TowneBank Reports Third Quarter Earnings


SUFFOLK, Va., Oct. 22, 2015 (GLOBE NEWSWIRE) -- Hampton Roads based TowneBank (the “Bank”) (NASDAQ:TOWN) reported earnings of $17.57 million for the quarter ended September 30, 2015, a 44.86% increase, or $5.44 million, over the $12.13 million reported for the comparative period in 2014.  Fully diluted earnings per share were $0.34 per share unchanged from $0.34 per share for the comparative period of 2014. 

Earnings for the year-to-date period increased 42.89% to $49.92 million as compared to the $34.93 million earned in the same period of 2014, while fully diluted earnings per share were $0.98 per share unchanged from comparative 2014.  Earnings per share were affected in 2015 by the issuance of 15.55 million new common shares in conjunction with the acquisition of Franklin Financial Corporation (“Franklin”) on January 2, 2015.

The Bank’s common dividend was $0.12 per share for the quarter with the common dividend totaling $6.19 million.  The current dividend represents an increase of 9.1% over the dividend paid during the same quarter of 2014.

“We are pleased to report another quarter of strong earnings, as we continue to see benefits and positive momentum from our entry into the Richmond, Virginia market, coupled with good growth in the Hampton Roads market,” said G. Robert Aston, Jr., Chairman and Chief Executive Officer.  “Our revenue increased $12.79 million, or 20.25%, from the third quarter of 2014 while producing a return on average assets of 1.14% and a return on average tangible equity of 11.25%.

Third Quarter 2015 Performance Highlights

  • Total revenues were $75.97 million, an increase of $12.79 million, or 20.25%, compared to the third quarter of 2014
    • Taxable equivalent net interest margin was 3.40%, including accretion of 0.06%, compared to 3.32% for third quarter 2014
    • Residential mortgage banking income increased 5.14% from third quarter 2014 to $8.26 million on production volume of $434.82 million
    • Insurance commissions increased 9.58% to $9.71 million
    • Noninterest income was 39.89% of total revenue in third quarter 2015
       
  • Loans held for investment increased $845.96 million, or 24.03%, from September 30, 2014 with organic growth of $395.34 million, an increase of 11.23%, including $118.67 million of new loan originations in Richmond
     
  • Total deposits were $4.79 billion, an increase of $937.95 million, or 24.36%, from the third quarter of 2014
    • Noninterest bearing deposits increased by 16.06%, to $1.45 billion
    • Average interest-bearing deposit costs were 0.58%, up 6 basis points from the prior year
    • Noninterest bearing deposits were 30.20% of total deposits compared to 32.36% at September 30, 2014
    • Total cost of deposits increased to 0.41% from 0.35% at September 30, 2014 reflective of a greater mix of savings deposits acquired in the Franklin merger
       
  • Asset quality showed continued strength
    • Nonperforming assets were $47.99 million, or 0.78% of total assets compared to 0.88% at September 30, 2014
    • Nonperforming loans of $8.48 million were 0.19% of period end loans
    • Foreclosed property of $39.51 million, including $6.21 million acquired in the Franklin merger
    • Performing troubled debt restructurings decreased $9.86 million
       
  • The Bank remained well-capitalized
    • Common equity tier 1 capital ratio of 12.52%
    • Tier 1 leverage capital ratio of 10.93%
    • Tier 1 risk-based capital ratio of 12.62%
    • Total risk-based capital ratio of 13.35%
    • Tangible book value increased to $12.25

Net Interest Income

Third Quarter 2015 compared to Third Quarter 2014

Net interest income increased to $45.67 million, an $8.80 million, or 23.88%, increase from the third quarter of 2014.  The primary driver of the increase was the significant increase in earning assets from the Franklin merger along with the restructuring of the Franklin balance sheet.  Average earning assets increased $1.05 billion, or 22.94%, from the third quarter of 2014.  Contributing to the increase was an 8 basis point widening of the tax-equivalent net interest margin to 3.40% in the current quarter from 3.32% in the third quarter of 2014.  Accretion income added $0.68 million, or 6 basis points, to margin in the current quarter.

Third Quarter 2015 compared to Second Quarter 2015

On a linked quarter basis, net interest income increased slightly by $0.79 million, or 1.75%, in third quarter 2015 versus second quarter 2015, while tax-equivalent net interest margin was 3.40% down 12 basis points from the second quarter of 2015.

Noninterest Income

       % Change
 Q3 Q3 Q2 Q3 15 vs. Q3 15 vs.
(in millions)2015 2014 2015 Q3 14 Q2 15
Residential mortgage banking income, net$8,262  $7,858  $10,251  5.14% (19.40)%
Real estate brokerage and property management, net5,349  3,645  4,584  46.75% 16.69%
Insurance commissions and other title fees and  income, net9,710  8,861  9,885  9.58% (1.77)%
Service charges on deposit accounts2,388  2,406  2,326  (0.75)% 2.67%
Credit card merchant fees, net823  927  566  (11.22)% 45.41%
Other income3,036  2,572  5,354  18.04% (43.29)%
Subtotal before gain on investment securities29,568  26,269  32,966  12.56% (10.31)%
Net gain on investment securities736  44  119  N/M  518.49%
Total noninterest income$30,304  $26,313  $33,085  15.17% (8.41)%


Third Quarter 2015 compared to Third Quarter 2014

Noninterest income, excluding gains or losses on investment securities, was $29.57 million for the third quarter of 2015, an increase of $3.30 million, or 12.56%, from the third quarter of 2014.  The majority of the increase from the comparative period in 2014 is attributable to real estate brokerage and property management income, which increased $1.70 million, or 46.75%, from the third quarter of 2014 primarily due to the acquisition of a resort property management company in Hilton Head, South Carolina in fourth quarter 2014 and was partially offset by the sale of our North Carolina-based property management business on April 1, 2015, which generated management fee revenue of $1.36 million in third quarter 2014.  Residential mortgage banking income increased $0.40 million, or 5.14%, from third quarter 2014 due to slightly improved production volumes and pricing.  Mortgage production was $434.82 million in the third quarter of 2015, which was $72.28 million greater than third quarter 2014.  Also contributing to the increase were insurance commissions, which increased $0.85 million, or 9.58%, primarily due to the acquisition of two insurance agencies in February 2015 and one agency in September 2015.

Third Quarter 2015 compared to Second Quarter 2015

In comparison to the second quarter of 2015, noninterest income, excluding gains or losses on investment securities, decreased $3.40 million, or 10.31%.  Residential mortgage banking income decreased by $1.99 million, or 19.40%, from the second quarter of 2015 as mortgage production saw a seasonally driven decrease of $31.41 million and a drop in the value of rate lock commitments of $0.46 million recorded as of September 30, 2015 led to a decrease in mortgage banking income, as compared to an increase due to the value of rate lock commitments of $0.22 million recognized for the quarter ended June 30, 2015.  Also contributing to the decrease from the linked quarter were nonrecurring gains recorded in other noninterest income in second quarter of $1.36 million on the sale of our North Carolina-based property management business and $0.57 million on the sale of land in Virginia Beach.  Insurance commissions decreased slightly due to seasonal decreases in policy renewals.  Partially offsetting the decrease from the linked quarter was an increase in real estate brokerage and property management income, which was positively affected by a seasonal increase related to our resort property management business.

