SUFFOLK, Va., Oct. 22, 2015 (GLOBE NEWSWIRE) -- Hampton Roads based TowneBank (the “Bank”) (NASDAQ:TOWN) reported earnings of $17.57 million for the quarter ended September 30, 2015, a 44.86% increase, or $5.44 million, over the $12.13 million reported for the comparative period in 2014. Fully diluted earnings per share were $0.34 per share unchanged from $0.34 per share for the comparative period of 2014.
Earnings for the year-to-date period increased 42.89% to $49.92 million as compared to the $34.93 million earned in the same period of 2014, while fully diluted earnings per share were $0.98 per share unchanged from comparative 2014. Earnings per share were affected in 2015 by the issuance of 15.55 million new common shares in conjunction with the acquisition of Franklin Financial Corporation (“Franklin”) on January 2, 2015.
The Bank’s common dividend was $0.12 per share for the quarter with the common dividend totaling $6.19 million. The current dividend represents an increase of 9.1% over the dividend paid during the same quarter of 2014.
“We are pleased to report another quarter of strong earnings, as we continue to see benefits and positive momentum from our entry into the Richmond, Virginia market, coupled with good growth in the Hampton Roads market,” said G. Robert Aston, Jr., Chairman and Chief Executive Officer. “Our revenue increased $12.79 million, or 20.25%, from the third quarter of 2014 while producing a return on average assets of 1.14% and a return on average tangible equity of 11.25%.
Third Quarter 2015 Performance Highlights
- Total revenues were $75.97 million, an increase of $12.79 million, or 20.25%, compared to the third quarter of 2014
- Taxable equivalent net interest margin was 3.40%, including accretion of 0.06%, compared to 3.32% for third quarter 2014
- Residential mortgage banking income increased 5.14% from third quarter 2014 to $8.26 million on production volume of $434.82 million
- Insurance commissions increased 9.58% to $9.71 million
- Noninterest income was 39.89% of total revenue in third quarter 2015
- Loans held for investment increased $845.96 million, or 24.03%, from September 30, 2014 with organic growth of $395.34 million, an increase of 11.23%, including $118.67 million of new loan originations in Richmond
- Total deposits were $4.79 billion, an increase of $937.95 million, or 24.36%, from the third quarter of 2014
- Noninterest bearing deposits increased by 16.06%, to $1.45 billion
- Average interest-bearing deposit costs were 0.58%, up 6 basis points from the prior year
- Noninterest bearing deposits were 30.20% of total deposits compared to 32.36% at September 30, 2014
- Total cost of deposits increased to 0.41% from 0.35% at September 30, 2014 reflective of a greater mix of savings deposits acquired in the Franklin merger
- Asset quality showed continued strength
- Nonperforming assets were $47.99 million, or 0.78% of total assets compared to 0.88% at September 30, 2014
- Nonperforming loans of $8.48 million were 0.19% of period end loans
- Foreclosed property of $39.51 million, including $6.21 million acquired in the Franklin merger
- Performing troubled debt restructurings decreased $9.86 million
- The Bank remained well-capitalized
- Common equity tier 1 capital ratio of 12.52%
- Tier 1 leverage capital ratio of 10.93%
- Tier 1 risk-based capital ratio of 12.62%
- Total risk-based capital ratio of 13.35%
- Tangible book value increased to $12.25
Net Interest Income
Third Quarter 2015 compared to Third Quarter 2014
Net interest income increased to $45.67 million, an $8.80 million, or 23.88%, increase from the third quarter of 2014. The primary driver of the increase was the significant increase in earning assets from the Franklin merger along with the restructuring of the Franklin balance sheet. Average earning assets increased $1.05 billion, or 22.94%, from the third quarter of 2014. Contributing to the increase was an 8 basis point widening of the tax-equivalent net interest margin to 3.40% in the current quarter from 3.32% in the third quarter of 2014. Accretion income added $0.68 million, or 6 basis points, to margin in the current quarter.
Third Quarter 2015 compared to Second Quarter 2015
On a linked quarter basis, net interest income increased slightly by $0.79 million, or 1.75%, in third quarter 2015 versus second quarter 2015, while tax-equivalent net interest margin was 3.40% down 12 basis points from the second quarter of 2015.
Noninterest Income
| | | | | | | | % Change |
| | Q3 | | Q3 | | Q2 | | Q3 15 vs. | | Q3 15 vs. |
| (in millions) | 2015 | | 2014 | | 2015 | | Q3 14 | | Q2 15 |
| Residential mortgage banking income, net | $ | 8,262 | | | $ | 7,858 | | | $ | 10,251 | | | 5.14 | % | | (19.40 | )% |
| Real estate brokerage and property management, net | 5,349 | | | 3,645 | | | 4,584 | | | 46.75 | % | | 16.69 | % |
| Insurance commissions and other title fees and income, net | 9,710 | | | 8,861 | | | 9,885 | | | 9.58 | % | | (1.77 | )% |
| Service charges on deposit accounts | 2,388 | | | 2,406 | | | 2,326 | | | (0.75 | )% | | 2.67 | % |
| Credit card merchant fees, net | 823 | | | 927 | | | 566 | | | (11.22 | )% | | 45.41 | % |
| Other income | 3,036 | | | 2,572 | | | 5,354 | | | 18.04 | % | | (43.29 | )% |
| Subtotal before gain on investment securities | 29,568 | | | 26,269 | | | 32,966 | | | 12.56 | % | | (10.31 | )% |
| Net gain on investment securities | 736 | | | 44 | | | 119 | | | N/M | | | 518.49 | % |
| Total noninterest income | $ | 30,304 | | | $ | 26,313 | | | $ | 33,085 | | | 15.17 | % | | (8.41 | )% |
Third Quarter 2015 compared to Third Quarter 2014
Noninterest income, excluding gains or losses on investment securities, was $29.57 million for the third quarter of 2015, an increase of $3.30 million, or 12.56%, from the third quarter of 2014. The majority of the increase from the comparative period in 2014 is attributable to real estate brokerage and property management income, which increased $1.70 million, or 46.75%, from the third quarter of 2014 primarily due to the acquisition of a resort property management company in Hilton Head, South Carolina in fourth quarter 2014 and was partially offset by the sale of our North Carolina-based property management business on April 1, 2015, which generated management fee revenue of $1.36 million in third quarter 2014. Residential mortgage banking income increased $0.40 million, or 5.14%, from third quarter 2014 due to slightly improved production volumes and pricing. Mortgage production was $434.82 million in the third quarter of 2015, which was $72.28 million greater than third quarter 2014. Also contributing to the increase were insurance commissions, which increased $0.85 million, or 9.58%, primarily due to the acquisition of two insurance agencies in February 2015 and one agency in September 2015.
Third Quarter 2015 compared to Second Quarter 2015
In comparison to the second quarter of 2015, noninterest income, excluding gains or losses on investment securities, decreased $3.40 million, or 10.31%. Residential mortgage banking income decreased by $1.99 million, or 19.40%, from the second quarter of 2015 as mortgage production saw a seasonally driven decrease of $31.41 million and a drop in the value of rate lock commitments of $0.46 million recorded as of September 30, 2015 led to a decrease in mortgage banking income, as compared to an increase due to the value of rate lock commitments of $0.22 million recognized for the quarter ended June 30, 2015. Also contributing to the decrease from the linked quarter were nonrecurring gains recorded in other noninterest income in second quarter of $1.36 million on the sale of our North Carolina-based property management business and $0.57 million on the sale of land in Virginia Beach. Insurance commissions decreased slightly due to seasonal decreases in policy renewals. Partially offsetting the decrease from the linked quarter was an increase in real estate brokerage and property management income, which was positively affected by a seasonal increase related to our resort property management business.
Noninterest Expense
| | | | | | | | % Change |
| | Q3 | | Q3 | | Q2 | | Q3 15 vs. | | Q3 15 vs. |
| (in millions) | 2015 | | 2014 | | 2015 | | Q3 14 | | Q2 15 |
| Salaries and benefits | $ | 28,910 | | | $ | 25,080 | | | $ | 26,544 | | | 15.27 | % | | 8.91 | % |
| Occupancy expense | 4,703 | | | 4,618 | | | 4,856 | | | 1.84 | % | | (3.15 | )% |
| Furniture and equipment | 2,211 | | | 2,040 | | | 2,369 | | | 8.38 | % | | (6.67 | )% |
| Acquisition-related expenses | 243 | | | 1,090 | | | 370 | | | (77.71 | )% | | (34.32 | )% |
| Other | 13,839 | | | 11,326 | | | 14,928 | | | 22.19 | % | | (7.30 | )% |
| Total noninterest expense | $ | 49,906 | | | $ | 44,154 | | | $ | 49,067 | | | 13.03 | % | | 1.71 | % |
Third Quarter 2015 compared to Third Quarter 2014
Noninterest expense increased by $5.75 million, or 13.03%, from the comparative quarter of 2014. Driving the increase were operating expenses of $2.75 million related to the Franklin merger. Additionally, operating expenses increased $1.67 million due to our insurance acquisitions in 2015 and resort property management acquisition in fourth quarter 2014. Excluding operating expenses associated with acquired companies and acquisition related expenses our expenses increased $1.13 million, or 2.57%, reflecting our continued focus on operational efficiencies.
Third Quarter 2015 compared to Second Quarter 2015
Noninterest expense increased by $0.84 million, or 1.71%, from the second quarter of 2015. Driving the increase were salary and benefits expenses, which increased by $2.37 million due to higher employee incentive compensation and annual salary adjustments effective July, 1, 2015. These expenses were partially offset by broad decreases in other expenses.
