SUFFOLK, Va., April 27, 2015 (GLOBE NEWSWIRE) -- Hampton Roads based TowneBank (the "Bank") (Nasdaq:TOWN) reported record earnings of $14.54 million for the quarter ended March 31, 2015, a 30.61% increase, or $3.41 million, over the $11.13 million reported for the comparative period in 2014. Fully diluted earnings per share were $0.29 per share compared to $0.31 per share for the comparative period of 2014. First quarter earnings per share reflect the issuance of 15.55 million new common shares issued in conjunction with the acquisition of Franklin Financial Corporation (FRNK) ("Franklin") on January 2, 2015. "The benefits of this merger are reflected in our operating results for the quarter that produced a 1.01% return on average assets and a 10.27% return on average tangible equity," said G. Robert Aston, Jr., Chairman and Chief Executive Officer. "Tangible book value ended the quarter at $11.73 compared to $11.00 in the 2014 comparative period and $11.09 in the linked quarter. The merger also provided an estimated $50 million of additional equity that will provide for approximately $500 million of asset growth in future periods," added Aston.
The Bank's common dividend was $0.11 per share for the quarter with the common dividend totaling $5.66 million. The current dividend represents an increase of 10.0% over the dividend paid during the same quarter of 2014.
"In addition to our strong financial performance in the first quarter of 2015, we set the stage for the continuation of the Towne growth story with the Franklin acquisition and our expansion into the Richmond, Virginia metro market," added Aston. "Importantly, our operations team has successfully completed the entire integration and systems conversion process including full implementation of all estimated cost saves and combined balance sheet restructuring. In addition, we have assembled a strong team of Richmond hometown bankers and have begun implementing our branding and market development strategies that resulted in $33.6 million of new loan originations in Richmond during the quarter."
First Quarter 2015 Performance Highlights
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Total revenues were $72.37 million, an increase of $14.45 million, or 24.95%, compared to the first quarter of 2014
- Taxable equivalent net interest margin was 3.52%, including accretion of 0.08%, compared to 3.44% for first quarter 2014
- Residential mortgage banking income increased 66.79% from first quarter 2014 to $8.44 million on production volume of $318.42 million
- Insurance commissions increased 21.94% to $11.05 million
- Noninterest income was 39.82% of total revenue in first quarter 2015
- Return on average assets of 1.01%, increased from 0.96% for first quarter 2014
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Loans held for investment increased $657.91 million, or 20.12%, from March 31, 2014 with organic growth of $190.60 million, an increase of 5.83%
- Commercial and industrial loans increased by $36.25 million, or 7.32%, with organic growth of $19.59 million
- Owner occupied commercial real estate loans increased $19.64 million, or 2.61% with organic growth of $13.21 million
- Income producing commercial real estate loans increased $310.70 million, or 48.24% with organic growth of $83.61 million
- Construction and development loans increased $49.55 million, or 10.55% with organic growth of $1.70 million
- Consumer and other loans increased $40.33 million, or 83.30% through organic growth
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Total deposits were $4.51 billion, an increase of $823.91 million, or 22.38%, from the first quarter of 2014
- Noninterest bearing deposits increased by 15.70%, to $1.26 billion
- Average interest-bearing deposit costs were 0.55%, up 2 basis points from the prior year
- Noninterest bearing deposits were 28.0% of total deposits compared to 29.61% at March 31, 2014
- Total cost of deposits increased to 0.40% from 0.38% at March 31, 2014 reflective of a richer mix of savings deposits acquired in the Franklin merger
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Asset quality showed continued strength
- Nonperforming assets were $58.74 million, or 1.01% of total assets compared to 1.10% at March 31, 2014
- Nonperforming loans decreased 35.82% to $7.05 million
- Foreclosed property increased to $51.70 million, including $14.30 million acquired in the Franklin merger
- Performing troubled debt restructurings decreased $10.96 million
- Low credit costs as provision for loan losses was $0.32 million for first quarter 2015
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Strategic acquisitions
- On February 1, 2015, acquired Lackey Saunders Co., Inc. and Gloucester Southside Insurance Agency, Inc., independent insurance agencies
- On January 2, 2015, completed the acquisition of Franklin and its wholly owned subsidiary, Franklin Federal Savings Bank, based in Richmond, Virginia
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The Bank remained well-capitalized
- Common equity tier 1 capital ratio of 13.09%
- Tier 1 leverage capital ratio of 10.99%
- Tier 1 risk-based capital ratio of 13.20%
- Total risk-based capital ratio of 13.96%
- Capital ratios were not significantly impacted by Basel III capital rules, which became effective on January 1, 2015
- Tangible book value increased to $11.73
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On January 7, 2015, the Company redeemed in full its $76.46 million of Preferred Stock issued to the U.S. Treasury under the Small Business Lending Fund.
- Capital structure of shareholders' equity is now 100% common equity
- Liquidity ratio in excess of 21%
Net Interest Income
Net interest income increased to $43.56 million, an $8.36 million, or 23.77%, increase from the first 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 $988.74 million, or 22.98%, from the first quarter of 2014. The increase was augmented by an 8 basis point widening of the tax-equivalent net interest margin to 3.52% in the current quarter from 3.44% in the first quarter of 2014. Accretion income added $0.78 million, or 8 basis points, to margin in the current quarter.
On a linked quarter basis, net interest income increased $6.42 million or 17.28%, in first quarter 2015 versus the fourth quarter of 2014, while tax-equivalent net interest margin was 3.52% versus 3.35% for the fourth quarter of 2014.