Noninterest Expense

       % Change
 Q3 Q3 Q2 Q3 15 vs. Q3 15 vs.
(in millions)2015 2014 2015 Q3 14 Q2 15
Salaries and benefits$28,910  $25,080  $26,544  15.27% 8.91%
Occupancy expense4,703  4,618  4,856  1.84% (3.15)%
Furniture and equipment2,211  2,040  2,369  8.38% (6.67)%
Acquisition-related expenses243  1,090  370  (77.71)% (34.32)%
Other13,839  11,326  14,928  22.19% (7.30)%
Total noninterest expense$49,906  $44,154  $49,067  13.03% 1.71%


Third Quarter 2015 compared to Third Quarter 2014

Noninterest expense increased by $5.75 million, or 13.03%, from the comparative quarter of 2014.  Driving the increase were operating expenses of $2.75 million related to the Franklin merger.  Additionally, operating expenses increased $1.67 million due to our insurance acquisitions in 2015 and resort property management acquisition in fourth quarter 2014.  Excluding operating expenses associated with acquired companies and acquisition related expenses our expenses increased $1.13 million, or 2.57%, reflecting our continued focus on operational efficiencies.

Third Quarter 2015 compared to Second Quarter 2015

Noninterest expense increased by $0.84 million, or 1.71%, from the second quarter of 2015.  Driving the increase were salary and benefits expenses, which increased by $2.37 million due to higher employee incentive compensation and annual salary adjustments effective July, 1, 2015.  These expenses were partially offset by broad decreases in other expenses.

Segment Results

        $ Change
(in millions) Q3 Q3 Q2 Q3 15 vs. Q3 15 vs.
Segment Net Income 2015 2014 2015 Q3 14 Q2 15
Banking $14,148  $9,569  $13,067  $4,579  $1,081 
Realty 2,345  1,532  3,727  813  (1,382)
Insurance 1,073  1,025  1,018  48  55 
Total net income $17,566  $12,126  $17,812  $5,440  $(246)


Banking

Third Quarter 2015 compared to Third Quarter 2014

Net income for the three months ended September 30, 2015 for the Banking segment was $14.15 million, increasing $4.58 million, or 47.85%, from the comparative 2014 quarter.  The increase in earnings was driven by an increase in net interest income of $8.40 million, primarily due to the increase in earning assets acquired in the Franklin merger and 2015 growth in Hampton Roads.  Also contributing to the increase was a decrease in the loan loss provision driven by a reduction in historical loss ratios and an increase in gains from the sales of investment securities.  The increases in income were partially offset by higher noninterest expenses related to the Franklin merger, increases in personnel costs, and the opening of a new banking office in May 2015.

Third Quarter 2015 compared to Second Quarter 2015

The increase in earnings of $1.08 million, or 8.27% from the second quarter of 2015 was driven by an increase in revenue due to a combination of higher net interest income of $0.67 million, which was primarily due to loan growth, and an increase in gains on the sale of investment securities of $0.62 million, partially offset by a second quarter gain of $0.57 million on the sale of land owned by the Bank.  Also contributing was a decrease in the loan loss provision primarily due to a reduction in historical loss ratios.  The increases were partially offset by an increase in noninterest expenses of $1.07 million as higher personnel costs more than offset decreases in occupancy expenses, charitable contributions, and advertising and marketing expenses.

Realty

Third Quarter 2015 compared to Third Quarter 2014

For the three months ended September 30, 2015, the Realty segment had net income of $2.35 million, an increase of $0.81 million compared to the third quarter of 2014.  The improvement was driven by an increase in residential mortgage banking income of $0.61 million, or 7.70%, and an increase in property management fees of $1.66 million, or 97.18%.  The increase in property management fees was primarily due to our purchase of Beach Properties on October 1, 2014, which generated management fee revenue of $2.95 million in third quarter 2015 and was partially offset by a decrease in fee revenue of $1.36 million, which was generated in third quarter 2014 by our previously-held North Carolina-based property management business, which was sold on April 1, 2015.

Third Quarter 2015 compared to Second Quarter 2015

Net income in the Realty segment decreased by $1.38 million from the linked quarter ended June 30, 2015.  The decrease resulted from a combination of a seasonal reduction in residential mortgage banking income of $1.92 million and the inclusion in second quarter of the nonrecurring gain of $1.36 million on the sale of our North Carolina-based property management business, partially offset by related expenses of $0.24 million.  The reduction in earnings was partially offset by an increase in property management fees of $0.74 million.

Insurance

Third Quarter 2015 compared to Third Quarter 2014

The Insurance segment had net income of $1.07 million for the three months ended September 30, 2015, an increase of $0.05 million as compared to the third quarter of 2014.  Increases in property and casualty commissions and contingency and bonus revenues outpaced increases in personnel costs and other noninterest expenses.  Increases to corporate allocation expenses and noninterest expenses, such as 401(k) expense, acquisition-related expense, amortization expense, and other loss expenses, were responsible for an increase in expenses of $0.34 million and $1.17 million for the three and nine months ended September 30, 2015, respectively.  The insurance agency acquisitions in the first and third quarters of 2015 resulted in additional commissions and fee revenue of $0.40 million and additional $0.40 million of noninterest expenses, including acquisition-related expenses.

Third Quarter 2015 compared to Second Quarter 2015

Net income increased $0.06 million from the second quarter of 2015.  The increase from the linked quarter was driven by an increase in employee benefits commission income of $0.11 million and an increase in specialized benefit services commission revenue of $0.01 million, which was partially offset by a seasonal decrease in property and casualty commissions of $0.15 million.

As previously announced, the Bank acquired two insurance agencies on October 1, 2015, which in combination with the agency acquired on September 1, 2015, serve to further our expansion in Richmond and the communities of central Virginia.

Balance Sheet

At September 30, 2015, total Bank assets reached $6.17 billion, an increase of $1.20 billion, or 24.16%, over September 30, 2014.

