SUFFOLK, Va., April 25, 2019 (GLOBE NEWSWIRE) -- TowneBank (the “Company”) (NASDAQ: TOWN) today reported earnings for the quarter ended March 31, 2019, of $31.41 million, or $0.44 per diluted share, compared to $24.71 million or $0.36 per diluted share for the quarter ended March 31, 2018. Excluding acquisition-related expenses, earnings for the quarter ended March 31, 2019 were $31.77 million (non-GAAP), or $0.44 (non-GAAP) per diluted share, compared to $31.79 million (non-GAAP), or $0.46 (non-GAAP) per diluted share for the quarter ended March 31, 2018.
“As we celebrate our twentieth anniversary since the founding of TowneBank, our consistent financial performance continues to enable us to invest in building a solid pathway to the future through our expansion of our North Carolina and Virginia franchise," said G. Robert Aston, Jr., Executive Chairman.
Highlights for the First Quarter of 2019 Compared to the First Quarter of 2018:
- Total revenues were $133.85 million, an increase of $7.58 million, or 6.0%.
- Loans held for investment were $8.11 billion, an increase of $0.64 billion, or 8.50%, from March 31, 2018, and $0.09 billion, or 1.09%, from December 31, 2018, or 4.41% on an annualized basis.
- Total deposits were $8.73 billion, an increase of $0.91 billion, or 11.58%.
- Noninterest bearing deposits increased by 12.41%, to $2.81 billion, representing 32.23% of total deposits.
- Annualized return on common shareholders' equity was 8.30% and annualized return on average tangible common shareholders' equity was 13.39% (non-GAAP).
- Net interest margin for the quarter was 3.54% and taxable equivalent net interest margin was 3.57% (non-GAAP).
- Effective tax rate of 20.72% in the quarter compared to 19.74% in the first quarter of 2018.
“Deposit growth was robust in the first quarter. We continue to add to our production teams in North Carolina. In addition to 11 member-facing hires in Greensboro and Greenville, North Carolina where we have added over $80 million in new deposits, we have added Jack Clayton in Raleigh as President of Business Strategies for North Carolina. Jack is a 40-year veteran of Wells Fargo where he led the central and northeastern North Carolina regions. His proven ability to recruit talent from the national banks and his extensive business contacts will enhance our already strong double-digit growth in North Carolina," said J. Morgan Davis, President and Chief Executive Officer.
Quarterly Net Interest Income Compared to the First Quarter of 2018:
- Net interest income was $87.47 million compared to $76.34 million at March 31, 2018.
- Taxable equivalent net interest margin was 3.57%, including accretion of 11 basis points, compared to 3.54%, including accretion of 15 basis points, for 2018.
- Total cost of deposits increased to 0.93% from 0.53% at March 31, 2018.
- Average interest-earning assets totaled $10.02 billion at March 31, 2019 compared to $8.81 billion at March 31, 2018, an increase of 13.73%.
- Average loans held for investment represented 80.16% of average earning assets at March 31, 2019 compared to 78.95% at March 31, 2018.
- Average interest-bearing liabilities totaled $6.82 billion, an increase of $0.79 billion from prior year.
- Management periodically reviews the cost of funds charged to TowneBank Mortgage to fund its operations. Effective January 1, 2019, the line moved a floating-rate structure tied to Federal Home Loan Bank rates. As a result of the funding change, interest income declined in the Realty Segment. All intercompany transaction are eliminated in the Banking Segment.
Quarterly Provision for Loan Losses:
- Recorded a provision for loan losses of $1.44 million compared to $1.95 million one year ago and $2.29 million in the prior quarter.
- Net charge-offs were $0.23 million compared to $0.35 million one year prior. The ratio of net charge-offs to average loans on an annualized basis was 0.01% compared to 0.02% in both the prior quarter and the first quarter of 2018.
- The allowance for loan losses represented 0.66% of total loans compared to 0.65% at December 31, 2018 and 0.63% at March 31, 2018. Loan loss reserve as a percentage of total loans, excluding purchased loans, decreased to 0.81%, from 0.82% at December 31, 2018 and 0.86% at March 31, 2018. The allowance for loan losses was 9.36 times nonperforming loans compared to 10.97 times at December 31, 2018 and 10.40 times at March 31, 2018.
Quarterly Noninterest Income Compared to the First Quarter of 2018:
- Total noninterest income was $46.38 million compared to $49.93 million in 2018. The increase in insurance commissions and other title fees of $2.21 million was offset by decreases in residential mortgage banking income of $4.10 million and real estate brokerage of $1.16 million.
- Residential mortgage banking income was $13.51 million compared to $17.60 million in first quarter 2018. Loan volume in the current quarter was $513.53 million, with purchase loan activity comprising 86.08%, compared to first quarter 2018 loan volume of $662.45 million, and 80.86% purchase loan activity. Lower volumes and continued pressure on gain on sale margin contributed to the decline in revenue, combined with a reduction in mortgage producers in certain markets as the Company repositions itself to enhance future growth and profitability.
- Total Insurance segment revenue increased 17.88% to $18.50 million in first quarter due to additional commission income from two insurance agency acquisitions in 2018 and one insurance agency acquisition in January 2019.
- Property management fee revenue decreased 11.72%, or $1.02 million, due to lower reservation levels in the current year, as compared to first quarter 2018.
Quarterly Noninterest Expense Compared to the First Quarter of 2018:
- Total noninterest expense was $92.12 million compared to $92.30 million, a decrease of $0.18 million, or 0.20%. Driving the decrease was a reduction in acquisition-related expenses of $8.32 million, which was partially offset by increases of $2.08 million in salary and benefits expense, $1.05 million in outside processing expenses, $0.78 million in charitable contributions, and $0.71 million in professional fees.
- Noninterest expense included operational expenses of insurance agencies acquired subsequent to first quarter 2018 of $2.41 million.
Quarterly Income Taxes Compared to the First Quarter of 2018:
- Income tax expense was $8.21 million compared to $6.08 million, one year prior. This represents an effective tax rate of 20.72% compared to 19.74% in the first quarter of 2018.
Investment Securities:
- Total investment securities were $1.20 billion compared to $1.19 billion at December 31, 2018 and $1.34 billion at March 31, 2018. The weighted average duration of the portfolio at March 31, 2019 was 3.30 years. The carrying value of the available-for-sale portfolio included $2.22 million of net unrealized losses compared to $11.91 million at December 31, 2018 and $17.95 million in net unrealized losses at March 31, 2018. The decrease in net unrealized losses was primarily due to interest rate fluctuations. During the first quarter of 2019, we sold $100.08 million in available-for-sale securities at a loss of $0.78 million, in order to position our portfolio for better yield, going forward. The carrying value of the held-to-maturity portfolio does not reflect $1.04 million in net unrealized gains compared to $0.67 million in net unrealized gains at December 31, 2018 and $0.88 million in net unrealized gains at March 31, 2018.
Loans and Asset Quality:
- Total loans held for investment were $8.11 billion at March 31, 2019 compared to $8.02 billion at December 31, 2018 and $7.47 billion at March 31, 2018.
- Nonperforming assets declined to $24.99 million, or 0.22% of total assets, compared to $28.48 million, or 0.27%, at March 31, 2018.
- Nonperforming loans were 0.07% of period end loans.
- Foreclosed property decreased to $17.07 million from $21.73 million at March 31, 2018.
Deposits and Borrowings:
- Total deposits were $8.73 billion compared to $8.37 billion at December 31, 2018, and $7.83 billion at March 31, 2018.
- Total loans to total deposits were 92.83% compared to 95.79% at December 31, 2018 and 95.46% at March 31, 2018.
- Non-interest bearing deposits were 32.23% of total deposits at March 31, 2019 compared to 31.33% at December 31, 2018 and 31.99% at March 31, 2018.
- Total borrowings were $1.03 billion compared to $1.09 billion and $1.18 billion at December 31, 2018 and March 31, 2018, respectively.
Capital:
- Common equity tier 1 capital ratio of 11.49%.
- Tier 1 leverage capital ratio of 9.92%.
