SUFFOLK, Va., Oct. 22, 2020 (GLOBE NEWSWIRE) -- TowneBank (the “Company”) (NASDAQ: TOWN) today reported earnings for the quarter ended September 30, 2020 of $34.46 million, or $0.48 per diluted share, compared to $37.66 million, or $0.52 per diluted share, for the quarter ended September 30, 2019.
“Our third quarter results were highlighted by strong performance across our fee-based business lines. Total revenues exceeded $192 million despite challenges from historically low interest rates. Credit metrics remained stable reflecting our relationship-based credit culture. Once again, strong deposit growth led to TowneBank earning the top spot in Hampton Roads market share according to recently released FDIC data,” said G. Robert Aston, Jr., Executive Chairman.
Highlights for Third Quarter 2020 Compared to Third Quarter 2019:
“Despite the many headwinds impacting the nation in 2020, our team at Towne has been working diligently behind the scenes to enhance and improve our member experience through our Towne 20.20 initiative. In early October, as part of that initiative, we implemented a new robust banking system that sets the stage for new and innovative technology, enhanced digital solutions, and a greater variety of financial services,” stated J. Morgan Davis, President and Chief Executive Officer.
Quarterly Net Interest Income Compared to Third Quarter 2019:
Quarterly Provision for Credit Losses:
Quarterly Noninterest Income Compared to Third Quarter 2019:
Quarterly Noninterest Expense Compared to Third Quarter 2019:
Quarterly Income Taxes Compared to Third Quarter 2019:
Consolidated Balance Sheet Highlights:
Investment Securities:
Loans and Asset Quality:
Deposits and Borrowings:
Capital:
About TowneBank:
As one of the top community banks in Virginia and North Carolina, TowneBank operates 42 banking offices serving Chesapeake, Chesterfield County, Glen Allen, Hampton, James City County, Mechanicsville, Newport News, Norfolk, Portsmouth, Richmond, Suffolk, Virginia Beach, Williamsburg, and York County in Virginia, along with Raleigh, Cary, Charlotte, Greensboro, Greenville, Moyock, Grandy, Camden County, Southern Shores, Corolla, Duck and Nags Head in North Carolina. TowneBank also offers a full range of financial services through its controlled divisions and subsidiaries that include Towne Investment Group, Towne Wealth Management, Towne Insurance Agency, Towne Benefits, TowneBank Mortgage, TowneBank Commercial Mortgage, Berkshire Hathaway HomeServices Towne Realty, Towne 1031 Exchange, LLC, and Towne Vacations. Local decision-making is a hallmark of its hometown banking strategy that is delivered through the leadership of each group’s President and Board of Directors. With total assets of $14.80 billion as of September 30, 2020, TowneBank is one of the largest banks headquartered in Virginia.
Non-GAAP Financial Measures:
This press release contains financial information determined by methods other than in accordance with GAAP. The Company's management uses these non-GAAP financial measures in its analysis of the Company's performance. These measures typically adjust GAAP performance measures to exclude the effects of the amortization of intangibles and include the tax benefit associated with revenue items that are tax-exempt, as well as adjust income available to common shareholders for certain significant activities or transactions that are infrequent in nature. Management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of the Company’s core businesses. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of GAAP to non-GAAP disclosures are included as tables at the end of this release.