Noninterest Income
% Change | |||||
Q1 | Q1 | Q4 | Q1 15 vs. | Q1 15 vs. | |
(in millions) | 2015 | 2014 | 2014 | Q1 14 | Q4 14 |
Residential mortgage banking income, net | $ 8,443 | $ 5,062 | $ 6,523 | 66.79% | 29.43% |
Real estate brokerage and property management, net | 3,955 | 3,292 | 2,450 | 20.14% | 61.43% |
Insurance commissions and other title fees and income, net | 11,049 | 9,061 | 7,743 | 21.94% | 42.70% |
Service charges on deposit accounts | 2,197 | 2,131 | 2,288 | 3.10% | (3.98)% |
Credit card merchant fees, net | 432 | 773 | 911 | (44.11)% | (52.58)% |
Other income | 2,691 | 2,408 | 2,486 | 11.75% | 8.25% |
Subtotal before gain on investment securities | 28,767 | 22,727 | 22,401 | 26.58% | 28.42% |
Net gain (loss) on investment securities | 49 | 2 | — | 2,350.00% | N/M |
Total noninterest income | $ 28,816 | $ 22,729 | $ 22,401 | 26.79% | 28.64% |
Noninterest income, excluding gains or losses on investment securities, was $28.77 million for the first quarter of 2015, an increase of $6.04 million, or 26.58%, from the first quarter of 2014. The majority of the increase from the comparative period in 2014 is attributable to residential mortgage banking income, which increased $3.38 million, or 66.79%, from the first quarter of 2014 primarily due to increased production volumes and improved pricing and margins. Mortgage production was $318.42 million in the first quarter of 2015, which was $114.66 million greater than first quarter 2014. Also contributing to the increase were insurance commissions, which increased $1.99 million, or 21.94%, due to the acquisition of two insurance agencies in February 2015 and one agency in May 2014. The increase in real estate brokerage and property management income was driven by the acquisition of a resort property management company in Hilton Head, South Carolina in fourth quarter 2014.
In comparison to the fourth quarter of 2014, noninterest income, excluding gains or losses on investment securities, increased $6.37 million, or 28.42%. Residential mortgage banking income increased by $1.92 million, or 29.43%, from the fourth quarter of 2014 despite a slight decrease in mortgage production of $2.88 million due to improvements in pricing and an increase in the value of rate lock commitments. Purchase closed volume was 76% of total production versus 24% refinance activity for first quarter 2015. Real estate brokerage and property management income increased due to a seasonal increase related to our resort property management business. Our North Carolina-based property management business, which was sold to a third party on April 1, 2015, generated $1.80 million in management fee revenue in first quarter 2015. Additionally, insurance commissions increased due to the current year agency acquisitions and higher contingent commission revenue, which is mostly received during the first quarter of each year.
Noninterest Expense
% Change | |||||
Q1 | Q1 | Q4 | Q1 15 vs. | Q1 15 vs. | |
(in millions) | 2015 | 2014 | 2014 | Q1 14 | Q4 14 |
Salaries and benefits | $ 27,679 | $ 23,396 | $ 25,205 | 18.31% | 9.82% |
Occupancy expense | 4,930 | 4,176 | 4,676 | 18.06% | 5.43% |
Furniture and equipment | 2,369 | 2,000 | 2,103 | 18.45% | 12.65% |
Acquisition-related expenses | 415 | 52 | 3,103 | 698.08% | (86.63)% |
Other | 15,047 | 11,457 | 13,872 | 31.33% | 8.47% |
Total noninterest expense | $ 50,440 | $ 41,081 | $ 48,959 | 22.78% | 3.02% |
Noninterest expense increased by $9.36 million, or 22.78%, from the comparative quarter of 2014. Driving the increase were operating expenses of $2.88 million related to the Franklin merger. Additionally, operating expenses increased $2.56 million due to our insurance and resort property management acquisitions in first quarter of 2015 and in 2014.
Noninterest expense increased by $1.48 million, or 3.02%, from the fourth quarter of 2014. Driving the increase were the additional operating expenses related to the first quarter 2015 acquisitions combined with the effect of a fourth quarter 2014 reversal of $0.90 million, pre-tax, in previously accrued employee incentive compensation unearned for the full 2014 year. These factors more than offset the decrease in acquisition-related expenses from the linked quarter.
Segment Results
$ Change | ||||||
(in millions) | Q1 | Q1 | Q4 | Q1 15 vs. | Q1 15 vs. | |
Segment Net Income | 2015 | 2014 | 2014 | Q1 14 | Q4 14 | |
Banking | $ 11,108 | $ 9,037 | $ 7,193 | $ 2,071 | $ 3,915 | |
Realty | 1,647 | (25) | (234) | 1,672 | 1,881 | |
Insurance | 1,783 | 2,119 | 276 | (336) | 1,507 | |
Total net income | $ 14,538 | $ 11,131 | $ 7,235 | $ 3,407 | $ 7,303 |
Banking
Net income for the three months ended March 31, 2015 for the Banking segment was $11.11 million, increasing $2.07 million, or 22.92%, from the comparative 2014 quarter. The increase in earnings was driven by an increase in net interest income of $8.28 million, primarily due to the increase in earning assets from the Franklin merger. The increase in net interest income was partially offset by an increase in noninterest expense related to the Franklin merger combined with increases in charitable contributions and marketing expenses.
The increase in earnings of $3.92 million, or 54.43% from the fourth quarter of 2014 was primarily driven by increases in net interest income of $6.49 million, which was also due to the increase in earning assets related to the Franklin merger and other income of $0.36 million combined with decreases in other expenses of $1.71 million, as acquisition-related expense decreased $2.83 million.
