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 MARCH 31, 2003
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
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 3,240,000 shares of common stock
($1.00 par) outstanding as of April 30, 2003.
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
Consolidated Statements of Cash Flows 5
Notes to Financial Statements 6
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operation 7-10
Item 3 Quantitative and Qualitative Disclosures
About Market Risks 10
Item 4 Controls and Procedures 11
Part II - Other Information
Item 1 Legal Proceedings 12
Item 2 Changes in Securities and Use of Proceeds 12
Item 3 Defaults Upon Senior Securities 12
Item 4 Submission of Matters to a Vote of
Security Holders 12
Item 5 Other Information 12
Item 6 Exhibits and Reports on Form 8-K 12
Signatures 13
Attachments:
Certification of Principal Executive Officer and
Principal Financial Officer (Section 906,
Sarbanes-Oxley Act of 2002) 14
Certification of Principal Executive Officer
(Section 302, Sarbanes-Oxley Act of 2002) 15
Certification of Principal Financial Officer
(Section 302, Sarbanes-Oxley Act of 2002) 16
Calvin B. Taylor Bankshares, Inc. and Subsidiary
Part I - Financial Information
Consolidated Balance Sheets
(unaudited)
March December
2003 2002
Assets
Cash and due from banks 18,128,997 21,051,412
Federal funds sold 43,560,048 54,821,617
Interest-bearing deposits 1,632,294 1,432,205
Investment securities available
for sale 8,388,060 8,390,550
Investment securities held to
maturity (approximate fair value
of 117,510,526 and 115,470,092) 116,570,170 114,181,749
Loans, less allowance for loan
losses of 2,182,665 and 2,181,135 167,819,932 161,824,677
Premises and equipment 6,096,967 5,745,842
Accrued interest income 1,402,520 1,405,587
Other assets 398,807 389,307
363,997,795 369,242,946
Liabilities and Stockholders' Equity
Deposits
Noninterest-bearing 63,968,675 73,289,541
Interest-bearing 229,535,328 228,205,925
293,504,003 301,495,466
Securities sold under agreements
to repurchase 3,496,842 4,029,100
Pending purchases of investment
securities 4,445,000 2,990,830
Accrued interest payable 204,433 243,468
Note payable 194,555 198,912
Accrued income taxes 742,756 106,514
Other liabilities 59,746 163,370
302,647,335 309,227,660
Stockholders' equity
Common stock, par value $1 per
share authorized 10,000,000 shares,
issued and issued and outstanding
3,240,000 shares 3,240,000 3,240,000
Additional paid in capital 17,290,000 17,290,000
Retained earnings 40,140,523 38,788,018
60,670,523 59,318,018
Net unrealized gain on securities
available for sale 679,937 697,268
61,350,460 60,015,286
363,997,795 369,242,946
Calvin B. Taylor Bankshares, Inc. and Subsidiary
Consolidated Statements of Income (unaudited)
For the three months ended March 31,
2003 2002
Interest and dividend revenue
363,997,795 369,242,946
Loans, including fees 3,026,791 3,260,478
U.S. Treasury and Agency securities 756,863 874,386
State and municipal securities 49,045 61,038
Federal funds sold 133,640 220,517
Deposits with banks 10,042 10,522
Equity securities 17,040 15,158
Total interest and dividend revenue 3,993,421 4,442,099
Interest expense
Deposit interest 657,727 1,160,399
Other 5,830 10,382
Total interest expense 663,557 1,170,781
Net interest income 3,329,864 3,271,318
Provision for loan losses - -
Net interest income after
provision for loan losses 3,329,864 3,271,318
Other operating revenue
Service charges on deposit accounts 257,571 218,719
Miscellaneous revenue 115,485 94,458
Total other operating revenue 373,056 313,177
Other expenses
Salaries and employee benefits 921,320 864,189
Occupancy 128,638 119,316
Furniture and equipment 142,282 157,485
Other operating 424,175 472,392
Total other expenses 1,616,415 1,613,382
Income before income taxes 2,086,505 1,971,113
Income taxes 734,000 691,200
Net income 1,352,505 1,279,913
Basic earnings per share 0.42 0.40
Calvin B. Taylor Bankshares, Inc. and Subsidiary
Consolidated Statements of Cash Flows (unaudited)
