Town And Country Financial Corporation Reports Third-Quarter Net Income

SPRINGFIELD, Ill., Nov. 07, 2016 (GLOBE NEWSWIRE) -- Town and Country Financial Corporation (OTC Pink:TWCF) reported third-quarter operating income of $1.3 million, or $0.47 per share, a 36% increase from $986 thousand, or $0.35 per share in the third-quarter of 2015.

The current quarter's reported earnings were nominally impacted by conversion expenses related to recent bank and branch acquisitions and security gains that collectively resulted in additional after-tax income of $8 thousand as compared to security gains of $650 thousand reported in the year-ago quarter.  Reported net income including these non-operating items was $1.3 million in the third quarter and net income available to common shareholders was $0.47 per share compared with $1.6 million and $0.57 per share in the year-ago period, net of the dividend paid on preferred stock. 

President and Chief Executive Officer, Micah R. Bartlett commented, "Third quarter results represent the first period without material one-time expenses related to our 2016 acquisitions and conversions.  We are pleased to report a significant increase in our profitability, positively impacted by the net earnings of the acquired entities, a 16% increase in mortgage originations, and over 8% organic loan growth in mostly commercial and residential lending from our legacy branches."

Operating income for the first nine months of 2016 was $3.4 million, or $1.20 per share, compared with $2.6 million, or $0.90 per share in 2015.  The nine month results were impacted by acquisition and conversion costs that totaled $634 thousand and security gains of $56 thousand, both after-tax.  Reported net income for the year-to-date 2016 including non-operating items was $2.8 million and net income available to common shareholders was $1.00 per share.  This compares to reported net income of $3.2 million, and $1.11 per share in 2015, including after-tax security gains of $650 thousand.

Bartlett continued, "The year has been rewarding on many fronts, including the growth and expansion in our traditional banking operations, as well as in our mortgage banking division.  While 2016 results have been bolstered by the early year reduction in mortgage rates, we are gratified that originations from purchase activity represents 72% of our volume this year."

Discussion of Third Quarter ResultsNet revenue was $8.3 million, an increase of 32.1% compared with $6.3 million in 2015.  Net interest income was up 35.1% over the year-ago quarter based upon the recent acquisitions and growth in loans and investment securities.  Non-interest income, excluding security gains, was $3.0 million and up $631 thousand from the prior year due to a 33.7% increase in mortgage loans sold and the 2016 acquisitions.

The tax equivalent net interest margin was 3.23% in the current quarter compared with 3.34% in the year-ago.  The year-over-year change was primarily due to significant growth in investment securities, as well as borrowing costs, as a result of the first-quarter bank acquisition.

Noninterest expense was $6.2 million, an increase of $1.7 million or 37.8% over the prior year's third-quarter.  The change was primarily due to the first and second quarter 2016 bank and branch acquisitions and secondarily due to costs that supported the substantial year-over-year increase in mortgage originations. 

The provision for loan loss was $325 thousand compared to $340 thousand in the third-quarter of 2015.  Net charge offs were $38 thousand, or 0.01% of average loans compared with $204 thousand, or 0.06%, in the prior year's quarter. 

Loans that were past due 30 days or more, including non-accrual loans, totaled 0.86% of loans outstanding at September 30, 2016 compared with 1.67% at December 31, 2015.  The allowance for loan loss was 1.06% of total loans, excluding loans held for sale.  When excluding purchased loans, the allowance is 1.22% compared with 1.18% at the prior year-end.  There is no allowance for loans associated with the acquisitions, as those purchased loans were recorded at their fair value.

At September 30, 2016, total assets were $734 million and total net loans were $477 million compared with $520 million and $365 million, respectively, at December 31, 2015.  Total deposits were $586 million and common equity capital was $47 million.  The reported book value was $16.52 per common share compared with $15.59 per share at December 31, 2015.  Town and Country Financial Corporation is considered a small bank holding company and therefore Basel III capital standards do not apply.  Town and Country Bank's capital levels remained strong in the quarter under the Basel III transitional standardized approach with common equity tier 1 capital of $59 million, or 10.9%, and total regulatory capital of $65 million, or 12.0%, both stated as a percentage of risk-weighted assets.