- Tier 1 risk-based capital ratio of 11.52%.
- Total risk-based capital ratio of 14.79%.
- Book value was $21.40 compared to $21.05 at December 31, 2018 and $19.90 at March 31, 2018.
- Tangible book value was $14.46 compared to $14.26 at December 31, 2018 and $13.34 at March 31, 2018.
About TowneBank:
As one of the top community banks in Virginia and North Carolina, TowneBank operates 41 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 Raleigh, Cary, Charlotte, Moyock, Greenville, Grandy, Camden County, Southern Shores, Corolla and Nags Head in North Carolina. TowneBank also offers a full range of financial services through its controlled divisions and subsidiaries that include Towne Investment Group, Towne Wealth Management, Towne Insurance Agency, Towne Benefits, TowneBank Mortgage, TowneBank Commercial Mortgage, Berkshire Hathaway HomeServices Towne Realty, Towne 1031 Exchange, LLC, and Towne Vacations. 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 $11.57 billion as of March 31, 2019, 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 its 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. 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:
Certain statements contained in this release constitute forward-looking statements within the meaning of U.S. federal securities laws. These forward-looking statements speak only as of the date of this release, are based on current expectations, and involve a number of assumptions. These include statements regarding TowneBank’s future economic performance, financial condition, prospects, growth, strategies and expectations, and objectives of management, and are generally identified by the use of words such as “believe,” “expect,” “intend,” “anticipate,” “estimate,” or “project” or similar expressions. 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. You should not place undue reliance on forward-looking statements, which are subject to assumptions that are subject to change. TowneBank’s ability to predict results, or the actual effect of future plans or strategies, is inherently uncertain. These forward-looking statements are subject to a number of factors and uncertainties that could cause actual results to differ from those indicated or implied in the forward-looking statements and such differences may be material. 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 System; the quality and composition of TowneBank’s loan and securities portfolios; demand for loan products; deposit flows; competition; demand for financial services in TowneBank’s market area; implementation of new technologies and the ability to develop and maintain secure and reliable electronic systems; changes in the securities markets; changes in accounting principles, policies and guidelines; and other risk factors detailed from time to time in filings made by TowneBank with the Federal Deposit Insurance Corporation. TowneBank undertakes no obligation to update or clarify these forward-looking statements, whether as a result of new information, future events or otherwise.
Media contact:
G. Robert Aston, Jr., Executive Chairman, 757-638-6780
J. Morgan Davis, President and Chief Executive Officer, 757-673-1673
Investor contact:
William B. Littreal, Chief Financial Officer, 757-638-6813
| TOWNEBANK |
| Selected Financial Highlights (unaudited) |
| (dollars in thousands, except per share data) |
| | | |
| | | Three Months Ended |
| | | March 31, | | December 31, | | September 30, | | June 30, | | March 31, |
| | 2019 | | 2018 | | 2018 | | 2018 | | 2018 |
| Income and Performance Ratios: | | | | | | | | | |
| | Total Revenue | $ | 133,854 | | | $ | 131,417 | | | $ | 137,914 | | | $ | 137,058 | | | $ | 126,276 | |
| | Net income | 32,082 | | | 36,440 | | | 39,252 | | | 36,138 | | | 25,943 | |
| | Net income attributable to TowneBank | 31,409 | | | 35,990 | | | 38,293 | | | 34,804 | | | 24,705 | |
| | Net income per common share - diluted | 0.44 | | | 0.50 | | | 0.53 | | | 0.48 | | | 0.36 | |
| | Book value per common share | 21.40 | | | 21.05 | | | 20.54 | | | 20.22 | | | 19.90 | |
| | Tangible book value per share (non-GAAP) | 14.46 | | | 14.26 | | | 13.83 | | | 13.50 | | | 13.34 | |
| | Return on average assets | 1.14 | % | | 1.28 | % | | 1.40 | % | | 1.32 | % | | 1.02 | % |
| | Return on average assets - tangible (non-GAAP) | 1.29 | % | | 1.43 | % | | 1.56 | % | | 1.48 | % | | 1.15 | % |
| | Return on average equity | 8.24 | % | | 9.44 | % | | 10.21 | % | | 9.55 | % | | 7.39 | % |
| | Return on average equity - tangible (non-GAAP) | 13.24 | % | | 14.91 | % | | 16.08 | % | | 15.19 | % | | 11.64 | % |
| | Return on average common equity | 8.30 | % | | 9.53 | % | | 10.30 | % | | 9.62 | % | | 7.45 | % |
| | Return on average common equity - tangible (non-GAAP) | 13.39 | % | | 15.11 | % | | 16.30 | % | | 15.36 | % | | 11.77 | % |
| | Noninterest income as a percentage of total revenue | 34.65 | % | | 32.12 | % | | 35.69 | % | | 36.65 | % | | 39.54 | % |
| | | | | | | | | | | |
| Regulatory Capital Ratios (1): | | | | | | | | | |
| | Common equity tier 1 | 11.49 | % | | 11.51 | % | | 11.53 | % | | 11.33 | % | | 11.65 | % |
| | Tier 1 | 11.52 | % | | 11.54 | % | | 11.57 | % | | 11.36 | % | | 11.68 | % |
| | Total | 14.79 | % | | 14.83 | % | | 14.90 | % | | 14.71 | % | | 15.27 | % |
| | Tier 1 leverage ratio | 9.92 | % | | 9.87 | % | | 9.98 | % | | 10.00 | % | | 9.97 | % |
| | | | | | | | | | | |
| Asset Quality: | | | | | | | | | |
| | Allowance for loan losses to nonperforming loans | | 9.36x | | | | 10.97x | | | | 7.25x | | | | 12.64x | | | | 10.40x | |
| | Allowance for loan losses to period end loans | 0.66 | % | | 0.65 | % | | 0.64 | % | | 0.64 | % | | 0.63 | % |
| | Allowance for loan losses to period end loans excluding purchased loans | 0.81 | % | | 0.82 | % | | 0.82 | % | | 0.84 | % | | 0.86 | % |
| | Nonperforming loans to period end loans | 0.07 | % | | 0.06 | % | | 0.09 | % | | 0.05 | % | | 0.06 | % |
| | Nonperforming assets to period end assets | 0.22 | % | | 0.22 | % | | 0.25 | % | | 0.24 | % | | 0.27 | % |
| | Net charge-offs to average loans (annualized) | 0.01 | % | | 0.02 | % | | 0.03 | % | | 0.01 | % | | 0.02 | % |
| | | | | | | | | | | |