For the three months ended March 31,
2003 2002
Cash flows from operating activities
Interest received 3,961,786 4,454,002
Fees and commissions received 372,813 313,169
Interest paid (702,594) (1,242,958)
Cash paid to suppliers and employees (1,538,160) (1,556,159)
Income taxes paid (97,758) (2,679)
1,996,087 1,965,375
Cash flows from investing activities
Proceeds from maturities of
investment securities held to
maturity 29,910,000 17,365,000
Purchase of investment securities
held to maturity (30,835,292)(20,481,124)
Purchases of premises, equipment,
and intangibles (531,356) (291,262)
Loans made, net of principal
collected (5,995,255) (1,110,602)
(7,451,903) (4,517,988)
Cash flows from financing activities
Net change in time deposits (1,346,600)(23,586,913)
Net change in other deposits (6,644,863) 24,514,861
Net change in repurchase agreements (532,258) (8,441)
Payment on mortgage obligation (4,357) (4,104)
Dividend paid - (1,944,000)
(8,528,078) (1,028,597)
Net increase (decrease) in cash (13,983,894) (3,581,210)
Cash and equivalents at beginning of
period 75,873,029 72,786,922
Cash and equivalents at end of period 61,889,135 69,205,712
Reconciliation of net income to net
cash provided from operating activities
Net income 1,352,505 1,279,913
Adjustments
Depreciation and amortization 168,492 153,964
Security discount accretion, net
of premium amortization (34,702) (27,881)
(Gain) loss on disposition of assets - 8,343
Decrease (increase) in accrued interest
receivable and other assets (53,946) 65,844
Increase (decrease) in accrued
interest payable and other
liabilities 563,738 485,192
1,996,087 1,965,375
Calvin B. Taylor Bankshares, Inc. and Subsidiary
Notes to Financial Statements
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 of financial position and results of operations
have been made. These adjustments are of a normal recurring nature.
Results of operations for the three months ended March 31, 2003 are
not necessarily indicative of the results that may be expected for
the year ending December 31, 2003. For further information, refer
to the audited consolidated financial statements and related
footnotes for the Registrant's fiscal period ended December 31, 2002.
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 and overnight
investments in federal funds sold.
Per share data
Earnings per common share and dividends per common share are
determined by dividing net income and dividends by the 3,240,000
shares outstanding, giving retroactive effect to the stock dividends
distributed.
2. Comprehensive Income
Comprehensive income consists of:
For the three months ended March 31,
2003 2002
Net income 1,352,505 1,279,913
Unrealized gain (loss) on investment
securities available for sale, net
of income taxes (17,331) (34,183)
Comprehensive income 1,335,174 1,245,730
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:
March 31, December 31,
2003 2002
Loan commitments 22,091,092 22,434,081
Standby letters of credit 1,914,777 1,726,127
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 "Maryland Bank"), a
commercial bank that was established in 1890 and incorporated under the
laws of the State of Maryland on December 17, 1907. This bank operates
nine banking offices in Worcester County, Maryland and one banking office
in Ocean View, Delaware. The Bank's administrative office is located in
Berlin, Maryland.
The Maryland 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 Maryland Bank.
Financial Condition, Liquidity and Sources of Capital
Total assets of the Company decreased $5.2 million from December 31,
2002 to March 31, 2003. During the first quarter of the 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 loan repayments from seasonal business customers, and deposits
from summer residents and tourists.
During the first quarter of 2003, the Bank's loan portfolio increased
$6.0 million. Funding for these loans was provided primarily by a
reduction in overnight federal funds sold. As loans earn at a higher
rate than federal funds sold, this shift has a positive impact on earnings.
