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, 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(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
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 July 31, 2003.
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
Item 4 Controls and Procedures 11-12
Part II - Other Information
Item 1 Legal Proceedings 13
Item 2 Changes in Securities and Use of Proceeds 13
Item 3 Defaults Upon Senior Securities 13
Item 4 Submission of Matters to a Vote of
Security Holders 13
Item 5 Other Information 13
Item 6 Exhibits and Reports on Form 8-K 13-16
Signatures 17
Calvin B. Taylor Bankshares, Inc. and Subsidiaries
Part I - Financial Information
Consolidated Balance Sheets
(unaudited)
June December
2003 2002
Assets
Cash and due from banks $ 25,228,850 $ 21,051,412
Federal funds sold 48,407,495 54,821,617
Interest-bearing deposits 1,781,787 1,432,205
Investment securities available
for sale 9,300,622 8,390,550
Investment securities held to
maturity (approximate fair
value of $121,051,099 and
$115,470,092) 120,547,097 114,181,749
Loans, less allowance for loan
losses of $2,183,265 and
$2,181,135 170,139,580 161,824,677
Premises and equipment 6,624,891 5,745,842
Accrued interest income 1,427,590 1,405,587
Other assets 366,368 389,307
$383,824,280 $369,242,946
Liabilities and Stockholders' Equity
Deposits
Noninterest-bearing $ 74,407,473 $ 73,289,541
Interest-bearing 238,748,870 228,205,925
313,156,343 301,495,466
Securities sold under
agreements to repurchase 4,106,858 4,029,100
Pending purchases of investment
securities 2,410,000 2,990,830
Accrued interest payable 179,063 243,468
Note payable 190,133 198,912
Accrued income taxes 89,116 106,514
Other liabilities 347,756 163,370
320,479,269 309,227,660
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 41,590,563 38,788,018
62,120,563 59,318,018
Net unrealized gain on
securities available
for sale 1,224,448 697,268
63,345,011 60,015,286
$383,824,280 $369,242,946
Calvin B. Taylor Bankshares, Inc. and Subsidiaries
Consolidated Statements of Income (unaudited)
For the three months ended June 30,
2003 2002
Interest and dividend revenue
Loans, including fees $ 3,110,407 $ 3,379,640
U.S. Treasury and Agency
securities 704,492 927,630
State and municipal securities 55,940 62,122
Federal funds sold 131,664 169,215
Deposits with banks 10,842 10,417
Equity securities 11,198 6,948
Total interest and dividend
revenue 4,024,543 4,555,972
Interest expense
Deposit interest 553,803 1,027,029
Other 5,293 9,036
Total interest expense 559,096 1,036,065
Net interest income 3,465,447 3,519,917
Provision for loan losses - -
Net interest income after
provision for loan losses 3,465,447 3,519,907
Other operating revenue
Service charges on deposit
accounts 268,079 253,727
Miscellaneous revenue 147,885 138,097
Total other operating revenue 415,964 391,824
Other expenses
Salaries and employee benefits 908,810 858,642
Occupancy 122,068 105,010
Furniture and equipment 121,522 119,319
Other operating 450,971 459,583
Total other expenses 1,603,371 1,542,554
Income before income taxes 2,278,040 2,369,177
Income taxes 828,000 829,000
Net income $ 1,450,040 $ 1,540,177
Basic earnings per share $ 0.45 $ 0.47
Calvin B. Taylor Bankshares, Inc. and Subsidiaries
Consolidated Statements of Income (unaudited)
(Continued)
For the six months ended June 30,
2003 2002
Interest and dividend revenue
Loans, including fees $ 6,137,198 $ 6,640,117
U.S. Treasury and Agency
securities 1,461,355 1,802,016
State and municipal securities 104,985 123,160
Federal funds sold 265,304 389,732
Deposits with banks 20,884 20,939
Equity securities 28,238 22,106
Total interest and dividend
revenue 8,017,964 8,998,070
Interest expense
Deposit interest 1,211,530 2,187,427
Other 11,124 19,418
Total interest expense 1,222,654 2,206,845
Net interest income 6,795,310 6,791,225