| | Nonperforming loans | $ | 5,697 | | | $ | 4,749 | | | $ | 6,926 | | | $ | 3,919 | | | $ | 4,495 | |
| | Former bank premises | 2,223 | | | 2,253 | | | 2,253 | | | 2,253 | | | 2,253 | |
| | Foreclosed property | 17,070 | | | 17,163 | | | 18,153 | | | 20,133 | | | 21,731 | |
| | Total nonperforming assets | $ | 24,990 | | | $ | 24,165 | | | $ | 27,332 | | | $ | 26,305 | | | $ | 28,479 | |
| | Loans past due 90 days and still accruing interest | $ | 117 | | | $ | 394 | | | $ | 153 | | | $ | 22 | | | $ | 199 | |
| | | | | | | | | | | |
| | Allowance for loan losses | $ | 53,303 | | | $ | 52,094 | | | $ | 50,236 | | | $ | 49,535 | | | $ | 46,735 | |
| | | | | | | | | | | |
| Mortgage Banking: | | | | | | | | | |
| | Loans originated, mortgage | $ | 366,643 | | | $ | 407,787 | | | $ | 561,543 | | | $ | 667,189 | | | $ | 477,147 | |
| | Loans originated, joint venture | 146,884 | | | 192,280 | | | 249,956 | | | 283,933 | | | 185,306 | |
| | Total loans originated | $ | 513,527 | | | $ | 600,067 | | | $ | 811,499 | | | $ | 951,122 | | | $ | 662,453 | |
| | Number of loans originated | 1,977 | | | 2,304 | | | 3,068 | | | 3,687 | | | 2,601 | |
| | Number of originators | 240 | | | 293 | | | 303 | | | 324 | | | 324 | |
| | Purchase % | 86.08 | % | | 88.64 | % | | 89.72 | % | | 91.23 | % | | 80.86 | % |
| | Loans sold | $ | 473,068 | | | $ | 694,341 | | | $ | 852,205 | | | $ | 825,313 | | | $ | 677,114 | |
| | Realized gain on sales and fees as a % of loans closed | 3.58 | % | | 3.37 | % | | 3.36 | % | | 3.30 | % | | 3.59 | % |
| | | | | | | | | | | |
| Other Ratios: | | | | | | | | | |
| | Net interest margin | 3.54 | % | | 3.53 | % | | 3.62 | % | | 3.69 | % | | 3.51 | % |
| | Net interest margin-fully tax equivalent (nonGAAP) | 3.57 | % | | 3.55 | % | | 3.64 | % | | 3.71 | % | | 3.54 | % |
| | Average earning assets/total average assets | 89.50 | % | | 89.91 | % | | 89.69 | % | | 89.61 | % | | 89.45 | % |
| | Average loans/average deposits | 95.83 | % | | 95.32 | % | | 97.55 | % | | 97.79 | % | | 95.89 | % |
| | Average noninterest deposits/total average deposits | 31.39 | % | | 31.90 | % | | 32.61 | % | | 32.28 | % | | 31.75 | % |
| | Period end equity/period end total assets | 13.53 | % | | 13.78 | % | | 13.49 | % | | 13.63 | % | | 13.65 | % |
| | Efficiency ratio | 68.43 | % | | 62.65 | % | | 64.00 | % | | 65.10 | % | | 73.10 | % |
| | | | | | | | | | | |
| | (1) Current reporting period regulatory capital ratios are preliminary | | | | | | |
| TOWNEBANK |
| Selected Data (unaudited) |
| (dollars in thousands) |
| |
| | | | | | | | | | |
| Investment Securities | | | | | | | % Change |
| | Q1 | | Q1 | | Q4 | | Q1 19 vs. | | Q1 19 vs. |
| Available-for-sale securities, at fair value | 2019 | | 2018 | | 2018 | | Q1 18 | | Q4 18 |
| U.S. agency securities | $ | 260,152 | | | $ | 428,952 | | | $ | 358,542 | | | (39.35 | )% | | (27.44 | )% |
| U.S. Treasury notes | 2,229 | | | 301,442 | | | 1,246 | | | (99.26 | )% | | 78.89 | % |
| Municipal securities | 107,278 | | | 56,655 | | | 87,308 | | | 89.35 | % | | 22.87 | % |
| Trust preferred and other corporate securities | 32,439 | | | 24,570 | | | 30,992 | | | 32.03 | % | | 4.67 | % |
| Mortgage-backed securities issued by GSE | 697,679 | | | 425,560 | | | 617,251 | | | 63.94 | % | | 13.03 | % |
| Total | $ | 1,099,777 | | | $ | 1,237,179 | | | $ | 1,095,339 | | | (11.11 | )% | | 0.41 | % |
| | | | | | | | | | |
| Held-to-maturity securities, at amortized cost | | | | | | | | | |
| Municipal securities | $ | 34,472 | | | $ | 36,056 | | | $ | 34,488 | | | (4.39 | )% | | (0.05 | )% |
| Trust preferred corporate securities | 500 | | | 500 | | | 500 | | | — | % | | — | % |
| Mortgage-backed securities issued by GSE | 14,715 | | | 18,727 | | | 15,610 | | | (21.42 | )% | | (5.73 | )% |
| Total | $ | 49,687 | | | $ | 55,283 | | | $ | 50,598 | | | (10.12 | )% | | (1.80 | )% |
| | | | | | | | | | |
| | | | | | | | | | |
| Loans Held For Investment | | | | | | | % Change |
| | Q1 | | Q1 | | Q4 | | Q1 19 vs. | | Q1 19 vs. |
| | 2019 | | 2018 | | 2018 | | Q1 18 | | Q4 18 |
| Real estate-construction and development | $ | 1,111,360 | | | $ | 996,159 | | | $ | 1,067,239 | | | 11.56 | % | | 4.13 | % |
| Commercial real estate - investment related properties | 1,951,292 | | | 1,853,737 | | | 1,978,592 | | | 5.26 | % | | (1.38 | )% |
| Commercial real estate - owner occupied | 1,279,039 | | | 1,164,923 | | | 1,262,748 | | | 9.80 | % | | 1.29 | % |
| Real estate-multifamily | 255,649 | | | 297,085 | | | 260,987 | | | (13.95 | )% | | (2.05 | )% |
| Real estate-residential 1-4 family | 1,637,579 | | | 1,566,449 | | | 1,626,896 | | | 4.54 | % | | 0.66 | % |
| Commercial and industrial business | 1,547,623 | | | 1,328,357 | | | 1,510,364 | | | 16.51 | % | | 2.47 | % |
| Consumer and other loans | 322,828 | | | 263,441 | | | 311,407 | | | 22.54 | % | | 3.67 | % |
| Total | $ | 8,105,370 | | | $ | 7,470,151 | | | $ | 8,018,233 | | | 8.50 | % | | 1.09 | % |
| | | | | | | | | | |
| | | | | | | | | | |
| Deposits | | | | | | | % Change |
| | Q1 | | Q1 | | Q4 | | Q1 19 vs. | | Q1 19 vs. |
| | 2019 | | 2018 | | 2018 | | Q1 18 | | Q4 18 |
| Noninterest-bearing demand | $ | 2,813,857 | | | $ | 2,503,246 | | | $ | 2,622,761 | | | 12.41 | % | | 7.29 | % |
| Interest-bearing: | | | | | | | | | |
| Demand and money market accounts | 3,290,907 | | | 3,001,256 | | | 3,223,215 | | | 9.65 | % | | 2.10 | % |
| Savings | 285,790 | | | 309,077 | | | 286,684 | | | (7.53 | )% | | (0.31 | )% |
| Certificates of deposits | 2,341,134 | | | 2,011,843 | | | 2,237,762 | | | 16.37 | % | | 4.62 | % |
| Total | $ | 8,731,688 | | | $ | 7,825,422 | | | $ | 8,370,422 | | | 11.58 | % | | 4.32 | % |
| | | | | | | | | | |
| | | | | | | | | | |
| The following table sets forth an estimate of the expected effects of the aggregate acquisition accounting adjustments on pre-tax net interest income for the periods shown: |
| | | Discount Accretion (Premium Amortization) | | |
| | | For the three months ended | | |
| | | June 30, | | September 30, | | December 31, | | |
| | | 2019 | | 2019 | | 2019 | | |
| Assets: | | | | | | | | |
| Investment Securities | | $ | (75 | ) | | $ | (74 | ) | | $ | (75 | ) | | |
| Loans | | 1,837 | | | 1,773 | | | 1,716 | | | |
| | | | | | | | | |
| Liabilities: | | | | | | | | |