Segment Results
| | | | | | | | | $ Change |
| (in millions) | | Q3 | | Q3 | | Q2 | | Q3 15 vs. | | Q3 15 vs. |
| Segment Net Income | | 2015 | | 2014 | | 2015 | | Q3 14 | | Q2 15 |
| Banking | | $ | 14,148 | | | $ | 9,569 | | | $ | 13,067 | | | $ | 4,579 | | | $ | 1,081 | |
| Realty | | 2,345 | | | 1,532 | | | 3,727 | | | 813 | | | (1,382 | ) |
| Insurance | | 1,073 | | | 1,025 | | | 1,018 | | | 48 | | | 55 | |
| Total net income | | $ | 17,566 | | | $ | 12,126 | | | $ | 17,812 | | | $ | 5,440 | | | $ | (246 | ) |
Banking
Third Quarter 2015 compared to Third Quarter 2014
Net income for the three months ended September 30, 2015 for the Banking segment was $14.15 million, increasing $4.58 million, or 47.85%, from the comparative 2014 quarter. The increase in earnings was driven by an increase in net interest income of $8.40 million, primarily due to the increase in earning assets acquired in the Franklin merger and 2015 growth in Hampton Roads. Also contributing to the increase was a decrease in the loan loss provision driven by a reduction in historical loss ratios and an increase in gains from the sales of investment securities. The increases in income were partially offset by higher noninterest expenses related to the Franklin merger, increases in personnel costs, and the opening of a new banking office in May 2015.
Third Quarter 2015 compared to Second Quarter 2015
The increase in earnings of $1.08 million, or 8.27% from the second quarter of 2015 was driven by an increase in revenue due to a combination of higher net interest income of $0.67 million, which was primarily due to loan growth, and an increase in gains on the sale of investment securities of $0.62 million, partially offset by a second quarter gain of $0.57 million on the sale of land owned by the Bank. Also contributing was a decrease in the loan loss provision primarily due to a reduction in historical loss ratios. The increases were partially offset by an increase in noninterest expenses of $1.07 million as higher personnel costs more than offset decreases in occupancy expenses, charitable contributions, and advertising and marketing expenses.
Realty
Third Quarter 2015 compared to Third Quarter 2014
For the three months ended September 30, 2015, the Realty segment had net income of $2.35 million, an increase of $0.81 million compared to the third quarter of 2014. The improvement was driven by an increase in residential mortgage banking income of $0.61 million, or 7.70%, and an increase in property management fees of $1.66 million, or 97.18%. The increase in property management fees was primarily due to our purchase of Beach Properties on October 1, 2014, which generated management fee revenue of $2.95 million in third quarter 2015 and was partially offset by a decrease in fee revenue of $1.36 million, which was generated in third quarter 2014 by our previously-held North Carolina-based property management business, which was sold on April 1, 2015.
Third Quarter 2015 compared to Second Quarter 2015
Net income in the Realty segment decreased by $1.38 million from the linked quarter ended June 30, 2015. The decrease resulted from a combination of a seasonal reduction in residential mortgage banking income of $1.92 million and the inclusion in second quarter of the nonrecurring gain of $1.36 million on the sale of our North Carolina-based property management business, partially offset by related expenses of $0.24 million. The reduction in earnings was partially offset by an increase in property management fees of $0.74 million.
Insurance
Third Quarter 2015 compared to Third Quarter 2014
The Insurance segment had net income of $1.07 million for the three months ended September 30, 2015, an increase of $0.05 million as compared to the third quarter of 2014. Increases in property and casualty commissions and contingency and bonus revenues outpaced increases in personnel costs and other noninterest expenses. Increases to corporate allocation expenses and noninterest expenses, such as 401(k) expense, acquisition-related expense, amortization expense, and other loss expenses, were responsible for an increase in expenses of $0.34 million and $1.17 million for the three and nine months ended September 30, 2015, respectively. The insurance agency acquisitions in the first and third quarters of 2015 resulted in additional commissions and fee revenue of $0.40 million and additional $0.40 million of noninterest expenses, including acquisition-related expenses.
Third Quarter 2015 compared to Second Quarter 2015
Net income increased $0.06 million from the second quarter of 2015. The increase from the linked quarter was driven by an increase in employee benefits commission income of $0.11 million and an increase in specialized benefit services commission revenue of $0.01 million, which was partially offset by a seasonal decrease in property and casualty commissions of $0.15 million.
As previously announced, the Bank acquired two insurance agencies on October 1, 2015, which in combination with the agency acquired on September 1, 2015, serve to further our expansion in Richmond and the communities of central Virginia.
Balance Sheet
At September 30, 2015, total Bank assets reached $6.17 billion, an increase of $1.20 billion, or 24.16%, over September 30, 2014.
Loans
| | | | | | | | % Change |
| | Q3 | | Q3 | | Q2 | | Q3 15 vs. | | Q3 15 vs. |
| (in thousands) | 2015 | | 2014 | | 2015 | | Q3 14 | | Q2 15 |
| Construction and land development | $ | 554,753 | | | $ | 476,379 | | | $ | 554,053 | | | 16.45 | % | | 0.13 | % |
| Commercial real estate - investment related properties | 1,020,860 | | | 701,286 | | | 987,945 | | | 45.57 | % | | 3.33 | % |
| Commercial real estate - owner occupied | 775,290 | | | 749,985 | | | 760,622 | | | 3.37 | % | | 1.93 | % |
| Multifamily real estate | 138,954 | | | 53,368 | | | 137,378 | | | 160.37 | % | | 1.15 | % |
| 1-4 family residential real estate | 965,559 | | | 833,208 | | | 948,138 | | | 15.88 | % | | 1.84 | % |
| Commercial and industrial business loans | 790,614 | | | 644,528 | | | 732,936 | | | 22.67 | % | | 7.87 | % |
| Consumer loans and other | 121,009 | | | 62,321 | | | 107,055 | | | 94.17 | % | | 13.03 | % |
| Total | $ | 4,367,039 | | | $ | 3,521,075 | | | $ | 4,228,127 | | | 24.03 | % | | 3.29 | % |
The Bank’s loan portfolio ended the period at $4.37 billion representing an increase of 24.03%, or $845.96 million, from the prior year and an increase of 3.29%, or $138.91 million, from June 30, 2015. Organic growth in 2015, including the effect of loan transfers to OREO, was $349.15 million, or 12.91% on an annualized basis. Included in this growth were new originations of $118.67 million in our Richmond market.
Deposits
| | | | | | | | % Change |
| | Q3 | | Q3 | | Q2 | | Q3 15 vs. | | Q3 15 vs. |
| (in thousands) | 2015 | | 2014 | | 2015 | | Q3 14 | | Q2 15 |
| Noninterest-bearing demand | $ | 1,445,978 | | | $ | 1,245,925 | | | $ | 1,363,551 | | | 16.06 | % | | 6.05 | % |
| Interest-bearing: | | | | | | | | | |
| Demand and money market accounts | 1,676,623 | | | 1,309,085 | | | 1,680,038 | | | 28.08 | % | | (0.20 | )% |
| Savings | 295,952 | | | 306,811 | | | 300,203 | | | (3.54 | )% | | (1.42 | )% |
| Certificates of deposits | 1,369,325 | | | 988,111 | | | 1,342,860 | | | 38.58 | % | | 1.97 | % |
| Total | $ | 4,787,878 | | | $ | 3,849,932 | | | $ | 4,686,652 | | | 24.36 | % | | 2.16 | % |
The Bank continued to experience solid deposit growth with total deposits increasing to $4.79 billion, up $937.95 million, or 24.36%, from September 30, 2014. The increase was mostly due to the deposits acquired in the Franklin merger and Hampton Roads market growth. The Bank saw continued growth in noninterest bearing demand deposits, which ended the quarter at $1.45 billion, a 16.06% increase from September 30, 2014. Noninterest deposits represented 30.20% of total deposits at September 30, 2015. The slight percentage decline from September 30, 2014 was a result of the funding mix in the acquired Franklin deposits.
Capital Ratios
| | | Q3 | | Q3 | | Q2 |
| | | 2015 | | 2014 | | 2015 |
| Common Equity Tier 1 (a) | | 12.52 | % | | N/A | | | 12.96 | % |
| Tier 1 (a) | | 12.62 | % | | 12.88 | % | | 13.07 | % |
| Total (a) | | 13.35 | % | | 13.84 | % | | 13.84 | % |
| Tier 1 leverage ratio (a) | | 10.93 | % | | 10.04 | % | | 11.12 | % |
| | | | | | | | | | |
(a) Basel III rules became effective January 1, 2015, with transitional provisions. All prior year data is based on Basel I rules
The Bank’s total equity at September 30, 2015 rose to $816.07 million, an increase of $202.66 million, or 33.04%, from September 30, 2014. Common equity increased 52.95%, or $279.43 million, as the Bank issued common stock in the amount of $238.66 million in the Franklin merger and redeemed in full its $76.46 million of outstanding Non-Cumulative Convertible Preferred Stock, Series C issued to the U.S. Treasury under the Small Business Lending Fund during first quarter 2015. Total risk-based capital remained strong as total risk-based capital, Tier 1 capital, Tier 1 leverage ratios, and common equity Tier 1 capital ratios were 13.35%, 12.62%, 10.93%, 12.52%, respectively. All ratios exceed the current regulatory standards for well capitalized status.
