UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED SEPTEMBER 30, 2005
Commission File Number: 000-50047
CALVIN B. TAYLOR BANKSHARES, INC.
I.R.S. Employer Identification No.: 52-1948274
State of incorporation: Maryland
Address of principal executive offices: 24 North Main Street, Berlin,
Maryland 21811
Issuer's telephone number: (410) 641-1700
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. YES X NO _____
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). YES X NO _____
Indicate by check mark if the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). YES ____ NO X
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: The registrant had 3,187,656
shares of common stock ($1.00 par) outstanding as of October 31, 2005.
Page 1
Calvin B. Taylor Bankshares, Inc. and Subsidiary
Form 10-Q
Index
Part I- Financial Information Page
Item 1 Consolidated Financial Statements
Consolidated Balance Sheets 3
Consolidated Statements of Income 4-5
Consolidated Statements of Cash Flows 6-7
Notes to Consolidated Financial Statements 8
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-12
Item 3 Quantitative and Qualitative Disclosures About Market Risks 13
Item 4 Controls and Procedures 13
Part II-Other Information
Item 1 Legal Proceedings 14
Item 2 Changes in Securities and Use of Proceeds 14
Item 3 Defaults Upon Senior Securities 14
Item 4 Submission of Matters to a Vote of Security Holders 14
Item 5 Other Information 14
Item 6 Exhibits 14-17
Signatures 18
Page 2
Calvin B. Taylor Bankshares, Inc. and Subsidiary
Part I - Financial Information
Consolidated Balance Sheets
(unaudited)
September 30, December 31,
2005 2004
Assets
Cash and due from banks $ 24,123,033 $ 21,901,546
Federal funds sold 33,915,275 32,692,233
Interest-bearing deposits 2,176,750 2,161,496
Investment securities available for sale 6,530,952 5,921,287
Investment securities held to maturity
(approximate fair value of $134,813,100
and $155,107,698) 136,063,697 156,029,445
Loans, less allowance for loan losses
of $2,193,108 and $2,177,926 195,943,991 161,510,157
Premises and equipment 6,691,963 6,891,238
Accrued interest receivable 1,598,148 1,415,775
Computer software 245,177 322,209
Bank owned life insurance 4,328,492 4,214,806
Other assets 235,876 272,790
$ 411,853,354 $ 393,332,982
Liabilities and Stockholders' Equity
Deposits
Noninterest-bearing $ 93,782,099 $ 78,542,414
Interest-bearing 238,129,545 241,229,944
331,911,644 319,772,358
Securities sold under agreements to repurchase 7,477,165 5,933,466
Accrued interest payable 145,666 116,502
Note payable 147,205 162,161
Deferred income taxes 725,531 549,070
Other liabilities 116,864 101,857
340,524,075 326,635,414
Stockholders' equity
Common stock, par value $1 per share
authorized 10,000,000 shares,
issued and outstanding
3,187,656 shares at September 30, 2005, and
3,208,478 shares at December 31, 2004 3,187,656 3,208,478
Additional paid in capital 15,458,235 16,187,005
Retained earnings 51,011,122 45,917,427
69,657,013 65,312,910
Accumulated other comprehensive income 1,672,266 1,384,658
71,329,279 66,697,568
$ 411,853,354 $ 393,332,982
See accompanying Notes to Consolidated Financial Statements
Page 3
Calvin B. Taylor Bankshares, Inc. and Subsidiary
Consolidated Statements of Income (unaudited)
For the three months ended
September 30
2005 2004
Interest and dividend revenue
Loans, including fees $ 3,315,873 $ 2,840,008
U.S. Treasury and government agency
securities 871,838 708,673
State and municipal securities 66,927 72,835
Federal funds sold 378,846 177,937
Interest-bearing deposits 14,766 11,595
Equity securities 8,316 9,195
Total interest and dividend revenue 4,656,566 3,820,243
Interest expense
Deposits 448,726 377,714
Borrowings 10,125 5,047
Total interest expense 458,851 382,761
Net interest income 4,197,715 3,437,482
Provision for loan losses - -
Net interest income after
provision for loan losses 4,197,715 3,437,482