| Deposits | | 54 | | | 51 | | | 47 | | | |
| | | | | | | | | |
| Total estimated effect on net interest income | | $ | 1,708 | | | $ | 1,648 | | | $ | 1,594 | | | |
| Note: This information is intended for informational purposes only and is not necessarily indicative of future results. Actual results may differ due to factors such |
| factors such as changes in estimated prepayment speeds or projected credit loss rates. |
| TOWNEBANK |
| Average Balances, Yields and Rate Paid (unaudited) |
| (dollars in thousands) |
| |
| | Three Months Ended | | Three Months Ended | | Three Months Ended |
| | March 31, 2019 | | December 31, 2018 | | March 31, 2018 |
| | | | 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 | $ | 8,030,994 | | | $ | 100,146 | | | 5.06 | % | | $ | 7,923,978 | | | $ | 99,895 | | | 5.00 | % | | $ | 6,954,777 | | | $ | 81,911 | | | 4.78 | % |
| Taxable investment securities | 1,036,645 | | | 7,529 | | | 2.91 | % | | 1,101,892 | | | 7,515 | | | 2.73 | % | | 902,292 | | | 5,041 | | | 2.23 | % |
| Tax-exempt investment securities | 79,310 | | | 765 | | | 3.86 | % | | 80,656 | | | 747 | | | 3.70 | % | | 73,037 | | | 672 | | | 3.68 | % |
| Total securities | 1,115,955 | | | 8,294 | | | 2.97 | % | | 1,182,548 | | | 8,262 | | | 2.73 | % | | 975,329 | | | 5,713 | | | 2.34 | % |
| Interest-bearing deposits | 693,365 | | | 3,998 | | | 2.34 | % | | 652,131 | | | 3,559 | | | 2.17 | % | | 640,349 | | | 2,362 | | | 1.50 | % |
| Loans held for sale | 178,475 | | | 2,003 | | | 4.49 | % | | 266,058 | | | 3,176 | | | 4.77 | % | | 239,103 | | | 2,379 | | | 3.98 | % |
| Total earning assets | 10,018,789 | | | 114,441 | | | 4.63 | % | | 10,024,715 | | | 114,892 | | | 4.55 | % | | 8,809,558 | | | 92,365 | | | 4.25 | % |
| Less: allowance for loan losses | (52,844 | ) | | | | | | (50,792 | ) | | | | | | (46,199 | ) | | | | |
| | | | | | | | | | | | | | | | | | |
| Total nonearning assets | 1,228,808 | | | | | | | 1,176,037 | | | | | | | 1,085,005 | | | | | |
| | | | | | | | | | | | | | | | | | |
| Total assets | $ | 11,194,753 | | | | | | | $ | 11,149,960 | | | | | | | $ | 9,848,364 | | | | | |
| | | | | | | | | | | | | | | | | | |
| Liabilities and Equity: | | | | | | | | | | | | | | | | | |
| Interest-bearing deposits | | | | | | | | | | | | | | | | | |
| Demand and money market | $ | 3,174,157 | | | $ | 6,240 | | | 0.80 | % | | $ | 3,122,973 | | | $ | 5,670 | | | 0.72 | % | | $ | 2,774,347 | | | $ | 2,969 | | | 0.43 | % |
| Savings | 285,499 | | | 1,027 | | | 1.46 | % | | 293,135 | | | 1,022 | | | 1.38 | % | | 308,539 | | | 876 | | | 1.15 | % |
| Certificates of deposit | 2,290,056 | | | 11,907 | | | 2.11 | % | | 2,245,039 | | | 10,803 | | | 1.91 | % | | 1,866,889 | | | 5,641 | | | 1.23 | % |
| Total interest-bearing deposits | 5,749,712 | | | 19,174 | | | 1.35 | % | | 5,661,147 | | | 17,495 | | | 1.23 | % | | 4,949,775 | | | 9,486 | | | 0.78 | % |
| Borrowings | 821,889 | | | 4,221 | | | 2.05 | % | | 920,389 | | | 4,643 | | | 1.97 | % | | 820,967 | | | 2,878 | | | 1.40 | % |
| Subordinated debt, net | 247,913 | | | 2,962 | | | 4.78 | % | | 247,769 | | | 2,961 | | | 4.78 | % | | 259,205 | | | 3,158 | | | 4.87 | % |
| Total interest-bearing liabilities | 6,819,514 | | | 26,357 | | | 1.57 | % | | 6,829,305 | | | 25,099 | | | 1.46 | % | | 6,029,947 | | | 15,522 | | | 1.04 | % |
| Demand deposits | 2,630,813 | | | | | | | 2,651,495 | | | | | | | 2,303,125 | | | | | |
| Other noninterest-bearing liabilities | 198,527 | | | | | | | 157,238 | | | | | | | 160,308 | | | | | |
| Total liabilities | 9,648,854 | | | | | | | 9,638,038 | | | | | | | 8,493,380 | | | | | |
| | | | | | | | | | | | | | | | | | |
| Shareholders’ equity | 1,545,899 | | | | | | | 1,511,922 | | | | | | | 1,354,984 | | | | | |
| | | | | | | | | | | | | | | | | | |
| Total liabilities and equity | $ | 11,194,753 | | | | | | | $ | 11,149,960 | | | | | | | $ | 9,848,364 | | | | | |
| | | | | | | | | | | | | | | | | | |
| Net interest income (tax-equivalent basis) | | | $ | 88,084 | | | | | | | $ | 89,793 | | | | | | | $ | 76,843 | | | |
| Reconcilement of Non-GAAP Financial Measures | | | | | | | | | | | | | | | | |
| Tax-equivalent basis adjustment | | | (611 | ) | | | | | | (585 | ) | | | | | | (499 | ) | | |
| Net interest income (GAAP) | | | $ | 87,473 | | | | | | | $ | 89,208 | | | | | | | $ | 76,344 | | | |
| | | | | | | | | | | | | | | | | | |
| Interest rate spread (1) | | | | | 3.06 | % | | | | | | 3.09 | % | | | | | | 3.21 | % |
| Interest expense as a percent of average earning assets | | | | 1.07 | % | | | | | | 0.99 | % | | | | | | 0.71 | % |
| Net interest margin (tax equivalent basis) (2) | | | | 3.57 | % | | | | | | 3.55 | % | | | | | | 3.54 | % |
| Total cost of deposits | | | | | 0.93 | % | | | | | | 0.83 | % | | | | | | 0.53 | % |
| | | | | | | | | | | | | | | | | | |
(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 Balance Sheets |
| (dollars in thousands, except share data) |
| | |
| | | |
| | March 31, | | December 31, |
| | 2019 | | 2018 |
| | (unaudited) | | (audited) |
| ASSETS | | | |
| Cash and due from banks | $ | 879,299 | | | $ | 665,029 | |
| Interest-bearing deposits in financial institutions | 21,001 | | | 21,667 | |
| Total Cash and Cash Equivalents | 900,300 | | | 686,696 | |
| Securities available for sale, at fair value | 1,099,777 | | | 1,095,339 | |
| Securities held to maturity, at amortized cost | 49,687 | | | 50,598 | |
| Other securities | 5,022 | | | 4,797 | |
| Federal Home Loan Bank stock, at amortized cost | 41,464 | | | 43,229 | |
| Total Securities | 1,195,950 | | | 1,193,963 | |
| Mortgage loans held for sale | 247,021 | | | 220,986 | |
| Loans, net of unearned income and deferred costs | 8,105,370 | | | 8,018,233 | |
| Less: allowance for loan losses | (53,303 | ) | | (52,094 | ) |
| Net Loans | 8,052,067 | | | 7,966,139 | |
| Premises and equipment, net | 227,458 | | | 211,796 | |
| Goodwill | 442,881 | | | 433,658 | |
| Other intangible assets, net | 61,333 | | | 58,752 | |
| Bank-owned life insurance policies | 238,977 | | | 237,371 | |
| Other assets | 202,276 | | | 153,669 | |
| TOTAL ASSETS | $ | 11,568,263 | | | $ | 11,163,030 | |
| | | | |
| LIABILITIES AND EQUITY | | | |
| Deposits: | | | |