Realty
For the three months ended March 31, 2015, the Realty segment had net income of $1.65 million, an increase of $1.67 million compared to the first quarter of 2014. Contributing to the improvement was an increase in residential mortgage banking income of $3.40 million, or 66.35%. Also contributing to the improvement was an increase in property management fees of $0.54 million, or 24.95%.
Net income in the Realty segment increased by $1.88 million from the linked quarter ended December 31, 2014. Residential mortgage banking income increased $1.88 million, or 28.38% and seasonal increases in resort property management business led to increased fees of $1.75 million in the linked quarter comparison. Total noninterest expenses increased by 5.97%, or $0.59 million, compared to the linked quarter.
Insurance
The Insurance segment had net income of $1.78 million for the three months ended March 31, 2015, a decrease of $0.34 million as compared to the first quarter of 2014. The decline was primarily caused by an increase of $0.47 million due to a combination of higher acquisition-related expenses and a one-time reclassification of expenses between segments in the prior year. The insurance agency acquisitions in first quarter 2015 and second quarter 2014 resulted in additional commissions and fee revenue of $1.47 million and additional $1.46 million of noninterest expenses.
Net income increased $1.51 million from the fourth quarter of 2014. The improvement from the linked quarter was driven by an increase in contingency and bonus revenue of $2.46 million. Contingent commissions are seasonal in nature and are mostly received during the first half of each year. The acquisition of two insurance agencies in first quarter 2015 accounted for an increase in commission and fee revenue of $0.42 million and an increase in noninterest expenses of $0.32 million and resulted in $0.18 million of acquisition-related expenses.
Balance Sheet
At March 31, 2015, total Bank assets reached $5.83 billion, an increase of $1.05 billion, or 22.06%, over March 31, 2014.
Loans
% Change | |||||
Q1 | Q1 | Q4 | Q1 15 vs. | Q1 15 vs. | |
(in thousands) | 2015 | 2014 | 2014 | Q1 14 | Q4 14 |
Construction and land development | $ 519,390 | $ 469,841 | $ 452,481 | 10.55% | 14.79% |
Commercial real estate - investment related properties | 954,826 | 644,126 | 695,526 | 48.24% | 37.28% |
Commercial real estate - owner occupied | 770,880 | 751,243 | 751,552 | 2.61% | 2.57% |
Multifamily real estate | 146,395 | 50,014 | 51,472 | 192.71% | 184.42% |
1-4 family residential real estate | 915,205 | 810,145 | 837,370 | 12.97% | 9.30% |
Commercial and industrial business loans | 531,831 | 495,576 | 533,500 | 7.32% | (0.31)% |
Consumer loans and other | 88,747 | 48,417 | 75,365 | 83.30% | 17.76% |
Total | $ 3,927,274 | $ 3,269,362 | $ 3,397,266 | 20.12% | 15.60% |
The Bank's loan portfolio ended the period at $3.93 billion representing an increase of 20.12%, or $657.91 million, from the prior year and an increase of 15.60%, or $530.01 million, from December 31, 2014. Organic growth, including the effect of loan transfers to OREO, in first quarter 2015 was $66.72 million, or 7.84% on an annualized basis. Included in this growth were originations of $33.62 million in our Richmond market. In addition, acquired loan balances were impacted by accelerated prepayments during the quarter.
Deposits
% Change | |||||
Q1 | Q1 | Q4 | Q1 15 vs. | Q1 15 vs. | |
(in thousands) | 2015 | 2014 | 2014 | Q1 14 | Q4 14 |
Noninterest-bearing demand | $ 1,261,482 | $ 1,090,273 | $ 1,224,466 | 15.70% | 3.02% |
Interest-bearing: | |||||
Demand and money market accounts | 1,643,534 | 1,303,207 | 1,365,183 | 26.11% | 20.39% |
Savings | 303,936 | 197,892 | 301,033 | 53.59% | 0.96% |
Certificates of deposits | 1,296,666 | 1,090,337 | 955,920 | 18.92% | 35.65% |
Total | $ 4,505,618 | $ 3,681,709 | $ 3,846,602 | 22.38% | 17.13% |
The Bank continued to experience solid deposit growth with total deposits increasing to $4.51 billion, up $823.91 million, or 22.38%, from March 31, 2014. The increase was mostly due to the $682.95 million of deposits acquired in the Franklin merger. Organic growth in total deposits was $185.13 million, or 5.03%, from March 31, 2014. The Bank saw continued growth in noninterest bearing demand deposits, which ended the quarter at $1.26 billion, a 15.70% increase from March 31, 2014. Noninterest deposits represented 28.00% of total deposits at March 31, 2015. The slight percentage decline was a result of the funding mix in the acquired Franklin deposits.
Capital Ratios
Q1 | Q1 | Q4 | |
2015 | 2014 | 2014 | |
Common Equity Tier 1 (a) | 13.09% | N/A | N/A |
Tier 1 (a) | 13.20% | 12.95% | 12.73% |
Total (a) | 13.96% | 13.97% | 13.67% |
Tier 1 leverage ratio (a) | 10.99% | 10.42% | 9.94% |
(a) Basel III rules became effective January 1, 2015, with transitional provisions. All prior period data is based on Basel I rules |
The Bank's total equity at March 31, 2015 rose to $791.58 million, an increase of $198.17 million, or 33.40%, from March 31, 2014. Common equity increased 54.18%, or $275.19 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. 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 13.96%, 13.20%, 10.99%, 13.09%, respectively. All ratios exceed the current regulatory standards for well capitalized status.
