Town and Country Financial : Reports Record Second Quarter 2021 Financial Results

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Town and Country Financial Corporation (the 'Company') (OTC Pink: TWCF) today announced record financial results for the second quarter of 2021.

Key highlights included:

• Record second quarter 2021 net income of $2.8 million, including $525 thousand ($375 thousand after-tax) in Paycheck Protection Program ('PPP') fee income and no provision for loan losses
• Quarterly net revenue of $11.1 million, driven primarily by strong mortgage volumes in addition to continued growth in net interest income.
• Mortgage banking fees of $2.2 million in the second quarter of 2021.
• Return on Tangible Common Equity of 15.96% at June 30, 2021.
• Announced the appointment of Edwin Depenbrok as Chief Financial Officer.

Micah R. Bartlett, President and Chief Executive Officer, noted, 'We are pleased to report another solid quarter of record performance despite certain headwinds facing the industry. Continued low-interest rates are putting pressure on net interest margins while excess monetary supply and government stimulus have weakened commercial loan demand. However, we have reduced our cost of funds in the second quarter such that our net interest margin remained relatively stable. Our mortgage volumes remain good even though lack of housing inventory presents challenges in the purchase business while refinance volumes are normalizing from recent highs. Our liquidity remains very strong, and we have reduced wholesale funding as a result. We have continued to manage costs and efficiency such that our non-mortgage related expenses are roughly flat as compared to last year. PPP fees recognized in the quarter totaled $525 thousand. Our Allowance for Loan Losses remains strong and we did not recognize any additional provisions in the second quarter. All of this translated into a Return on Tangible Equity ratio of 15.6% annualized for the second quarter, and our tangible book value per share has increased 17% since a year ago.'

Bartlett continued, 'We continue to make solid progress on our strategic plans and priorities and our bankers are continuing to engage deeply with our customers to determine how best to serve them as the economy hopefully continues to normalize.'

The Company reported a record second quarter 2021 net income of $2.8 million ($0.99 per share), compared to $1.1 million ($0.37 per share) in the second quarter of 2020. Second quarter 2021 net income included no provision for loan losses and a $500 thousand positive MSR valuation adjustment while the same period in 2020 reflected a $2 million provision for loan losses and a $1.2 million negative MSR valuation adjustment as a result of the economic implications of the pandemic. The company posted record pre-tax, pre-provision profits of $3.8 million compared to $3.3 million in the second quarter of 2020.

Total assets at June 30, 2021 were $876.7 million, down $28.0 million, when compared to $905.0 million as of June 30, 2020. The decrease was due to a $79.4 million reduction in wholesale funding, partially offset by deposit growth. PPP loans outstanding totaled $30 million as of June 30, 2021 with $22 million of that attributed to the second round of PPP. Including PPP forgiveness, total commercial loans outstanding have contracted $29 million since June 30, 2020.

Total Borrowed Money was $28.8 million at June 30, 2021 compared to $96.6 million at June 30, 2020. This reduction was primarily due to the paydown of Federal Home Loan Bank advances as a result of excess liquidity.

Net interest income was $6.9 million for the quarter ending June 30, 2021, compared to $6.5 million for the quarter ending June 30, 2020, and includes $525 thousand in PPP fees. The net interest margin for the quarter ending June 30, 2021 was 3.47% an increase compared to 3.26% in the second quarter of 2020.

Noninterest income was $4.1 million in the second quarter of 2021, unchanged compared to $4.1 million in the second quarter of 2020. The Company is continuing to experience strong mortgage loan volumes due to the low interest rate environment, which impacted noninterest income and noninterest expense numbers. A MSR valuation adjustment of $500 thousand was taken in the second quarter. The second quarter 2021 noninterest expense of $7.3 million was unchanged compared to $7.3 million for the second quarter of 2020.

The Company's nonperforming loans as a percentage of total loans were 1.07% as of June 30, 2021 compared to 0.84% as of June 30, 2020. When these ratios are adjusted for nonperforming loans that have a government guarantee, the ratios are 0.46% as of June 30, 2021 and 0.51% as of June 30, 2020.

Town and Country Bank maintains solid capital levels, with a tier 1 leverage ratio of 9.92% and a total risk-based ratio of 14.55% as of June 30, 2021. The tier 1 leverage ratio was 9.36% and the total risked-based ratio was 13.51% as of December 31, 2020.

On July 29, 2021, the board of directors declared a $0.10 per share cash dividend payable September 15, 2021, to shareholders of record as of September 1, 2021. The company's book value per share was $28.47 at June 30, 2021 up from $26.62 as of December 31, 2020 and $24.77 as of June 30, 2020. Tangible book value per share increased nearly 17% to $26.10 per share at June 30, 2021 compared to $22.33 at June 30, 2020.

The company also announced the appointment of Edwin Depenbrok as Executive Vice President and Chief Financial Officer as of July 1, 2021. Commenting on the appointment, President and CEO Micah R. Bartlett noted, 'We are extremely grateful for Ed's contributions to our company. He has served our organization on a contractual basis from time-to-time and has been instrumental in leading the development of our forward-looking finance operation as well as assisting in improvements to our strategic planning and risk management. We are pleased that he has agreed to continue to serve us on an employment basis until such time as we recruit and place a permanent CFO.'

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.

Denise Skiles
Vice President and Controller
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