Forward-Looking Statements:
Certain statements contained in this release constitute forward-looking statements within the meaning of U.S. federal securities laws. These forward-looking statements speak only as of the date of this release, are based on current expectations, and involve a number of assumptions. These include statements regarding TowneBank’s future economic performance, financial condition, prospects, growth, strategies and expectations, and objectives of management, and are generally identified by the use of words such as “believe,” “expect,” “intend,” “anticipate,” “estimate,” or “project” or similar expressions. TowneBank intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is including this statement for purposes of these safe harbor provisions. You should not place undue reliance on forward-looking statements, which are subject to assumptions that are subject to change. TowneBank’s ability to predict results, or the actual effect of future plans or strategies, is inherently uncertain. These forward-looking statements are subject to a number of factors and uncertainties that could cause actual results to differ from those indicated or implied in the forward-looking statements and such differences may be material. Factors which could have a material effect on the operations and future prospects of TowneBank include but are not limited to: the impacts of the ongoing coronavirus (COVID-19) pandemic, changes in interest rates, general economic and business conditions; legislative/regulatory changes; the monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System; the quality and composition of TowneBank’s loan and securities portfolios; demand for loan products; deposit flows; competition; demand for financial services in TowneBank’s market area; implementation of new technologies and the ability to develop and maintain secure and reliable electronic systems; changes in the securities markets; changes in accounting principles, policies and guidelines; and other risk factors detailed from time to time in filings made by TowneBank with the Federal Deposit Insurance Corporation. TowneBank undertakes no obligation to update or clarify these forward-looking statements, whether as a result of new information, future events or otherwise.
Media contact:
G. Robert Aston, Jr., Executive Chairman, 757-638-6780
J. Morgan Davis, President and Chief Executive Officer, 757-673-1673
Investor contact:
William B. Littreal, Chief Financial Officer, 757-638-6813
TOWNEBANK | ||||||||||||||||||||
Selected Financial Highlights (unaudited) | ||||||||||||||||||||
(dollars in thousands, except per share data) | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
2020 | 2020 | 2020 | 2019 | 2019 | ||||||||||||||||
Income and Performance Ratios: | ||||||||||||||||||||
Total Revenue | $ | 192,135 | $ | 162,656 | $ | 137,696 | $ | 139,671 | $ | 145,879 | ||||||||||
Net income | 50,715 | 37,222 | 27,605 | 35,948 | 39,400 | |||||||||||||||
Net income available to common shareholders | 34,464 | 34,605 | 26,384 | 35,075 | 37,659 | |||||||||||||||
Pre-provision, pre-tax, net revenues (non-GAAP) | 73,903 | 69,014 | 39,587 | 46,462 | 46,851 | |||||||||||||||