Asset Quality
(in thousands) | 3/31/2015 | 12/31/2014 | 9/30/2014 | 6/30/2014 | 3/31/2014 |
Nonperforming loans | $ 7,045 | $ 6,741 | $ 5,853 | $ 7,501 | $ 10,977 |
Foreclosed property | 51,698 | 35,116 | 37,951 | 42,404 | 41,510 |
Total nonperforming assets | $ 58,743 | $ 41,857 | $ 43,804 | $ 49,905 | $ 52,487 |
Quarterly net loans charged off | $ 333 | $ 262 | $ 602 | $ 925 | $ 1,167 |
Year-to-date net loans charged off | $ 333 | $ 2,955 | $ 2,694 | $ 2,092 | $ 1,167 |
Continued improvements in credit quality contributed to the Bank's financial results as nonperforming loans decreased to $7.05 million from $10.98 million, at March 31, 2014 and increased from $6.74 million at December 31, 2014. Net charge-offs were $0.33 million in the first quarter of 2015 compared to $1.17 million in the first quarter of 2014 and $0.26 million in the linked quarter. Total nonperforming assets were $58.74 million, or 1.01%, of Bank assets, including foreclosed property of $14.30 million acquired in the Franklin merger, at March 31, 2015, as compared to $52.49 million, or 1.10%, at March 31, 2014, and $41.86 million, or 0.84%, at December 31, 2014.
Change | |||||
Q1 | Q1 | Q4 | Q1 15 vs. | Q1 15 vs. | |
(dollars in thousands) | 2015 | 2014 | 2014 | Q1 14 | Q4 14 |
Total loans 90 days past due and still accruing | $ 3 | $ 576 | $ 12 | $ (573) | $ (9) |
Total loans 30-89 days past due | $ 10,483 | $ 12,663 | $ 13,436 | $ (2,180) | $ (2,953) |
Allowance for loan losses | $ 35,907 | $ 37,543 | $ 35,917 | $ (1,636) | $ (10) |
Total performing TDRs | $ 32,896 | $ 43,859 | $ 38,418 | $ (10,963) | $ (5,522) |
Nonperforming loans to period end loans | 0.18% | 0.34% | 0.20% | (0.16) | (0.02) |
Nonperforming assets to period end assets | 1.01% | 1.10% | 0.84% | (0.09) | 0.17 |
Allowance for loan losses to period end loans | 0.91% | 1.15% | 1.06% | (0.24) | (0.15) |
Allowance for loan losses (originated) to originated period end loans | 1.05% | 1.16% | 1.07% | (0.11) | (0.02) |
Net charge-offs to average loans (annualized) | 0.03% | 0.15% | 0.03% | (0.12) | — |
Ratio of allowance for loan losses to nonperforming loans | 5.10x | 3.42x | 5.33x | 1.68x | (0.23)x |
About TowneBank:
As one of the top community banks in Virginia and North Carolina, TowneBank operates 36 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 $5.83 billion as of March 31, 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 | ||||
March 31, 2015 | ||||
(dollars in thousands, except per share data) | ||||
Increase/ | % Increase/ | |||
Three months ended March 31, | 2015 | 2014 | (Decrease) | (Decrease) |
Results of Operations: | ||||
Net interest income | $43,556 | $ 35,192 | $ 8,364 | 23.77% |
Noninterest income (1) | 28,767 | 22,727 | 6,040 | 26.58% |
Gain (loss) on investment securities | 49 | 2 | 47 | 2,350.00% |
Total Revenue | 72,372 | 57,921 | 14,451 | 24.95% |
Noninterest expenses | 50,440 | 41,081 | 9,359 | 22.78% |
Provision for loan losses | 323 | 330 | (7) | (2.12)% |
Income before income tax and noncontrolling interest | 21,610 | 16,510 | 5,100 | 30.89% |
Provision for income tax expense | 6,385 | 4,905 | 1,480 | 30.17% |
Net income | 15,224 | 11,605 | 3,619 | 31.18% |
Net income attributable to noncontrolling interest | (686) | (474) | (212) | 44.73% |
Net income attributable to TowneBank | 14,538 | 11,131 | 3,407 | 30.61% |
Preferred stock dividends and accretion | 13 | 191 | (178) | (93.19)% |
Net income available to common shareholders | 14,525 | 10,940 | 3,585 | 32.77% |
Net income per common share - basic | 0.29 | 0.31 | (0.02) | (6.45)% |
Net income per common share - diluted | 0.29 | 0.31 | (0.02) | (6.45)% |
Period End Data: | ||||
Total assets | $ 5,828,703 | $ 4,775,234 | $ 1,053,469 | 22.06% |
Total assets - tangible | 5,649,097 | 4,655,641 | 993,456 | 21.34% |
Earning assets (2) | 5,355,376 | 4,415,853 | 939,523 | 21.28% |
Loans (net of unearned income) | 3,927,274 | 3,269,362 | 657,912 | 20.12% |
Allowance for loan losses | 35,907 | 37,543 | (1,636) | (4.36)% |
Goodwill and other intangibles | 179,607 | 119,593 | 60,014 | 50.18% |
Nonperforming assets | 58,743 | 52,488 | 6,255 | 11.92% |
Noninterest bearing deposits | 1,261,482 | 1,090,273 | 171,209 | 15.70% |
Interest bearing deposits | 3,244,136 | 2,591,437 | 652,699 | 25.19% |