Noninterest revenue
Service charges on deposit accounts 262,392 265,332
ATM and debit card revenue 137,509 94,575
Miscellaneous revenue 59,391 77,207
Total noninterest revenue 459,292 437,114
Noninterest expenses
Salaries 768,349 751,872
Employee benefits 170,344 163,555
Occupancy 156,146 144,916
Furniture and equipment 147,460 141,103
Other operating 464,337 435,186
Total noninterest expenses 1,706,636 1,636,632
Income before income taxes 2,950,371 2,237,964
Income taxes 1,045,000 790,000
Net income $ 1,905,371 $ 1,447,964
Earnings per common share $ 0.60 $ 0.45
See accompanying Notes to Consolidated Financial Statements
Page 4
Calvin B. Taylor Bankshares, Inc. and Subsidiary
Consolidated Statements of Income (unaudited)
(Continued)
For the nine months ended
September 30
2005 2004
Interest and dividend revenue
Loans, including fees $ 9,403,300 $ 8,652,638
U.S. Treasury and government agency
securities 2,407,803 2,044,401
State and municipal securities 211,905 199,343
Federal funds sold 784,849 331,299
Interest-bearing deposits 39,629 35,109
Equity securities 39,976 34,108
Total interest and dividend revenue 12,887,462 11,296,898
Interest expense
Deposits 1,189,036 1,156,169
Borrowings 19,763 13,350
Total interest expense 1,208,799 1,169,519
Net interest income 11,678,663 10,127,379
Provision for loan losses - -
Net interest income after
provision for loan losses 11,678,663 10,127,379
Noninterest revenue
Service charges on deposit accounts 784,588 786,822
ATM and debit card revenue 324,370 241,314
Miscellaneous revenue 252,703 294,590
Total noninterest revenue 1,361,661 1,322,726
Noninterest expenses
Salaries 2,300,937 2,285,596
Employee benefits 553,555 535,520
Occupancy 472,641 433,847
Furniture and equipment 395,924 422,049
Other operating 1,416,572 1,346,252
Total noninterest expenses 5,139,629 5,023,264
Income before income taxes 7,900,695 6,426,841
Income taxes 2,807,000 2,265,000
Net income $ 5,093,695 $ 4,161,841
Earnings per common share $ 1.59 $ 1.29
See accompanying Notes to Consolidated Financial Statements
Page 5
Calvin B. Taylor Bankshares, Inc. and Subsidiary
Consolidated Statements of Cash Flows (unaudited)
For the nine months ended
September 30
2005 2004
Cash flows from operating activities
Interest received $ 12,536,294 $ 11,288,221
Fees and commissions received 1,322,259 1,327,427
Interest paid (1,179,635) (1,189,360)
Cash paid to suppliers and employees (4,783,172) (4,657,504)
Income taxes paid (2,690,920) (2,290,678)
5,204,826 4,478,106
Cash flows from investing activities
Certificates of deposit purchased,
net of maturities (1,864) (3)
Purchase of investments available for sale (145,379) (164,504)
Proceeds from maturities of investments
held to maturity 65,215,000 77,740,084
Purchase of investments held to maturity (45,080,673) (86,908,942)
Loans made, net of principal collected (34,433,834) 3,954,014
Purchases of and deposits on premises,
equipment, and computer software (218,595) (287,086)
(14,665,345) (5,666,437)
Cash flows from financing activities
Net increase (decrease) in
Time deposits (6,464,506) (6,759,292)
Other deposits 18,603,792 26,533,917
Securities sold under agreements
to repurchase 1,543,699 2,256,148
Payment on note payable (14,956) (14,088)
Common stock repurchased (749,592) (590,688)
12,918,437 21,425,997
Net increase in cash and cash equivalents 3,457,918 20,237,666
Cash and equivalents at beginning of period 54,623,503 50,158,779
Cash and equivalents at end of period $ 58,081,421 $ 70,396,445
Page 6
Calvin B. Taylor Bankshares, Inc. and Subsidiary
Consolidated Statements of Cash Flows (unaudited)
For the nine months ended
September 30
2005 2004
Reconciliation of net income to
net cash provided by operating activities
Net income $ 5,093,695 $ 4,161,841
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation and amortization 492,740 491,434
Amortization of premiums and accretion
of discounts, net (168,795) (38,048)