| Noninterest-bearing demand | $ | 2,813,857 | | | $ | 2,622,761 | |
| Interest-bearing: | | | |
| Demand and money market accounts | 3,290,907 | | | 3,223,215 | |
| Savings | 285,790 | | | 286,684 | |
| Certificates of deposit | 2,341,134 | | | 2,237,762 | |
| Total Deposits | 8,731,688 | | | 8,370,422 | |
| Advances from the Federal Home Loan Bank | 739,160 | | | 799,315 | |
| Subordinated debt, net | 248,010 | | | 247,861 | |
| Repurchase agreements and other borrowings | 44,775 | | | 47,156 | |
| Total Borrowings | 1,031,945 | | | 1,094,332 | |
| Other liabilities | 238,974 | | | 159,856 | |
| TOTAL LIABILITIES | 10,002,607 | | | 9,624,610 | |
| Preferred stock | | | |
| Authorized and unissued shares - 2,000,000 | — | | | — | |
| Common stock, $1.667 par: 150,000,000 shares authorized | | | |
| 72,613,754 and 72,465,923 shares issued at | | | |
| March 31, 2019 and December 31, 2018, respectively | 121,047 | | | 120,801 | |
| Capital surplus | 1,035,563 | | | 1,034,676 | |
| Retained earnings | 399,030 | | | 379,239 | |
| Common stock issued to deferred compensation trust, at cost | | | |
| 768,274 and 769,200 shares at | | | |
| March 31, 2019 and December 31, 2018, respectively | (14,067 | ) | | (13,955 | ) |
| Deferred compensation trust | 14,067 | | | 13,955 | |
| Accumulated other comprehensive loss | (1,792 | ) | | (9,190 | ) |
| TOTAL SHAREHOLDERS’ EQUITY | 1,553,848 | | | 1,525,526 | |
| Noncontrolling interest | 11,808 | | | 12,894 | |
| TOTAL EQUITY | 1,565,656 | | | 1,538,420 | |
| TOTAL LIABILITIES AND EQUITY | $ | 11,568,263 | | | $ | 11,163,030 | |
| TOWNEBANK |
| Consolidated Statements of Income (unaudited) |
| (dollars in thousands, except per share data) |
| | | | |
| | | | |
| | Three Months Ended |
| | March 31, |
| | 2019 | | 2018 |
| INTEREST INCOME: | | | |
| Loans, including fees | $ | 99,695 | | | $ | 81,533 | |
| Investment securities | 8,134 | | | 5,592 | |
| Interest-bearing deposits in financial institutions and federal funds sold | 3,998 | | | 2,362 | |
| Mortgage loans held for sale | 2,003 | | | 2,379 | |
| Total interest income | 113,830 | | | 91,866 | |
| INTEREST EXPENSE: | | | |
| Deposits | 19,174 | | | 9,486 | |
| Advances from the Federal Home Loan Bank | 4,153 | | | 2,838 | |
| Subordinated capital debentures | 2,962 | | | 3,158 | |
| Repurchase agreements and other borrowings, net of capitalized interest | 68 | | | 40 | |
| Total interest expense | 26,357 | | | 15,522 | |
| Net interest income | 87,473 | | | 76,344 | |
| | | | |
| PROVISION FOR LOAN LOSSES | 1,438 | | | 1,953 | |
| Net interest income after provision for loan losses | 86,035 | | | 74,391 | |
| NONINTEREST INCOME: | | | |
| Residential mortgage banking income, net | 13,508 | | | 17,604 | |
| Insurance commissions and other title fees and income, net | 15,582 | | | 13,372 | |
| Real estate brokerage and property management income, net | 9,268 | | | 10,429 | |
| Service charges on deposit accounts | 2,861 | | | 2,883 | |
| Credit card merchant fees, net | 1,183 | | | 1,168 | |
| Bank owned life insurance | 1,598 | | | 1,532 | |
| Other income | 3,157 | | | 2,941 | |
| Gain/(loss) on investment securities | (776 | ) | | 3 | |
| Total noninterest income | 46,381 | | | 49,932 | |
| NONINTEREST EXPENSE: | | | |
| Salaries and employee benefits | 52,860 | | | 50,784 | |
| Occupancy | 8,251 | | | 6,477 | |
| Furniture and equipment | 3,371 | | | 3,698 | |
| Other expenses | 27,641 | | | 31,344 | |
| Total noninterest expense | 92,123 | | | 92,303 | |
| Income before income tax expense and noncontrolling interest | 40,293 | | | 32,020 | |
| Provision for income tax expense | 8,211 | | | 6,077 | |
| Net income | $ | 32,082 | | | $ | 25,943 | |
| Net income attributable to noncontrolling interest | (673 | ) | | (1,238 | ) |
| Net income attributable to TowneBank | $ | 31,409 | | | $ | 24,705 | |
| Per common share information | | | |
| Basic earnings | $ | 0.44 | | | $ | 0.36 | |
| Diluted earnings | $ | 0.44 | | | $ | 0.36 | |
| Cash dividends declared | $ | 0.16 | | | $ | 0.14 | |
| TOWNEBANK |
| Consolidated Balance Sheets - Five Quarter Trend |
| (dollars in thousands, except share data) |
| |
| | | | | | | | | | |
| | March 31, | | December 31, | | September 30, | | June 30, | | March 31, |
| | 2019 | | 2018 | | 2018 | | 2018 | | 2018 |
| | (unaudited) | | (audited) | | (unaudited) | | (unaudited) | | (unaudited) |
| ASSETS | | | | | | | | | |
| Cash and due from banks | $ | 879,299 | | | $ | 665,029 | | | $ | 688,584 | | | $ | 440,054 | | | $ | 479,453 | |
| Interest-bearing deposits in financial institutions | 21,001 | | | 21,667 | | | 20,910 | | | 17,749 | | | 17,728 | |
| Total Cash and Cash Equivalents | 900,300 | | | 686,696 | | | 709,494 | | | 457,803 | | | 497,181 | |
| Securities available for sale, at fair value | 1,099,777 | | | 1,095,339 | | | 1,051,773 | | | 1,057,663 | | | 1,237,179 | |
| Securities held to maturity, at amortized cost | 49,687 | | | 50,598 | | | 52,002 | | | 53,954 | | | 55,283 | |
| Other securities | 5,022 | | | 4,797 | | | 5,519 | | | 5,206 | | | 5,002 | |
| Federal Home Loan Bank stock, at amortized cost | 41,464 | | | 43,229 | | | 46,393 | | | 46,393 | | | 46,400 | |
| Total Securities | 1,195,950 | | | 1,193,963 | | | 1,155,687 | | | 1,163,216 | | | 1,343,864 | |
| Mortgage loans held for sale | 247,021 | | | 220,986 | | | 333,354 | | | 396,185 | | | 293,731 | |
| Loans, net of unearned income and deferred costs | 8,105,370 | | | 8,018,233 | | | 7,881,692 | | | 7,774,956 | | | 7,470,151 | |
| Less: allowance for loan losses | (53,303 | ) | | (52,094 | ) | | (50,236 | ) | | (49,535 | ) | | (46,735 | ) |
| Net Loans | 8,052,067 | | | 7,966,139 | | | 7,831,456 | | | 7,725,421 | | | 7,423,416 | |
| Premises and equipment, net | 227,458 | | | 211,796 | | | 210,724 | | | 207,997 | | | 207,126 | |
| Goodwill | 442,881 | | | 433,658 | | | 427,117 | | | 425,625 | | | 416,789 | |
| Other intangible assets, net | 61,333 | | | 58,752 | | | 58,165 | | | 60,669 | | | 57,493 | |
| Bank-owned life insurance policies | 238,977 | | | 237,371 | | | 235,348 | | | 233,682 | | | 232,039 | |
| Other assets | 202,276 | | | 153,669 | | | 159,887 | | | 161,055 | | | 148,776 | |
| TOTAL ASSETS | $ | 11,568,263 | | | $ | 11,163,030 | | | $ | 11,121,232 | | | $ | 10,831,653 | | | $ | 10,620,415 | |