The allowance for loan losses represents a reserve for potential
losses in the loan portfolio. The adequacy of the allowance for loan
losses is evaluated periodically based on a review of all significant
loans, 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 and anticipated changes in the composition and size of the
portfolio, as well as assumptions about the economy. Historically,
the Company has low loan charge-offs. The Bank's target levels for the
allowance as a percentage of gross loans range from approximately 1.00% to
Financial Condition, Liquidity and Sources of Capital (continued)
1.35%. Based on review of the consolidated loan portfolio, the Company
determined that an allowance of 1.28% of gross loans was adequate as of
March 31, 2003. At December 31, 2002, the allowance was 1.33% of gross
loans. At March 31, 2003, there were no non-accruing loans and loans
delinquent ninety days or more, excluding non-accruing loans, totaled
$227,041 or .13% of the portfolio.
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 start repaying 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 62.54% for
the first quarter of 2003, compared to 58.36% for the first quarter of
2002.
At March 31, 2003, the Company's interest rate sensitivity, as
measured by gap analysis, showed the Company was asset-sensitive with
a one-year cumulative gap of 12.86%, 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.
Tier one risk-based capital ratios of the Company as of March 31,
2003 and 2002 were 38.89% and 34.60%, respectively. Both are
substantially in excess of regulatory minimum requirements.
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.
Net income for the three months ended March 31, 2003, was $1,352,505
or $.42 per share, compared to $1,279,913 or $.40 per share for the first
quarter of 2002. This represents an increase of $72,592. The primary
reasons for the increase in net income are higher net interest income
and other operating revenues. Net interest income increased $58,546 in
the first quarter of 2003 as compared to the first quarter of 2002 due an
improved interest spread and higher balances of both interest-earning assets
and interest-bearing liabilities. Although rates on both assets and
liabilities are lower than they were for the same period last year, the Bank
has tried to maintain loan rates while making timely reductions in deposit
rates in response to market conditions. Market rate reductions have also
diminished rates of return on federal funds sold and investment securities.
Results of Operations (continued)
Net interest income of the company is one of the most important
factors in evaluating the financial performance of the Company. The
Company 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 made in the first quarters of 2003
or 2002. Loans charged-off during the first quarter of 2003 totaled
$1,736. Loans charged-off during the first quarter of 2002 totaled $7,775.
Other operating revenues exceed last year primarily due to additional
activity fees on a larger deposit portfolio and increases to the Bank's fee
schedule in Spring 2002.
Other expense variances include an increase in salaries and benefits
of $57.1 thousand, of which $32.3 thousand is increased salaries. The Bank
employed 97 full time equivalent employees as of March 31, 2003. The Bank
hires seasonal employees during the summer. The Company has no employees
other than those hired by the Bank.
Other expense variances also include a decrease of $48.2 thousand in
other operating expenses. Significant downward variances in postage and
stationery & supplies expense may be due, in part, to the timing of
payments, in addition to reflecting an effort to reduce unnecessary mailings.
A $16.9 thousand decrease in telephone expense is due to changing vendors.
Income taxes are $42,800 higher than last year, on a pre-tax income
increase of $115,392.
Plans of Operation
The Bank conducts general commercial banking businesses in its
service area of Worcester County, Maryland and Sussex County, Delaware,
while also emphasizing the banking needs of individuals and small- to
medium-sized businesses and professional concerns. The Bank offers a full
range of federally insured deposit services that are typically available in
most banks and savings and loan associations, including checking accounts,
NOW accounts, savings accounts and time deposits of various types ranging
from daily money market accounts to longer-term certificates of deposit.
The Company, through the Bank, offers a full range of short- to medium-
term commercial and personal loans, and originates mortgage loans, including
real estate construction and acquisition loans. The Bank has the intent and
the ability to hold loans that their portfolios.