Provision for loan losses - -
Net interest income after
provision for loan losses 6,795,310 6,791,225
Other operating revenue
Service charges on deposit
accounts 525,650 472,447
Miscellaneous revenue 263,371 232,555
Total other operating revenue 789,021 705,002
Other expenses
Salaries and employee benefits 1,830,129 1,722,832
Occupancy 250,706 224,326
Furniture and equipment 263,804 276,804
Other operating 875,147 931,975
Total other expenses 3,219,786 3,155,937
Income before income taxes 4,364,545 4,340,290
Income taxes 1,562,000 1,520,200
Net income $ 2,802,545 $ 2,820,090
Basic earnings per share $ 0.86 $ 0.87
Calvin B. Taylor Bankshares, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (unaudited)
For the six months ended June 30,
2003 2002
Cash flows from operating activities
Interest received $ 7,946,860 $ 8,571,635
Fees and commissions received 722,210 704,900
Interest paid (1,287,060) (2,381,486)
Cash paid to suppliers and
employees (2,908,417) (2,895,906)
Income taxes paid (1,579,398) (1,396,787)
2,894,195 2,602,356
Cash flows from investing activities
Proceeds from maturities of
investment securities 58,280,000 34,875,000
Purchase of investment
securities held to
maturity (65,288,219) (43,239,805)
Certificates of deposit
purchased, net of
redemptions (349,582) (100,518)
Purchases of premises, equipment,
and intangibles (1,188,031) (408,542)
Loans made, net of principal
collected (8,314,903) (6,078,348)
Proceeds from sales of equipment - -
(16,860,735) (14,952,213)
Cash flows from financing activities
Net change in time deposits (1,591,962) (6,301,875)
Net change in other deposits 13,252,840 16,668,822
Net change in repurchase
agreements 77,758 (28,825)
Payment on mortgage obligation (8,780) (8,270)
Dividend paid - (1,944,000)
11,729,856 8,385,852
Net increase (decrease) in cash (2,236,684) (3,964,005)
Cash and equivalents at
beginning of period 75,873,029 72,786,922
Cash and equivalents at
end of period $ 73,636,345 $ 68,822,917
Reconciliation of net income to net
cash provided from operating
activities
Net income $ 2,802,545 $ 2,820,090
Adjustments
Depreciation and amortization 317,647 307,928
Deferred income tax - -
Provision for loan losses - -
Security discount accretion,
net of premium amortization (49,101) (50,646)
(Gain) loss on disposition
of assets - 8,343
Decrease (increase) in accrued
interest receivable and
other assets (7,730) (301,856)
Increase (decrease) in accrued
interest payable and
other liabilities (169,166) (181,503)
$ 2,894,195 $ 2,602,356
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 six months ended June 30, 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 stock dividends distributed.
2. Comprehensive Income
Comprehensive income consists of:
Six months ended June 30,
2003 2002
Net income $ 2,802,545 $ 2,820,090
Unrealized gain (loss) on
investment securities
available for sale, net of
income taxes 527,180 34,052
Comprehensive income $ 3,329,725 $ 2,854,142
3. Loan commitments
Loan commitments are agreements to lend to customers as long as there
is no violation of any conditions of the contracts. Outsatnding loan
commitments and letters of credit consist of:
June 30 June 30
2003 2002
Loan commitments $ 25,011,480 $ 2,820,090
Standby letters of credit $ 2,629,094 $ 2,450,483
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. The 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
Total assets of the Company increased $14.6 million from December 31,
2002 to June 30, 2003. Combined deposits and customer repurchase agreements
increased $11.7 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. During the first six months
of 2002 and 2003, this traditional pattern has not applied. Management
believes that adverse conditions in the stock markets have contributed
to unusually large increases in deposits throughout the first halves of
this year and last year.