| LIABILITIES AND EQUITY | | | | | | | | | |
| Deposits: | | | | | | | | | |
| Noninterest-bearing demand | $ | 2,813,857 | | | $ | 2,622,761 | | | $ | 2,671,558 | | | $ | 2,597,320 | | | $ | 2,503,246 | |
| Interest-bearing: | | | | | | | | | |
| Demand and money market accounts | 3,290,907 | | | 3,223,215 | | | 3,096,317 | | | 3,017,767 | | | 3,001,256 | |
| Savings | 285,790 | | | 286,684 | | | 298,368 | | | 305,334 | | | 309,077 | |
| Certificates of deposit | 2,341,134 | | | 2,237,762 | | | 2,233,188 | | | 2,070,790 | | | 2,011,843 | |
| Total Deposits | 8,731,688 | | | 8,370,422 | | | 8,299,431 | | | 7,991,211 | | | 7,825,422 | |
| Advances from the Federal Home Loan Bank | 739,160 | | | 799,315 | | | 873,469 | | | 873,622 | | | 873,773 | |
| Subordinated debt, net | 248,010 | | | 247,861 | | | 247,712 | | | 247,563 | | | 257,723 | |
| Repurchase agreements and other borrowings | 44,775 | | | 47,156 | | | 45,591 | | | 50,981 | | | 52,509 | |
| Total Borrowings | 1,031,945 | | | 1,094,332 | | | 1,166,772 | | | 1,172,166 | | | 1,184,005 | |
| Other liabilities | 238,974 | | | 159,856 | | | 155,205 | | | 191,490 | | | 161,638 | |
| TOTAL LIABILITIES | 10,002,607 | | | 9,624,610 | | | 9,621,408 | | | 9,354,867 | | | 9,171,065 | |
| Preferred stock | | | | | | | | | |
| Authorized shares - 2,000,000 | — | | | — | | | — | | | — | | | — | |
| | | | | | | | | | |
| Common stock, $1.667 par value | 121,047 | | | 120,801 | | | 120,613 | | | 120,615 | | | 120,472 | |
| Capital surplus | 1,035,563 | | | 1,034,676 | | | 1,032,863 | | | 1,031,965 | | | 1,028,985 | |
| Retained earnings | 399,030 | | | 379,239 | | | 354,842 | | | 328,125 | | | 304,896 | |
| Common stock issued to deferred compensation | | | | | | | | | |
| trust, at cost | (14,067 | ) | | (13,955 | ) | | (13,780 | ) | | (13,500 | ) | | (12,612 | ) |
| Deferred compensation trust | 14,067 | | | 13,955 | | | 13,780 | | | 13,500 | | | 12,612 | |
| Accumulated other comprehensive loss | (1,792 | ) | | (9,190 | ) | | (22,348 | ) | | (17,944 | ) | | (15,873 | ) |
| TOTAL SHAREHOLDERS’ EQUITY | 1,553,848 | | | 1,525,526 | | | 1,485,970 | | | 1,462,761 | | | 1,438,480 | |
| Noncontrolling interest | 11,808 | | | 12,894 | | | 13,854 | | | 14,025 | | | 10,870 | |
| TOTAL EQUITY | 1,565,656 | | | 1,538,420 | | | 1,499,824 | | | 1,476,786 | | | 1,449,350 | |
| TOTAL LIABILITIES AND EQUITY | $ | 11,568,263 | | | $ | 11,163,030 | | | $ | 11,121,232 | | | $ | 10,831,653 | | | $ | 10,620,415 | |
| TOWNEBANK |
| Consolidated Statements of Income - Five Quarter Trend (unaudited) |
| (dollars in thousands, except share data) |
| | |
| | |
| | Three Months Ended |
| | March 31, | | December 31, | | September 30, | | June 30, | | March 31, |
| | 2019 | | 2018 | | 2018 | | 2018 | | 2018 |
| INTEREST INCOME: | | | | | | | | | |
| Loans, including fees | $ | 99,695 | | | $ | 99,446 | | | $ | 97,215 | | | $ | 93,150 | | | $ | 81,533 | |
| Investment securities | 8,134 | | | 8,126 | | | 7,019 | | | 6,390 | | | 5,592 | |
| Interest-bearing deposits in financial institutions and federal funds sold | 3,998 | | | 3,559 | | | 2,148 | | | 2,159 | | | 2,362 | |
| Mortgage loans held for sale | 2,003 | | | 3,176 | | | 4,012 | | | 3,557 | | | 2,379 | |
| Total interest income | 113,830 | | | 114,307 | | | 110,394 | | | 105,256 | | | 91,866 | |
| INTEREST EXPENSE: | | | | | | | | | |
| Deposits | 19,174 | | | 17,495 | | | 14,540 | | | 11,620 | | | 9,486 | |
| Advances from the Federal Home Loan Bank | 4,153 | | | 4,585 | | | 4,153 | | | 3,764 | | | 2,838 | |
| Subordinated capital debentures | 2,962 | | | 2,961 | | | 2,962 | | | 2,986 | | | 3,158 | |
| Repurchase agreements and other borrowings | 68 | | | 58 | | | 42 | | | 63 | | | 40 | |
| Total interest expense | 26,357 | | | 25,099 | | | 21,697 | | | 18,433 | | | 15,522 | |
| Net interest income | 87,473 | | | 89,208 | | | 88,697 | | | 86,823 | | | 76,344 | |
| | | | | | | | | | |
| PROVISION FOR LOAN LOSSES | 1,438 | | | 2,292 | | | 1,241 | | | 3,056 | | | 1,953 | |
| Net interest income after provision for loan losses | 86,035 | | | 86,916 | | | 87,456 | | | 83,767 | | | 74,391 | |
| NONINTEREST INCOME: | | | | | | | | | |
| Residential mortgage banking income, net | 13,508 | | | 12,951 | | | 15,804 | | | 18,745 | | | 17,604 | |
| Insurance commissions and other title fees and income, net | 15,582 | | | 13,212 | | | 14,493 | | | 15,087 | | | 13,372 | |
| Real estate brokerage and property management income, net | 9,268 | | | 5,982 | | | 8,542 | | | 6,910 | | | 10,429 | |
| Service charges on deposit accounts | 2,861 | | | 2,928 | | | 3,028 | | | 2,969 | | | 2,883 | |
| Credit card merchant fees, net | 1,183 | | | 1,298 | | | 1,563 | | | 1,443 | | | 1,168 | |
| Bank owned life insurance | 1,598 | | | 2,014 | | | 1,657 | | | 1,633 | | | 1,532 | |
| Other income | 3,157 | | | 3,824 | | | 4,130 | | | 3,448 | | | 2,941 | |
| Gain/(loss) on investment securities | (776 | ) | | — | | | — | | | — | | | 3 | |
| Total noninterest income | 46,381 | | | 42,209 | | | 49,217 | | | 50,235 | | | 49,932 | |
| NONINTEREST EXPENSE: | | | | | | | | | |
| Salaries and employee benefits | 52,860 | | | 50,233 | | | 50,497 | | | 50,324 | | | 50,784 | |
| Occupancy expense | 8,251 | | | 7,352 | | | 7,013 | | | 6,802 | | | 6,477 | |
| Furniture and equipment | 3,371 | | | 3,587 | | | 3,646 | | | 3,546 | | | 3,698 | |
| Other expenses | 27,641 | | | 21,165 | | | 27,106 | | | 28,549 | | | 31,344 | |
| Total noninterest expense | 92,123 | | | 82,337 | | | 88,262 | | | 89,221 | | | 92,303 | |
| Income before income tax expense and noncontrolling interest | 40,293 | | | 46,788 | | | 48,411 | | | 44,781 | | | 32,020 | |
| Provision for income tax expense | 8,211 | | | 10,348 | | | 9,159 | | | 8,643 | | | 6,077 | |
| Net income | 32,082 | | | 36,440 | | | 39,252 | | | 36,138 | | | 25,943 | |
| Net income attributable to noncontrolling interest | (673 | ) | | (450 | ) | | (959 | ) | | (1,334 | ) | | (1,238 | ) |
| Net income attributable to TowneBank | $ | 31,409 | | | $ | 35,990 | | | $ | 38,293 | | | $ | 34,804 | | | $ | 24,705 | |
| Per common share information | | | | | | | | | |
| Basic earnings | $ | 0.44 | | | $ | 0.50 | | | $ | 0.53 | | | $ | 0.48 | | | $ | 0.36 | |