Total deposits | 4,505,618 | 3,681,709 | 823,909 | 22.38% |
Total equity | 791,581 | 593,406 | 198,175 | 33.40% |
Total equity - tangible | 611,974 | 473,813 | 138,161 | 29.16% |
Common equity | 783,157 | 507,963 | 275,194 | 54.18% |
Common equity - tangible | 603,550 | 388,370 | 215,180 | 55.41% |
Book value per common share | 15.22 | 14.38 | 0.84 | 5.84% |
Book value per common share - tangible | 11.73 | 11.00 | 0.73 | 6.64% |
Daily Average Balances: | ||||
Total assets | $ 5,829,533 | $ 4,684,881 | $ 1,144,652 | 24.43% |
Total assets - tangible | 5,642,883 | 4,565,004 | 1,077,879 | 23.61% |
Earning assets (2) | 5,290,562 | 4,301,821 | 988,741 | 22.98% |
Loans (net of unearned income), excluding nonaccrual loans | 3,898,576 | 3,225,089 | 673,487 | 20.88% |
Allowance for loan losses | 36,048 | 38,596 | (2,548) | (6.60)% |
Goodwill and other intangibles | 186,650 | 119,877 | 66,773 | 55.70% |
Noninterest bearing deposits | 1,256,023 | 1,037,907 | 218,116 | 21.02% |
Interest bearing deposits | 3,248,834 | 2,545,505 | 703,329 | 27.63% |
Total deposits | 4,504,857 | 3,583,412 | 921,445 | 25.71% |
Total equity | 781,833 | 591,688 | 190,145 | 32.14% |
Total equity - tangible | 595,183 | 471,811 | 123,372 | 26.15% |
Common equity | 767,980 | 506,435 | 261,545 | 51.64% |
Common equity - tangible | 581,330 | 386,558 | 194,772 | 50.39% |
Key Ratios: | ||||
Return on average assets | 1.01% | 0.96% | 0.05% | 5.21% |
Return on average assets - tangible | 1.08% | 0.99% | 0.09% | 9.09% |
Return on average equity | 7.54% | 7.63% | (0.09)% | (1.18)% |
Return on average equity - tangible | 10.27% | 9.57% | 0.70% | 7.31% |
Return on average common equity | 7.67% | 8.76% | (1.09)% | (12.44)% |
Return on average common equity - tangible | 10.51% | 11.48% | (0.97)% | (8.45)% |
Net interest margin-fully tax equivalent (2)(3) | 3.52% | 3.44% | 0.08% | 2.33% |
Net interest margin (2) | 3.43% | 3.36% | 0.07% | 2.08% |
Average earning assets/total average assets | 90.75% | 91.82% | (1.07)% | (1.17)% |
Average loans/average deposits | 86.54% | 90.00% | (3.46)% | (3.84)% |
Average noninterest deposits/total average deposits | 27.88% | 28.96% | (1.08)% | (3.73)% |
Allowance for loan losses/period end loans | 0.91% | 1.15% | (0.24)% | (20.87)% |
Nonperforming assets to period end assets | 1.01% | 1.10% | (0.09)% | (8.18)% |
Period end equity/period end total assets | 13.58% | 12.43% | 1.15% | 9.25% |
Efficiency ratio (1) | 69.74% | 70.93% | (1.19)% | (1.68)% |
(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 | ||||
March 31, 2015 | ||||
(dollars in thousands, except per share data) | ||||
March 31, | December 31, | Increase/ | % Increase/ | |
Three Months Ended | 2015 | 2014 | (Decrease) | (Decrease) |
Results of Operations: | ||||
Net interest income | $ 43,556 | $ 37,139 | $ 6,417 | 17.28% |
Noninterest income (1) | 28,767 | 22,401 | 6,366 | 28.42% |
Gain (loss) on investment securities | 49 | — | 49 | N/M |
Total Revenue | 72,372 | 59,540 | 12,832 | 21.55% |
Noninterest expenses | 50,440 | 48,959 | 1,481 | 3.02% |
Provision for loan losses | 323 | (1) | 324 | N/M |
Income before income tax and noncontrolling interest | 21,610 | 10,582 | 11,028 | 104.21% |
Provision for income tax expense | 6,385 | 2,798 | 3,587 | 128.20% |
Net income | 15,224 | 7,784 | 7,440 | 95.58% |
Net income attributable to noncontrolling interest | (686) | (549) | (137) | 24.95% |
Net income attributable to TowneBank | 14,538 | 7,235 | 7,303 | 100.94% |
Preferred stock dividends and accretion | 13 | 191 | (178) | (93.19)% |
Net income available to common shareholders | 14,525 | 7,044 | 7,481 | 106.20% |
Net income per common share - basic | 0.29 | 0.20 | 0.09 | 45.00% |
Net income per common share - diluted | 0.29 | 0.20 | 0.09 | 45.00% |
Period End Data: | ||||
Total assets | $ 5,828,703 | $ 4,982,485 | $ 846,218 | 16.98% |
Total assets - tangible | 5,649,097 | 4,846,816 | 802,281 | 16.55% |
Earning assets (2) | 5,355,376 | 4,610,142 | 745,234 | 16.17% |
Loans (net of unearned income) | 3,927,274 | 3,397,266 | 530,008 | 15.60% |
Allowance for loan losses | 35,907 | 35,917 | (10) | (0.03)% |
Goodwill and other intangibles | 179,607 | 135,668 | 43,939 | 32.39% |
Nonperforming assets | 58,743 | 41,857 | 16,886 | 40.34% |