(Gain) loss on disposition of assets 2,162 12,899
Decrease (increase) in
Accrued interest receivable (182,373) 28,812
Cash surrender value of bank owned
life insurance (113,686) (121,327)
Other assets 36,914 61,388
Increase (decrease) in
Accrued interest payable 29,164 (19,841)
Other liabilities 15,005 (99,052)
$ 5,204,826 $ 4,478,106
Composition of cash and cash equivalents
Cash and due from banks $ 24,123,033 $ 22,363,881
Federal funds sold 33,915,275 47,816,193
Interest-bearing deposits, except
for time deposits 43,113 216,371
$ 58,081,421 $ 70,396,445
See accompanying Notes to Consolidated Financial Statements
Page 7
Calvin B. Taylor Bankshares, Inc. and Subsidiary
Notes to Consolidated Financial Statements (unaudited)
1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q. Accordingly, they
do not include all the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments considered necessary for a fair presentation have
been made. These adjustments are of a normal recurring nature. Results of
operations for the nine months ended September 30, 2005 are not necessarily
indicative of the results that may be expected for the year ending December 31,
2005. For further information, refer to the audited consolidated financial
statements and related footnotes for the Company's year ended December 31, 2004.
Consolidation has resulted in the elimination of all significant
intercompany accounts and transactions.
Cash Flows
For purposes of reporting cash flows, cash and cash equivalents include
cash on hand, amounts due from banks, federal funds sold, and interest-bearing
deposits except for time deposits. Federal funds are purchased and sold for
one-day periods.
Per share data
Earnings per common share are determined by dividing net income by the
weighted average number of common shares outstanding for the period, as follows:
2005 2004
Three months ended September 30 3,187,656 3,216,586
Nine months ended September 30 3,197,045 3,222,068
2. Comprehensive Income
Comprehensive income consists of:
For the nine months ended
September 30,
2005 2004
Net income $ 5,093,695 $ 4,161,841
Unrealized gain on investment securities
available for sale, net of income taxes 287,608 123,966
Comprehensive income $ 5,381,303 $ 4,285,807
3. Loan commitments
Loan commitments are agreements to lend to customers as long as there is no
violation of any conditions of the contracts. Outstanding loan commitments and
letters of credit consist of:
September 30,
2005 2004
Loan commitments $ 36,501,237 $ 28,387,145
Standby letters of credit $ 1,277,488 $ 1,843,425
Page 8
Calvin B. Taylor Bankshares, Inc. and Subsidiary
Part I. Financial Information
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion contains certain forward-looking statements within
the meaning of and made pursuant to the safe harbor provisions of the Private
Litigation Securities Reform Act of 1995.
The following discussion of the financial condition and results of
operations of the Registrant (the Company) should be read in conjunction with
the Company's financial statements and related notes and other statistical
information included elsewhere herein.
General
Calvin B. Taylor Bankshares, Inc. (the "Company") was incorporated as a
Maryland corporation on October 31, 1995. The Company owns all of the stock of
Calvin B. Taylor Banking Company (the "Bank"), a commercial bank that was
established in 1890 and incorporated under the laws of the State of Maryland on
December 17, 1907. The Bank operates nine branches in Worcester County,
Maryland and one branch in Ocean View, Delaware. The Bank's administrative
office is located in Berlin, Maryland. The Bank is engaged in a general
commercial and retail banking business serving individuals, businesses, and
governmental units in Worcester County, Maryland, Ocean View, Delaware, and
neighboring counties.
The Company currently engages in no business other than owning and managing
the Bank.