Net income per common share - diluted | 0.48 | 0.48 | 0.36 | 0.49 | 0.52 | |||||||||||||||
Book value per common share | 23.83 | 23.50 | 22.77 | 22.58 | 22.38 | |||||||||||||||
Book value per common share - tangible (non-GAAP) | 17.06 | 16.68 | 15.91 | 15.69 | 15.44 | |||||||||||||||
Return on average assets | 0.89 | % | 0.97 | % | 0.88 | % | 1.16 | % | 1.26 | % | ||||||||||
Return on average assets - tangible (non-GAAP) | 0.97 | % | 1.07 | % | 1.00 | % | 1.30 | % | 1.40 | % | ||||||||||
Return on average equity | 7.85 | % | 8.18 | % | 6.37 | % | 8.44 | % | 9.22 | % | ||||||||||
Return on average equity - tangible (non-GAAP) | 11.66 | % | 12.32 | % | 9.91 | % | 12.97 | % | 14.20 | % | ||||||||||
Return on average common equity | 7.91 | % | 8.24 | % | 6.42 | % | 8.51 | % | 9.29 | % | ||||||||||
Return on average common equity - tangible (non-GAAP) | 11.79 | % | 12.44 | % | 10.01 | % | 13.12 | % | 14.36 | % | ||||||||||
Noninterest income as a percentage of total revenue | 49.64 | % | 42.66 | % | 35.00 | % | 35.59 | % | 37.55 | % | ||||||||||
Regulatory Capital Ratios (1): | ||||||||||||||||||||
Common equity tier 1 | 11.75 | % | 11.54 | % | 11.23 | % | 11.46 | % | 11.52 | % | ||||||||||
Tier 1 | 11.91 | % | 11.67 | % | 11.35 | % | 11.49 | % | 11.55 | % | ||||||||||
Total | 15.33 | % | 14.91 | % | 14.40 | % | 14.58 | % | 14.70 | % | ||||||||||
Tier 1 leverage ratio | 8.89 | % | 9.05 | % | 10.11 | % | 9.95 | % | 9.84 | % | ||||||||||
Asset Quality: | ||||||||||||||||||||
Allowance for credit losses on loans to nonperforming loans | 7.31x | 5.34x | 3.85x | 3.34x | 3.95x | |||||||||||||||
Allowance for credit losses on loans to period end loans | 1.22 | % | 0.92 | % | 0.73 | % | 0.69 | % | 0.68 | % | ||||||||||
Allowance for credit losses on loans to period end loans excluding PPP loans (non-GAAP) | 1.37 | % | 1.04 | % | 0.73 | % | 0.69 | % | 0.68 | % | ||||||||||
Nonperforming loans to period end loans | 0.17 | % | 0.17 | % | 0.19 | % | 0.21 | % | 0.17 | % | ||||||||||
Nonperforming assets to period end assets | 0.19 | % | 0.19 | % | 0.24 | % | 0.27 | % | 0.26 | % | ||||||||||
Net charge-offs (recoveries) to average loans (annualized) | (0.01 | )% | — | % | 0.03 | % | 0.04 | % | 0.03 | % | ||||||||||
Nonperforming loans | $ | 16,295 | $ | 16,935 | $ | 16,700 | $ | 17,437 | $ | 14,016 | ||||||||||
Former bank premises | 750 | — | — | 1,521 | 1,510 | |||||||||||||||
Foreclosed property | 11,695 | 12,315 | 13,053 | 13,839 | 15,517 | |||||||||||||||
Total nonperforming assets | $ | 28,740 | $ | 29,250 | $ | 29,753 | $ | 32,797 | $ | 31,043 | ||||||||||
Loans past due 90 days and still accruing interest | $ | 19 | $ | 464 | $ | 91 | $ | 309 | $ | 636 | ||||||||||
Allowance for credit losses on loans | $ | 119,058 | $ | 90,467 | $ | 64,372 | $ | 58,234 | $ | 55,428 | ||||||||||
Mortgage Banking: | ||||||||||||||||||||
Loans originated, mortgage | $ | 1,292,801 | $ | 1,116,782 | $ | 718,681 | $ | 628,279 | $ | 703,922 | ||||||||||
Loans originated, joint venture | 498,100 | 357,815 | 204,522 | 231,879 | 259,742 | |||||||||||||||
Total loans originated | $ | 1,790,901 | $ | 1,474,597 | $ | 923,203 | $ | 860,158 | $ | 963,664 | ||||||||||