| Diluted earnings | $ | 0.44 | | | $ | 0.50 | | | $ | 0.53 | | | $ | 0.48 | | | $ | 0.36 | |
| Basic weighted average shares outstanding | 71,992,330 | | | 71,905,956 | | | 71,875,085 | | | 71,787,980 | | | 68,983,745 | |
| Diluted weighted average shares outstanding | 72,099,558 | | | $ | 72,043,369 | | | 72,044,355 | | | 71,949,590 | | | 69,156,809 | |
| Cash dividends declared | $ | 0.16 | | | $ | 0.16 | | | $ | 0.16 | | | $ | 0.16 | | | $ | 0.14 | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| TOWNEBANK |
| Banking Segment Financial Information (unaudited) |
| (dollars in thousands) |
| |
| | | | | | |
| | Three Months Ended | | Increase/(Decrease) |
| | March 31, | | December 31, | | 2019 over 2018 |
| | 2019 | | 2018 | | 2018 | | Amount | | Percent |
| Revenue | | | | | | | | | |
| Net interest income | $ | 86,400 | | | $ | 74,042 | | | $ | 86,433 | | | $ | 12,358 | | | 16.69 | % |
| Noninterest income | | | | | | | | | |
| Service charges on deposit accounts | 2,861 | | | 2,883 | | | 2,928 | | | (22 | ) | | (0.76 | )% |
| Credit card merchant fees | 1,183 | | | 1,168 | | | 1,298 | | | 15 | | | 1.28 | % |
| Other income | 3,927 | | | 3,956 | | | 4,660 | | | (29 | ) | | (0.73 | )% |
| Subtotal | 7,971 | | | 8,007 | | | 8,886 | | | (36 | ) | | (0.45 | )% |
| Gain/(loss) on investment securities | (776 | ) | | 3 | | | — | | | (779 | ) | | N/M | |
| Total noninterest income | 7,195 | | | 8,010 | | | 8,886 | | | (815 | ) | | (10.17 | )% |
| Total revenue | 93,595 | | | 82,052 | | | 95,319 | | | 11,543 | | | 14.07 | % |
| | | | | | | | | | |
| Provision for loan losses | 1,438 | | | 1,953 | | | 2,292 | | | (515 | ) | | (26.37 | )% |
| | | | | | | | | | |
| Expenses | | | | | | | | | |
| Salaries and employee benefits | 31,087 | | | 30,202 | | | 28,100 | | | 885 | | | 2.93 | % |
| Occupancy expense | 5,244 | | | 4,016 | | | 4,789 | | | 1,228 | | | 30.58 | % |
| Furniture and equipment | 2,367 | | | 2,532 | | | 2,426 | | | (165 | ) | | (6.52 | )% |
| Amortization of intangibles | 1,366 | | | 1,221 | | | 1,428 | | | 145 | | | 11.88 | % |
| Other expenses | 16,181 | | | 20,748 | | | 9,759 | | | (4,567 | ) | | (22.01 | )% |
| Total expenses | 56,245 | | | 58,719 | | | 46,502 | | | (2,474 | ) | | (4.21 | )% |
| Income before income tax, corporate allocation and noncontrolling interest | 35,912 | | | 21,380 | | | 46,525 | | | 14,532 | | | 67.97 | % |
| Corporate allocation | 452 | | | 456 | | | 367 | | | (4 | ) | | (0.88 | )% |
| Income before income tax provision and noncontrolling interest | 36,364 | | | 21,836 | | | 46,892 | | | 14,528 | | | 66.53 | % |
| Provision for income tax expense | 7,192 | | | 3,881 | | | 10,252 | | | 3,311 | | | 85.31 | % |
| Net income | 29,172 | | | 17,955 | | | 36,640 | | | 11,217 | | | 62.47 | % |
| Noncontrolling interest | 2 | | | (2 | ) | | 4 | | | 4 | | | N/M | |
| Net income attributable to TowneBank | $ | 29,174 | | | $ | 17,953 | | | $ | 36,644 | | | $ | 11,221 | | | 62.50 | % |
| | | | | | | | | | |
| Efficiency ratio | 59.60 | % | | 71.57 | % | | 48.79 | % | | (11.97 | )% | | (16.72 | )% |
| TOWNEBANK |
| Realty Segment Financial Information (unaudited) |
| (dollars in thousands) |
| |
| | | |
| | Three Months Ended | | Increase/(Decrease) |
| | March 31, | | December 31, | | 2019 over 2018 |
| | 2019 | | 2018 | | 2018 | | Amount | | Percent |
| Revenue | | | | | | | | | |
| Residential mortgage brokerage income, net | $ | 13,756 | | | $ | 17,661 | | | $ | 13,472 | | | $ | (3,905 | ) | | (22.11 | )% |
| Real estate brokerage income, net | 1,561 | | | 1,698 | | | 2,183 | | | (137 | ) | | (8.07 | )% |
| Title insurance and settlement fees | 368 | | | 315 | | | 458 | | | 53 | | | 16.83 | % |
| Property management fees, net | 7,708 | | | 8,731 | | | 3,799 | | | (1,023 | ) | | (11.72 | )% |
| Income from unconsolidated subsidiary | 94 | | | 94 | | | 54 | | | — | | | — | % |
| Net interest and other income | 1,372 | | | 2,546 | | | 3,210 | | | (1,174 | ) | | (46.11 | )% |
| Total revenue | 24,859 | | | 31,045 | | | 23,176 | | | (6,186 | ) | | (19.93 | )% |
| | | | | | | | | | |
| Expenses | | | | | | | | | |
| Salaries and employee benefits | 12,895 | | | 13,877 | | | 14,308 | | | (982 | ) | | (7.08 | )% |
| Occupancy expense | 2,345 | | | 1,894 | | | 1,928 | | | 451 | | | 23.81 | % |
| Furniture and equipment | 768 | | | 980 | | | 930 | | | (212 | ) | | (21.63 | )% |
| Amortization of intangible assets | 725 | | | 672 | | | 767 | | | 53 | | | 7.89 | % |
| Other expenses | 6,241 | | | 6,294 | | | 6,419 | | | (53 | ) | | (0.84 | )% |
| Total expenses | 22,974 | | | 23,717 | | | 24,352 | | | (743 | ) | | (3.13 | )% |
| | | | | | | | | | |
| Income/(loss) before income tax, corporate allocation and noncontrolling interest | 1,885 | | | 7,328 | | | (1,176 | ) | | (5,443 | ) | | (74.28 | )% |
| Corporate allocation | (263 | ) | | (289 | ) | | (238 | ) | | 26 | | | (9.00 | )% |
| Income before income tax provision and noncontrolling interest | 1,622 | | | 7,039 | | | (1,414 | ) | | (5,417 | ) | | (76.96 | )% |
| Provision for income tax expense | 551 | | | 1,559 | | | (86 | ) | | (1,008 | ) | | (64.66 | )% |
| Net income/(loss) | 1,071 | | | 5,480 | | | (1,328 | ) | | (4,409 | ) | | (80.46 | )% |
| Noncontrolling interest | (252 | ) | | (622 | ) | | (130 | ) | | 370 | | | (59.49 | )% |
| Net income/(loss) attributable to TowneBank | $ | 819 | | | $ | 4,858 | | | $ | (1,458 | ) | | $ | (4,039 | ) | | (83.14 | )% |
| | | | | | | | | | |
| Efficiency ratio | 92.42 | % | | 76.40 | % | | 105.07 | % | | 16.02 | % | | 20.97 | % |
| | | | | | | | | | |
| TOWNEBANK |
| Insurance Segment Financial Information (unaudited) |
| (dollars in thousands) |
| |
| | | | | | |
| | | | |
| | Three Months Ended | | Increase/(Decrease) |
| | March 31, | | December 31, | | 2019 over 2018 |
| | 2019 | | 2018 | | 2018 | | Amount | | Percent |
| Commission and fee income | | | | | | | | | |
| Property and casualty | $ | 11,873 | | | $ | 9,356 | | | $ | 9,770 | | | $ | 2,517 | | | 26.90 | % |
| Employee benefits | 3,506 | | | 3,196 | | | 3,625 | | | 310 | | | 9.70 | % |
| Travel insurance | 1,289 | | | 1,768 | | | 1,095 | | | (479 | ) | | (27.09 | )% |