Critical Accounting Policies
The Company's financial condition and results of operations are sensitive
to accounting measurements and estimates of inherently uncertain matters. When
applying accounting policies in areas that are subjective in nature, management
uses its best judgment to arrive at the carrying value of certain assets. One
of the most critical accounting policies applied is related to the valuation of
the loan portfolio. Management estimates the appropriate allowance for loan
losses, including the timing of loan charge-offs.
The allowance for loan losses represents a reserve for potential losses in
the loan portfolio. It is one of the most difficult and subjective judgments.
The adequacy of the allowance for loan losses is evaluated periodically based on
a review of the loan portfolio, with a particular emphasis on non-accruing, past
due, and other loans that management believes require attention. The
determination of the reserve level relies on management's judgment about factors
affecting loan quality, current trends in delinquencies and charge-offs, and
anticipated changes in the composition and size of the portfolio. Management
also considers external factors such as changes in the interest rate
environment, the view of the Bank's regulators, economic conditions in the
Bank's service area and beyond, and legislation that affects the banking
industry.
Financial Condition
Total assets of the Company increased $18.5 million from December 31, 2004
to September 30, 2005. Combined deposits and customer repurchase agreements
increased $13.7 million during the same period. During the first quarter of the
Page 9
year, the Bank typically experiences a decline in deposits since business
customers are using their deposits to meet cash flow needs. Generally, this
situation reverses late in the second quarter of the year as the Bank receives
deposits from seasonal business customers, summer residents and tourists. The
seasonal influx of deposits in the third quarter results in an increase in asset
size.
During the first nine months of 2005, the Bank's gross loan portfolio
increased $34.4 million. As the historically low interest rate market of the
past few years begins to reverse, the Bank's fixed rate loans have become more
competitive.
Historically, the Company has low loan charge-offs. Based on a review of
the consolidated loan portfolio, the Company determined that an allowance of
1.11% of gross loans was adequate as of September 30, 2005. At December 31,
2004, the allowance was 1.33% of gross loans. At September 30, 2005, there were
no non-accruing loans, and loans delinquent ninety days or more, and still
accruing interest, totaled $54,102 or .03% of the portfolio. There were no
non-accruing loans as of December 31, 2004, and loans delinquent ninety days or
more totaled $391,676 or .24% of the portfolio.
The Company makes loans to customers located primarily in the Delmarva
region. Although the loan portfolio is diversified, its performance will be
influenced by the economy of the region.
Liquidity
The Company's major sources of liquidity are loan repayments, maturities of
short-term investments including federal funds sold, and increases in core
deposits. Throughout the first quarter of the year, when the Bank typically
experiences a decline in deposits, federal funds sold and investment securities
are primary sources of liquidity. During the second quarter of the year,
additional sources of liquidity become more readily available as business
borrowers accelerate repayment of loans, and the Bank receives seasonal
deposits. Throughout the second and third quarters the Bank maintains a high
liquidity level. Funds from seasonal deposits are generally invested in short-
term U.S. Treasury Bills and overnight federal funds.
Average liquid assets (cash and amounts due from banks, interest-bearing
deposits in other banks, federal funds sold, and investment securities) compared
to average deposits were 62.48% for the third quarter of 2005 compared to
69.85% for the third quarter of 2004. This decrease in liquidity is primarily
due to growth in the loan portfolio, which has been funded by a decrease in
investment securities. This shift in earning assets is considered to be
favorable to earnings, as average loan rates are higher than average rates on
the investment portfolio.
Results of Operations
Year to date net income increased $931,854 or $.30 per share from
$4,161,841 or $1.29 per share in 2004 to $5,093,695 or $1.59 per share in 2005.
Net income for the three months ended September 30, 2004, was $1,447,964
or $.45 per share, compared to $1,905,371 or $.60 per share for the third
quarter of 2005. This represents an increase of $457,407 or 31.6% from the
prior year.
The key components of net income are discussed in the following paragraphs.