Number of loans originated | 5,817 | 4,818 | 3,025 | 2,984 | 3,360 | |||||||||||||||
Number of originators | 224 | 216 | 223 | 217 | 225 | |||||||||||||||
Purchase % | 61.21 | % | 51.26 | % | 61.31 | % | 70.32 | % | 68.83 | % | ||||||||||
Loans sold | $ | 1,833,590 | $ | 1,398,649 | $ | 809,834 | $ | 879,910 | $ | 925,058 | ||||||||||
Gross realized gain on sales and fees as a % of loans originated | 3.65 | % | 3.17 | % | 1.80 | % | 3.38 | % | 3.45 | % | ||||||||||
Other Ratios: | ||||||||||||||||||||
Net interest margin | 2.70 | % | 2.85 | % | 3.35 | % | 3.33 | % | 3.41 | % | ||||||||||
Net interest margin-fully tax equivalent (non-GAAP) | 2.72 | % | 2.87 | % | 3.37 | % | 3.35 | % | 3.43 | % | ||||||||||
Average earning assets/total average assets | 92.09 | % | 91.33 | % | 89.15 | % | 89.57 | % | 89.53 | % | ||||||||||
Average loans/average deposits | 86.29 | % | 91.81 | % | 92.99 | % | 88.41 | % | 87.63 | % | ||||||||||
Average noninterest deposits/total average deposits | 37.76 | % | 36.52 | % | 32.21 | % | 32.14 | % | 31.82 | % | ||||||||||
Period end equity/period end total assets | 11.82 | % | 11.05 | % | 13.19 | % | 13.84 | % | 13.63 | % | ||||||||||
Efficiency ratio (non-GAAP) | 53.55 | % | 56.99 | % | 73.02 | % | 66.11 | % | 66.66 | % | ||||||||||
(1) Current reporting period regulatory capital ratios are preliminary |
TOWNEBANK | ||||||||||||||||||||
Selected Data (unaudited) | ||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Investment Securities | % Change | |||||||||||||||||||
Q3 | Q3 | Q2 | Q3 20 vs. | Q3 20 vs. | ||||||||||||||||
Available-for-sale securities, at fair value | 2020 | 2019 | 2020 | Q3 19 | Q2 20 | |||||||||||||||
U.S. agency securities | $ | 167,275 | $ | 152,581 | $ | 118,176 | 9.63 | % | 41.55 | % | ||||||||||
U.S. Treasury notes | 1,006 | 999 | 1,010 | 0.70 | % | (0.40 | )% | |||||||||||||
Municipal securities | 292,792 | 173,519 | 313,322 | 68.74 | % | (6.55 | )% | |||||||||||||
Trust preferred and other corporate securities | 24,236 | 52,006 | 59,598 | (53.40 | )% | (59.33 | )% | |||||||||||||
Mortgage-backed securities issued by GSE and GNMA | 825,378 | 958,290 | 774,658 | (13.87 | )% | 6.55 | % | |||||||||||||
Allowance for credit losses | (4 | ) | n/a | (140 | ) | n/a | (97.14 | )% | ||||||||||||
Total | $ | 1,310,683 | $ | 1,337,395 | $ | 1,266,624 | (2.00 | )% | 3.48 | % | ||||||||||
Gross unrealized gains (losses) reflected in financial statements | ||||||||||||||||||||
Total gross unrealized gains | $ | 62,206 | $ | 28,114 | $ | 61,559 | 121.26 | % | 1.05 | % | ||||||||||
Total gross unrealized losses | (773 | ) | (2,046 | ) | (1,674 | ) | (62.22 | )% | (53.82 | )% | ||||||||||
Net unrealized gains (losses) and other adjustments on AFS securities | $ | 61,433 | $ | 26,068 | $ | 59,885 | ||||||||||||||
Held-to-maturity securities, at amortized cost | ||||||||||||||||||||
Municipal securities | $ | 2,333 | $ | 29,166 | $ | 28,855 | (92.00 | )% | (91.91 | )% | ||||||||||
Trust preferred corporate securities | 4,992 | 2,381 | 2,345 | 109.66 | % | 112.88 | % | |||||||||||||
Mortgage-backed securities issued by GSE and GNMA | 9,806 | 12,947 | 10,395 | (24.26 | )% | (5.67 | )% | |||||||||||||
