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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, 2002
Commission File Number: 0001003986
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 October 31, 2002.
Calvin B. Taylor Bankshares, Inc. and Subsidiaries
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
Notes to Financial Statements 7
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operation 8-11
Item 3 Quantitative and Qualitative Disclosures About
Market Risks 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 906, Sarbanes-Oxley Act of 2002) 16
Calvin B. Taylor Bankshares, Inc. and Subsidiaries
Part I - Financial Information
Consolidated Statements of Condition
(unaudited)
September 30 December 31
2002 2001
Assets
Cash and due from banks $ 25,100,100 $ 18,397,266
Federal funds sold 69,862,131 54,389,656
Interest-bearing deposits 1,079,205 879,000
Investment securities available
for sale 4,035,534 3,974,099
Investment securities held to
maturity (approximate fair value
of $113,632,600 and $85,604,100) 112,680,488 84,398,152
Loans, less allowance for credit
losses of $2,170,466 and
$2,195,922 163,707,004 166,501,512
Premises and equipment 5,964,889 5,895,275
Accrued interest income 1,367,886 1,753,816
Deferred income taxes 55,564 134,639
Other assets 487,460 501,152
$ 384,340,261 $ 336,824,567
Liabilities and Stockholders' Equity
Deposits
Noninterest-bearing $ 76,799,536 $ 60,508,663
Interest-bearing 241,397,646 213,640,518
318,197,182 274,149,181
Securities sold under agreements
to repurchase 5,643,474 4,555,323
Accrued interest payable 326,360 529,348
Note payable 203,205 215,702
Accrued income taxes 156,798 2,298
Other liabilities 2,499 130,145
324,529,518 279,581,997
Stockholders' equity
Common stock, par value $1 per
share authorized 10,000,000
shares, 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 38,642,189 36,274,102
59,172,189 56,804,102
Net unrealized gain on securities
available for sale 638,554 438,468
59,810,743 57,242,570
$ 384,340,261 $ 336,824,567
Calvin B. Taylor Bankshares, Inc. and Subsidiaries
Consolidated Statements of Income (unaudited)
For the three months ended
September 30
2002 2001
Interest and dividend revenue
Loans, including fees $ 3,314,206 $ 3,526,900
U.S. Treasury and Agency securities 875,517 894,005
State and municipal securities 50,190 74,748
Federal funds sold 297,203 490,283
Deposits with banks 10,996 11,622
Equity securities 5,143 6,314
Total interest and dividend
revenue 4,553,255 5,003,872
Interest expense
Deposit interest 983,556 1,602,832
Other 12,064 23,843
Total interest expense 995,620 1,626,675
Net interest income 3,557,635 3,377,197
Provision for credit losses - -
Net interest income after
provision for credit losses 3,557,634 3,377,197
Other operating revenue
Service charges on deposit accounts 251,430 199,001
Miscellaneous revenue 130,279 131,250
Total other operating revenue 381,709 330,251
Other expenses
Salaries and employee benefits 844,671 856,231
Occupancy 115,349 128,106
Furniture and equipment 143,871 155,494
Other operating 471,355 388,292
Total other expenses 1,575,246 1,528,123
Income before income taxes 2,364,097 2,179,325
Income taxes 872,100 778,413
Net income $ 1,491,997 $ 1,400,912
Basic earnings per share $ 0.46 $ 0.43
Calvin B. Taylor Bankshares, Inc. and Subsidiaries
Consolidated Statements of Income (unaudited)
For the nine months ended
September 30
2002 2001
Interest and dividend revenue
Loans, including fees $ 9,954,324 $ 10,725,442
U.S. Treasury and Agency securities2,677,533 2,589,108
State and municipal securities 173,349 261,696
Federal funds sold 686,935 1,103,534
Deposits with banks 31,935 35,670
Equity securities 27,249 25,786
Total interest and dividend
revenue 13,551,325 14,741,236
Interest expense
Deposit interest 3,170,983 4,642,570
Other 31,483 55,687
Total interest expense 3,202,466 4,698,257
Net interest income 10,348,859 10,042,979
Provision for credit losses - -
Net interest income after
provision for credit losses 10,348,859 10,042,979
Other operating revenue
Service charges on deposit accounts 723,877 608,122
Miscellaneous revenue 362,833 374,577
Total other operating revenue 1,086,710 982,699
Other expenses
Salaries and employee benefits 2,567,502 2,508,625
Occupancy 339,675 332,793
Furniture and equipment 420,676 445,651
Other operating 1,403,329 1,200,524
Total other expenses 4,731,182 4,487,593
Income before income taxes 6,704,387 6,538,085
Income taxes 2,392,300 2,288,825
Net income $ 4,312,087 $ 4,249,260
Basic earnings per share $ 1.33 $ 1.31
Calvin B. Taylor Bankshares, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (unaudited)
For the nine months ended
September 30
2002 2001
Cash flows from operating activities
Interest received $ 13,838,534 $ 14,847,228
Fees and commissions received 979,903 1,021,867
Interest paid (3,405,454) (4,641,398)
Cash paid to suppliers and
employees (4,311,990) (4,276,194)
Income taxes paid (2,235,847) (2,335,511)
4,865,146 4,615,992
Cash flows from investing activities