Asset Quality
| | | | | | | | | | |
| (in thousands) | 9/30/2015 | | 6/30/2015 | | 3/31/2015 | | 12/31/2014 | | 9/30/2014 |
| | | | | | | | | | |
| Nonperforming loans | $ | 8,477 | | | $ | 7,455 | | | $ | 7,045 | | | $ | 6,741 | | | $ | 5,853 | |
| | | | | | | | | | |
| Foreclosed property | 39,509 | | | 46,154 | | | 51,698 | | | 35,116 | | | 37,951 | |
| | | | | | | | | | |
| Total nonperforming assets | $ | 47,986 | | | $ | 53,609 | | | $ | 58,743 | | | $ | 41,857 | | | $ | 43,804 | |
| | | | | | | | | | |
| Quarterly net loans charged off | $ | 69 | | | $ | 339 | | | $ | 333 | | | $ | 262 | | | $ | 602 | |
| | | | | | | | | | |
| Year-to-date net loans charged off | $ | 741 | | | $ | 672 | | | $ | 333 | | | $ | 2,955 | | | $ | 2,694 | |
Continued improvements in credit quality contributed to the Bank's financial results as net charge-offs decreased to $0.07 million in the third quarter of 2015 compared to $0.60 million in the third quarter of 2014 and $0.34 million in the linked quarter. Total nonperforming assets were $47.99 million, or 0.78%, of Bank assets, including foreclosed property of $6.21 million originally acquired in the Franklin merger, at September 30, 2015, as compared to $43.80 million, or 0.88%, at September 30, 2014, and $53.61 million, or 0.89%, at June 30, 2015. The allowance for loan losses was $37.35 million, increased from $36.18 million at September 30, 2014 and $37.29 million at June 30, 2015.
| | | | | | | | | Change |
| | | Q3 | | Q3 | | Q2 | | Q3 15 vs. | | Q3 15 vs. |
| (dollars in thousands) | | 2015 | | 2014 | | 2015 | | Q3 14 | | Q2 15 |
| Total loans 90 days past due and still accruing | | $ | 31 | | | $ | — | | | $ | 277 | | | $ | 31 | | | $ | (246 | ) |
| Total loans 30-89 days past due | | $ | 5,864 | | | $ | 7,918 | | | $ | 5,283 | | | $ | (2,054 | ) | | $ | 581 | |
| Allowance for loan losses | | $ | 37,351 | | | $ | 36,180 | | | $ | 37,290 | | | $ | 1,171 | | | $ | 61 | |
| Total performing TDRs | | $ | 29,920 | | | $ | 39,776 | | | $ | 31,714 | | | $ | (9,856 | ) | | $ | (1,794 | ) |
| | | | | | | | | | | |
| Nonperforming loans to period end loans | | 0.19 | % | | 0.17 | % | | 0.18 | % | | 0.02 | % | | 0.01 | % |
| Nonperforming assets to period end assets | | 0.78 | % | | 0.88 | % | | 0.89 | % | | (0.10 | )% | | (0.11 | )% |
| Allowance for loan losses to period end loans | | 0.86 | % | | 1.03 | % | | 0.88 | % | | (0.17 | )% | | (0.02 | )% |
| Allowance for loan losses (originated) to originated period end loans | | 0.96 | % | | 1.04 | % | | 1.00 | % | | (0.08 | )% | | (0.04 | )% |
| Net charge-offs to average loans (annualized) | | 0.01 | % | | 0.07 | % | | 0.03 | % | | (0.06 | )% | | (0.02 | )% |
| Ratio of allowance for loan losses to nonperforming loans | | | 4.41x | | | | 6.18x | | | | 5.00x | | | | -1.77x | | | | (0.59)x | |
About TowneBank:
As one of the top community banks in Virginia and North Carolina, TowneBank operates 37 banking offices serving Chesapeake, Chesterfield County, Glen Allen, Hampton, James City County, Mechanicsville, Newport News, Norfolk, Portsmouth, Richmond, Suffolk, Virginia Beach, Williamsburg, and York County in Virginia, along with Moyock, Grandy, Camden County, Southern Shores, Corolla and Nags Head in North Carolina. Towne also offers a full range of financial services through its controlled divisions and subsidiaries that include Towne Investment Group, Towne Insurance Agency, TFA Benefits, TowneBank Mortgage, TowneBank Commercial Mortgage, Berkshire Hathaway HomeServices Towne Realty, Towne 1031 Exchange, LLC, and Beach Properties of Hilton Head. Local decision-making is a hallmark of its hometown banking strategy that is delivered through the leadership of each group’s President and Board of Directors. With total assets of $6.17 billion as of September 30, 2015, TowneBank is one of the largest banks headquartered in Virginia.
Non-GAAP Financial Measures:
This press release contains financial information determined by methods other than in accordance with GAAP. The Company’s management uses these non-GAAP financial measures in their analysis of the Company’s performance. These measures typically adjust GAAP performance measures to exclude the effects of the amortization of intangibles and include the tax benefit associated with revenue items that are tax-exempt, as well as adjust income available to common shareholders for certain significant activities or transactions that are infrequent in nature. Since the presentation of these GAAP performance measures and their impact differ between companies, management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of the Company’s core businesses. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of GAAP to non-GAAP disclosures are included as tables at the end of this release.
Forward-Looking Statements:
Statements made in this release, other than those concerning historical financial information, may be considered forward-looking statements, which speak only as of the date of this release and are based on current expectations and involve a number of assumptions. TowneBank intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is including this statement for purposes of these safe harbor provisions. The Company’s ability to predict results, or the actual effect of future plans or strategies, is inherently uncertain. Factors which could have a material effect on the operations and future prospects of TowneBank include but are not limited to changes in interest rates, general economic and business conditions; legislative/regulatory changes; the monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve; the quality and composition of the loan and securities portfolios; demand for loan products; deposit flows; competition; demand for financial services in the companies’ respective market areas; implementation of new technologies; ability to develop and maintain secure and reliable electronic systems; changes in the securities markets; changes in accounting principles, policies and guidelines; mergers and acquisitions; and other risk factors detailed from time to time in filings made by TowneBank with the FDIC. TowneBank undertakes no obligation to update or clarify these forward-looking statements, whether as a result of new information, future events or otherwise.
| |
| Selected Financial Highlights (unaudited) |
| TOWNEBANK |
| September 30, 2015 |
| (dollars in thousands, except per share data) |
| |
| | | | | | | Increase/ | | % Increase/ |
| Three months ended September 30, | 2015 | | 2014 | | (Decrease) | | (Decrease) |
| | | | | | | | | |
| Results of Operations: | | | | | | | |
| | Net interest income | $ | 45,670 | | | $ | 36,867 | | | $ | 8,803 | | | 23.88 | % |
| | Noninterest income (1) | 29,568 | | | 26,269 | | | 3,299 | | | 12.56 | % |
| | Gain (loss) on investment securities | 736 | | | 44 | | | 692 | | | N/M | |
| | Total Revenue | 75,974 | | | 63,180 | | | 12,794 | | | 20.25 | % |
| | Noninterest expenses | 49,906 | | | 44,154 | | | 5,752 | | | 13.03 | % |
| | Provision for loan losses | 130 | | | 996 | | | (866 | ) | | (86.95 | )% |
| | Income before income tax and noncontrolling interest | 25,938 | | | 18,030 | | | 7,908 | | | 43.86 | % |
| | Provision for income tax expense | 7,444 | | | 5,044 | | | 2,400 | | | 47.58 | % |
| | Net income | 18,494 | | | 12,986 | | | 5,508 | | | 42.41 | % |
| | Net income attributable to noncontrolling interest | (928 | ) | | (860 | ) | | (68 | ) | | 7.91 | % |
| | Net income attributable to TowneBank | 17,566 | | | 12,126 | | | 5,440 | | | 44.86 | % |
| | Preferred stock dividends and accretion | — | | | 191 | | | (191 | ) | | (100.00 | )% |
| | Net income available to common shareholders | 17,566 | | | 11,935 | | | 5,631 | | | 47.18 | % |
| | Net income per common share - basic | 0.34 | | | 0.34 | | | — | | | — | % |
| | Net income per common share - diluted | 0.34 | | | 0.34 | | | — | | | — | % |
| Period End Data: | | | | | | | |
| | Total assets | $ | 6,173,891 | | | $ | 4,972,448 | | | $ | 1,201,443 | | | 24.16 | % |
| | Total assets - tangible | 5,998,373 | | | 4,842,966 | | | 1,155,407 | | | 23.86 | % |