Noninterest bearing deposits | 1,261,482 | 1,224,466 | 37,016 | 3.02% |
Interest bearing deposits | 3,244,136 | 2,622,136 | 622,000 | 23.72% |
Total deposits | 4,505,618 | 3,846,602 | 659,016 | 17.13% |
Total equity | 791,581 | 618,276 | 173,305 | 28.03% |
Total equity - tangible | 611,974 | 482,608 | 129,366 | 26.81% |
Common equity | 783,157 | 532,487 | 250,670 | 47.08% |
Common equity - tangible | 603,550 | 396,819 | 206,731 | 52.10% |
Book value per common share | 15.22 | 14.88 | 0.34 | 2.28% |
Book value per common share - tangible | 11.73 | 11.09 | 0.64 | 5.77% |
Daily Average Balances: | ||||
Total assets | $ 5,829,533 | $ 5,005,112 | $ 824,421 | 16.47% |
Total assets - tangible | 5,642,883 | 4,868,868 | 774,015 | 15.90% |
Earning assets (2) | 5,290,562 | 4,610,309 | 680,253 | 14.76% |
Loans (net of unearned income), excluding nonaccrual loans | 3,898,576 | 3,362,814 | 535,762 | 15.93% |
Allowance for loan losses | 36,048 | 36,296 | (248) | (0.68)% |
Goodwill and other intangibles | 186,650 | 136,243 | 50,407 | 37.00% |
Noninterest bearing deposits | 1,256,023 | 1,247,712 | 8,311 | 0.67% |
Interest bearing deposits | 3,248,834 | 2,616,976 | 631,858 | 24.14% |
Total deposits | 4,504,857 | 3,864,688 | 640,169 | 16.56% |
Total equity | 781,833 | 621,579 | 160,254 | 25.78% |
Total equity - tangible | 595,183 | 485,335 | 109,848 | 22.63% |
Common equity | 767,980 | 536,091 | 231,889 | 43.26% |
Common equity - tangible | 581,330 | 399,848 | 181,482 | 45.39% |
Key Ratios: | ||||
Return on average assets | 1.01% | 0.57% | 0.44% | 77.19% |
Return on average assets - tangible | 1.08% | 0.63% | 0.45% | 71.43% |
Return on average equity | 7.54% | 4.62% | 2.92% | 63.20% |
Return on average equity - tangible | 10.27% | 6.35% | 3.92% | 61.73% |
Return on average common equity | 7.67% | 5.21% | 2.46% | 47.22% |
Return on average common equity - tangible | 10.51% | 7.52% | 2.99% | 39.76% |
Net interest margin-fully tax equivalent (2)(3) | 3.52% | 3.35% | 0.17% | 5.07% |
Net interest margin (2) | 3.43% | 3.26% | 0.17% | 5.21% |
Average earning assets/total average assets | 90.75% | 92.11% | (1.36)% | (1.48)% |
Average loans/average deposits | 86.54% | 87.01% | (0.47)% | (0.54)% |
Average noninterest deposits/total average deposits | 27.88% | 32.28% | (4.40)% | (13.63)% |
Allowance for loan losses/period end loans | 0.91% | 1.06% | (0.15)% | (14.15)% |
Nonperforming assets to period end assets | 1.01% | 0.84% | 0.17% | 20.24% |
Period end equity/period end total assets | 13.58% | 12.41% | 1.17% | 9.43% |
Efficiency ratio (1) | 69.74% | 82.23% | (12.49)% | (15.19)% |
(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 | |||||||||
(dollars in thousands) | |||||||||
Three Months Ended | Three Months Ended | Three Months Ended | |||||||
March 31, 2015 | December 31, 2014 | March 31, 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 | $ 3,898,576 | $ 46,160 | 4.80% | $ 3,362,814 | $ 39,508 | 4.66% | $ 3,225,089 | $ 38,220 | 4.81% |
Taxable investment securities | 803,681 | 3,145 | 1.57% | 714,991 | 2,178 | 1.22% | 470,029 | 1,720 | 1.46% |
Tax-exempt investment securities | 180,453 | 1,922 | 4.26% | 176,887 | 1,919 | 4.34% | 172,205 | 1,769 | 4.11% |
Interest-bearing deposits | 202,852 | 125 | 0.25% | 227,773 | 145 | 0.25% | 334,136 | 207 | 0.25% |
Loans held for sale | 64,512 | 565 | 3.50% | 69,496 | 652 | 3.75% | 42,849 | 428 | 4.00% |
Bank-owned life insurance | 140,488 | 1,753 | 5.06% | 58,348 | 1,200 | 8.16% | 57,514 | 749 | 5.28% |
Total earning assets | 5,290,562 | 53,670 | 4.11% | 4,610,309 | 45,602 | 3.92% | 4,301,822 | 43,093 | 4.06% |
Less: allowance for loan losses | (36,048) | (36,296) | (38,596) | ||||||
Total nonearning assets | 575,019 | 431,099 | 421,655 | ||||||
Total assets | $ 5,829,533 | $ 5,005,112 | $ 4,684,881 | ||||||
Liabilities and Equity: | |||||||||
Interest-bearing deposits | |||||||||
Demand and money market | $ 1,635,454 | $ 1,111 | 0.28% | $ 1,344,262 | $ 772 | 0.23% | $ 1,258,335 | $ 740 | 0.23% |
Savings | 305,016 | 683 | 0.91% | 303,623 | 699 | 0.91% | 319,263 | 725 | 0.92% |
Certificates of deposit | 1,308,364 | 2,630 | 0.82% | 969,091 | 1,837 | 0.75% | 967,907 | 1,877 | 0.75% |
Total interest-bearing deposits | 3,248,834 | 4,424 | 0.55% | 2,616,976 | 3,308 | 0.50% | 2,545,505 | 3,342 | 0.53% |