For the first nine months of 2005 compared to 2004, net interest income
increased $1,551,284. Net interest income increased $760,233 in the 3rd quarter
of 2005 compared to the 3rd quarter of 2004. Increasing rates paid on federal
Page 10
funds sold and investment securities, coupled with consistent yields on higher
loan balances have increased interest revenues. On the liability side,
management has repriced time deposit rates to retain core deposits.
The yield on interest earning assets increased by 86 basis points from
4.02% for 3rd quarter 2004 to 4.88% in 2005. During this same period, the
yield on interest bearing liabilities increased by 12 basis points from .62%
to .74%. Management expects to see gradual upward repricing of all earnings
assets and liabilities as the current market rate trend continues.
The Company's net interest income is one of the most important factors in
evaluating its financial performance. Management uses interest sensitivity
analysis to determine the effect of rate changes. Net interest income is
projected over a one-year period to determine the effect of an increase or
decrease in the prime rate of 100 basis points. If prime were to decrease one
hundred basis points, and all assets and liabilities maturing within that period
were fully adjusted for the rate change, the Company would experience a decrease
of less than five percent in net interest income. The sensitivity analysis does
not consider the likelihood of these rate changes nor whether management's
reaction to this rate change would be to reprice its loans or deposits.
No provision for loan losses was charged to expense during the first three
quarters of 2005 or 2004. Net loans charged-off (recovered) were $2,393 during
the first nine months of 2004, versus ($15,182) during the same period in 2005.
Noninterest revenue, including service charges on deposit accounts,
increased $22,178 from third quarter 2004 to third quarter 2005. For the year
to date, noninterest revenue has increased $38,935. Increases for the quarter
and year-to-date are primarily due to increased customer use of ATM and debit
cards.
Salaries were up slightly in both the third quarter and the year-to date
of 2005 versus 2004. Throughout the year, the Bank has made an effort to
streamline the employee roster, increasing production per employee. Employee
benefit costs for these same periods are up only slightly with no individually
notable variances.
The Bank, which hires seasonal employees during the summer, employed 96
full time equivalent employees as of September 30, 2005. The Company has no
employees other than those hired by the Bank.
The Company's occupancy expense increased $11,230 from third quarter 2004
to third quarter 2005. For the year to date, occupancy expense has increased
$38,794. About half of this increase is caused by accounting reclassification
of building insurance previously reported in other operating expenses.
Third quarter income taxes are $255,000 more than last year, on a pre-tax
income increase of $712,406. Year-to-date income taxes are $542,000 more than
last year, on a pre-tax income increase of $1,473,853. These increases reflect
the Company's effective tax rate of approximately 35.8%.
Plans of Operation
The Bank offers a full range of deposit services including checking, NOW,
Money Market, and savings accounts, and time deposits including certificates of
deposit. The transaction accounts and time certificates are tailored to the
Bank's principal market areas at rates competitive to those offered in the area.
In addition, the Bank offers certain retirement account services, such as
Page 11
Individual Retirements Accounts ("IRAs"). All deposits are insured by the
Federal Deposit Insurance Corporation (the "FDIC") up to the maximum amount
allowed by law (generally, $100,000 per depositor subject to aggregation rules).
The Bank solicits these accounts from individuals, businesses, associations and
organizations, and governmental authorities.
The Company, through the Bank, offers a full range of short- to medium-term
commercial and personal loans. Commercial loans include both secured and
unsecured loans for working capital (including inventory and receivables),
business expansion (including acquisition of real estate and improvements), and
purchase of equipment and machinery. Consumer loans include secured and
unsecured loans for financing automobiles, home improvements, education, and
personal investments. The Company originates commercial and residential
mortgage loans and real estate construction and acquisition loans. These
lending activities are subject to a variety of lending limits imposed by state
and federal law. The Bank may not make any loans to any director or executive
officer (except for commercial loans to directors who are not officers or
employees) unless the Board of Directors of the Bank approves the loans.
The Board of Directors must review any such loan every six months.
Other bank services include cash management services, 24-hour ATMs, debit
cards, safe deposit boxes, travelers' checks, direct deposit of payroll and
social security, and automatic drafts. The Bank offers bank-by-phone and
Internet banking services, including electronic bill-payment, to both
commercial and retail customers.