Other bank services include cash management services, 24-hour ATM's,
credit cards, debit cards, safe deposit boxes, travelers' checks, direct
deposit of payroll and social security checks, and automatic drafts for
various accounts. 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 $1,335,174 from December 31,
2002 to March 31, 2003. This change is attributable to the comprehensive
income recorded during the period, as detailed in Note 2 of the Notes to
Financial Statements.
Under the capital guidelines of the Federal Reserve Board and the FDIC,
the Company and the 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 common shareholders' equity, qualifying perpetual
preferred stock, and minority interests in equity accounts of consolidated
subsidiaries, less certain intangibles. In addition, the Company and the
Bank must maintain a minimum Tier 1 leverage ratio (Tier 1 capital to total
assets) of at least 3%, but this minimum ratio is increased by 100 to 200
basis points for other than the highest-rated institutions.
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.
Item 4. Controls and procedures
Within the ninety days prior to the date of this report,
the Company's management performed an evaluation of the
effectiveness of the design and operation of the Company's
disclosure controls and procedures and its internal controls
and procedures for financial reporting. Disclosure Controls
are procedures that are designed to ensure that information
required to be disclosed in the Company's publicly filed
reports is reported in a timely manner. As part of these
controls, Management reviews information gathered through
systems developed for that purpose to determine the nature
of required disclosure.
Internal controls are procedures designed to provide
management with reasonable assurance that assets are safeguarded,
and that transactions are properly authorized, executed, and
recorded to permit the preparation of financial statements in
accordance with generally accepted accounting principles.
Because of inherent limitations in any internal controls,
errors or irregularities may occur and not be detected. 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.
The Chief Executive Officer and the Treasurer of the
Company have concluded, based on the evaluation of disclosure
controls and internal controls that the financial information
and disclosures included in periodic SEC filings and the Company's
financial statements are fairly presented in conformity with
generally accepted accounting principles.
Changes in Internal Controls
There were no significant changes in the company's internal
controls or in other factors that could significantly affect
internal controls, including corrective actions with regard to
significant deficiencies and material weaknesses.
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
Not applicable
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
Not applicable.
Item 6 Exhibits and Reports on Form 8-K
a) Exhibits
Proxy Statement dated March 18, 2003, is
incorporated by reference.
b) Reports on Form 8-K
There were no reports on Form 8-K filed for the
quarter ended March 31, 2003.
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: May 9, 2003 By:/s/Reese F. Cropper, Jr.
Reese F. Cropper, Jr.,
Chairman & Chief Executive Officer
(Principal Executive Officer)
Date: May 9, 2003 By:/s/Jennifer G. Hawkins
Jennifer G. Hawkins
Treasurer
(Principal Financial Officer)
Certification of Principal Executive Officer and Principal
Financial Officer 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 March 31, 2003 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: May 9, 2003 By:/s/Reese F. Cropper, Jr.
Reese F. Cropper, Jr.,
Chairman & Chief Executive Officer
(Principal Executive Officer)
Date: May 9, 2003 By:/s/Jennifer G. Hawkins
Jennifer G. Hawkins
Treasurer
(Principal Financial Officer)
Certification of Principal Executive Officer
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 quarterly 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 quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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
quarterly 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) for the registrant and we have:
a. designed such disclosure controls and procedures 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 quarterly report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of the
quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, 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 in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and
6. The registrant's other certifying officers and I have indicated in the
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Calvin B. Taylor Bankshares, Inc.
Date: May 9, 2003 By:/s/Reese F. Cropper, Jr.
Reese F. Cropper, Jr.,
Chairman & Chief Executive Officer
(Principal Executive Officer)
Certification of Principal Financial Officer
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 quarterly 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 quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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
quarterly 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) for the registrant and we have:
a. designed such disclosure controls and procedures 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 quarterly report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of the
quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, 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 in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and
6. The registrant's other certifying officers and I have indicated in the
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Calvin B. Taylor Bankshares, Inc.
Date: May 9, 2003 By:/s/Jennifer G. Hawkins
Jennifer G. Hawkins
Treasurer
(Principal Financial Officer)