Proceeds from maturities of
investment securities 67,142,815 47,747,000
Purchase of investment securities
held to maturity (95,108,703) (57,333,426)
Certificates of deposit purchased,
net of redemptions (200,205) -
Purchases of premises, equipment,
and intangibles (497,903) (750,060)
Loans made, net of principal
collected 2,794,505 705,280
Proceeds from sales of equipment - 17,000
(25,869,491) (9,614,206)
Cash flows from financing activities
Net change in time deposits (5,765,467) 14,054,954
Net change in other deposits 49,813,468 24,546,091
Net change in repurchase agreements 1,088,151 1,995,717
Payment on mortgage obligation (12,498) (11,772)
Dividend paid (1,944,000) -
43,179,654 40,584,990
Net increase (decrease) in cash 22,175,309 35,586,776
Cash and equivalents at beginning
of period 72,786,922 31,499,806
Cash and equivalents at end
of period $ 94,962,231 $ 67,086,582
Reconciliation of net income to net
cash provided from operating activities
Net income $ 4,312,087 $ 4,249,260
Adjustments
Depreciation and amortization 469,571 380,284
Deferred income tax - -
Provision for loan losses - -
Security discount accretion,
net of premium amortization (98,721) (107,873)
(Gain) loss on disposition of assets 5,183 (13,933)
Decrease (increase) in accrued
interest receivable and other
assets 353,157 173,984
Increase (decrease) in accrued
interest payable and other
liabilities (176,131) (65,730)
$ 4,865,146 $ 4,615,992
Calvin B. Taylor Bankshares, Inc. and Subsidiaries
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 nine months
ended September 30, 2002 are not necessarily indicative of the
results that may be expected for the year ending December 31,
2002. For further information, refer to the audited
consolidated financial statements and related footnotes for the
Registrant's fiscal period ended December 31, 2001.
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
stock dividends distributed.
2. Comprehensive Income
Comprehensive income consists of:
Nine months ended
September 30,
2002 2001
Net income $ 4,312,087 $ 4,249,260
Unrealized gain (loss) on
investment securities available
for sale, net of income taxes 200,086 (19,688)
Comprehensive income $ 4,512,173 $ 4,229,572
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, December 31,
2002 2001
Loan commitments $ 22,253,644 $ 15,096,247
Standby letters of credit $ 1,733,677 $ 3,243,063
Calvin B. Taylor Bankshares, Inc. and Subsidiaries
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.
Effective at the close of business on September 26, 2002,
Calvin B. Taylor Bank of Delaware (the "Delaware Bank") was
merged into the Maryland Bank. The Delaware Bank was incorporated
in the state of Delaware in 1997 and opened its only branch in late
second quarter of 1998. The location from which the Delaware Bank
operated is now a branch of the Maryland Bank. No assets,
accounts, or services were abandoned or sold as a result of the
merger. Management believes that operating efficiency of the
overall organization will improve as a result of the merger.
The Company currently engages in no business other than
owning and managing the Maryland Bank.
Financial Condition
Total assets of the Company increased $47.5 million from
December 31, 2001 to September 30, 2002. Combined deposits and
customer repurchase agreements increased $45.1 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 loan repayments from seasonal
business customers, and deposits from summer residents and
tourists. Late in the third quarter, seasonal deposits decline.
Management believes that adverse conditions in the national stock
markets, which were amplified by the terrorist attacks of
September 11, 2001, are contributing to the sustained high level of
deposits in the bank as of September 30, 2002.
During the first nine months of 2002, the bank's loan
portfolio has decreased $2.8 million. Low market rates have
triggered aggressive competition for low rate loans in the bank's
lending area.
The allowance for credit losses represents a reserve for
potential losses in the loan portfolio. The adequacy of the
allowance for credit 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 rests
upon 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 level for the
allowance as a percentage of gross loans is approximately 1.00% to
1.35%. Based on a review of the consolidated loan portfolio, the
Company determined that an allowance of 1.31% of gross loans was
adequate as of September 30, 2002. At December 31, 2001, the
allowance was 1.30% of gross loans. At September 30, 2002, there
were no nonaccruing loans. Loans delinquent ninety days or more and
still accruing totaled $254,012 or .15% of the portfolio.
Liquidity
The company's major sources of liquidity arise from loan
repayments, short-term investments, including federal funds sold,
and an increase 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 63.94% for the third
quarter of 2002 as compared to 57.28% for the second quarter of
2002 and 56.66% for the third quarter of 2001.