| | Earning assets (2) | 5,508,341 | | | 4,606,030 | | | 902,311 | | | 19.59 | % |
| | Loans (net of unearned income) | 4,367,039 | | | 3,521,075 | | | 845,964 | | | 24.03 | % |
| | Allowance for loan losses | 37,351 | | | 36,180 | | | 1,171 | | | 3.24 | % |
| | Goodwill and other intangibles | 175,518 | | | 129,482 | | | 46,036 | | | 35.55 | % |
| | Nonperforming assets | 47,986 | | | 43,804 | | | 4,182 | | | 9.55 | % |
| | Noninterest bearing deposits | 1,445,978 | | | 1,245,925 | | | 200,053 | | | 16.06 | % |
| | Interest bearing deposits | 3,341,900 | | | 2,604,007 | | | 737,893 | | | 28.34 | % |
| | Total deposits | 4,787,878 | | | 3,849,932 | | | 937,946 | | | 24.36 | % |
| | Total equity | 816,069 | | | 613,408 | | | 202,661 | | | 33.04 | % |
| | Total equity - tangible | 640,551 | | | 483,926 | | | 156,625 | | | 32.37 | % |
| | Common equity | 807,152 | | | 527,727 | | | 279,425 | | | 52.95 | % |
| | Common equity - tangible | 631,634 | | | 398,245 | | | 233,389 | | | 58.60 | % |
| | Book value per common share | 15.65 | | | 14.85 | | | 0.80 | | | 5.39 | % |
| | Book value per common share - tangible | 12.25 | | | 11.21 | | | 1.04 | | | 9.28 | % |
| Daily Average Balances: | | | | | | | |
| | Total assets | $ | 6,115,681 | | | $ | 4,961,204 | | | $ | 1,154,477 | | | 23.27 | % |
| | Total assets - tangible | 5,940,258 | | | 4,831,294 | | | 1,108,964 | | | 22.95 | % |
| | Earning assets (2) | 5,604,472 | | | 4,558,857 | | | 1,045,615 | | | 22.94 | % |
| | Loans (net of unearned income), excluding nonaccrual loans | 4,300,751 | | | 3,471,206 | | | 829,545 | | | 23.90 | % |
| | Allowance for loan losses | 37,926 | | | 36,355 | | | 1,571 | | | 4.32 | % |
| | Goodwill and other intangibles | 175,423 | | | 129,910 | | | 45,513 | | | 35.03 | % |
| | Noninterest bearing deposits | 1,388,002 | | | 1,228,807 | | | 159,195 | | | 12.96 | % |
| | Interest bearing deposits | 3,346,874 | | | 2,610,027 | | | 736,847 | | | 28.23 | % |
| | Total deposits | 4,734,876 | | | 3,838,834 | | | 896,042 | | | 23.34 | % |
| | Total equity | 812,602 | | | 612,250 | | | 200,352 | | | 32.72 | % |
| | Total equity - tangible | 637,179 | | | 482,341 | | | 154,838 | | | 32.10 | % |
| | Common equity | 804,090 | | | 526,994 | | | 277,096 | | | 52.58 | % |
| | Common equity - tangible | 628,667 | | | 397,084 | | | 231,583 | | | 58.32 | % |
| Key Ratios: | | | | | | | |
| | Return on average assets | 1.14 | % | | 0.97 | % | | 0.17 | % | | 17.53 | % |
| | Return on average assets - tangible | 1.21 | % | | 1.03 | % | | 0.18 | % | | 17.48 | % |
| | Return on average equity | 8.58 | % | | 7.86 | % | | 0.72 | % | | 9.16 | % |
| | Return on average equity - tangible | 11.25 | % | | 10.32 | % | | 0.93 | % | | 9.01 | % |
| | Return on average common equity | 8.67 | % | | 8.98 | % | | (0.31 | )% | | (3.45 | )% |
| | Return on average common equity - tangible | 11.41 | % | | 12.34 | % | | (0.93 | )% | | (7.54 | )% |
| | Net interest margin-fully tax equivalent (2)(3) | 3.40 | % | | 3.32 | % | | 0.08 | % | | 2.41 | % |
| | Net interest margin (2) | 3.32 | % | | 3.25 | % | | 0.07 | % | | 2.15 | % |
| | Average earning assets/total average assets | 91.64 | % | | 91.89 | % | | (0.25 | )% | | (0.27 | )% |
| | Average loans/average deposits | 90.83 | % | | 90.42 | % | | 0.41 | % | | 0.45 | % |
| | Average noninterest deposits/total average deposits | 29.31 | % | | 32.01 | % | | (2.70 | )% | | (8.43 | )% |
| | Allowance for loan losses/period end loans | 0.86 | % | | 1.03 | % | | (0.17 | )% | | (16.50 | )% |
| | Nonperforming assets to period end assets | 0.78 | % | | 0.88 | % | | (0.10 | )% | | (11.36 | )% |
| | Period end equity/period end total assets | 13.22 | % | | 12.34 | % | | 0.88 | % | | 7.13 | % |
| | Efficiency ratio (1) | 66.33 | % | | 69.94 | % | | (3.61 | )% | | (5.16 | )% |
| | | | | | | | | |
| (1) Excludes gain (loss) on investment securities | | | | | | | |
| (2) Includes bank-owned life insurance | | | | | | | |
| (3) Presented on a tax-equivalent basis | | | | | | | |
| |
| Selected Financial Highlights (unaudited) |
| TOWNEBANK |
| September 30, 2015 |
| (dollars in thousands) |
| | | | | | | | | |
| | | | | | | Increase/ | | % Increase/ |
| Nine Months Ended September 30, 2015 | 2015 | | 2014 | | (Decrease) | | (Decrease) |
| | | | | | | | | |
| Results of Operations: | | | | | | | |
| | Net interest income | $ | 134,111 | | | $ | 108,598 | | | $ | 25,513 | | | 23.49 | % |
| | Noninterest income (1) | 91,301 | | | 74,342 | | | 16,959 | | | 22.81 | % |
| | Gain (loss) on investment securities | 904 | | | (15 | ) | | 919 | | | N/M | |
| | Total Revenue | 226,316 | | | 182,925 | | | 43,391 | | | 23.72 | % |
| | Noninterest expenses | 149,414 | | | 129,905 | | | 19,509 | | | 15.02 | % |
| | Provision for loan losses | 2,176 | | | 493 | | | 1,683 | | | 341.38 | % |
| | Income before income tax and noncontrolling interest | 74,726 | | | 52,527 | | | 22,199 | | | 42.26 | % |
| | Provision for income tax expense | 22,030 | | | 15,381 | | | 6,649 | | | 43.23 | % |
| | Net income | 52,696 | | | 37,146 | | | 15,550 | | | 41.86 | % |
| | Net income attributable to noncontrolling interest | (2,780 | ) | | (2,212 | ) | | (568 | ) | | 25.68 | % |
| | Net income attributable to TowneBank | 49,916 | | | 34,934 | | | 14,982 | | | 42.89 | % |
| | Preferred stock dividends | 13 | | | 573 | | | (560 | ) | | (97.73 | )% |
| | Net income available to common shareholders | 49,903 | | | 34,361 | | | 15,542 | | | 45.23 | % |
| | Net income per common share - basic | 0.98 | | | 0.98 | | | — | | | — | % |
| | Net income per common share - diluted | 0.98 | | | 0.98 | | | — | | | — | % |
| Period End Data: | | | | | | | |
| | Total assets | $ | 6,173,891 | | | $ | 4,972,448 | | | $ | 1,201,443 | | | 24.16 | % |
| | Total assets - tangible | 5,998,373 | | | 4,842,966 | | | 1,155,407 | | | 23.86 | % |
| | Earning assets (2) | 5,508,341 | | | 4,606,030 | | | 902,311 | | | 19.59 | % |
| | Loans (net of unearned income) | 4,367,039 | | | 3,521,075 | | | 845,964 | | | 24.03 | % |
| | Allowance for loan losses | 37,351 | | | 36,180 | | | 1,171 | | | 3.24 | % |
| | Goodwill and other intangibles | 175,518 | | | 129,482 | | | 46,036 | | | 35.55 | % |
| | Nonperforming assets | 47,986 | | | 43,804 | | | 4,182 | | | 9.55 | % |
| | Noninterest bearing deposits | 1,445,978 | | | 1,245,925 | | | 200,053 | | | 16.06 | % |
| | Interest bearing deposits | 3,341,900 | | | 2,604,007 | | | 737,893 | | | 28.34 | % |
| | Total deposits | 4,787,878 | | | 3,849,932 | | | 937,946 | | | 24.36 | % |
| | Total equity | 816,069 | | | 613,408 | | | 202,661 | | | 33.04 | % |
| | Total equity - tangible | 640,551 | | | 483,926 | | | 156,625 | | | 32.37 | % |
| | Common equity | 807,152 | | | 527,727 | | | 279,425 | | | 52.95 | % |
| | Common equity - tangible | 631,634 | | | 398,245 | | | 233,389 | | | 58.60 | % |
| | Book value per common share | 15.65 | | | 14.85 | | | 0.80 | | | 5.39 | % |
| | Book value per common share - tangible | 12.25 | | | 11.21 | | | 1.04 | | | 9.28 | % |
| Daily Average Balances: | | | | | | | |
| | Total assets | $ | 5,949,725 | | | $ | 4,819,901 | | | $ | 1,129,824 | | | 23.44 | % |
| | Total assets - tangible | 5,770,456 | | | 4,694,307 | | | 1,076,149 | | | 22.92 | % |
| | Earning assets (2) | 5,435,333 | | | 4,425,547 | | | 1,009,786 | | | 22.82 | % |
| | Loans (net of unearned income), excluding nonaccrual loans | 4,177,038 | | | 3,425,074 | | | 751,964 | | | 21.95 | % |
| | Allowance for loan losses | 36,950 | | | 37,461 | | | (511 | ) | | (1.36 | )% |
| | Goodwill and other intangibles | 179,269 | | | 125,594 | | | 53,675 | | | 42.74 | % |
| | Noninterest bearing deposits | 1,317,517 | | | 1,128,954 | | | 188,563 | | | 16.70 | % |
| | Interest bearing deposits | 3,279,354 | | | 2,581,126 | | | 698,228 | | | 27.05 | % |
| | Total deposits | 4,596,871 | | | 3,710,081 | | | 886,790 | | | 23.90 | % |
| | Total equity | 798,381 | | | 601,789 | | | 196,592 | | | 32.67 | % |
| | Total equity - tangible | 619,111 | | | 476,195 | | | 142,916 | | | 30.01 | % |