Allowance for credit losses | (90 | ) | n/a | (121 | ) | n/a | (25.62 | )% | ||||||||||||
Total | $ | 17,041 | $ | 44,494 | $ | 41,474 | (61.70 | )% | (58.91 | )% | ||||||||||
Gross unrealized gains (losses) not reflected in financial statements | ||||||||||||||||||||
Total gross unrealized gains | $ | 1,971 | $ | 1,688 | $ | 1,980 | 16.77 | % | (0.45 | )% | ||||||||||
Total gross unrealized losses | — | (5 | ) | — | (100.00 | )% | — | % | ||||||||||||
Net unrealized gains (losses) in HTM securities | $ | 1,971 | $ | 1,683 | $ | 1,980 | ||||||||||||||
Loans Held For Investment (1) | % Change | |||||||||||||||||||
Q3 | Q3 | Q2 | Q3 20 vs. | Q3 20 vs. | ||||||||||||||||
2020 | 2019 | 2020 | Q3 19 | Q2 20 | ||||||||||||||||
Real estate - construction and development | $ | 1,143,202 | $ | 1,142,225 | $ | 1,178,832 | 0.09 | % | (3.02 | )% | ||||||||||
Commercial real estate - non owner occupied | 2,338,532 | 2,070,317 | 2,332,447 | 12.96 | % | 0.26 | % | |||||||||||||
Commercial real estate - owner occupied | 1,378,443 | 1,286,137 | 1,383,294 | 7.18 | % | (0.35 | )% | |||||||||||||
Real estate - multifamily | 289,270 | 219,901 | 277,947 | 31.55 | % | 4.07 | % | |||||||||||||
Real estate - residential 1-4 family and HELOC | 1,660,535 | 1,621,175 | 1,670,530 | 2.43 | % | (0.60 | )% | |||||||||||||
Commercial and industrial business | 2,499,801 | 1,527,515 | 2,503,161 | 63.65 | % | (0.13 | )% | |||||||||||||
Consumer and other loans | 460,787 | 315,559 | 455,678 | 46.02 | % | 1.12 | % | |||||||||||||
Total | $ | 9,770,570 | $ | 8,182,829 | $ | 9,801,889 | 19.40 | % | (0.32 | )% | ||||||||||
(1) Paycheck Protection Program loans totaling $1.10 billion and $1.09 billion, primarily in C&I, are included in Q3 2020 and Q2 2020, respectively. | ||||||||||||||||||||
Deposits | % Change | |||||||||||||||||||
Q3 | Q3 | Q2 | Q3 20 vs. | Q3 20 vs. | ||||||||||||||||
2020 | 2019 | 2020 | Q3 19 | Q2 20 | ||||||||||||||||
Noninterest-bearing demand | $ | 4,464,178 | $ | 3,030,505 | $ | 4,226,208 | 47.31 | % | 5.63 | % | ||||||||||
Interest-bearing: | ||||||||||||||||||||
Demand and money market accounts | 4,642,482 | 3,534,252 | 4,223,391 | 31.36 | % | 9.92 | % | |||||||||||||
Savings | 312,444 | 280,552 | 298,673 | 11.37 | % | 4.61 | % | |||||||||||||
Certificates of deposits | 2,285,859 | 2,592,705 | 2,516,666 | (11.83 | )% | (9.17 | )% | |||||||||||||
Total | $ | 11,704,963 | $ | 9,438,014 | $ | 11,264,938 | 24.02 | % | 3.91 | % |
TOWNEBANK | ||||||||||||||||||||||||||||||||||||||
Average Balances, Yields and Rate Paid (unaudited) | ||||||||||||||||||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||||||||||||||
Three Months Ended | Three Months Ended | Three Months Ended | ||||||||||||||||||||||||||||||||||||
September 30, 2020 | June 30, 2020 | September 30, 2019 | ||||||||||||||||||||||||||||||||||||
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 (1) | $ | 9,752,746 | $ | 103,401 | 4.22 | % | $ | 9,619,931 | $ | 102,656 | 4.29 | % | $ | 8,096,908 | $ | 102,495 | 5.02 | % | ||||||||||||||||||||
Taxable investment securities | 1,206,679 | 6,726 | 2.23 | % | 1,198,776 | 7,367 | 2.46 | % | 1,266,447 | 9,087 | 2.87 | % | ||||||||||||||||||||||||||