Borrowings | 447,198 | 3,388 | 3.03% | 430,374 | 3,396 | 3.09% | 435,559 | 3,300 | 3.03% |
Total interest-bearing liabilities | 3,696,032 | 7,812 | 0.86% | 3,047,350 | 6,704 | 0.87% | 2,981,064 | 6,642 | 0.90% |
Demand deposits | 1,256,025 | 1,247,712 | 1,037,907 | ||||||
Other noninterest-bearing liabilities | 95,643 | 88,471 | 74,222 | ||||||
Total liabilities | 5,047,700 | 4,383,533 | 4,093,193 | ||||||
Shareholders' equity | 781,833 | 621,579 | 591,688 | ||||||
Total liabilities and equity | $ 5,829,533 | $ 5,005,112 | $ 4,684,881 | ||||||
Net interest income (tax-equivalent basis) | |||||||||
Reconcilement of Non-GAAP Financial Measures | $ 45,858 | $ 38,898 | $ 36,451 | ||||||
Bank-owned life insurance | (1,753) | (1,200) | (749) | ||||||
Tax-equivalent basis adjustment | (549) | (558) | (509) | ||||||
Net interest income (GAAP) | $ 43,556 | $ 37,140 | $ 35,193 | ||||||
Interest rate spread (1) | 3.26% | 3.05% | 3.16% | ||||||
Interest expense as a percent of average earning assets | 0.60% | 0.58% | 0.63% | ||||||
Net interest margin (tax equivalent basis) (2) | 3.52% | 3.35% | 3.44% | ||||||
Total cost of deposits | 0.40% | 0.34% | 0.38% | ||||||
(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 | ||
March 31, | ||
2015 | 2014 | |
INTEREST INCOME: | ||
Loans, including fees | $ 46,145 | $ 38,207 |
Investment securities | 4,533 | 2,992 |
Interest-bearing deposits in financial institutions and federal funds sold | 125 | 207 |
Mortgage loans held for sale | 565 | 428 |
Total Interest Income | 51,368 | 41,834 |
INTEREST EXPENSE: | ||
Deposits | 4,424 | 3,342 |
Advances from the Federal Home Loan Bank | 3,374 | 3,285 |
Repurchase agreements and other borrowings | 14 | 15 |
Total Interest Expense | 7,812 | 6,642 |
Net Interest Income | 43,556 | 35,192 |
PROVISION FOR LOAN LOSSES | 323 | 330 |
Net Interest Income after Provision for Loan Losses | 43,233 | 34,862 |
NONINTEREST INCOME: | ||
Residential mortgage banking income, net | 8,443 | 5,062 |
Real estate brokerage and property management income, net | 3,955 | 3,292 |
Insurance commissions and other title fees and income, net | 11,049 | 9,061 |
Service charges on deposit accounts | 2,197 | 2,131 |
Credit card merchant fees, net | 432 | 773 |
Other income | 2,691 | 2,408 |
Net gain on investment securities | 49 | 2 |
Total Noninterest Income | 28,816 | 22,729 |
NONINTEREST EXPENSE: | ||
Salaries and employee benefits | 27,679 | 23,396 |
Occupancy expense | 4,930 | 4,176 |
Furniture and equipment | 2,369 | 2,000 |
Other expenses | 15,462 | 11,509 |
Total Noninterest Expense | 50,440 | 41,081 |
Income before income tax expense and noncontrolling interest | 21,609 | 16,510 |
Provision for income tax expense | 6,385 | 4,905 |
Net income | 15,224 | 11,605 |
Net income attributable to noncontrolling interest | (686) | (474) |
Net income attributable to TowneBank | $ 14,538 | $ 11,131 |
Preferred stock dividends | 13 | 191 |
Net income available to common shareholders | $ 14,525 | $ 10,940 |
Per common share information | ||
Basic earnings | $ 0.29 | $ 0.31 |
Diluted earnings | $ 0.29 | $ 0.31 |
Cash dividends declared | $ 0.11 | $ 0.10 |
TOWNEBANK | ||
Consolidated Statements of Comprehensive Income (unaudited) | ||
(dollars in thousands) | ||
Three Months Ended | ||
March 31, | ||
2015 | 2014 | |
Net income | $ 15,224 | $ 11,605 |
Other comprehensive income | ||
Unrealized gains on securities | ||
Unrealized holding gains arising during the period | 2,914 | 359 |
Deferred tax expense | (1,020) | (126) |
Realized gains reclassified into earnings | (49) | (2) |
Deferred tax benefit | 17 | 1 |
Net unrealized gains (losses) | 1,862 | 232 |
Defined benefit retirement plan | ||
Amortization | 60 | — |
Deferred tax expense | (21) | — |
Change in defined benefit retirement plan, net of tax | 39 | — |
Other comprehensive income, net of tax | 1,901 | 232 |
Comprehensive income | $ 17,125 | $ 11,837 |
TOWNEBANK | |||
Consolidated Balance Sheets (unaudited) | |||
(dollars in thousands) | |||
March 31, | December 31, | ||
2015 | 2014 | 2014 | |
(unaudited) | (audited) | ||
ASSETS | |||
Cash and due from banks | $ 144,215 | $ 235,984 | $ 212,994 |
Interest-bearing deposits in financial institutions | 1,000 | 1,000 | 1,011 |