Loans

       % Change
 Q3 Q3 Q2 Q3 15 vs. Q3 15 vs.
(in thousands)2015 2014 2015 Q3 14 Q2 15
Construction and land development$554,753  $476,379  $554,053  16.45% 0.13%
Commercial real estate - investment related properties1,020,860  701,286  987,945  45.57% 3.33%
Commercial real estate - owner occupied775,290  749,985  760,622  3.37% 1.93%
Multifamily real estate138,954  53,368  137,378  160.37% 1.15%
1-4 family residential real estate965,559  833,208  948,138  15.88% 1.84%
Commercial and industrial business loans790,614  644,528  732,936  22.67% 7.87%
Consumer loans and other121,009  62,321  107,055  94.17% 13.03%
Total$4,367,039  $3,521,075  $4,228,127  24.03% 3.29%


The Bank’s loan portfolio ended the period at $4.37 billion representing an increase of 24.03%, or $845.96 million, from the prior year and an increase of 3.29%, or $138.91 million, from June 30, 2015.  Organic growth in 2015, including the effect of loan transfers to OREO, was $349.15 million, or 12.91% on an annualized basis.  Included in this growth were new originations of $118.67 million in our Richmond market.

Deposits

       % Change
 Q3 Q3 Q2 Q3 15 vs. Q3 15 vs.
(in thousands)2015 2014 2015 Q3 14 Q2 15
Noninterest-bearing demand$1,445,978  $1,245,925  $1,363,551  16.06% 6.05%
Interest-bearing:         
Demand and money market accounts1,676,623  1,309,085  1,680,038  28.08% (0.20)%
Savings295,952  306,811  300,203  (3.54)% (1.42)%
Certificates of deposits1,369,325  988,111  1,342,860  38.58% 1.97%
Total$4,787,878  $3,849,932  $4,686,652  24.36% 2.16%

 

The Bank continued to experience solid deposit growth with total deposits increasing to $4.79 billion, up $937.95 million, or 24.36%, from September 30, 2014.  The increase was mostly due to the deposits acquired in the Franklin merger and Hampton Roads market growth.  The Bank saw continued growth in noninterest bearing demand deposits, which ended the quarter at $1.45 billion, a 16.06% increase from September 30, 2014.  Noninterest deposits represented 30.20% of total deposits at September 30, 2015.  The slight percentage decline from September 30, 2014 was a result of the funding mix in the acquired Franklin deposits.

Capital Ratios

  Q3 Q3 Q2
  2015 2014 2015
Common Equity Tier 1 (a) 12.52% N/A  12.96%
Tier 1 (a) 12.62% 12.88% 13.07%
Total (a) 13.35% 13.84% 13.84%
Tier 1 leverage ratio (a) 10.93% 10.04% 11.12%
          

(a) Basel III rules became effective January 1, 2015, with transitional provisions.  All prior year data is based on Basel I rules

The Bank’s total equity at September 30, 2015 rose to $816.07 million, an increase of $202.66 million, or 33.04%, from September 30, 2014.  Common equity increased 52.95%, or $279.43 million, as the Bank issued common stock in the amount of $238.66 million in the Franklin merger and redeemed in full its $76.46 million of outstanding Non-Cumulative Convertible Preferred Stock, Series C issued to the U.S. Treasury under the Small Business Lending Fund during first quarter 2015.  Total risk-based capital remained strong as total risk-based capital, Tier 1 capital, Tier 1 leverage ratios, and common equity Tier 1 capital ratios were 13.35%, 12.62%, 10.93%, 12.52%, respectively.  All ratios exceed the current regulatory standards for well capitalized status.

Asset Quality

          
(in thousands)9/30/2015 6/30/2015 3/31/2015 12/31/2014 9/30/2014
          
Nonperforming loans$8,477  $7,455  $7,045  $6,741  $5,853 
          
Foreclosed property39,509  46,154  51,698  35,116  37,951 
          
Total nonperforming assets$47,986  $53,609  $58,743  $41,857  $43,804 
          
Quarterly net loans charged off$69  $339  $333  $262  $602 
          
Year-to-date net loans charged off$741  $672  $333  $2,955  $2,694 

 

Continued improvements in credit quality contributed to the Bank's financial results as net charge-offs decreased to $0.07 million in the third quarter of 2015 compared to $0.60 million in the third quarter of 2014 and $0.34 million in the linked quarter.  Total nonperforming assets were $47.99 million, or 0.78%, of Bank assets, including foreclosed property of $6.21 million originally acquired in the Franklin merger, at September 30, 2015, as compared to $43.80 million, or 0.88%, at September 30, 2014, and $53.61 million, or 0.89%, at June 30, 2015.  The allowance for loan losses was $37.35 million, increased from $36.18 million at September 30, 2014 and $37.29 million at June 30, 2015.

 

        Change
  Q3 Q3 Q2 Q3 15 vs. Q3 15 vs.
(dollars in thousands) 2015 2014 2015 Q3 14 Q2 15
Total loans 90 days past due and still accruing $31  $  $277  $31  $(246)
Total loans 30-89 days past due $5,864  $7,918  $5,283  $(2,054) $581 
Allowance for loan losses $37,351  $36,180  $37,290  $1,171  $61 
Total performing TDRs $29,920  $39,776  $31,714  $(9,856) $(1,794)
           
Nonperforming loans to period end loans 0.19% 0.17% 0.18% 0.02% 0.01%
Nonperforming assets to period end assets 0.78% 0.88% 0.89% (0.10)% (0.11)%
Allowance for loan losses to period end loans 0.86% 1.03% 0.88% (0.17)% (0.02)%
Allowance for loan losses (originated) to originated period end loans 0.96% 1.04% 1.00% (0.08)% (0.04)%
Net charge-offs to average loans (annualized) 0.01% 0.07% 0.03% (0.06)% (0.02)%
Ratio of allowance for loan losses to nonperforming loans  4.41x   6.18x   5.00x   -1.77x   (0.59)x 


About TowneBank:

As one of the top community banks in Virginia and North Carolina, TowneBank operates 37 banking offices serving Chesapeake, Chesterfield County, Glen Allen, Hampton, James City County, Mechanicsville, Newport News, Norfolk, Portsmouth, Richmond, Suffolk, Virginia Beach, Williamsburg, and York County in Virginia, along with Moyock, Grandy, Camden County, Southern Shores, Corolla and Nags Head in North Carolina. Towne also offers a full range of financial services through its controlled divisions and subsidiaries that include Towne Investment Group, Towne Insurance Agency, TFA Benefits, TowneBank Mortgage, TowneBank Commercial Mortgage, Berkshire Hathaway HomeServices Towne Realty, Towne 1031 Exchange, LLC, and Beach Properties of Hilton Head. Local decision-making is a hallmark of its hometown banking strategy that is delivered through the leadership of each group’s President and Board of Directors.  With total assets of $6.17 billion as of September 30, 2015, TowneBank is one of the largest banks headquartered in Virginia.

Non-GAAP Financial Measures:
This press release contains financial information determined by methods other than in accordance with GAAP.  The Company’s management uses these non-GAAP financial measures in their analysis of the Company’s performance.  These measures typically adjust GAAP performance measures to exclude the effects of the amortization of intangibles and include the tax benefit associated with revenue items that are tax-exempt, as well as adjust income available to common shareholders for certain significant activities or transactions that are infrequent in nature.  Since the presentation of these GAAP performance measures and their impact differ between companies, management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of the Company’s core businesses.  These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of GAAP to non-GAAP disclosures are included as tables at the end of this release.