| | Common equity | 788,128 | | | 516,586 | | | 271,542 | | | 52.56 | % |
| | Common equity - tangible | 608,858 | | | 390,992 | | | 217,866 | | | 55.72 | % |
| Key Ratios: | | | | | | | |
| | Return on average assets | 1.12 | % | | 0.97 | % | | 0.15 | % | | 15.46 | % |
| | Return on average assets - tangible | 1.19 | % | | 1.03 | % | | 0.16 | % | | 15.53 | % |
| | Return on average equity | 8.36 | % | | 7.76 | % | | 0.60 | % | | 7.73 | % |
| | Return on average equity - tangible | 11.12 | % | | 10.13 | % | | 0.99 | % | | 9.77 | % |
| | Return on average common equity | 8.47 | % | | 8.89 | % | | (0.42 | )% | | (4.72 | )% |
| | Return on average common equity - tangible | 11.30 | % | | 12.14 | % | | (0.84 | )% | | (6.92 | )% |
| | Net interest margin-fully tax equivalent (2)(3) | 3.48 | % | | 3.39 | % | | 0.09 | % | | 2.65 | % |
| | Net interest margin (2) | 3.39 | % | | 3.32 | % | | 0.07 | % | | 2.11 | % |
| | Average earning assets/total average assets | 91.35 | % | | 91.82 | % | | (0.47 | )% | | (0.51 | )% |
| | Average loans/average deposits | 90.87 | % | | 92.32 | % | | (1.45 | )% | | (1.57 | )% |
| | Average noninterest deposits/total average deposits | 28.66 | % | | 30.43 | % | | (1.77 | )% | | (5.82 | )% |
| | Allowance for loan losses/period end loans | 0.86 | % | | 1.03 | % | | (0.17 | )% | | (16.50 | )% |
| | Nonperforming assets to period end assets | 0.78 | % | | 0.88 | % | | (0.10 | )% | | (11.36 | )% |
| | Period end equity/period end total assets | 13.22 | % | | 12.34 | % | | 0.88 | % | | 7.13 | % |
| | Efficiency ratio (1) | 66.28 | % | | 71.01 | % | | (4.73 | )% | | (6.66 | )% |
| | | | | | | | | |
| (1) Excludes gain on investment securities | | | | | | | |
| (2) Includes bank-owned life insurance | | | | | | | |
| (3) Presented on a tax-equivalent basis | | | | | | | |
| |
| Selected Financial Highlights (unaudited) |
| TOWNEBANK |
| September 30, 2015 |
| (dollars in thousands, except per share data) |
| |
| | | September 30, | | June 30, | | Increase/ | | % Increase/ |
| Three Months Ended | 2015 | | 2015 | | (Decrease) | | (Decrease) |
| | | | | | | | | |
| Results of Operations: | | | | | | | |
| | Net interest income | $ | 45,670 | | | $ | 44,884 | | | $ | 786 | | | 1.75 | % |
| | Noninterest income (1) | 29,568 | | | 32,966 | | | (3,398 | ) | | (10.31 | )% |
| | Gain (loss) on investment securities | 736 | | | 119 | | | 617 | | | 518.49 | % |
| | Total Revenue | 75,974 | | | 77,969 | | | (1,995 | ) | | (2.56 | )% |
| | Noninterest expenses | 49,906 | | | 49,067 | | | 839 | | | 1.71 | % |
| | Provision for loan losses | 130 | | | 1,723 | | | (1,593 | ) | | (92.46 | )% |
| | Income before income tax and noncontrolling interest | 25,938 | | | 27,179 | | | (1,241 | ) | | (4.57 | )% |
| | Provision for income tax expense | 7,444 | | | 8,201 | | | (757 | ) | | (9.23 | )% |
| | Net income | 18,494 | | | 18,978 | | | (484 | ) | | (2.55 | )% |
| | Net income attributable to noncontrolling interest | (928 | ) | | (1,166 | ) | | 238 | | | (20.41 | )% |
| | Net income attributable to TowneBank | 17,566 | | | 17,812 | | | (246 | ) | | (1.38 | )% |
| | Preferred stock dividends and accretion | — | | | — | | | — | | | — | % |
| | Net income available to common shareholders | 17,566 | | | 17,812 | | | (246 | ) | | (1.38 | )% |
| | Net income per common share - basic | 0.34 | | | 0.35 | | | (0.01 | ) | | (2.86 | )% |
| | Net income per common share - diluted | 0.34 | | | 0.35 | | | (0.01 | ) | | (2.86 | )% |
| Period End Data: | | | | | | | |
| | Total assets | $ | 6,173,891 | | | $ | 6,055,181 | | | $ | 118,710 | | | 1.96 | % |
| | Total assets - tangible | 5,998,373 | | | 5,879,975 | | | 118,398 | | | 2.01 | % |
| | Earning assets (2) | 5,508,341 | | | 5,576,243 | | | (67,902 | ) | | (1.22 | )% |
| | Loans (net of unearned income) | 4,367,039 | | | 4,228,127 | | | 138,912 | | | 3.29 | % |
| | Allowance for loan losses | 37,351 | | | 37,290 | | | 61 | | | 0.16 | % |
| | Goodwill and other intangibles | 175,518 | | | 175,207 | | | 311 | | | 0.18 | % |
| | Nonperforming assets | 47,986 | | | 53,609 | | | (5,623 | ) | | (10.49 | )% |
| | Noninterest bearing deposits | 1,445,978 | | | 1,363,551 | | | 82,427 | | | 6.05 | % |
| | Interest bearing deposits | 3,341,900 | | | 3,323,101 | | | 18,799 | | | 0.57 | % |
| | Total deposits | 4,787,878 | | | 4,686,652 | | | 101,226 | | | 2.16 | % |
| | Total equity | 816,069 | | | 802,891 | | | 13,178 | | | 1.64 | % |
| | Total equity - tangible | 640,551 | | | 627,685 | | | 12,866 | | | 2.05 | % |
| | Common equity | 807,152 | | | 794,018 | | | 13,134 | | | 1.65 | % |
| | Common equity - tangible | 631,634 | | | 618,812 | | | 12,822 | | | 2.07 | % |
| | Book value per common share | 15.65 | | | 15.40 | | | 0.25 | | | 1.62 | % |
| | Book value per common share - tangible | 12.25 | | | 12.00 | | | 0.25 | | | 2.08 | % |
| Daily Average Balances: | | | | | | | |
| | Total assets | $ | 6,115,681 | | | $ | 5,900,816 | | | $ | 214,865 | | | 3.64 | % |
| | Total assets - tangible | 5,940,258 | | | 5,724,957 | | | 215,301 | | | 3.76 | % |
| | Earning assets (2) | 5,604,472 | | | 5,407,516 | | | 196,956 | | | 3.64 | % |
| | Loans (net of unearned income), excluding nonaccrual loans | 4,300,751 | | | 4,161,304 | | | 139,447 | | | 3.35 | % |
| | Allowance for loan losses | 37,926 | | | 36,854 | | | 1,072 | | | 2.91 | % |
| | Goodwill and other intangibles | 175,423 | | | 175,858 | | | (435 | ) | | (0.25 | )% |
| | Noninterest bearing deposits | 1,388,002 | | | 1,307,075 | | | 80,927 | | | 6.19 | % |
| | Interest bearing deposits | 3,346,874 | | | 3,241,276 | | | 105,598 | | | 3.26 | % |
| | Total deposits | 4,734,876 | | | 4,548,351 | | | 186,525 | | | 4.10 | % |
| | Total equity | 812,602 | | | 800,369 | | | 12,233 | | | 1.53 | % |
| | Total equity - tangible | 637,179 | | | 624,511 | | | 12,668 | | | 2.03 | % |
| | Common equity | 804,090 | | | 791,915 | | | 12,175 | | | 1.54 | % |
| | Common equity - tangible | 628,667 | | | 616,057 | | | 12,610 | | | 2.05 | % |
| Key Ratios: | | | | | | | |
| | Return on average assets | 1.14 | % | | 1.21 | % | | (0.07 | )% | | (5.79 | )% |
| | Return on average assets - tangible | 1.21 | % | | 1.28 | % | | (0.07 | )% | | (5.47 | )% |
| | Return on average equity | 8.58 | % | | 8.93 | % | | (0.35 | )% | | (3.92 | )% |
| | Return on average equity - tangible | 11.25 | % | | 11.77 | % | | (0.52 | )% | | (4.42 | )% |
| | Return on average common equity | 8.67 | % | | 9.02 | % | | (0.35 | )% | | (3.88 | )% |
| | Return on average common equity - tangible | 11.41 | % | | 11.93 | % | | (0.52 | )% | | (4.36 | )% |
| | Net interest margin-fully tax equivalent (2)(3) | 3.40 | % | | 3.52 | % | | (0.12 | )% | | (3.41 | )% |
| | Net interest margin (2) | 3.32 | % | | 3.43 | % | | (0.11 | )% | | (3.21 | )% |
| | Average earning assets/total average assets | 91.64 | % | | 91.64 | % | | — | % | | — | % |
| | Average loans/average deposits | 90.83 | % | | 91.49 | % | | (0.66 | )% | | (0.72 | )% |
| | Average noninterest deposits/total average deposits | 29.31 | % | | 28.74 | % | | 0.57 | % | | 1.98 | % |
| | Allowance for loan losses/period end loans | 0.86 | % | | 0.88 | % | | (0.02 | )% | | (2.27 | )% |
| | Nonperforming assets to period end assets | 0.78 | % | | 0.89 | % | | (0.11 | )% | | (12.36 | )% |
| | Period end equity/period end total assets | 13.22 | % | | 13.26 | % | | (0.04 | )% | | (0.30 | )% |
| | Efficiency ratio (1) | 66.33 | % | | 63.03 | % | | 3.30 | % | | 5.24 | % |
| | | | | | | | | |
| (1) Excludes gain (loss) on investment securities | | | | | | | |
| (2) Includes bank-owned life insurance | | | | | | | |
| (3) Presented on a tax-equivalent basis | | | | | | | |
| |
| TOWNEBANK |
| Average Balances, Yields and Rate Paid (unaudited) |
| (dollars in thousands) |
| |
| | Three Months Ended | | Three Months Ended | | Three Months Ended |
| | September 30, 2015 | | June 30, 2015 | | September 30, 2014 |
| | | Interest | Average | | | Interest | Average | | | Interest | Average |
| | Average | Income/ | Yield/ | | Average | Income/ | Yield/ | | Average | Income/ | Yield/ |
