SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13(a) OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED JUNE 30, 2004
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(a) 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
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 3,217,968 shares of common stock ($1.00
par) outstanding as of July 31, 2004.
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 12
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 and Reports on Form 8-K 14-17
Signatures 18
Calvin B. Taylor Bankshares, Inc. and Subsidiary
Part I - Financial Information
Consolidated Balance Sheets
(unaudited)
June December
2004 2003
Assets
Cash and due from banks $ 18,110,361 $ 20,482,866
Federal funds sold 42,050,901 29,525,781
Interest-bearing deposits 2,143,660 2,281,337
Investment securities available
for sale 9,327,599 9,265,471
Investment securities held to maturity
(approximate fair value of
$146,941,520 and $150,075,210) 147,718,987 149,666,806
Loans, less allowance for loan losses
of $2,190,706 and $2,187,277 163,097,097 162,243,008
Premises and equipment 6,919,445 7,064,970
Accrued interest receivable 1,359,227 1,344,613
Bank owned life insurance 4,135,220 4,054,035
Other assets 595,758 557,514
$395,458,255 $386,486,401
Liabilities and Stockholders' Equity
Deposits
Noninterest-bearing $ 83,250,030 $ 75,601,460
Interest-bearing 239,492,646 242,344,593
322,742,676 317,946,053
Securities sold under agreements to
repurchase 5,566,673 4,113,154
Pending purchases of investment securities 544,786 -
Accrued interest payable 123,992 145,044
Note payable 171,766 181,087
Deferred income taxes 308,577 355,632
Other liabilities 1,065 109,399
329,459,535 322,850,369
Stockholders' equity
Common stock, par value $1 per share
authorized 10,000,000 shares, issued
and outstanding 3,220,748 shares at
June 30,2004 and 3,227,966 shares at
December 31, 2003 3,220,748 3,227,966
Additional paid in capital 16,616,455 16,869,085
Retained earnings 45,105,240 42,391,363
64,942,443 62,488,414
Accumulated other comprehensive income 1,056,277 1,147,618
65,998,720 63,636,032
$395,458,255 $386,486,401
See accompanying Notes to consolidated Financial Statements
Calvin B. Taylor Bankshares, Inc. and Subsidiary
Consolidated Statements of Income (unaudited)
For the three months ended June 30,
2004 2003
Interest and dividend revenue
Loans, including fees $ 2,906,603 $ 3,110,407
U.S. Treasury and Agency securities 662,180 704,492
State and municipal securities 66,339 55,940
Federal funds sold 80,821 131,664
Interest-bearing deposits 11,444 10,842
Equity securities 6,146 11,198
Total interest and dividend revenue 3,733,533 4,024,543
Interest expense
Deposit interest 379,891 553,803
Other 4,330 5,293
Total interest expense 384,221 559,096
Net interest income 3,349,312 3,465,447
Provision for loan losses - -
Net interest income after
provision for loan losses 3,349,312 3,465,447
Non-interest revenue
Service charges on deposit accounts 269,269 268,079
Miscellaneous revenue 196,959 147,885
Total non-interest revenue 466,228 415,964
Non-interest expenses
Salaries 759,793 745,893
Employee benefits 168,735 162,917
Occupancy 144,098 122,068
Furniture and equipment 153,696 121,522
Other operating 478,125 450,971
Total non-interest expenses 1,704,447 1,603,371
Income before income taxes 2,111,093 2,278,040
Income taxes 740,000 828,000
Net income $ 1,371,093 $ 1,450,040
Basic earnings per share $ 0.43 $ 0.45
See accompanying Notes to consolidated Financial Statements
Calvin B. Taylor Bankshares, Inc. and Subsidiary
Consolidated Statements of Income (unaudited)
(Continued)
For the six months ended June 30,
2004 2003
Interest and dividend revenue
Loans, including fees $ 5,812,630 $ 6,137,198
U.S. Treasury and Agency securities 1,335,728 1,461,355
State and municipal securities 126,508 104,985
Federal funds sold 153,362 265,304
Interest-bearing deposits 23,514 20,884
Equity securities 24,913 28,238
Total interest and dividend revenue 7,476,655 8,017,964
Interest expense
Deposit interest 778,455 1,211,530
Other 8,303 11,124
Total interest expense 786,758 1,222,654
Net interest income 6,689,897 6,795,310
Provision for loan losses - -
Net interest income after provision
for loan losses 6,689,897 6,795,310
Non-interest revenue
Service charges on deposit accounts 521,490 525,650
Miscellaneous revenue 364,122 263,371
Total non-interest revenue 885,612 789,021
Non-interest expenses
Salaries 1,533,724 1,493,095
Employee benefits 371,965 337,034
Occupancy 288,931 250,706
Furniture and equipment 280,946 263,804
Other operating 911,066 875,147
Total non-interest expenses 3,386,632 3,219,786
Income before income taxes 4,188,877 4,364,545
Income taxes 1,475,000 1,562,000
Net income $ 2,713,877 $ 2,802,545
Basic earnings per share $ 0.84 $ 0.86
See accompanying Notes to consolidated Financial Statements
Calvin B. Taylor Bankshares, Inc. and Subsidiary
