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Town and Country Financial Corp. (TWCF.OB) Reports 2010 Net Income of $2.1 Million

On Saturday, Town and Country Financial Corp. reported 2010 net income of $2.1 million, or $0.75 per share. This is in comparison with $1.0 million, or $0.36 per share, generated in 2009. Net income adjusted to exclude gains and impairments of investment securities was $2.2 million, or $0.80 per share, compared to $0.44 in the previous year.

The improvement in year-over-year earnings was due primarily to lower loan loss provision expense driven by lower net charge-offs of 0.18% on average loans in 2010 compared to 1.53% in 2009. In addition, contributing to the improvement was net interest income that was $11.9 million and 4.0% above the prior year level. This resulted in a net interest margin of 3.57% compared to 3.39%.

Non-interest income was $5.7 million. This was 9.6% below 2009 due to lower mortgage production volumes, down 8%, and one-time insurance proceeds received in 2009. Non-interest expense was $13.8 million compared with $13.7 million in 2009.

As of December 31, 2010, total assets were $361 million compared to $375 million at the end of 2009. The change was due mainly to investment portfolio cash flows. Net loans were $226 million, up $6 million, or 2.8%. The serviced mortgage portfolio posted growth of 5.5%.

Total deposits were $297 million compared to $305 million at the 2009 year-end. Equity capital was $31 million and the reported book value was $11.14 per share compared to $10.47 per share on December 31, 2009.

Town and Country Financial Corporation’s capital position strengthened further with Tier 1 capital of $39.9 million, or 11.0% of average assets, and total risk-based capital of $45.6 million, or an estimated 15.7% of risk-weighted assets compared to 14.9% on December 31, 2009. All ratios are well above the regulatory definition of a well-capitalized bank. The Company’s ratios compare favorably to most peers’.

At quarter-end, the allowance for loan losses was 1.32% of loans outstanding (excluding loans held for sale) compared to 1.22% at year-end 2009. Nonperforming loans plus other real estate owned as a percentage of total loans plus other real estate was 1.17%. This is significantly below peer averages and down from 1.60% on December 31, 2009.

Furthermore, The Board of Directors declared a $0.03 per share quarterly cash dividend payable on March 15, 2011 to stockholders of record March 1, 2011. The Board of Directors also named Micah R. Bartlett Chief Executive Officer of the Company, succeeding David Kirschner who was named Executive Chairman of the Board. Mr. Kirschner remains actively involved in daily bank management.

Mr. Kirschner commented on the quarter: “Great progress was made in 2010 as we continued to focus on the fundamentals of core profitability, expansion of our mortgage market share, and strength in our balance sheet through capital, credit quality, and liquidity management. Our optimism for the future is tempered somewhat by the challenges from an extended low-rate environment and slower economic growth. We feel confident, however, that the hard work of our people and dedication to sound financial practices will continue to be a compelling component of our growth and health in the coming years.”

Headquartered in Springfield, Illinois, Town and Country Financial Corporation is the parent holding company for Town & Country Bank with offices in Springfield, Mt. Zion, Forsyth, and Decatur. They are also the parent holding company for Town & Country Banc Mortgage Services, Inc., as well as Logan County Bank, which has offices in Lincoln and Buffalo.

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