| | Balance | Expense | Rate | | Balance | Expense | Rate | | Balance | Expense | Rate |
| Assets: | | | | | | | | | | | |
| Loans (net of unearned income and deferred costs), excluding nonaccrual loans | $ | 4,300,751 | | $ | 49,398 | | 4.56 | % | | $ | 4,161,304 | | $ | 48,729 | | 4.70 | % | | $ | 3,471,206 | | $ | 40,961 | | 4.68 | % |
| Taxable investment securities | 796,062 | | 3,235 | | 1.63 | % | | 818,000 | | 2,825 | | 1.38 | % | | 604,908 | | 1,734 | | 1.15 | % |
| Tax-exempt investment securities | 61,048 | | 493 | | 3.23 | % | | 63,255 | | 496 | | 3.14 | % | | 70,854 | | 568 | | 3.21 | % |
| Interest-bearing deposits | 167,247 | | 107 | | 0.25 | % | | 87,709 | | 56 | | 0.25 | % | | 275,634 | | 174 | | 0.25 | % |
| Loans held for sale | 132,214 | | 1,246 | | 3.77 | % | | 131,305 | | 1,161 | | 3.54 | % | | 78,325 | | 787 | | 4.02 | % |
| Bank-owned life insurance | 147,150 | | 1,877 | | 5.06 | % | | 145,943 | | 2,044 | | 5.62 | % | | 57,930 | | 674 | | 4.62 | % |
| Total earning assets | 5,604,472 | | 56,356 | | 3.99 | % | | 5,407,516 | | 55,311 | | 4.10 | % | | 4,558,857 | | 44,898 | | 3.91 | % |
| Less: allowance for loan losses | (37,926 | ) | | | | (36,854 | ) | | | | (36,355 | ) | | |
| | | | | | | | | | | | |
| Total nonearning assets | 549,135 | | | | | 530,154 | | | | | 438,702 | | | |
| | | | | | | | | | | | |
| Total assets | $ | 6,115,681 | | | | | $ | 5,900,816 | | | | | $ | 4,961,204 | | | |
| | | | | | | | | | | | |
| Liabilities and Equity: | | | | | | | | | | | |
| Interest-bearing deposits | | | | | | | | | | | |
| Demand and money market | $ | 1,693,424 | | $ | 1,201 | | 0.28 | % | | $ | 1,646,075 | | $ | 1,144 | | 0.28 | % | | $ | 1,317,611 | | $ | 717 | | 0.22 | % |
| Savings | 297,041 | | 695 | | 0.93 | % | | 301,020 | | 692 | | 0.92 | % | | 308,466 | | 707 | | 0.91 | % |
| Certificates of deposit | 1,356,409 | | 2,985 | | 0.87 | % | | 1,294,181 | | 2,606 | | 0.81 | % | | 983,950 | | 1,981 | | 0.80 | % |
| Total interest-bearing deposits | 3,346,874 | | 4,881 | | 0.58 | % | | 3,241,276 | | 4,442 | | 0.55 | % | | 2,610,027 | | 3,405 | | 0.52 | % |
| Borrowings | 472,120 | | 3,435 | | 2.85 | % | | 460,993 | | 3,381 | | 2.90 | % | | 424,746 | | 3,396 | | 3.13 | % |
| Total interest-bearing liabilities | 3,818,994 | | 8,316 | | 0.86 | % | | 3,702,269 | | 7,823 | | 0.85 | % | | 3,034,773 | | 6,801 | | 0.89 | % |
| Demand deposits | 1,388,002 | | | | | 1,307,075 | | | | | 1,228,807 | | | |
| Other noninterest-bearing liabilities | 96,083 | | | | | 91,103 | | | | | 85,374 | | | |
| Total liabilities | 5,303,079 | | | | | 5,100,447 | | | | | 4,348,954 | | | |
| | | | | | | | | | | | |
| Shareholders’ equity | 812,602 | | | | | 800,369 | | | | | 612,250 | | | |
| | | | | | | | | | | | |
| Total liabilities and equity | $ | 6,115,681 | | | | | $ | 5,900,816 | | | | | $ | 4,961,204 | | | |
| | | | | | | | | | | | |
| Net interest income (tax-equivalent basis) | | $ | 48,040 | | | | | $ | 47,488 | | | | | $ | 38,097 | | |
| Reconcilement of Non-GAAP Financial Measures | | | | | | | | | | | | | |
| Bank-owned life insurance | | (1,877 | ) | | | | (2,044 | ) | | | | (674 | ) | |
| Tax-equivalent basis adjustment | | (493 | ) | | | | (560 | ) | | | | (556 | ) | |
| Net interest income (GAAP) | | $ | 45,670 | | | | | $ | 44,884 | | | | | $ | 36,867 | | |
| | | | | | | | | | | | |
| Interest rate spread (1) | | | 3.13 | % | | | | 3.26 | % | | | | 3.02 | % |
| Interest expense as a percent of average earning assets | | | | | 0.59 | % | | | | 0.58 | % | | | | 0.59 | % |
| Net interest margin (tax equivalent basis) (2) | | | | | 3.40 | % | | | | 3.52 | % | | | | 3.32 | % |
| Total cost of deposits | | | 0.41 | % | | | | 0.39 | % | | | | 0.35 | % |
| | | | | | | | | | | | |
(1) Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities. Fully tax equivalent.
(2) Net interest margin is net interest income expressed as a percentage of average earning assets. Fully tax equivalent.
| |
| TOWNEBANK |
| Average Balances, Yields and Rate Paid (unaudited) |
| (dollars in thousands) |
| |
| | Nine Months Ended | | Nine Months Ended | | Nine Months Ended September 30, 2015 |
| | September 30, 2015 | | September 30, 2014 | | Compared with September 30, 2014 |
| | | Interest | Average | | | Interest | Average | | | |
| | Average | Income/ | Yield/ | | Average | Income/ | Yield/ | | Increase | Change due to |
| | Balance | Expense | Rate | | Balance | Expense | Rate | | (Decrease) | Rate | Volume |
| Assets: | | | | | | | | | | | |
| Loans (net of unearned income and deferred costs), excluding nonaccrual loans | $ | 4,177,038 | | $ | 146,020 | | 4.67 | % | | $ | 3,425,074 | | $ | 121,129 | | 4.73 | % | | $ | 24,891 | | $ | (1,411 | ) | $ | 26,302 | |
| Taxable investment securities | 787,996 | | 8,862 | | 1.50 | % | | 545,226 | | 5,067 | | 1.24 | % | | 3,795 | | 1,216 | | 2,578 | |
| Tax-exempt investment securities | 63,684 | | 1,524 | | 3.19 | % | | 71,035 | | 1,621 | | 3.04 | % | | (97 | ) | 77 | | (173 | ) |
| Interest-bearing deposits | 152,472 | | 287 | | 0.25 | % | | 262,057 | | 493 | | 0.25 | % | | (206 | ) | — | | (206 | ) |
| Loans held for sale | 109,592 | | 2,971 | | 3.62 | % | | 64,483 | | 1,934 | | 4.00 | % | | 1,037 | | (201 | ) | 1,239 | |
| Bank-owned life insurance | 144,551 | | 5,674 | | 5.25 | % | | 57,672 | | 2,090 | | 4.85 | % | | 3,584 | | 187 | | 3,396 | |
| Total earning assets | 5,435,333 | | 165,338 | | 4.07 | % | | 4,425,547 | | 132,334 | | 4.00 | % | | 33,004 | | (132 | ) | 33,136 | |
| Less: allowance for loan losses | (36,950 | ) | | | | (37,461 | ) | | | | | | |
| | | | | | | | | | | | |
| Total nonearning assets | $ | 551,342 | | | | | $ | 431,815 | | | | | | | |
| | | | | | | | | | | | |
| Total assets | $ | 5,949,725 | | | | | $ | 4,819,901 | | | | | | | |
| | | | | | | | | | | | |
| Liabilities and Equity: | | | | | | | | | | | |
| Interest-bearing deposits | | | | | | | | | | | |
| Demand and money market | $ | 1,658,531 | | $ | 3,456 | | 0.28 | % | | $ | 1,294,093 | | $ | 2,264 | | 0.23 | % | | $ | 1,192 | | $ | 482 | | $ | 710 | |
| Savings | 300,996 | | 2,071 | | 0.92 | % | | 313,114 | | 2,155 | | 0.92 | % | | (84 | ) | (1 | ) | (83 | ) |
| Certificates of deposit | 1,319,827 | | 8,220 | | 0.83 | % | | 973,919 | | 5,624 | | 0.77 | % | | 2,596 | | 471 | | 2,126 | |
| Total interest-bearing deposits | 3,279,354 | | 13,747 | | 0.56 | % | | 2,581,126 | | 10,043 | | 0.52 | % | | 3,704 | | 952 | | 2,753 | |
| Borrowings | 460,195 | | 10,205 | | 2.92 | % | | 428,870 | | 10,028 | | 3.12 | % | | 177 | | (600 | ) | 776 | |
| Total interest-bearing liabilities | 3,739,549 | | 23,952 | | 0.86 | % | | 3,009,996 | | 20,071 | | 0.89 | % | | 3,881 | | 352 | | 3,529 | |
| Demand deposits | 1,317,517 | | | | | 1,128,954 | | | | | | | |
| Other noninterest-bearing liabilities | 94,278 | | | | | 79,161 | | | | | | | |
| Total liabilities | 5,151,344 | | | | | 4,218,111 | | | | | | | |
| | | | | | | | | | | | |
| Shareholders’ equity | 798,381 | | | | | 601,790 | | | | | | | |
| | | | | | | | | | | | |
| Total liabilities and equity | $ | 5,949,725 | | | | | $ | 4,819,901 | | | | | | | |
| | | | | | | | | | | | |
| Net interest income (tax-equivalent basis) | | | | $ | 141,386 | | | | | $ | 112,263 | | | | $ | 29,123 | | $ | (484 | ) | $ | 29,607 | |
| Reconcilement of Non-GAAP Financial Measures | | | | | | | | | | | | | | | |
| Bank-owned life insurance | | (5,674 | ) | | | | (2,090 | ) | | | (3,583 | ) | | |
| Tax-equivalent basis adjustment | | (1,601 | ) | | | | (1,575 | ) | | | $ | (26 | ) | | |
| Net interest income (GAAP) | | $ | 134,111 | | | | | $ | 108,598 | | | | $ | 25,514 | | | |
| | | | | | | | | | | | |
| Interest rate spread (1) | | | | | 3.21 | % | | | | 3.11 | % | | | | |
| Interest expense as a percent of average earning assets | | | | | 0.59 | % | | | | 0.61 | % | | | | |
| Net interest margin (tax equivalent basis) (2) | | | | | 3.48 | % | | | | 3.39 | % | | | | |
| Total cost of deposits | | | 0.40 | % | | | | 0.36 | % | | | | |
| | | | | | | | | | | | | | |
(1) Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities. Fully tax equivalent.