Results of Operations
Net income for the three months ended September 30, 2002, was
$1,491,997 or $.46 per share, compared to $1,400,912 or $.43 per
share for the third quarter of 2001. This represents an increase
of $91,085 or 6.50% from the prior year. Year to date net income
increased $62,827 or $.02 per share from $4,249,260 or $1.31 per
share in 2001 to $4,312,087 or $1.33 per share in 2002.
Significant reasons for the year to date increase in net income are
increased net interest income and non-interest income, offset in
part by increased operating expenses.
Net interest income increased $305,880 in the first nine
months of 2002 as compared to the first nine months of 2001. Net
interest income increased $180,437 in the three months ended
September 30, 2002 as compared to the three months ended September
30, 2001. This increase, both year-to-date and for the most recent
quarter, is attributable to rate reductions on interest-bearing
deposits, which offset loan rate reductions. 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 six 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 three
quarters of 2002 or 2001. Net charge-offs during the third
quarter of 2002, and the year-to-date, were ($2,839) and $25,456,
respectively. Net charge-offs during the third quarter of 2001,
and the year-to-date, were $10,143 and $15,623, respectively.
Other operating revenue, including service charges on deposit
accounts, increased $51 thousand from third quarter 2001 to third
quarter 2002. For the year to date, other operating revenue has
increased $104 thousand from 2001 to 2002. Revenue increases are
primarily due to deposit services charges assessed against a larger
deposit base and fee increases placed in effect in May 2002.
Personnel expenses are higher for the nine months ended
September 30, 2002 compared to the same period in 2001 due to
general increases in salaries as well as increased health care
costs. The bank, which hires seasonal employees during the
summer, employed 95 full time equivalent employees as of September
30, 2002. The Company has no employees other than those hired by
the bank.
The Company's occupancy expense increased $7 thousand from
first three quarters of 2001 to 2002. In 2001, the banks changed
their accounting for real property taxes from cash basis to
amortizing the cost throughout the year.
Furniture and equipment expense decreased $25 thousand from
the first three quarters of 2001 to 2002. A significant cause of
this decrease is the reclassification of software maintenance
contract costs from furniture and equipment expense to other
operating expense. The Company replaced its core processing system
in the fourth quarter of 2001 and is experiencing the expected
increases in related depreciation, maintenance costs, and software
amortization expense. Prior to the installation of the new
processing system, improved data storage, networking, and Internet
banking systems were installed. These, too, have caused an
increase in related costs.
Plans of Operation
The bank conducts general commercial banking businesses in
their service areas, 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 banks offer 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 other 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
they originate in their portfolios.
Other bank services include cash management services, safe
deposit boxes, travelers checks, direct deposit of payroll and
social security checks, debit cards, and automatic drafts for
various accounts. The Company is associated with the STAR network
of automated teller machines that may be used by customers
throughout Maryland, Delaware and other regions. The Company
offers credit card services through a correspondent bank.
Capital Resources and Adequacy
Total stockholders' equity increased $2,568,173 from December
31, 2001 to September 30, 2002. 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 a special
cash dividend of $1,944,000 or $.60 per share paid in February
2002.
Under the capital guidelines of the Federal Reserve Board and
the FDIC, the Company and its banks 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 banks
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
September 30, 2002 and 2001 were 38.57% and 32.31%, respectively.
Both are substantially in excess of regulatory minimum
requirements.
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
banks 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, 2002, the Company's interest rate
sensitivity, as measured by gap analysis, showed the Company was
asset-sensitive with a one-year cumulative gap of 17.36%, 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. Both banks have classified their demand mortgage and
commercial loans as immediately repricing. 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.
Calvin B. Taylor Bankshares, Inc. and Subsidiaries
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
The Company held its annual meeting on
May 8, 2002, during which the items detailed in the
proxy statement dated March 15, 2002, 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 15, 2002, is
incorporated by reference.
b) Reports on Form 8-K
There were no reports on Form 8-K filed for the
quarter ended September 30, 2002.
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: _________________ By: /s/ Reese F. Cropper, Jr.
Reese F. Cropper, Jr.,
Chairman & Chief Executive Officer
Date: _________________ By: /s/ Jennifer G. Hawkins
Jennifer G. Hawkins
Treasurer
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 September 30, 2002 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: _________________ By: /s/ Reese F. Cropper, Jr.
Reese F. Cropper, Jr.,
Chairman & Chief Executive Officer
Date: _________________ By: /s/ Jennifer G. Hawkins
Jennifer G. Hawkins
Treasurer
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 subsidiaries, 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: _________________ 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 subsidiaries, 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: _________________ By: /s/ Jennifer G. Hawkins
Jennifer G. Hawkins
Treasurer
(Principal Financial Officer)