Consolidated Statements of Cash Flows (unaudited)
For the six months ended June 30,
2004 2003
Cash flows from operating activities
Interest received $ 7,461,114 $ 7,946,860
Fees and commissions received 914,244 722,210
Interest paid (807,810) (1,287,060)
Cash paid to suppliers and employees (3,032,817) (2,908,417)
Income taxes paid (1,696,328) (1,579,398)
2,838,403 2,894,195
Cash flows from investing activities
Certificates of deposit purchased, net
of redemptions (3) (349,582)
Purchase of investment securities
available for sale (99,004) (100,000)
Proceeds from maturities of investment
securities held to maturity 54,450,084 58,280,000
Purchase of investment securities held
to maturity (52,057,988) (65,188,219)
Loans made, net of principal collected (854,089) (8,314,903)
Purchases of premises, equipment, and
intangibles (243,441) (1,188,031)
1,195,559 (16,860,735)
Cash flows from financing activities
Net increase (decrease) in
Time deposits (6,821,176) (1,591,962)
Other deposits 11,617,799 13,252,840
Securities purchased under agreements
to repurchase 1,453,519 77,758
Payment on note payable (9,321) (8,780)
Purchases and retirement of common
shares (259,848) -
5,980,973 11,729,856
Net increase (decrease) in cash 10,014,935 (2,236,684)
Cash and equivalents at beginning of
period 50,158,779 75,873,029
Cash and equivalents at end of period $ 60,173,714 $ 73,636,345
Calvin B. Taylor Bankshares, Inc. and Subsidiary
Consolidated Statements of Cash Flows (unaudited)
For the six months ended June 30,
2004 2003
Reconciliation of net income to net cash
provided
By operating activities
Net income $ 2,713,877 $ 2,802,545
Adjustments to reconcile net income to
net cash
Provided by operating activities
Depreciation and amortization 326,500 317,647
Security discount accretion, net of
premium amortization (927) (49,101)
(Gain) loss on disposition of assets 12,815 -
Decrease (increase) in
Accrued interest receivable (14,614) (22,003)
Cash surrender value of bank owned
life insurance (81,185) -
Other assets 11,324 14,273
Increase (decrease) in
Accrued interest payable (21,052) (64,405)
Other liabilities (108,335) (104,761)
$ 2,838,403 $ 2,894,195
Composition of cash and cash
equivalents
Cash and due from banks $ 18,110,361 $ 25,228,850
Federal funds sold 42,050,901 48,407,495
Interest-bearing deposits, except for
time deposits 12,452 -
$ 60,173,714 $ 73,636,345
See accompanying Notes to consolidated Financial Statements
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 have been made. These adjustments are of a normal recurring
nature. Results of operations for the six months ended June 30, 2004 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 2004. For further information, refer to the audited
consolidated financial statements and related footnotes for the Registrant's
year ended December 31, 2003.
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:
2004 2003
Three months ended June 30 3,222,311 3,240,000
Six months ended June 30 3,224,838 3,240,000
2. Comprehensive Income
Comprehensive income consists of:
Six months ended June 30,
2004 2003
Net income $2,713,877 $2,802,545
Unrealized gain (loss) on investment
securities available for sale,
net of income taxes (91,341) 527,180
Comprehensive income $2,622,536 $3,329,725
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:
June 30,
2004 2003
Loan commitments $29,012,919 $25,011,480
Standby letters of credit $ 2,809,485 $ 2,629,094
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. 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 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 $9.0 million from December 31, 2003
to June 30, 2004. Combined deposits and customer repurchase agreements
increased $6.3 million during the same period. 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
deposits from seasonal business customers, summer residents and tourists.
During the first six months of 2003, this traditional pattern did not apply.
Management believes that adverse conditions in the stock markets contributed
to unusually large increases in deposits in the first half of last year.
After nearly three years of unusually large deposit increases, the Bank
appears to be returning to a more historically typical model in 2004.
During the first six months of 2004, the Bank's grossloan portfolio has
increased $864 thousand. Funding for these loans was provided by growth in
deposits. This increase in loans does not negatively impact the Company's
ability to meet liquidity demands.
Historically, the Company has low loan charge-offs. Based on a
review of the consolidated loan portfolio, the Company determined that an
allowance of 1.33% of gross loans was adequate as of June 30, 2004. At
December 31, 2003, the allowance was 1.33% of gross loans. At June 30, 2004,
there was one non-accruing loan with an outstanding principal balance of $3,081.
Loans delinquent ninety days or more totaled $531,105 or .32% of the portfolio.