(2) Net interest margin is net interest income expressed as a percentage of average earning assets. Fully tax equivalent.
| |
| TOWNEBANK |
| Consolidated Statements of Income (unaudited) |
| (dollars in thousands) |
| |
| | Three Months Ended | | Nine Months Ended |
| | September 30, | | September 30, |
| | 2015 | | 2014 | | 2015 | | 2014 |
| INTEREST INCOME: | | | | | | | |
| Loans, including fees | $ | 48,906 | | | $ | 40,404 | | | $ | 144,418 | | | $ | 119,554 | |
| Investment securities | 3,728 | | | 2,303 | | | 10,386 | | | 6,688 | |
| Interest-bearing deposits in financial institutions and federal funds sold | 107 | | | 174 | | | 287 | | | 493 | |
| Mortgage loans held for sale | 1,246 | | | 787 | | | 2,971 | | | 1,934 | |
| Total Interest Income | 53,987 | | | 43,668 | | | 158,062 | | | 128,669 | |
| | | | | | | | |
| INTEREST EXPENSE: | | | | | | | |
| Deposits | 4,881 | | | 3,405 | | | 13,747 | | | 10,043 | |
| Advances from the Federal Home Loan Bank | 3,422 | | | 3,385 | | | 10,160 | | | 9,990 | |
| Repurchase agreements and other borrowings | 14 | | | 11 | | | 44 | | | 38 | |
| Total Interest Expense | 8,317 | | | 6,801 | | | 23,951 | | | 20,071 | |
| | | | | | | | |
| Net Interest Income | 45,670 | | | 36,867 | | | 134,111 | | | 108,598 | |
| | | | | | | | |
| PROVISION FOR LOAN LOSSES | 130 | | | 996 | | | 2,176 | | | 493 | |
| | | | | | | | |
| Net Interest Income after Provision for Loan Losses | 45,540 | | | 35,871 | | | 131,935 | | | 108,105 | |
| | | | | | | | |
| NONINTEREST INCOME: | | | | | | | |
| Residential mortgage banking income, net | 8,262 | | | 7,858 | | | 26,956 | | | 20,655 | |
| Real estate brokerage and property management income, net | 5,349 | | | 3,645 | | | 13,888 | | | 10,184 | |
| Insurance commissions and other title fees and income, net | 9,710 | | | 8,861 | | | 30,644 | | | 26,815 | |
| Service charges on deposit accounts | 2,388 | | | 2,406 | | | 6,911 | | | 6,904 | |
| Credit card merchant fees, net | 823 | | | 927 | | | 1,821 | | | 2,665 | |
| Other income | 3,036 | | | 2,572 | | | 11,081 | | | 7,119 | |
| Net gain (loss) on investment securities | 736 | | | 44 | | | 904 | | | (15 | ) |
| Total Noninterest Income | 30,304 | | | 26,313 | | | 92,205 | | | 74,327 | |
| | | | | | | | |
| NONINTEREST EXPENSE: | | | | | | | |
| Salaries and employee benefits | 28,910 | | | 25,080 | | | 83,133 | | | 73,801 | |
| Occupancy expense | 4,703 | | | 4,618 | | | 14,489 | | | 13,188 | |
| Furniture and equipment | 2,211 | | | 2,040 | | | 6,949 | | | 6,080 | |
| Other expenses | 14,082 | | | 12,416 | | | 44,843 | | | 36,836 | |
| Total Noninterest Expense | 49,906 | | | 44,154 | | | 149,414 | | | 129,905 | |
| | | | | | | | |
| Income before income tax expense and noncontrolling interest | 25,938 | | | 18,030 | | | 74,726 | | | 52,527 | |
| | | | | | | | |
| Provision for income tax expense | 7,444 | | | 5,044 | | | 22,030 | | | 15,381 | |
| | | | | | | | |
| Net income | 18,494 | | | 12,986 | | | 52,696 | | | 37,146 | |
| | | | | | | | |
| Net income attributable to noncontrolling interest | (928 | ) | | (860 | ) | | (2,780 | ) | | (2,212 | ) |
| | | | | | | | |
| Net income attributable to TowneBank | $ | 17,566 | | | $ | 12,126 | | | $ | 49,916 | | | $ | 34,934 | |
| | | | | | | | |
| Preferred stock dividends | — | | | 191 | | | 13 | | | 573 | |
| | | | | | | | |
| Net income available to common shareholders | $ | 17,566 | | | $ | 11,935 | | | $ | 49,903 | | | $ | 34,361 | |
| | | | | | | | |
| Per common share information | | | | | | | |
| Basic earnings | $ | 0.34 | | | $ | 0.34 | | | $ | 0.98 | | | $ | 0.98 | |
| Diluted earnings | $ | 0.34 | | | $ | 0.34 | | | $ | 0.98 | | | $ | 0.98 | |
| Cash dividends declared | $ | 0.12 | | | $ | 0.11 | | | $ | 0.35 | | | $ | 0.32 | |
| |
| TOWNEBANK |
| Consolidated Statements of Comprehensive Income (unaudited) |
| (dollars in thousands) |
| |
| | Three Months Ended | | Nine Months Ended |
| | September 30, | | September 30, |
| | 2015 | | 2014 | | 2015 | | 2014 |
| Net income | $ | 18,494 | | | $ | 12,986 | | | $ | 52,696 | | | $ | 37,146 | |
| | | | | | | | |
| Other comprehensive income (loss) | | | | | | | |
| | | | | | | | |
| Unrealized gains (losses) on securities | | | | | | | |
| Unrealized holding gains (losses) arising during the period | 1,822 | | | (229 | ) | | 1,536 | | | 1,575 | |
| Deferred tax (expense) benefit | (638 | ) | | 80 | | | (538 | ) | | (552 | ) |
| Realized (gains) losses reclassified into earnings | (736 | ) | | (44 | ) | | (785 | ) | | 15 | |
| Deferred tax benefit | 258 | | | 15 | | | 275 | | | (6 | ) |
| Net unrealized gains (losses) | 706 | | | (178 | ) | | 488 | | | 1,032 | |
| | | | | | | | |
| Defined benefit retirement plan | | | | | | | |
| Amortization | 60 | | | 15 | | | 138 | | | 15 | |
| Deferred tax expense | (21 | ) | | (5 | ) | | (48 | ) | | (5 | ) |
| Change in defined benefit retirement plan, net of tax | 39 | | | 10 | | | 90 | | | 10 | |
| | | | | | | | |
| Other comprehensive income (loss), net of tax | 745 | | | (168 | ) | | 578 | | | 1,042 | |
| | | | | | | | |
| Comprehensive income | $ | 19,239 | | | $ | 12,818 | | | $ | 53,274 | | | $ | 38,188 | |
| |
| TOWNEBANK |
| Consolidated Balance Sheets |
| (dollars in thousands) |
| |
| | September 30, | | December 31, |
| | 2015 | | 2014 | | 2014 |
| | (unaudited) | | | (1 | ) |
| ASSETS | | | | | |
| Cash and due from banks | $ | 284,625 | | | $ | 230,889 | | | $ | 212,994 | |
| Interest-bearing deposits in financial institutions | 1,000 | | | 1,000 | | | 1,011 | |
| Total Cash and Cash Equivalents | 285,625 | | | 231,889 | | | 214,005 | |
| Securities available for sale, at fair value | 542,634 | | | 607,931 | | | 603,908 | |
| Securities held to maturity, at amortized cost | 75,154 | | | 86,794 | | | 85,247 | |
| Federal Home Loan Bank stock, at amortized cost | 24,058 | | | 22,150 | | | 22,157 | |
| Total Securities | 641,846 | | | 716,875 | | | 711,312 | |
| Mortgage loans held for sale | 99,330 | | | 86,034 | | | 71,390 | |
| Loans, net of unearned income and deferred costs: | | | | | |
| Real estate - residential 1-4 family | 965,559 | | | 833,208 | | | 837,370 | |
| Real estate - commercial | 1,796,150 | | | 1,451,271 | | | 1,447,078 | |
| Real estate - construction and land development | 554,753 | | | 476,379 | | | 452,481 | |
| Real estate - multifamily | 138,954 | | | 53,368 | | | 51,472 | |
| Commercial and industrial business | 790,614 | | | 644,528 | | | 700,623 | |
| Consumer and other loans | 121,009 | | | 62,321 | | | 75,365 | |
| Loans, net of unearned income and deferred costs | 4,367,039 | | | 3,521,075 | | | 3,564,389 | |
| Less: Allowance for loan losses | (37,351 | ) | | (36,180 | ) | | (35,917 | ) |
| Net Loans | 4,329,688 | | | 3,484,895 | | | 3,528,472 | |
| Premises and equipment, net | 172,940 | | | 154,343 | | | 155,774 | |
| Goodwill | 152,438 | | | 111,761 | | | 113,159 | |
| Other intangible assets, net | 23,080 | | | 17,721 | | | 22,509 | |
| Bank-owned life insurance policies | 147,949 | | | 58,217 | | | 58,716 | |
| Other assets | 320,995 | | | 110,713 | | | 107,148 | |
| TOTAL ASSETS | $ | 6,173,891 | | | $ | 4,972,448 | | | $ | 4,982,485 | |
| | | | | | |
| LIABILITIES AND EQUITY | | | | | |
| Liabilities | | | | | |
| Deposits: | | | | | |
| Noninterest-bearing demand | $ | 1,445,978 | | | $ | 1,245,925 | | | $ | 1,224,466 | |
| Interest-bearing: | | | | | |
| Demand and money market accounts | 1,676,623 | | | 1,309,085 | | | 1,365,183 | |
| Savings | 295,952 | | | 306,811 | | | 301,033 | |
| Certificates of deposit | 1,369,325 | | | 988,111 | | | 955,920 | |
| Total Deposits | 4,787,878 | | | 3,849,932 | | | 3,846,602 | |
| Advances from the Federal Home Loan Bank | 437,282 | | | 398,477 | | | 398,181 | |
| Repurchase agreements and other borrowings | 33,784 | | | 24,594 | | | 31,893 | |
| Total Borrowings | 471,066 | | | 423,071 | | | 430,074 | |
| Other liabilities | 98,878 | | | 86,037 | | | 87,533 | |
| TOTAL LIABILITIES | 5,357,822 | | | 4,359,040 | | | 4,364,209 | |
| Shareholders’ Equity | | | | | |
| Preferred stock: 2,000,000 shares authorized 0 shares issued at September 30, 2015 and 76,458 shares issued at September 30, 2014 and December 31, 2014 | — | | | 76,458 | | | 76,458 | |
| Common stock, $1.667 par: 90,000,000 shares authorized 51,580,762; 35,538,144; and 35,785,679 shares issued at September 30, 2015 and 2014 and December 31, 2014, respectively | 85,985 | | | 59,242 | | | 59,655 | |
| Capital surplus | 533,609 | | | 316,240 | | | 317,718 | |
| Retained earnings | 186,522 | | | 151,547 | | | 154,655 | |
| Common stock issued to deferred compensation trust, at cost 651,362; 617,886; and 627,730 shares at September 30, 2015 and 2014 and December 31, 2014, respectively | (10,151 | ) | | (9,508 | ) | | (9,674 | ) |
| Deferred compensation trust | 10,151 | | | 9,508 | | | 9,674 | |
| Accumulated other comprehensive income | 1,036 | | | 698 | | | 458 | |
| TOTAL SHAREHOLDERS’ EQUITY | 807,152 | | | 604,185 | | | 608,944 | |
| Noncontrolling interests | 8,917 | | | 9,223 | | | 9,332 | |
| TOTAL EQUITY | 816,069 | | | 613,408 | | | 618,276 | |
| TOTAL LIABILITIES AND EQUITY | $ | 6,173,891 | | | $ | 4,972,448 | | | $ | 4,982,485 | |
(1) As derived from the audited consolidated financial statements for December 31, 2014.
