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Town and Country Financial Corporation Reports Record Fourth Quarter 2020 Financial Results; Increases Quarterly Dividend nearly 43%
Town and Country Financial Corporation (the “Company”) (OTC Pink: TWCF) today announced record financial results for the fourth quarter of 2020.
Key highlights included:
- Record fourth quarter 2020 net income of $2.9 million, after a quarterly provision for loan losses of $1 million and Paycheck Protection Program (“PPP”) fee income of $427 thousand.
- Net revenue of $11.8 million, driven primarily by strong mortgage volumes in addition to continued growth in net interest income.
- Mortgage banking fees of $4.4 million in the fourth quarter of 2020.
- Full-year 2020 net income of $7.1 million, after provision for loan losses of $5 million and PPP fee income of $827 thousand.
- Record 2020 pre-tax, pre-provision profit of $14.2 million.
- Full-year 2020 Return on Equity ratio exceeding 10% for the fifth year in a row.
Micah R. Bartlett, President and Chief Executive Officer, noted, “It is gratifying for our company to end 2020 on such a strong note after all that our people and our customers had to work through this year. During 2020, we closed a record number of mortgage loans, posted record revenue for the year, posted record profits for the third and fourth quarters, achieved a record level of full-year pre-tax, pre-provision profits, and recorded an ROE ratio exceeding 10% for the fifth year in a row. In addition, we increased our allowance for loan losses from $5.9 million at December 31, 2019 to $10.1 million at December 31, 2020 to cover potential loan losses as a result of the COVID-19 pandemic. Based on our performance, our board of directors has increased the quarterly per share dividend by nearly 43% from $0.07 to $0.10 per quarter.”
Bartlett continued, “Our company’s strong financial performance, particularly in the second half of 2020, is a testament to our employees who worked harder than ever to make sure we deeply engaged with our customers to meet their needs. I am extremely proud of our employees—our mortgage originators and staff for producing record results, our commercial bankers and staff for handling PPP loans and client engagement, and all employees for working hard and embracing our core values to help each other and our customers during the pandemic.”
The Company reported a record fourth quarter 2020 net income of $2.9 million ($1.03 per share), compared to $2.1 million ($0.72 per share) in the fourth quarter of 2019. Net income for the year ending December 31, 2020 was $7.1 million, compared to $7.7 million for the year ending December 31, 2019. The decrease in year-to-date net income was largely a result of an increase in the provision for loan losses of $3.6 million. The company posted record pre-tax, pre-provision profits of $14.2 million compared to $11.2 million in 2019.
The Company recorded $1 million in provision for loan losses in the fourth quarter 2020 compared to $300 thousand in the fourth quarter 2019. The additional provision increased the allowance for loan losses to $10.1 million as of December 31, 2020 and was in response to the possible impact of the economic environment surrounding the COVID-19 pandemic. For the year ending December 31, 2020, the provision for loan losses was $5.0 million, compared to $1.375 million for the year ending December 31, 2019. The carrying value of mortgage servicing rights was also reduced by $1.3 million in the fourth quarter 2020, bringing the year-to-date 2020 total valuation adjustment to $4.3 million.
Total assets at December 31, 2020 were $898.7 million, up $84 million (10.3%), when compared to $814.7 million as of December 31, 2019. The increase, in part, was due to loan portfolio growth of $47.6 million (8.0%) over that period of time, driven by commercial and PPP loans. Balances held in correspondent banks were also larger at the year ended 2020, $77.7 million compared to $16.8 million as of December 31, 2019, with the increase due to investment cashflows and higher customer deposit balances.
Total deposits were $727 million at December 31, 2020, an increase of $71.9 million from December 31, 2019. The increase over that time period was driven by deposit growth in demand, money market and savings deposits, partially offset by reductions in time and brokered deposits.
Net interest income was $6.9 million for the quarter ending December 31, 2020, compared to $6.1 million for the quarter ending December 31, 2019. Net interest income was $26.1 million for the year-to-date period ending December 31, 2020, up $1.6 million (6.6%) when compared to $24.4 million for 2019. The quarter and year-to-date numbers include PPP fees. The net interest margin for the year ending December 31, 2020 was 3.34% compared to 3.44% for the year ending December 31, 2019. The lower margin ratio was due to lower asset yields as a result of decreased interest rates.
Noninterest income was $4.9 million in the fourth quarter of 2020, an increase of $2 million (68.6%) compared to $2.9 million in the fourth quarter of 2019. For the year, noninterest income increased $4.7 million (40%) between 2020 ($16.5 million) and 2019 ($11.8 million). The primary reason for this increase was higher fees on mortgage banking activities which totaled $11.9 million for the year ending December 31, 2020. Due to the continued heavy mortgage loan volumes, noninterest expense also increased when comparing the fourth quarter and year-to-date numbers. As of December 31, 2020, the year-to-date noninterest expense was $28.5 million, up $3.3 million (13.3%), when compared to $25.1 million for the prior year. Fourth quarter 2020 noninterest expense was up $746 thousand, or 12.2%, when compared to fourth quarter 2019.
The Company’s nonperforming loans as a percentage of total loans were 0.93% as of December 31, 2020 compared to 0.80% as of December 31, 2019. When these ratios are adjusted for nonperforming loans that have a government guarantee, the ratios are 0.50% as of December 31, 2020 and 0.35% as of December 31, 2019.
Town and Country Bank maintains solid capital levels, with a tier 1 leverage ratio of 9.36% and a total risk-based ratio of 13.51% as of December 31, 2020. The tier 1 leverage ratio was 9.66% as of December 31, 2019 and the total risked-based ratio was 13.00% as of December 31, 2019.
On January 28, 2021, the board of directors declared a $0.10 per share cash dividend payable March 15, 2021, to shareholders of record as of March 1, 2021. This is nearly a 43% increase from the prior quarterly dividend of $0.07. The company’s book value per share was $26.62 at December 31, 2020 up from $23.94 the prior year-end. Tangible book value per share increased nearly 13% for 2020, to $24.20 per share at December 31, 2020 compared to $21.43 at December 31, 2019.
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.
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