Forward-Looking Statements:
Statements made in this release, other than those concerning historical financial information, may be considered forward-looking statements, which speak only as of the date of this release and are based on current expectations and involve a number of assumptions. TowneBank intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is including this statement for purposes of these safe harbor provisions. The Company’s ability to predict results, or the actual effect of future plans or strategies, is inherently uncertain. Factors which could have a material effect on the operations and future prospects of TowneBank include but are not limited to changes in interest rates, general economic and business conditions; legislative/regulatory changes; the monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve; the quality and composition of the loan and securities portfolios; demand for loan products; deposit flows; competition; demand for financial services in the companies’ respective market areas; implementation of new technologies; ability to develop and maintain secure and reliable electronic systems; changes in the securities markets; changes in accounting principles, policies and guidelines; mergers and acquisitions; and other risk factors detailed from time to time in filings made by TowneBank with the FDIC. TowneBank undertakes no obligation to update or clarify these forward-looking statements, whether as a result of new information, future events or otherwise.

 

 
Selected Financial Highlights (unaudited)
TOWNEBANK
September 30, 2015
(dollars in thousands, except per share data)
 
        Increase/  % Increase/
Three months ended September 30,2015 2014  (Decrease)  (Decrease)
         
Results of Operations:       
 Net interest income$45,670  $36,867  $8,803  23.88%
 Noninterest income (1)29,568  26,269  3,299  12.56%
 Gain (loss) on investment securities736  44  692  N/M 
 Total Revenue75,974  63,180  12,794  20.25%
 Noninterest expenses49,906  44,154  5,752  13.03%
 Provision for loan losses130  996  (866) (86.95)%
 Income before income tax and noncontrolling interest25,938  18,030  7,908  43.86%
 Provision for income tax expense7,444  5,044  2,400  47.58%
 Net income18,494  12,986  5,508  42.41%
 Net income attributable to noncontrolling interest(928) (860) (68) 7.91%
 Net income attributable to TowneBank17,566  12,126  5,440  44.86%
 Preferred stock dividends and accretion  191  (191) (100.00)%
 Net income available to common shareholders17,566  11,935  5,631  47.18%
 Net income per common share - basic0.34  0.34    %
 Net income per common share - diluted0.34  0.34    %
Period End Data:       
 Total assets$6,173,891  $4,972,448  $1,201,443  24.16%
 Total assets - tangible5,998,373  4,842,966  1,155,407  23.86%
 Earning assets (2)5,508,341  4,606,030  902,311  19.59%
 Loans (net of unearned income)4,367,039  3,521,075  845,964  24.03%
 Allowance for loan losses37,351  36,180  1,171  3.24%
 Goodwill and other intangibles175,518  129,482  46,036  35.55%
 Nonperforming assets47,986  43,804  4,182  9.55%
 Noninterest bearing deposits1,445,978  1,245,925  200,053  16.06%
 Interest bearing deposits3,341,900  2,604,007  737,893  28.34%
   Total deposits4,787,878  3,849,932  937,946  24.36%
 Total equity816,069  613,408  202,661  33.04%
 Total equity - tangible640,551  483,926  156,625  32.37%
 Common equity807,152  527,727  279,425  52.95%
 Common equity - tangible631,634  398,245  233,389  58.60%
 Book value per common share15.65  14.85  0.80  5.39%
 Book value per common share - tangible12.25  11.21  1.04  9.28%
Daily Average Balances:       
 Total assets$6,115,681  $4,961,204  $1,154,477  23.27%
 Total assets - tangible5,940,258  4,831,294  1,108,964  22.95%
 Earning assets (2)5,604,472  4,558,857  1,045,615  22.94%
 Loans (net of unearned income), excluding nonaccrual loans4,300,751  3,471,206  829,545  23.90%
 Allowance for loan losses37,926  36,355  1,571  4.32%
 Goodwill and other intangibles175,423  129,910  45,513  35.03%
 Noninterest bearing deposits1,388,002  1,228,807  159,195  12.96%
 Interest bearing deposits3,346,874  2,610,027  736,847  28.23%
   Total deposits4,734,876  3,838,834  896,042  23.34%
 Total equity812,602  612,250  200,352  32.72%
 Total equity - tangible637,179  482,341  154,838  32.10%
 Common equity804,090  526,994  277,096  52.58%
 Common equity - tangible628,667  397,084  231,583  58.32%
Key Ratios:       
 Return on average assets1.14% 0.97% 0.17% 17.53%
 Return on average assets - tangible1.21% 1.03% 0.18% 17.48%
 Return on average equity8.58% 7.86% 0.72% 9.16%
 Return on average equity - tangible11.25% 10.32% 0.93% 9.01%
 Return on average common equity8.67% 8.98% (0.31)% (3.45)%
 Return on average common equity - tangible11.41% 12.34% (0.93)% (7.54)%
 Net interest margin-fully tax equivalent (2)(3)3.40% 3.32% 0.08% 2.41%
 Net interest margin (2)3.32% 3.25% 0.07% 2.15%
 Average earning assets/total average assets91.64% 91.89% (0.25)% (0.27)%
 Average loans/average deposits90.83% 90.42% 0.41% 0.45%
 Average noninterest deposits/total average deposits29.31% 32.01% (2.70)% (8.43)%
 Allowance for loan losses/period end loans0.86% 1.03% (0.17)% (16.50)%
 Nonperforming assets to period end assets0.78% 0.88% (0.10)% (11.36)%
 Period end equity/period end total assets13.22% 12.34% 0.88% 7.13%
 Efficiency ratio (1)66.33% 69.94% (3.61)% (5.16)%
         
(1) Excludes gain (loss) on investment securities       
(2) Includes bank-owned life insurance       
(3) Presented on a tax-equivalent basis       

 

 
Selected Financial Highlights (unaudited)
TOWNEBANK
September 30, 2015
(dollars in thousands)
         
       Increase/ % Increase/
Nine Months Ended September 30, 20152015 2014 (Decrease) (Decrease)
         