Total Cash and Cash Equivalents | 145,215 | 236,984 | 214,005 |
Securities available for sale, at fair value | 771,208 | 551,797 | 603,908 |
Securities held to maturity, at amortized cost | 252,173 | 232,879 | 252,370 |
Federal Home Loan Bank stock, at amortized cost | 22,366 | 21,987 | 22,157 |
Total Securities | 1,045,747 | 806,663 | 878,435 |
Mortgage loans held for sale | 102,850 | 57,745 | 71,390 |
Loans, net of unearned income and deferred costs: | |||
Real estate - residential 1-4 family | 915,205 | 810,145 | 837,370 |
Real estate - commercial | 1,725,706 | 1,395,369 | 1,447,078 |
Real estate - construction and land development | 519,390 | 469,841 | 452,481 |
Real estate - multifamily | 146,395 | 50,014 | 51,472 |
Commercial and industrial business | 531,831 | 495,576 | 533,500 |
Consumer and other loans | 88,747 | 48,417 | 75,365 |
Loans, net of unearned income and deferred costs | 3,927,274 | 3,269,362 | 3,397,266 |
Less: Allowance for loan losses | (35,907) | (37,543) | (35,917) |
Net Loans | 3,891,367 | 3,231,819 | 3,361,349 |
Premises and equipment, net | 166,164 | 152,976 | 155,774 |
Goodwill | 156,516 | 104,508 | 113,159 |
Other intangible assets, net | 23,090 | 15,084 | 22,509 |
Bank-owned life insurance policies | 145,401 | 57,567 | 58,716 |
Other assets | 152,353 | 111,888 | 107,148 |
TOTAL ASSETS | $ 5,828,703 | $ 4,775,234 | $ 4,982,485 |
LIABILITIES AND EQUITY | |||
Liabilities | |||
Deposits: | |||
Noninterest-bearing demand | $ 1,261,482 | $ 1,090,273 | $ 1,224,466 |
Interest-bearing: | |||
Demand and money market accounts | 1,643,534 | 1,303,207 | 1,365,183 |
Savings | 303,936 | 197,892 | 301,033 |
Certificates of deposit | 1,296,666 | 1,090,337 | 955,920 |
Total Deposits | 4,505,618 | 3,681,709 | 3,846,602 |
Advances from the Federal Home Loan Bank | 397,884 | 394,855 | 398,181 |
Repurchase agreements and other borrowings | 37,202 | 31,571 | 31,893 |
Total Borrowings | 435,086 | 426,426 | 430,074 |
Other liabilities | 96,419 | 73,693 | 87,533 |
TOTAL LIABILITIES | 5,037,123 | 4,181,828 | 4,364,209 |
Shareholders' Equity | |||
Preferred stock: 2,000,000 shares authorized 0 shares issued at March 31, 2015 and 76,458 shares issued at March 31, 2014 and December 31, 2014 | — | 76,458 | 76,458 |
Common stock, $1.667 par: 90,000,000 shares authorized 51,466,606; 35,312,537; and 35,785,679 shares issued at March 31, 2015 and 2014 and December 31, 2014, respectively | 85,795 | 58,866 | 59,655 |
Capital surplus | 531,483 | 313,272 | 317,718 |
Retained earnings | 163,519 | 135,936 | 154,655 |
Common stock issued to deferred compensation trust, at cost 637,935; 571,101; and 627,730 shares at March 31, 2015 and 2014 and December 31, 2014, respectively | (9,816) | (8,782) | (9,674) |
Deferred compensation trust | 9,816 | 8,782 | 9,674 |
Accumulated other comprehensive income (loss) | 2,359 | (112) | 458 |
TOTAL SHAREHOLDERS' EQUITY | 783,156 | 584,420 | 608,944 |
Noncontrolling interests | 8,424 | 8,986 | 9,332 |
TOTAL EQUITY | 791,580 | 593,406 | 618,276 |
TOTAL LIABILITIES AND EQUITY | $ 5,828,703 | $ 4,775,234 | $ 4,982,485 |
TOWNEBANK | |||
March 31, 2015 | |||
Reconcilement of Non-GAAP Financial Measures: | |||
(dollars in thousands) | |||
Three Months Ended | |||
March 31, | March 31, | December 31, | |
2015 | 2014 | 2014 | |
Return on average assets (GAAP basis) | 1.01% | 0.96% | 0.57% |
Impact of excluding average goodwill and other intangibles and amortization | 0.07% | 0.03% | 0.06% |
Return on average tangible assets (Non-GAAP) | 1.08% | 0.99% | 0.63% |
Return on average equity (GAAP basis) | 7.54% | 7.63% | 4.62% |
Impact of excluding average goodwill and other intangibles and amortization | 2.73% | 1.94% | 1.73% |
Return on average tangible equity (Non-GAAP) | 10.27% | 9.57% | 6.35% |
Return on average common equity (GAAP basis) | 7.67% | 8.76% | 5.21% |
Impact of excluding average goodwill and other intangibles and amortization | 2.84% | 2.72% | 2.31% |
Return on average tangible common equity (Non-GAAP) | 10.51% | 11.48% | 7.52% |
Book value (GAAP basis) | $ 15.22 | $ 14.38 | $ 14.88 |
Impact of excluding average goodwill and other intangibles and amortization | (3.49) | (3.38) | (3.79) |
Tangible book value | $ 11.73 | $ 11.00 | $ 11.09 |