| |
| TOWNEBANK |
| Insurance Segment Financial Information |
| (dollars in thousands) |
| |
| | | | | | | | | | |
| | | | Increase/(Decrease) |
| | Three Months Ended | | September 30, 2015 | | September 30, 2015 |
| | September 30, | | June 30, | | September 30, 2014 | | June 30, 2015 |
| | 2015 | | 2014 | | 2015 | | Amount | | Percent | | Amount | | Percent |
| Commission and fee income | | | | | | | | | | | | | |
| Property and casualty | $ | 8,156 | | | $ | 7,335 | | | $ | 8,012 | | | $ | 821 | | | 11.19 | % | | $ | 144 | | | 1.80 | % |
| Employee benefits | 2,578 | | | 2,723 | | | 2,443 | | | (145 | ) | | (5.33 | )% | | 135 | | | 5.53 | % |
| Travel insurance | 626 | | | 468 | | | 910 | | | 158 | | | 33.76 | % | | (284 | ) | | (31.21 | )% |
| Specialized benefit services | 145 | | | 138 | | | 135 | | | 7 | | | 5.07 | % | | 10 | | | 7.41 | % |
| Total commissions and fees | 11,505 | | | 10,664 | | | 11,500 | | | 841 | | | 7.89 | % | | 5 | | | 0.04 | % |
| | | | | | | | | | | | | | |
| Contingency and bonus revenue | 260 | | | 56 | | | 387 | | | 204 | | | 364.29 | % | | (127 | ) | | (32.82 | )% |
| Other income | 53 | | | 52 | | | 47 | | | 1 | | | 1.92 | % | | 6 | | | 12.77 | % |
| Total revenue | $ | 11,818 | | | $ | 10,772 | | | $ | 11,934 | | | $ | 1,046 | | | 9.71 | % | | $ | (116 | ) | | (0.97 | )% |
| | | | | | | | | | | | | | |
| Employee commission expense | 2,361 | | | 2,165 | | | 2,326 | | | 196 | | | 9.05 | % | | 35 | | | 1.50 | % |
| Revenue, net of commission expense | $ | 9,457 | | | $ | 8,607 | | | $ | 9,608 | | | $ | 850 | | | 9.88 | % | | $ | (151 | ) | | (1.57 | )% |
| | | | | | | | | | | | | | |
| Salaries and employee benefits | 4,583 | | | 4,274 | | | 4,734 | | | 309 | | | 7.23 | % | | (151 | ) | | (3.19 | )% |
| Occupancy expense | 480 | | | 454 | | | 480 | | | 26 | | | 5.73 | % | | — | | | — | % |
| Furniture and equipment | 202 | | | 200 | | | 225 | | | 2 | | | 1.00 | % | | (23 | ) | | (10.22 | )% |
| Amortization of intangible assets | 543 | | | 510 | | | 540 | | | 33 | | | 6.47 | % | | 3 | | | 0.56 | % |
| Other expenses | 1,491 | | | 1,236 | | | 1,424 | | | 255 | | | 20.63 | % | | 67 | | | 4.71 | % |
| Total operating expenses | 7,299 | | | 6,674 | | | 7,403 | | | 625 | | | 9.36 | % | | (104 | ) | | (1.40 | )% |
| Income before income tax provision and noncontrolling interest | $ | 2,158 | | | $ | 1,933 | | | $ | 2,205 | | | $ | 225 | | | 11.64 | % | | $ | (47 | ) | | (2.13 | )% |
| Plus: Acquisition related expenses | 164 | | | 128 | | | 176 | | | 36 | | | 28.13 | % | | (12 | ) | | (6.82 | )% |
| Plus: Amortization of intangible assets | 543 | | | 510 | | | 540 | | | 33 | | | 6.47 | % | | 3 | | | 0.56 | % |
| Operating earnings before income taxes (non-GAAP) | $ | 2,865 | | | $ | 2,571 | | | $ | 2,921 | | | $ | 294 | | | 11.44 | % | | $ | (56 | ) | | (1.92 | )% |
| | | | | | | | | | | | | | |
| TOWNEBANK |
| Insurance Segment Financial Information |
| (dollars in thousands) |
| |
| | | | | | | | |
| | Nine Months Ended | | Increase/(Decrease) |
| | September 30, | | 2015 over 2014 |
| | 2015 | | 2014 | | Amount | | Percent |
| Commission and fee income | | | | | | | |
| Property and casualty | $ | 22,627 | | | $ | 18,805 | | | $ | 3,822 | | | 20.32 | % |
| Employee benefits | 7,690 | | | 8,027 | | | (337 | ) | | (4.20 | )% |
| Travel insurance | 2,668 | | | 1,893 | | | 775 | | | 40.94 | % |
| Specialized benefit services | 414 | | | 407 | | | 7 | | | 1.72 | % |
| Total commissions and fees | 33,399 | | | 29,132 | | | 4,267 | | | 14.65 | % |
| | | | | | | | |
| Contingency and bonus revenue | 3,171 | | | 3,165 | | | 6 | | | 0.19 | % |
| Other income | 148 | | | 287 | | | (139 | ) | | (48.43 | )% |
| Total revenue | $ | 36,718 | | | $ | 32,584 | | | $ | 4,134 | | | 12.69 | % |
| | | | | | | | |
| Employee commission expense | 6,723 | | | 6,278 | | | 445 | | | 7.09 | % |
| Revenue, net of commission expense | $ | 29,995 | | | $ | 26,306 | | | $ | 3,689 | | | 14.02 | % |
| | | | | | | | |
| Salaries and employee benefits | $ | 14,111 | | | $ | 11,640 | | | 2,471 | | | 21.23 | % |
| Occupancy expense | 1,417 | | | 1,232 | | | 185 | | | 15.02 | % |
| Furniture and equipment | 669 | | | 562 | | | 107 | | | 19.04 | % |
| Amortization of intangible assets | 1,609 | | | 1,368 | | | 241 | | | 17.62 | % |
| Other expenses | 4,157 | | | 3,417 | | | 740 | | | 21.66 | % |
| Total operating expenses | 21,963 | | | 18,219 | | | 3,744 | | | 20.55 | % |
| Income before income tax, corporate allocation and noncontrolling interest | $ | 8,032 | | | $ | 8,087 | | | $ | (55 | ) | | (0.68 | )% |
| Plus: Acquisition related expenses | 520 | | | 214 | | | 306 | | | 142.99 | % |
| Plus: Amortization of intangible assets | 1,609 | | | 1,368 | | | 241 | | | 17.62 | % |
| Operating earnings before income taxes (non-GAAP) | $ | 10,161 | | | $ | 9,669 | | | $ | 492 | | | 5.09 | % |
| | | | | | | | |
| TOWNEBANK |
| September 30, 2015 |
| Reconcilement of Non-GAAP Financial Measures: |
| (dollars in thousands) |
| | | | | | | |
| | | | | | | |
| | | Three Months Ended |
| | | September 30, | | September 30, | | December 31, |
| | | 2015 | | 2014 | | 2014 |
| | | | | | | |
| Return on average assets (GAAP basis) | | 1.14 | % | | 0.97 | % | | 0.57 | % |
| Impact of excluding average goodwill and other intangibles and amortization | | 0.07 | % | | 0.06 | % | | 0.06 | % |
| Return on average tangible assets (Non-GAAP) | | 1.21 | % | | 1.03 | % | | 0.63 | % |
| | | | | | | |
| Return on average equity (GAAP basis) | | 8.58 | % | | 7.86 | % | | 4.62 | % |
| Impact of excluding average goodwill and other intangibles and amortization | | 2.67 | % | | 2.46 | % | | 1.73 | % |
| Return on average tangible equity (Non-GAAP) | | 11.25 | % | | 10.32 | % | | 6.35 | % |
| | | | | | | |
| Return on average common equity (GAAP basis) | | 8.67 | % | | 8.98 | % | | 5.21 | % |
| Impact of excluding average goodwill and other intangibles and amortization | | 2.74 | % | | 3.36 | % | | 2.31 | % |
| Return on average tangible common equity (Non-GAAP) | | 11.41 | % | | 12.34 | % | | 7.52 | % |
| | | | | | | |
| Book value (GAAP basis) | | $ | 15.65 | | | 14.85 | | | $ | 14.88 | |
| Impact of excluding average goodwill and other intangibles and amortization | | 3.40 | | | 3.64 | | | (3.79 | ) |
| Tangible book value | | $ | 12.25 | | | $ | 11.21 | | | $ | 11.09 | |
| | | | | | | |
For more information contact:
G. Robert Aston, Jr., Chairman and CEO, 757-638-6780
Clyde E. McFarland, Jr., Senior Executive Vice President and CFO, 757-638-6801
William B. Littreal, Chief Investment Relations Officer and COO, 757-638-6813