Results of Operations:       
 Net interest income$134,111  $108,598  $25,513  23.49%
 Noninterest income (1)91,301  74,342  16,959  22.81%
 Gain (loss) on investment securities904  (15) 919  N/M 
 Total Revenue226,316  182,925  43,391  23.72%
 Noninterest expenses149,414  129,905  19,509  15.02%
 Provision for loan losses2,176  493  1,683  341.38%
 Income before income tax and noncontrolling interest74,726  52,527  22,199  42.26%
 Provision for income tax expense22,030  15,381  6,649  43.23%
 Net income52,696  37,146  15,550  41.86%
 Net income attributable to noncontrolling interest(2,780) (2,212) (568) 25.68%
 Net income attributable to TowneBank49,916  34,934  14,982  42.89%
 Preferred stock dividends13  573  (560) (97.73)%
 Net income available to common shareholders49,903  34,361  15,542  45.23%
 Net income per common share - basic0.98  0.98    %
 Net income per common share - diluted0.98  0.98    %
Period End Data:       
 Total assets$6,173,891  $4,972,448  $1,201,443  24.16%
 Total assets - tangible5,998,373  4,842,966  1,155,407  23.86%
 Earning assets (2)5,508,341  4,606,030  902,311  19.59%
 Loans (net of unearned income)4,367,039  3,521,075  845,964  24.03%
 Allowance for loan losses37,351  36,180  1,171  3.24%
 Goodwill and other intangibles175,518  129,482  46,036  35.55%
 Nonperforming assets47,986  43,804  4,182  9.55%
 Noninterest bearing deposits1,445,978  1,245,925  200,053  16.06%
 Interest bearing deposits3,341,900  2,604,007  737,893  28.34%
   Total deposits4,787,878  3,849,932  937,946  24.36%
 Total equity816,069  613,408  202,661  33.04%
 Total equity - tangible640,551  483,926  156,625  32.37%
 Common equity807,152  527,727  279,425  52.95%
 Common equity - tangible631,634  398,245  233,389  58.60%
 Book value per common share15.65  14.85  0.80  5.39%
 Book value per common share - tangible12.25  11.21  1.04  9.28%
Daily Average Balances:       
 Total assets$5,949,725  $4,819,901  $1,129,824  23.44%
 Total assets - tangible5,770,456  4,694,307  1,076,149  22.92%
 Earning assets (2)5,435,333  4,425,547  1,009,786  22.82%
 Loans (net of unearned income), excluding nonaccrual loans4,177,038  3,425,074  751,964  21.95%
 Allowance for loan losses36,950  37,461  (511) (1.36)%
 Goodwill and other intangibles179,269  125,594  53,675  42.74%
 Noninterest bearing deposits1,317,517  1,128,954  188,563  16.70%
 Interest bearing deposits3,279,354  2,581,126  698,228  27.05%
   Total deposits4,596,871  3,710,081  886,790  23.90%
 Total equity798,381  601,789  196,592  32.67%
 Total equity - tangible619,111  476,195  142,916  30.01%
 Common equity788,128  516,586  271,542  52.56%
 Common equity - tangible608,858  390,992  217,866  55.72%
Key Ratios:       
 Return on average assets1.12% 0.97% 0.15% 15.46%
 Return on average assets - tangible1.19% 1.03% 0.16% 15.53%
 Return on average equity8.36% 7.76% 0.60% 7.73%
 Return on average equity - tangible11.12% 10.13% 0.99% 9.77%
 Return on average common equity8.47% 8.89% (0.42)% (4.72)%
 Return on average common equity - tangible11.30% 12.14% (0.84)% (6.92)%
 Net interest margin-fully tax equivalent (2)(3)3.48% 3.39% 0.09% 2.65%
 Net interest margin (2)3.39% 3.32% 0.07% 2.11%
 Average earning assets/total average assets91.35% 91.82% (0.47)% (0.51)%
 Average loans/average deposits90.87% 92.32% (1.45)% (1.57)%
 Average noninterest deposits/total average deposits28.66% 30.43% (1.77)% (5.82)%
 Allowance for loan losses/period end loans0.86% 1.03% (0.17)% (16.50)%
 Nonperforming assets to period end assets0.78% 0.88% (0.10)% (11.36)%
 Period end equity/period end total assets13.22% 12.34% 0.88% 7.13%
 Efficiency ratio (1)66.28% 71.01% (4.73)% (6.66)%
         
(1) Excludes gain on investment securities       
(2) Includes bank-owned life insurance       
(3) Presented on a tax-equivalent basis       

  

 
Selected Financial Highlights (unaudited)
TOWNEBANK
September 30, 2015
(dollars in thousands, except per share data)
 
  September 30, June 30,   Increase/  % Increase/
Three Months Ended2015 2015  (Decrease)  (Decrease)
         
Results of Operations:       
 Net interest income$45,670  $44,884  $786  1.75%
 Noninterest income (1)29,568  32,966  (3,398) (10.31)%
 Gain (loss) on investment securities736  119  617  518.49%
 Total Revenue75,974  77,969  (1,995) (2.56)%
 Noninterest expenses49,906  49,067  839  1.71%
 Provision for loan losses130  1,723  (1,593) (92.46)%
 Income before income tax and noncontrolling interest25,938  27,179  (1,241) (4.57)%
 Provision for income tax expense7,444  8,201  (757) (9.23)%
 Net income18,494  18,978  (484) (2.55)%
 Net income attributable to noncontrolling interest(928) (1,166) 238  (20.41)%
 Net income attributable to TowneBank17,566  17,812  (246) (1.38)%
 Preferred stock dividends and accretion      %
 Net income available to common shareholders17,566  17,812  (246) (1.38)%
 Net income per common share - basic0.34  0.35  (0.01) (2.86)%
 Net income per common share - diluted0.34  0.35  (0.01) (2.86)%
Period End Data:       
 Total assets$6,173,891  $6,055,181  $118,710  1.96%
 Total assets - tangible5,998,373  5,879,975  118,398  2.01%
 Earning assets (2)5,508,341  5,576,243  (67,902) (1.22)%
 Loans (net of unearned income)4,367,039  4,228,127  138,912  3.29%
 Allowance for loan losses37,351  37,290  61  0.16%
 Goodwill and other intangibles175,518  175,207  311  0.18%
 Nonperforming assets47,986  53,609  (5,623) (10.49)%
 Noninterest bearing deposits1,445,978  1,363,551  82,427  6.05%
 Interest bearing deposits3,341,900  3,323,101  18,799  0.57%
 Total deposits4,787,878  4,686,652  101,226  2.16%
 Total equity816,069  802,891  13,178  1.64%
 Total equity - tangible640,551  627,685  12,866  2.05%
 Common equity807,152  794,018  13,134  1.65%
 Common equity - tangible631,634  618,812  12,822  2.07%
 Book value per common share15.65  15.40  0.25  1.62%
 Book value per common share - tangible12.25  12.00  0.25  2.08%
Daily Average Balances:       
 Total assets$6,115,681  $5,900,816  $214,865  3.64%
 Total assets - tangible5,940,258  5,724,957  215,301  3.76%
 Earning assets (2)5,604,472  5,407,516  196,956  3.64%
 Loans (net of unearned income), excluding nonaccrual loans4,300,751  4,161,304  139,447  3.35%
 Allowance for loan losses37,926  36,854  1,072  2.91%
 Goodwill and other intangibles175,423  175,858  (435) (0.25)%
 Noninterest bearing deposits1,388,002  1,307,075  80,927  6.19%
 Interest bearing deposits3,346,874  3,241,276  105,598  3.26%
 Total deposits4,734,876  4,548,351  186,525  4.10%
 Total equity812,602  800,369  12,233  1.53%
 Total equity - tangible637,179  624,511  12,668  2.03%
 Common equity804,090  791,915  12,175  1.54%
 Common equity - tangible628,667  616,057  12,610  2.05%
Key Ratios:       
 Return on average assets1.14% 1.21% (0.07)% (5.79)%
 Return on average assets - tangible1.21% 1.28% (0.07)% (5.47)%
 Return on average equity8.58% 8.93% (0.35)% (3.92)%
 Return on average equity - tangible11.25% 11.77% (0.52)% (4.42)%
 Return on average common equity8.67% 9.02% (0.35)% (3.88)%
 Return on average common equity - tangible11.41% 11.93% (0.52)% (4.36)%
 Net interest margin-fully tax equivalent (2)(3)3.40% 3.52% (0.12)% (3.41)%
 Net interest margin (2)3.32% 3.43% (0.11)% (3.21)%
 Average earning assets/total average assets91.64% 91.64% % %
 Average loans/average deposits90.83% 91.49% (0.66)% (0.72)%
 Average noninterest deposits/total average deposits29.31% 28.74% 0.57% 1.98%
 Allowance for loan losses/period end loans0.86% 0.88% (0.02)% (2.27)%
 Nonperforming assets to period end assets0.78% 0.89% (0.11)% (12.36)%
 Period end equity/period end total assets13.22% 13.26% (0.04)% (0.30)%
 Efficiency ratio (1)66.33% 63.03% 3.30% 5.24%
         