Capital Resources and Adequacy
Total stockholders' equity increased $4,631,711 from December 31, 2004 to
September 30, 2005. This increase is attributable to the comprehensive income
recorded during the period, as detailed in Note 2 of the Notes to Financial
Statements, reduced by $749,592 used to repurchase and retire 20,822 shares of
common stock. Stock repurchases were at a price of $36.00 dollars per share.
Under the capital guidelines of the Federal Reserve Board and the FDIC,
the Company and Bank are currently required to maintain a minimum risk-based
total capital ratio of 8%, with at least 4% being Tier 1 capital. Tier 1
capital consists of stockholders' equity less accumulated other comprehensive
income. In addition, the Company and the Bank must maintain a minimum Tier 1
leverage ratio (Tier 1 capital to total assets) of at least 4%, but this
minimum ratio is increased by 100 to 200 basis points for other than the
highest-rated institutions.
Tier one risk-based capital ratios of the Company as of September 30, 2005
and December 31, 2004 were 37.0% and 41.7%, respectively. Both are
substantially in excess of regulatory minimum requirements.
Website Access to SEC Reports
The Bank maintains an Internet website at www.taylorbank.com. The
Company's periodic SEC reports, including annual reports on Form 10-K,
quarterly reports on Form 10-Q, and current reports on Form 8-K, are accessible
through this website. Access to these filings is free of charge. The reports
are available as soon as practicable after they are filed electronically with
the SEC.
Page 12
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company's principal market risk exposure relates to interest rates on
interest-earning assets and interest-bearing liabilities. Unlike most
industrial companies, the assets and liabilities of financial institutions such
as the Company and the Bank are primarily monetary in nature. Therefore,
interest rates have a more significant effect on the Company's performance than
do the effects of changes in the general rate of inflation and change in prices.
In addition, interest rates do not necessarily move in the same direction or in
the same magnitude as the prices of goods and services. As discussed
previously, management monitors and seeks to manage the relationships between
interest sensitive assets and liabilities in order to protect against wide
interest rate fluctuations, including those resulting from inflation.
At September 30, 2005, the Company's interest rate sensitivity, as
measured by gap analysis, showed the Company was asset-sensitive with a one-
year cumulative gap of 22.70%, as a percentage of interest-earning assets.
Generally asset-sensitivity indicates that assets reprice more quickly than
liabilities and in a rising rate environment net interest income typically
increases. Conversely, if interest rates decrease, net interest income would
decline. The Bank has classified its demand mortgage and commercial loans as
immediately repriceable. Unlike loans tied to prime, these rates do not
necessarily change as prime changes since the decision to call the loans and
change the rates rests with management.
Item 4. Controls and procedures
Disclosure Controls and procedures are designed and maintained by the
Company to ensure that information required to be disclosed in the Company's
publicly filed reports is recorded, processed, summarized and reported in a
timely manner. Such information must be available to management, including the
Chief Executive Officer (CEO) and Treasurer, to allow them to make timely
decisions about required disclosures. Even a well-designed and maintained
control system can provide only reasonable, not absolute, assurance that its
objectives are achieved. Inherent limitations in any system of controls
include flawed judgment, errors, omissions, or intentional circumvention of
controls.
The Company's management, including the CEO and Treasurer, performed an
evaluation of the effectiveness of the design and operation of the Company's
disclosure controls and procedures as of September 30, 2005. Based on that
evaluation, the Company's management, including the CEO and Treasurer, has
concluded that the Company's disclosure controls and procedures are effective.
The projection of an evaluation of controls to future periods is subject to the
risk that procedures may become inadequate due to changes in conditions
including the degree of compliance with procedures.
Changes in Internal Controls
During the quarter ended on the date of this report, there were no
significant changes in the Company's internal control over financial reporting
that have had or are reasonably likely to have a material affect on the
Company's internal control over financial reporting. As of September 30, 2005,
the Company's management, including the CEO and Treasurer, has concluded that
the Company's internal controls over financial reporting are effective.