The parent holding company reported an investment in Town and Country Bank of $71.1 million at September 30, 2016, compared with $51.0 million at the end of 2015.  Borrowings were $13.7 million and trust preferred securities were $14.5 million, as compared with no borrowed debt and trust preferred securities of $11.5 million at year-end, both changes a result of the acquisition.

The Board of Directors declared a $0.03 per share quarterly cash dividend payable on December 15, 2016 to stockholders of record December 1, 2016. 

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 Buffalo, Decatur, Edwardsville, Fairview Heights, Jacksonville, Lincoln, Mt. Zion, Springfield, Waverly, White Hall and Quincy, that latter operating under the name of Peoples Prosperity Bank.  Town and Country Financial Corporation shares are quoted under the symbol TWCF.

CONSOLIDATED STATEMENT OF CONDITION          
AS OF SEPTEMBER 30 (UNAUDITED)     2016       2015    
ASSETS          
Cash and due from banks $     12,168,021   $     7,673,923    
Investments       194,643,781         105,254,032    
Loans, net       476,660,559         357,028,132    
Other assets       50,573,224         32,124,534    
Total assets $     734,045,585   $     502,080,621    
           
           
LIABILITIES & EQUITY          
Deposits $     585,906,640   $     397,374,073    
Borrowed money        83,000,000         41,500,000    
Other liabilities        3,627,050         2,687,674    
Total liabilities $     672,533,690   $     441,561,747    
Trust preferred securities       14,500,000         11,500,000    
SBLF preferred capital       -          5,000,000    
Equity capital       47,011,895         44,018,874    
Total liabilities & equity $     734,045,585   $     502,080,621    
           
           
NINE MONTH PERIOD ENDED SEPTEMBER 30 (UNAUDITED)     2016       2015    
Interest income $     17,192,869   $     13,007,910    
Interest expense       2,408,184         1,344,487    
Net interest income $     14,784,685   $     11,663,423    
Provision for loan losses       824,000         680,000    
Noninterest income       7,459,781         5,876,987    
Gain on sale of securities       91,248         1,068,142    
Noninterest expense       17,797,262         13,136,955    
Income before income taxes  $     3,714,452   $     4,791,597    
Income taxes       871,970         1,583,680    
Net income $     2,842,482   $     3,207,917    
Preferred dividend       9,305         37,500    
Net income available to common stockholders $     2,833,177   $     3,170,417    
           
           
Selected Financial Comparison:          
NINE MONTH PERIOD ENDED SEPTEMBER 30 (UNAUDITED)     2016       2015    
Basic earnings per share $     1.00   $     1.11    
Book value per common share $     16.52   $     15.47    
Net charge offs to average loans less HFS     0.01 %     0.06 %  
Net revenue (in 000s) $     22,336   $     18,609    
Net interest margin     3.23 %     3.36 %  
Fees from mortgage banking activities (in 000s) $     4,451   $     3,566    
Return on common equity     8.18 %     9.68 %  
Return on assets     0.56 %     0.85 %  
           
           
(UNAUDITED)   AS OF   SEPTEMBER 30  2016   AS OF   DECEMBER 31  2015  
Tier 1 leverage ratio (TCB only per Basel III)     8.20 %     9.27 %  
Total risk-based capital ratio (TCB only per Basel III)     11.97 %     12.50 %  
Nonperforming loans     0.52 %     0.60 %  
Delinquent loans, excluding nonperforming     0.34 %     1.07 %  
Allowance for loan loss     1.06 %     1.18 %  
Coverage ratio (allowance to NPLs)     203 %     198 %  
Mortgage loans sold with servicing retained (in 000s) $     588,171    $      441,649    
Trust assets under management (in 000s) $     141,783    $      127,711    
           
           
HOLDING COMPANY ONLY          
AS OF SEPTEMBER 30 (UNAUDITED)     2016       2015    
ASSETS          
Cash and other assets $     5,407,883   $     9,084,023    
Investment in TCB       71,107,821         52,398,368    
Total assets $     76,515,704   $     61,482,391    
           
LIABILITIES & EQUITY          
Other liabilities  $     1,303,809   $     963,517    
Borrowings       13,700,000         -     
Trust preferred securities       14,500,000         11,500,000    
SBLF preferred capital       -          5,000,000    
Equity capital       47,011,895         44,018,874    
Total liabilities & equity $     76,515,704   $     61,482,391    

Nancy Bahre(217) 787-3100nbahre@townandcountrybank.com