(1) Excludes gain (loss) on investment securities       
(2) Includes bank-owned life insurance       
(3) Presented on a tax-equivalent basis       

  

 
TOWNEBANK
Average Balances, Yields and Rate Paid (unaudited)
(dollars in thousands)
 
 Three Months Ended Three Months Ended Three Months Ended
 September 30, 2015 June 30, 2015 September 30, 2014
  InterestAverage  InterestAverage  InterestAverage
 AverageIncome/Yield/ AverageIncome/Yield/ AverageIncome/Yield/
 BalanceExpenseRate BalanceExpenseRate BalanceExpenseRate
Assets:           
Loans (net of unearned income and deferred costs), excluding nonaccrual loans$4,300,751 $49,398 4.56% $4,161,304 $48,729 4.70% $3,471,206 $40,961 4.68%
Taxable investment securities796,062 3,235 1.63% 818,000 2,825 1.38% 604,908 1,734 1.15%
Tax-exempt investment securities61,048 493 3.23% 63,255 496 3.14% 70,854 568 3.21%
Interest-bearing deposits167,247 107 0.25% 87,709 56 0.25% 275,634 174 0.25%
Loans held for sale132,214 1,246 3.77% 131,305 1,161 3.54% 78,325 787 4.02%
Bank-owned life insurance147,150 1,877 5.06% 145,943 2,044 5.62% 57,930 674 4.62%
Total earning assets5,604,472 56,356 3.99% 5,407,516 55,311 4.10% 4,558,857 44,898 3.91%
Less: allowance for loan losses(37,926)   (36,854)   (36,355)  
            
Total nonearning assets549,135    530,154    438,702   
            
Total assets$6,115,681    $5,900,816    $4,961,204   
            
Liabilities and Equity:           
Interest-bearing deposits           
Demand and money market$1,693,424 $1,201 0.28% $1,646,075 $1,144 0.28% $1,317,611 $717 0.22%
Savings297,041 695 0.93% 301,020 692 0.92% 308,466 707 0.91%
Certificates of deposit1,356,409 2,985 0.87% 1,294,181 2,606 0.81% 983,950 1,981 0.80%
Total interest-bearing deposits3,346,874 4,881 0.58% 3,241,276 4,442 0.55% 2,610,027 3,405 0.52%
Borrowings472,120 3,435 2.85% 460,993 3,381 2.90% 424,746 3,396 3.13%
Total interest-bearing liabilities3,818,994 8,316 0.86% 3,702,269 7,823 0.85% 3,034,773 6,801 0.89%
Demand deposits1,388,002    1,307,075    1,228,807   
Other noninterest-bearing liabilities96,083    91,103    85,374   
Total liabilities5,303,079    5,100,447    4,348,954   
            
Shareholders’ equity812,602    800,369    612,250   
            
Total liabilities and equity$6,115,681    $5,900,816    $4,961,204   
            
Net interest income (tax-equivalent basis) $48,040    $47,488    $38,097  
Reconcilement of Non-GAAP Financial Measures             
Bank-owned life insurance (1,877)   (2,044)   (674) 
Tax-equivalent basis adjustment (493)   (560)   (556) 
Net interest income (GAAP) $45,670    $44,884    $36,867  
            
Interest rate spread (1)  3.13%   3.26%   3.02%
Interest expense as a percent of average earning assets    0.59%   0.58%   0.59%
Net interest margin (tax equivalent basis) (2)    3.40%   3.52%   3.32%
Total cost of deposits  0.41%   0.39%   0.35%
            

(1) Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities.  Fully tax equivalent.
(2) Net interest margin is net interest income expressed as a percentage of average earning assets.  Fully tax equivalent.

 

 
TOWNEBANK
Average Balances, Yields and Rate Paid (unaudited)
(dollars in thousands)
 
 Nine Months Ended Nine Months Ended Nine Months Ended September 30, 2015
 September 30, 2015 September 30, 2014 Compared with September 30, 2014
  InterestAverage  InterestAverage   
 AverageIncome/Yield/ AverageIncome/Yield/ IncreaseChange due to
 BalanceExpenseRate BalanceExpenseRate (Decrease)RateVolume
Assets:           
Loans (net of unearned income and deferred costs), excluding  nonaccrual loans$4,177,038 $146,020 4.67% $3,425,074 $121,129 4.73% $24,891 $(1,411)$26,302 
Taxable investment securities787,996 8,862 1.50% 545,226 5,067 1.24% 3,795 1,216 2,578 
Tax-exempt investment securities63,684 1,524 3.19% 71,035 1,621 3.04% (97)77 (173)
Interest-bearing deposits152,472 287 0.25% 262,057 493 0.25% (206) (206)
Loans held for sale109,592 2,971 3.62% 64,483 1,934 4.00% 1,037 (201)1,239 
Bank-owned life insurance144,551 5,674 5.25% 57,672 2,090 4.85% 3,584 187 3,396 
Total earning assets5,435,333 165,338 4.07% 4,425,547 132,334 4.00% 33,004 (132)33,136 
Less: allowance for loan losses(36,950)   (37,461)      
            