| Specialized benefit services | 170 | | | 169 | | | 168 | | | 1 | | | 0.59 | % |
| Total commissions and fees | 16,838 | | | 14,489 | | | 14,658 | | | 2,349 | | | 16.21 | % |
| | | | | | | | | | |
| Contingency and bonus revenue | 1,585 | | | 1,133 | | | 1,185 | | | 452 | | | 39.89 | % |
| Other income | 75 | | | 70 | | | 79 | | | 5 | | | 7.14 | % |
| Total revenue | 18,498 | | | 15,692 | | | 15,922 | | | 2,806 | | | 17.88 | % |
| | | | | | | | | | |
| Employee commission expense | 3,098 | | | 2,513 | | | 3,000 | | | 585 | | | 23.28 | % |
| Revenue, net of commission expense | 15,400 | | | 13,179 | | | 12,922 | | | 2,221 | | | 16.85 | % |
| | | | | | | | | | |
| Salaries and employee benefits | 8,878 | | | 6,705 | | | 7,825 | | | 2,173 | | | 32.41 | % |
| Occupancy expense | 662 | | | 567 | | | 635 | | | 95 | | | 16.75 | % |
| Furniture and equipment | 236 | | | 185 | | | 231 | | | 51 | | | 27.57 | % |
| Amortization of intangible assets | 1,101 | | | 702 | | | 928 | | | 399 | | | 56.84 | % |
| Other expenses | 2,027 | | | 1,708 | | | 1,865 | | | 319 | | | 18.68 | % |
| Total operating expenses | 12,904 | | | 9,867 | | | 11,484 | | | 3,037 | | | 30.78 | % |
| Income before income tax, corporate allocation and noncontrolling interest | 2,496 | | | 3,312 | | | 1,438 | | | (816 | ) | | (24.64 | )% |
| Corporate allocation | (189 | ) | | (167 | ) | | (128 | ) | | (22 | ) | | 13.17 | % |
| Income before income tax provision and noncontrolling interest | 2,307 | | | 3,145 | | | 1,310 | | | (838 | ) | | (26.65 | )% |
| Provision for income tax expense | 468 | | | 637 | | | 182 | | | (169 | ) | | (26.53 | )% |
| Net income | 1,839 | | | 2,508 | | | 1,128 | | | (669 | ) | | (26.67 | )% |
| Noncontrolling interest | (423 | ) | | (614 | ) | | (324 | ) | | 191 | | | (31.11 | )% |
| Net income attributable to TowneBank | $ | 1,416 | | | $ | 1,894 | | | $ | 804 | | | $ | (478 | ) | | (25.24 | )% |
| | | | | | | | | | |
| Provision for income taxes | 468 | | | 637 | | | 182 | | | (169 | ) | | (26.53 | )% |
| Depreciation, amortization and interest expense | 1,333 | | | 906 | | | 1,152 | | | 427 | | | 47.13 | % |
| EBITDA | $ | 3,217 | | | $ | 3,437 | | | $ | 2,138 | | | $ | (220 | ) | | (6.40 | )% |
| | | | | | | | | | |
| Efficiency ratio | 83.79 | % | | 74.87 | % | | 88.87 | % | | 8.92 | % | | 11.91 | % |
| TOWNEBANK |
| Reconcilement of Non-GAAP Financial Measures |
| |
| | | | | | |
| | Three Months Ended |
| | March 31, | | March 31, | | December 31, |
| | 2019 | | 2018 | | 2018 |
| | | | | | |
| Return on average assets (GAAP) | 1.14 | % | | 1.02 | % | | 1.28 | % |
| Impact of excluding average goodwill and other intangibles and amortization | 0.15 | % | | 0.13 | % | | 0.15 | % |
| Return on average tangible assets (non-GAAP) | 1.29 | % | | 1.15 | % | | 1.43 | % |
| | | | | | |
| Return on average equity (GAAP) | 8.24 | % | | 7.39 | % | | 9.44 | % |
| Impact of excluding average goodwill and other intangibles and amortization | 5.00 | % | | 4.25 | % | | 5.47 | % |
| Return on average tangible equity (non-GAAP) | 13.24 | % | | 11.64 | % | | 14.91 | % |
| | | | | | |
| Return on average common equity (GAAP) | 8.30 | % | | 7.45 | % | | 9.53 | % |
| Impact of excluding average goodwill and other intangibles and amortization | 5.09 | % | | 4.32 | % | | 5.58 | % |
| Return on average tangible common equity (non-GAAP) | 13.39 | % | | 11.77 | % | | 15.11 | % |
| | | | | | |
| Book value (GAAP) | $ | 21.40 | | | $ | 19.90 | | | $ | 21.05 | |
| Impact of excluding average goodwill and other intangibles and amortization | (6.94 | ) | | (6.56 | ) | | (6.79 | ) |
| Tangible book value (non-GAAP) | $ | 14.46 | | | $ | 13.34 | | | $ | 14.26 | |
| | | | | | |
| TOWNEBANK |
| Reconcilement of Non-GAAP Financial Measures |
| (dollars in thousands, except per share data) |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Reconcilement of GAAP Earnings to Operating Earnings Excluding Certain Items Affecting Comparability | | Three Months Ended |
| | | March 31, | | December 31, | | September 30, | | June 30, | | March 31, |
| | | 2018 | | 2018 | | 2018 | | 2018 | | 2018 |
| | | | | | | | | | | |
| Net income (GAAP) | | $ | 31,409 | | | $ | 35,990 | | | $ | 38,293 | | | $ | 34,804 | | | $ | 24,705 | |
| | | | | | | | | | | |
| Acquisition-related expenses | | 411 | | | (1,518 | ) | | 424 | | | 797 | | | 8,726 | |
| Income tax expense -tax reform legislation | | — | | | 696 | | | — | | | — | | | — | |
| Income tax expense (benefit) - other items | | (52 | ) | | 355 | | | (44 | ) | | (93 | ) | | (1,639 | ) |
| Income tax expense (benefit) | | (52 | ) | | 1,051 | | | (44 | ) | | (93 | ) | | (1,639 | ) |
| Total charges, net of taxes | | 359 | | | (467 | ) | | 380 | | | 704 | | | 7,087 | |
Operating earnings, excluding certain items affecting
comparability (non-GAAP) | | $ | 31,768 | | | $ | 35,523 | | | $ | 38,673 | | | $ | 35,508 | | | $ | 31,792 | |
| | | | | | | | | | | |
| Weighted average diluted shares | | 72,099,558 | | | 72,043,369 | | | 72,044,355 | | | 71,949,590 | | | 69,156,809 | |
| | | | | | | | | | | |
| Diluted EPS (GAAP) | | $ | 0.44 | | | $ | 0.50 | | | $ | 0.53 | | | $ | 0.48 | | | $ | 0.36 | |
Diluted EPS, excluding certain items affecting
comparability (non-GAAP) | | $ | 0.44 | | | $ | 0.49 | | | $ | 0.54 | | | $ | 0.49 | | | $ | 0.46 | |
| | | | | | | | | | | |
| Average assets | | $ | 11,194,753 | | | $ | 11,149,960 | | | $ | 10,844,570 | | | $ | 10,536,847 | | | $ | 9,848,364 | |
| Average tangible equity | | $ | 1,039,630 | | | $ | 1,022,982 | | | $ | 1,003,151 | | | $ | 981,607 | | | $ | 932,161 | |
| | | | | | | | | | | |
Return on average assets, excluding certain items
affecting comparability (non-GAAP) | | 1.15 | % | | 1.26 | % | | 1.41 | % | | 1.35 | % | | 1.31 | % |
| Return on average tangible equity, excluding certain items affecting comparability (non-GAAP) | | 13.38 | % | | 14.73 | % | | 16.23 | % | | 15.48 | % | | 14.72 | % |
| Return on average common tangible equity, excluding certain items affecting comparability (non-GAAP) | | 13.53 | % | | 14.93 | % | | 16.45 | % | | 15.66 | % | | 14.89 | % |
Efficiency ratio, excluding certain items affecting
comparability (non-GAAP) | | 68.12 | % | | 63.81 | % | | 63.69 | % | | 64.52 | % | | 66.19 | % |
| | | | | | | | | | | |