During the first six months of 2003, the Bank's loan portfolio has
increased $8.3 million. 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.
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 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 its allowance as a percentage
of gross loans range from approximately 1.00% to 1.35%. Based on a review
of the consolidated loan portfolio, the Company determined that an allowance
of 1.27% of gross loans was adequate as of June 30, 2003. At December 31,
2002, the allowance was 1.33% of gross loans. At June 30, 2003, there were
no non-accruing loans. Loans delinquent ninety days or more totaled $373,252
or .22% 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 62.62% for the second quarter of 2003 compared to 62.54% for
the first quarter of 2003 and 57.28% for the second quarter of 2002. This
increase in liquidity is primarily due to the rapid growth in deposits which
has not been accompanied by a corresponding increase in demand for loans.
At June 30, 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 13.29%, 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.
Results of Operations
Net income for the three months ended June 30, 2003, was $1,450,040 or
$.45 per share, compared to $1,540,177 or $.47 per share for the first
quarter of 2002. This represents a decrease of $90,137 or 5.85% from the
prior year. Year to date net income has decreased $17,545 or $.01 per share
from $2,820,090 or $.87 per share in 2002 to $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 $54,460 in the first six months of 2003
as compared to the first six months of 2002. This decrease is attributable
to a falling market rates, which are causing a continuing repricing of
federal funds sold and the Bank's investment portfolio. 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 half of 2003 or 2002.
Loans charged-off, net of recoveries, during the first half of 2003 totaled
$2,130. Loans charged-off, net of recoveries, for the same period in 2002
totaled $20,920.
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 $107.3 thousand, O whoich $51.9 thousand is increased salaries and $35.8
thousand is group insurance premium increases. The Bank employed 97 full
time equivalent employees as of June 30, 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 $56.8 thousand in
other operating expenses. Significant downward variances in postage,
stationery and supplies exoense may be due, in part, to the timing of
payments, in addition to reflecting an effort to reduce unneccesary mailings.
A $16.2 thousand decrease in telephone expense is due to changing vendors.
Teller shortages, net of overages, are down $11.7 thousand due to improved
accuracy and transaction processing with a new teller platform.
Income taxes are $41.8 thousand higher than last year, on a pre-tax
income increase of $24.3 thousand, due to an increase in the Company's
effective tax rate. This is the result of tax-favored income becoming a
smaller percentage of total revenues.
Plans of Operation
The Bank conducts general commercial banking businesses in its service
area, of Worcester County, Maryland and Sussex County, Delaware, while
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 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 it originate in its portfolio.
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 $3,329,725 from December 31, 2002
to June 30, 2003. This increase is attributable to 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.
Tier one risk-based capital ratios of the Company as of June 30,
2003 and 2002 were 36.74% and 36.36%, respectively. Both are substantially
in excess of regulatory minimum requirements.
Website Access to SEC Reports
The Bank maintians an Internet webiste at www.taylorbank.com. The
Company's periodic SEC reports, inclduing annual reports on Form 10-K,
quarterly reports on Form 10-Q, and current reports on Form 8-K, are
accesssible 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.
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 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 7, 2003,
during which the items detailed in the proxy statement
dated March 18, 2003, were approved. This includes
the reelection f 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 18, 2003, 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 17.
b) Reports on Form 8-K
There were no reports on Form 8-K filed for the
quarter ended June 30, 2003.
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 4, 2003 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 4, 2003 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, 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: August 4, 2003 By: /s/ Reese F. Cropper, Jr.
Reese F. Cropper, Jr.,
Chairman & Chief Executive Officer
(Principal Executive Officer)
Date: August 4, 2003 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 4, 2003 By: /s/ Reese F. Cropper, Jr.
Reese F. Cropper, Jr.,
Chairman & Chief Executive Officer
Date: August 4, 2003 By: /s/ Jennifer G. Hawkins
Jennifer G. Hawkins
Treasurer