of 0.27% as of June 30, 2019, and 0.09% as of June 30, 2018;
  • Reduced overhead, with noninterest expenses declining by $165,000 from June 30, 2018 to June 30, 2019.

Core net income was $1.90 million in the second quarter of 2019, compared to $1.36 million in the second quarter of 2018, an increase of 40%. Core net income was $3.51 million in the first half of 2019, compared to $2.59 million in the first half of 2018, an increase of 35%. Core net income excludes securities gains and losses and other non-core items. Strong loan growth, solid noninterest income, and reduced expenses contributed to the increases in quarterly and year to date results.

Reported net income increased $531,000 (38.7%) from the second quarter of 2018 to the second quarter of 2019, to $1.90 million ($0.67 per share), from $1.37 million ($0.48 per share) in the second quarter of 2018. Reported net income was $3.55 million ($1.25 per share) in the first half of 2019, and increase of $768,000 (27.6%) from $2.78 million ($0.97 per share) in the first half of 2018.

In announcing the financial results, President and Chief Executive Officer, Micah R. Bartlett, said, “Our focus on doing what we do best is paying off, with great momentum in all major aspects of performance. Commercial loan growth and a very strong mortgage business are driving revenue to record levels. In the first half of this year, revenue growth of 8%, along with strong credit quality and a reduction in overhead, was leveraged into 35% growth in core net income.”

Loans were $594 million as of June 30, 2019 and $553 million as of December 31, 2018, reflecting an increase of $41 million in the first half of 2019. Compared to loans of $536 million as of June 30, 2018, loans grew $58 million, or 9.8%. Loan growth was driven by commercial lending, including commercial real estate. Commercial loans were $471 million as of June 30, 2019, compared to $437 million as of December 31, 2018, and $414 million as of June 30, 2018, reflecting $57 million (14%) year over year growth.

Loan growth was funded, in part, by a reduction in the investment portfolio, resulting in a reallocation of earning assets. Deposits also contributed to funding loan growth, growing to $637 million as of June 30, 2019, from $625 million as of December 31, 2018, and $611 million as of June 30, 2018. Other sources of funding included borrowing and equity capital resulting from retained earnings. Borrowing grew $4.5 million from $86.7 million as of June 30, 2018, to $91.2 million as of June 30, 2019. Equity capital grew $7.3 million from $56.5 million as of June 30, 2018, to $63.8 million as of June 30, 2019.

The reallocation of assets to loans, which are generally higher yielding assets than investment securities, helped to maintain a stable net interest margin in a changing interest rate environment. The net interest margin was 3.48% for both the second quarter and the six months ended June 30, 2019, compared to 3.47% in the second quarter of 2018 and 3.44% in the six months ended June 30, 2018.

Noninterest income was $3.0 million in the second quarter of 2019, compared to $2.8 million in the second quarter of 2018. Noninterest income was $5.3 million in the first half of 2019, compared to $5.1 million in the first half of 2018. Mortgage banking fees, which accounted for over 60% of noninterest income in the second quarter of 2019, were $1.9 million in the second quarter of 2019, and $1.6 million in the second quarter of 2018.

Noninterest expenses were $6.5 million in the second quarter of 2019, unchanged from the second quarter of 2018. Noninterest expenses were $12.5 million in the first half of 2019, compared to $12.7 million in the first half of 2018. Maintaining stable or declining expenses while growing revenue contributed to core net income growth noted above.

Nonperforming loans as a percent of total loans were 0.61%, 0.67% and 0.90% as of June 30, 2019, December 31, 2018, and June 30, 2018, respectively. A portion of these loans have government guarantees. Excluding the guaranteed portion, the adjusted ratio was 0.33%, 0.48%, and 0.81% as of June 30, 2019, December 31, 2018, and June 30, 2018, respectively, as credit quality remained strong.

Town and Country Bank’s capital levels remained strong at quarter-end, with a Tier 1 leverage ratio of 9.36% and a total risked-based ratio of 12.76%. These ratios compare to 9.06% and 12.67% a year earlier. Consolidated equity capital grew to $63.8 million at June 30, 2019, from $57.5 million at June 30, 2018. Book value was $22.39 per share as of June 30, 2019, compared to $20.82 per share as of June 30, 2018, an increase of 7.6%.

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
dcheatham@townandcountrybank.com
(217) 321-3424

2019 Second Quarter Financials image

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