Total nonearning assets$551,342    $431,815       
            
Total assets$5,949,725    $4,819,901       
            
Liabilities and Equity:           
Interest-bearing deposits           
Demand and money market$1,658,531 $3,456 0.28% $1,294,093 $2,264 0.23% $1,192 $482 $710 
Savings300,996 2,071 0.92% 313,114 2,155 0.92% (84)(1)(83)
Certificates of deposit1,319,827 8,220 0.83% 973,919 5,624 0.77% 2,596 471 2,126 
Total interest-bearing deposits3,279,354 13,747 0.56% 2,581,126 10,043 0.52% 3,704 952 2,753 
Borrowings460,195 10,205 2.92% 428,870 10,028 3.12% 177 (600)776 
Total interest-bearing liabilities3,739,549 23,952 0.86% 3,009,996 20,071 0.89% 3,881 352 3,529 
Demand deposits1,317,517    1,128,954       
Other noninterest-bearing liabilities94,278    79,161       
Total liabilities5,151,344    4,218,111       
            
Shareholders’ equity798,381    601,790       
            
Total liabilities and equity$5,949,725    $4,819,901       
            
Net interest income (tax-equivalent basis)   $141,386    $112,263   $29,123 $(484)$29,607 
Reconcilement of Non-GAAP Financial Measures               
Bank-owned life insurance (5,674)   (2,090)  (3,583)  
Tax-equivalent basis adjustment (1,601)   (1,575)  $(26)  
Net interest income (GAAP) $134,111    $108,598   $25,514   
            
Interest rate spread (1)    3.21%   3.11%    
Interest expense as a percent of average earning assets    0.59%   0.61%    
Net interest margin (tax equivalent basis) (2)    3.48%   3.39%    
Total cost of deposits  0.40%   0.36%    
              

(1) Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities. Fully tax equivalent.
(2) Net interest margin is net interest income expressed as a percentage of average earning assets. Fully tax equivalent.

  

 
TOWNEBANK
Consolidated Statements of Income (unaudited)
(dollars in thousands)
 
 Three Months Ended Nine Months Ended
 September 30, September 30,
 2015 2014 2015 2014
INTEREST INCOME:       
Loans, including fees$48,906  $40,404  $144,418  $119,554 
Investment securities3,728  2,303  10,386  6,688 
Interest-bearing deposits in financial institutions and federal funds sold107  174  287  493 
Mortgage loans held for sale1,246  787  2,971  1,934 
Total Interest Income53,987  43,668  158,062  128,669 
        
INTEREST EXPENSE:       
Deposits4,881  3,405  13,747  10,043 
Advances from the Federal Home Loan Bank3,422  3,385  10,160  9,990 
Repurchase agreements and other borrowings14  11  44  38 
Total Interest Expense8,317  6,801  23,951  20,071 
        
Net Interest Income45,670  36,867  134,111  108,598 
        
PROVISION FOR LOAN LOSSES130  996  2,176  493 
        
Net Interest Income after Provision for Loan Losses45,540  35,871  131,935  108,105 
        
NONINTEREST INCOME:       
Residential mortgage banking income, net8,262  7,858  26,956  20,655 
Real estate brokerage and property management income, net5,349  3,645  13,888  10,184 
Insurance commissions and other title fees and income, net9,710  8,861  30,644  26,815 
Service charges on deposit accounts2,388  2,406  6,911  6,904 
Credit card merchant fees, net823  927  1,821  2,665 
Other income3,036  2,572  11,081  7,119 
Net gain (loss) on investment securities736  44  904  (15)
Total Noninterest Income30,304  26,313  92,205  74,327 
        
NONINTEREST EXPENSE:       
Salaries and employee benefits28,910  25,080  83,133  73,801 
Occupancy expense4,703  4,618  14,489  13,188 
Furniture and equipment2,211  2,040  6,949  6,080 
Other expenses14,082  12,416  44,843  36,836 
Total Noninterest Expense49,906  44,154  149,414  129,905 
        
Income before income tax expense and noncontrolling interest25,938  18,030  74,726  52,527 
        
Provision for income tax expense7,444  5,044  22,030  15,381 
        
Net income18,494  12,986  52,696  37,146 
        
Net income attributable to noncontrolling interest(928) (860) (2,780) (2,212)
        
Net income attributable to TowneBank$17,566  $12,126  $49,916  $34,934 
        
Preferred stock dividends  191  13  573 
        
Net income available to common shareholders$17,566  $11,935  $49,903  $34,361 
        
Per common share information       
Basic earnings$0.34  $0.34  $0.98  $0.98 
Diluted earnings$0.34  $0.34  $0.98  $0.98 
Cash dividends declared$0.12  $0.11  $0.35  $0.32 

 

 
TOWNEBANK
Consolidated Statements of Comprehensive Income (unaudited)
(dollars in thousands)
 
 Three Months Ended Nine Months Ended
 September 30, September 30,
 2015 2014 2015 2014
Net income$18,494  $12,986  $52,696  $37,146 
        
Other comprehensive income (loss)       
        
Unrealized gains (losses) on securities       
Unrealized holding gains (losses) arising during the period1,822  (229) 1,536  1,575 
Deferred tax (expense) benefit(638) 80  (538) (552)
Realized (gains) losses reclassified into earnings(736) (44) (785) 15 
Deferred tax benefit258  15  275  (6)
Net unrealized gains (losses)706  (178) 488  1,032 
        
Defined benefit retirement plan       
Amortization60  15  138  15 
Deferred tax expense(21) (5) (48) (5)
Change in defined benefit retirement plan, net of tax39  10  90  10 
        
Other comprehensive income (loss), net of tax745  (168) 578  1,042 
        
Comprehensive income$19,239  $12,818  $53,274  $38,188 

  

 
TOWNEBANK
Consolidated Balance Sheets
(dollars in thousands)
 
 September 30, December 31,
 2015 2014  2014 
 (unaudited)   (1)
ASSETS     
Cash and due from banks$284,625  $230,889  $212,994 
Interest-bearing deposits in financial institutions1,000  1,000  1,011 
Total Cash and Cash Equivalents285,625  231,889  214,005 
Securities available for sale, at fair value542,634  607,931  603,908 
Securities held to maturity, at amortized cost75,154  86,794  85,247 
Federal Home Loan Bank stock, at amortized cost24,058  22,150  22,157 
Total Securities641,846  716,875  711,312 
Mortgage loans held for sale99,330  86,034  71,390 
Loans, net of unearned income and deferred costs:     
Real estate - residential 1-4 family965,559  833,208  837,370 
Real estate - commercial1,796,150  1,451,271  1,447,078 
Real estate - construction and land development554,753  476,379  452,481 
Real estate - multifamily138,954  53,368  51,472 
Commercial and industrial business790,614  644,528  700,623 
Consumer and other loans121,009  62,321  75,365 
Loans, net of unearned income and deferred costs4,367,039  3,521,075  3,564,389 
Less:  Allowance for loan losses(37,351) (36,180) (35,917)
Net Loans4,329,688  3,484,895  3,528,472 
Premises and equipment, net172,940  154,343  155,774 
Goodwill152,438  111,761  113,159 
Other intangible assets, net23,080  17,721  22,509 
Bank-owned life insurance policies147,949  58,217  58,716 
Other assets320,995  110,713  107,148 
TOTAL ASSETS$6,173,891  $4,972,448  $4,982,485 
      