Page 13
Calvin B. Taylor Bankshares, Inc. and Subsidiary
Part II. Other Information
Item 1 Legal Proceedings - Not applicable
Item 2 Changes in Securities and Use of Proceeds
c) The following table presents information about the Company's
repurchase of its equity securities during the calendar quarter ended on the
date of this Form 10-Q.
(c) Total number (d) Maximum Number
(a) Total (b) Average of Shares Purchased of Shares that may
Number Price Paid as Part of a Publicly yet be Purchased
Period of Shares per Share Announced Program Under the Program
July None N/A None 300,026
August None N/A None 300,026
September None N/A None 300,026
Totals None N/A None N/A
The Company publicly announced on August 14, 2003, that it would
repurchase up to 10% of its outstanding equity stock at that time, which equated
to a total of 324,000 common shares available for repurchase. As of January 1,
2005, this plan was renewed, by public announcement, making up to 10% of the
Company's outstanding equity stock at that time, which equates to a total of
320,848 common shares, available for repurchase in 2005. There is no expiration
date for this program. No other stock repurchase plan or program existed or
exists simultaneously, nor has any other plan or program expired during the
period covered by this table. Common shares repurchased under this plan are
retired.
Item 3 Defaults Upon Senior Securities - Not applicable
Item 4 Submission of Matters to a Vote of Security Holders - Not applicable
Item 5 Other information
a) Reports on Form 8-K
There were no reports on Form 8-K filed for the quarter ended
September 30, 2005.
Item 6 Exhibits
a) Exhibits
31. Certifications of Principal Executive Officer and Principal
Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 are presented on pages 15 and 16, respectively.
32. Certification of Principal Executive Officer and Principal
Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 is presented on page 17.
Page 14
Exhibit 31.1
Certification - Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Reese F. Cropper, Jr., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Calvin B. Taylor
Bankshares, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and we have:
a. designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiary, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
b. designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
c. evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
d. disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the most recent fiscal quarter
that has or is reasonably likely to materially affect the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent function):
a. all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
b. any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.
Calvin B. Taylor Bankshares, Inc.
Date: November 4, 2005_______ By:/s/ Reese F. Cropper, Jr.
Reese F. Cropper, Jr.
Chairman & Chief Executive Officer
Page 15
Exhibit 31.2
Certification - Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Jennifer G. Hawkins, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Calvin B. Taylor
Bankshares, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and we have:
a. designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiary, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
b. designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
c. evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
d. disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the most recent fiscal quarter
that has or is reasonably likely to materially affect the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent function):
a. all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
b. any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.
Calvin B. Taylor Bankshares, Inc.
Date: November 4, 2005_______ By:/s/ Jennifer G. Hawkins
Jennifer G. Hawkins
Treasurer (Principal Financial Officer)
Page 16
Exhibit 32
Certification - Pursuant to 18 U.S.C. 1350
(Section 906 of the Sarbanes-Oxley Act of 2002)
We, the undersigned, certify that to the best of our knowledge, based upon a
review of the Quarterly Report on Form 10-Q for the period ended September 30,
2005 of the Registrant (the "Report"):
(1) The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Registrant.
Calvin B. Taylor Bankshares, Inc.
Date: November 4, 2005_______ By:/s/ Reese F. Cropper, Jr.
Reese F. Cropper, Jr.
Chairman & Chief Executive Officer
Date: November 4, 2005_______ By:/s/ Jennifer G. Hawkins
Jennifer G. Hawkins
Treasurer (Principal Financial Officer)
Page 17
SIGNATURES
Pursuant to the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
Calvin B. Taylor Bankshares, Inc.
Date: November 4, 2005_______ By:/s/ Reese F. Cropper, Jr.
Reese F. Cropper, Jr.
Chairman & Chief Executive Officer
Date: November 4, 2005_______ By:/s/ Jennifer G. Hawkins
Jennifer G. Hawkins
Treasurer (Principal Financial Officer)
Page 18