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 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 65.41% for
the second quarter of 2004 compared to 64.27% for the first quarter of 2004 and
62.62% for the second quarter of 2003. This increase in liquidity is primarily
due to growth in deposits, which has not been accompanied by a corresponding
increase in demand for loans.
Results of Operations
Net income for the three months ended June 30, 2004, was $1,371,093 or
$.43 per share, compared to $1,450,040 or $.45 per share for the second quarter
of 2003. This represents a decrease of $78,947 or 5.44% from the prior year.
Year to date net income has decreased $88,668 or $.02 per share to $2,713,877
or $.84 per share in 2004 from $2,802,545 or $.86 per share in 2003. The key
components of net income are discussed in the following paragraphs.
Net interest income decreased $105,413 in the first six months of 2004
compared to the first six months of 2003. This decrease is attributable to the
fall of market rates throughout 2001 through 2003. Although deposit rates
dropped to the current level in July 2003, the Bank's loan and investment
portfolios have continued to reprice downward. 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 made in the first six months of 2004
or 2003. Net loans charged-off(recovered) were ($3,429) during the first
half of 2004 versus ($2,130) in the same period in 2003.
Miscellaneous non-interest revenues exceed last year-to-date primarily
due to the increase in cash surrender value of bank owned life insurance.
The Bank invested $4 million in life insurance in August 2003. As of
June 30, 2004, the current year increase in cash surrender value is $81.2
thousand.
Non-interest expense variances include a $45.7 thousand increase in group
insurance premiums. The Bank employed 98 full time equivalent employees as of
June 30, 2004. The Bank hires seasonal employees during the summer.
The Company has no employees other than those hired by the Bank.
Non-interest expense variances also include an increase of $35.9 thousand
in other operating expenses. Significant line items variances include a $14.3
thousand increase in correspondent bank fees, and $10.9 thousand in computer
software annual maintenance fees.
Income taxes are $87.0 thousand lower than last year, on a pre-tax income
decrease of $175.7 thousand.
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 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 ATM's,
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 $2,362,688 from December 31, 2003
to June 30, 2004. This increase is attributable to comprehensive income
recorded during the period, as detailed in Note 2 of the Notes to Financial
Statements, reduced by $259,848 used to purchase and retire 7,218 shares of
the Company's common stock. Stock repurchases were at a price of $36.00
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 3%, 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 June 30, 2004
and 2003 were 39.71% and 36.74%, 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.
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 June 30, 2004, the Company's interest rate sensitivity, as measured
by gap analysis, showed the Company was asset-sensitive with a one-year
cumulative gap of 11.47%, 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
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
e) 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
April 2,550 $36.00 2,550 306,348
May 500 $36.00 500 305,348
June 1,100 $36.00 1,100 304,748
Totals 4,150 $36.00 4,150
The Company publicly announced on August 14, 2003, that it would
repurchase up to 10% of its outstanding equity stock at that time, which
equates to a total of 324,000 common shares available for repurchase.
There is no expiration date for this program. No other stock repurchase
plan or program exists at this time, nor has any other plan or program
expired during the period covered by this table.
Item 3 Defaults Upon Senior Securities
Not applicable
Item 4 Submission of Matters to a Vote of Security Holders
The Company held its annual meeting on May 12, 2004, during
which the items detailed in the proxy statement dated March 19,
2004, were approved. This includes the reelection of the Board
of Directors.
Item 5 Other information
Not applicable.
Item 6 Exhibits and Reports on Form 8-K
a) Exhibits
2. Proxy Statement dated March 19, 2004, is incorporated by
reference.
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 14 and 15,
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 16.
b) Reports on Form 8-K
There were no reports on Form 8-K filed for the quarter ended
June 30, 2004.
Exhibit 31
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: August 5, 2004_______ By:/s/ Reese F. Cropper, Jr.
Reese F. Cropper, Jr.
Chairman & Chief
Executive Officer
(Principal Executive Officer)
Exhibit 31
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: August 5, 2004_______ By:/s/ Jennifer G.Hawkins
Jennifer G. Hawkins
Treasurer
(Principal Financial Officer)
Exhibit 32
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 June 30, 2004
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: August 5, 2004_______ By:/s/ Reese F. Cropper,Jr.
Reese F. Cropper, Jr.
Chairman & Chief
Executive Officer
(Principal Executive Officer)
Date: August 5, 2004_______ By:/s/ Jennifer G.Hawkins
Jennifer G. Hawkins
Treasurer
(Principal Financial Officer)
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: August 5, 2004_______ By:/s/ Reese F. Cropper,Jr.
Reese F. Cropper, Jr.,
Chairman & Chief
Executive Officer
Date: August 5, 2004_______ By:/s/ Jennifer G.Hawkins
Jennifer G. Hawkins
Treasurer
(Principal Financial Officer)