LIABILITIES AND EQUITY     
Liabilities     
Deposits:     
Noninterest-bearing demand$1,445,978  $1,245,925  $1,224,466 
Interest-bearing:     
Demand and money market accounts1,676,623  1,309,085  1,365,183 
Savings295,952  306,811  301,033 
Certificates of deposit1,369,325  988,111  955,920 
Total Deposits4,787,878  3,849,932  3,846,602 
Advances from the Federal Home Loan Bank437,282  398,477  398,181 
Repurchase agreements and other borrowings33,784  24,594  31,893 
Total Borrowings471,066  423,071  430,074 
Other liabilities98,878  86,037  87,533 
TOTAL LIABILITIES5,357,822  4,359,040  4,364,209 
Shareholders’ Equity     
Preferred stock: 2,000,000 shares authorized 0 shares issued at September 30, 2015 and 76,458 shares issued at September 30, 2014 and December 31, 2014  76,458  76,458 
Common stock, $1.667 par: 90,000,000 shares authorized 51,580,762; 35,538,144; and 35,785,679 shares issued at September 30, 2015 and 2014 and December 31, 2014, respectively85,985  59,242  59,655 
Capital surplus533,609  316,240  317,718 
Retained earnings186,522  151,547  154,655 
Common stock issued to deferred compensation trust, at cost 651,362; 617,886; and 627,730 shares at September 30, 2015 and 2014 and December 31, 2014, respectively(10,151) (9,508) (9,674)
Deferred compensation trust10,151  9,508  9,674 
Accumulated other comprehensive income1,036  698  458 
TOTAL SHAREHOLDERS’ EQUITY807,152  604,185  608,944 
Noncontrolling interests8,917  9,223  9,332 
TOTAL EQUITY816,069  613,408  618,276 
TOTAL LIABILITIES AND EQUITY$6,173,891  $4,972,448  $4,982,485 

                                                                       
(1) As derived from the audited consolidated financial statements for December 31, 2014.

 

 
TOWNEBANK
Insurance Segment Financial Information
(dollars in thousands)
 
          
   Increase/(Decrease)
 Three Months Ended September 30, 2015 September 30, 2015
 September 30, June 30, September 30, 2014 June 30, 2015
 2015 2014 2015 Amount Percent Amount Percent
Commission and fee income             
Property and casualty$8,156  $7,335  $8,012  $821  11.19% $144  1.80%
Employee benefits2,578  2,723  2,443  (145) (5.33)% 135  5.53%
Travel insurance626  468  910  158  33.76% (284) (31.21)%
Specialized benefit services145  138  135  7  5.07% 10  7.41%
Total commissions and fees11,505  10,664  11,500  841  7.89% 5  0.04%
              
Contingency and bonus revenue260  56  387  204  364.29% (127) (32.82)%
Other income53  52  47  1  1.92% 6  12.77%
Total revenue$11,818  $10,772  $11,934  $1,046  9.71% $(116) (0.97)%
              
Employee commission expense2,361  2,165  2,326  196  9.05% 35  1.50%
Revenue, net of commission expense$9,457  $8,607  $9,608  $850  9.88% $(151) (1.57)%
              
Salaries and employee benefits4,583  4,274  4,734  309  7.23% (151) (3.19)%
Occupancy expense480  454  480  26  5.73%   %
Furniture and equipment202  200  225  2  1.00% (23) (10.22)%
Amortization of intangible assets543  510  540  33  6.47% 3  0.56%
Other expenses1,491  1,236  1,424  255  20.63% 67  4.71%
Total operating expenses7,299  6,674  7,403  625  9.36% (104) (1.40)%
Income before income tax provision and noncontrolling interest$2,158  $1,933  $2,205  $225  11.64% $(47) (2.13)%
Plus: Acquisition related expenses164  128  176  36  28.13% (12) (6.82)%
Plus: Amortization of intangible assets543  510  540  33  6.47% 3  0.56%
Operating earnings before income taxes (non-GAAP)$2,865  $2,571  $2,921  $294  11.44% $(56) (1.92)%
              

 

TOWNEBANK
Insurance Segment Financial Information
(dollars in thousands)
 
        
 Nine Months Ended Increase/(Decrease)
 September 30, 2015 over 2014
 2015 2014 Amount Percent
Commission and fee income       
Property and casualty$22,627  $18,805  $3,822  20.32%
Employee benefits7,690  8,027  (337) (4.20)%
Travel insurance2,668  1,893  775  40.94%
Specialized benefit services414  407  7  1.72%
Total commissions and fees33,399  29,132  4,267  14.65%
        
Contingency and bonus revenue3,171  3,165  6  0.19%
Other income148  287  (139) (48.43)%
Total revenue$36,718  $32,584  $4,134  12.69%
        
Employee commission expense6,723  6,278  445  7.09%
Revenue, net of commission expense$29,995  $26,306  $3,689  14.02%
        
Salaries and employee benefits$14,111  $11,640  2,471  21.23%
Occupancy expense1,417  1,232  185  15.02%
Furniture and equipment669  562  107  19.04%
Amortization of intangible assets1,609  1,368  241  17.62%
Other expenses4,157  3,417  740  21.66%
Total operating expenses21,963  18,219  3,744  20.55%
Income before income tax, corporate allocation and noncontrolling interest$8,032  $8,087  $(55) (0.68)%
Plus: Acquisition related expenses520  214  306  142.99%
Plus: Amortization of intangible assets1,609  1,368  241  17.62%
Operating earnings before income taxes (non-GAAP)$10,161  $9,669  $492  5.09%
        

  

TOWNEBANK
September 30, 2015
Reconcilement of Non-GAAP Financial Measures:
(dollars in thousands)
       
       
  Three Months Ended
  September 30, September 30, December 31,
  2015 2014 2014
       
Return on average assets (GAAP basis) 1.14% 0.97% 0.57%
Impact of excluding average goodwill and other intangibles and amortization 0.07% 0.06% 0.06%
Return on average tangible assets (Non-GAAP) 1.21% 1.03% 0.63%
       
Return on average equity (GAAP basis) 8.58% 7.86% 4.62%
Impact of excluding average goodwill and other intangibles and amortization 2.67% 2.46% 1.73%
Return on average tangible equity (Non-GAAP) 11.25% 10.32% 6.35%
       
Return on average common equity (GAAP basis) 8.67% 8.98% 5.21%
Impact of excluding average goodwill and other intangibles and amortization 2.74% 3.36% 2.31%
Return on average tangible common equity (Non-GAAP) 11.41% 12.34% 7.52%
       
Book value (GAAP basis) $15.65  14.85  $14.88 
Impact of excluding average goodwill and other intangibles and amortization 3.40  3.64  (3.79)
Tangible book value $12.25  $11.21  $11.09 
       

            

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