Tax-exempt investment securities | 144,999 | 779 | 2.15 | % | 147,489 | 836 | 2.27 | % | 121,738 | 997 | 3.28 | % | ||||||||||||||||||||||||||
Total securities | 1,351,678 | 7,505 | 2.22 | % | 1,346,265 | 8,203 | 2.44 | % | 1,388,185 | 10,084 | 2.91 | % | ||||||||||||||||||||||||||
Interest-bearing deposits | 2,523,644 | 632 | 0.10 | % | 1,729,140 | 433 | 0.10 | % | 711,030 | 3,745 | 2.09 | % | ||||||||||||||||||||||||||
Loans held for sale | 634,309 | 4,587 | 2.89 | % | 464,796 | 3,811 | 3.28 | % | 408,377 | 3,956 | 3.87 | % | ||||||||||||||||||||||||||
Total earning assets | 14,262,377 | 116,125 | 3.24 | % | 13,160,132 | 115,103 | 3.52 | % | 10,604,500 | 120,280 | 4.50 | % | ||||||||||||||||||||||||||
Less: allowance for credit losses | (95,594 | ) | (69,451 | ) | (54,858 | ) | ||||||||||||||||||||||||||||||||
Total nonearning assets | 1,320,369 | 1,318,787 | 1,295,640 | |||||||||||||||||||||||||||||||||||
Total assets | $ | 15,487,152 | $ | 14,409,468 | $ | 11,845,282 | ||||||||||||||||||||||||||||||||
Liabilities and Equity: | ||||||||||||||||||||||||||||||||||||||
Interest-bearing deposits | ||||||||||||||||||||||||||||||||||||||
Demand and money market | $ | 4,311,920 | $ | 2,663 | 0.25 | % | $ | 3,857,757 | $ | 2,491 | 0.26 | % | $ | 3,379,888 | $ | 7,223 | 0.85 | % | ||||||||||||||||||||
Savings | 304,753 | 555 | 0.72 | % | 290,201 | 554 | 0.77 | % | 278,048 | 702 | 1.00 | % | ||||||||||||||||||||||||||
Certificates of deposit | 2,417,772 | 9,747 | 1.60 | % | 2,503,648 | 12,027 | 1.93 | % | 2,641,681 | 15,627 | 2.35 | % | ||||||||||||||||||||||||||
Total interest-bearing deposits | 7,034,445 | 12,965 | 0.73 | % | 6,651,606 | 15,072 | 0.91 | % | 6,299,617 | 23,552 | 1.48 | % | ||||||||||||||||||||||||||
Borrowings | 1,931,120 | 2,841 | 0.58 | % | 1,741,832 | 3,238 | 0.74 | % | 486,644 | 2,020 | 1.62 | % | ||||||||||||||||||||||||||
Subordinated debt, net | 248,807 | 2,962 | 4.76 | % | 248,660 | 2,962 | 4.76 | % | 248,210 | 2,962 | 4.77 | % | ||||||||||||||||||||||||||
Total interest-bearing liabilities | 9,214,372 | 18,768 | 0.81 | % | 8,642,098 | 21,272 | 0.99 | % | 7,034,471 | 28,534 | 1.61 | % | ||||||||||||||||||||||||||
Demand deposits | 4,268,443 | 3,826,439 | 2,940,370 | |||||||||||||||||||||||||||||||||||
Other noninterest-bearing liabilities | 257,304 | 239,154 | 250,371 | |||||||||||||||||||||||||||||||||||
Total liabilities | 13,740,119 | 12,707,691 | 10,225,212 | |||||||||||||||||||||||||||||||||||
Shareholders’ equity | 1,747,033 | 1,701,777 | 1,620,070 | |||||||||||||||||||||||||||||||||||
Total liabilities and equity | $ | 15,487,152 | $ | 14,409,468 | $ | 11,845,282 | ||||||||||||||||||||||||||||||||
Net interest income (tax-equivalent basis) | $ | 97,357 | $ | 93,831 | $ | 91,746 | ||||||||||||||||||||||||||||||||
Reconcilement of Non-GAAP Financial Measures | ||||||||||||||||||||||||||||||||||||||
Tax-equivalent basis adjustment | (598 | ) | (557 | ) | (643 | ) | ||||||||||||||||||||||||||||||||
Net interest income (GAAP) | $ | 96,759 | $ | 93,274 | $ | 91,103 | ||||||||||||||||||||||||||||||||
Interest rate spread (2)(4) | 2.43 | % | 2.53 | % | 2.89 | % | ||||||||||||||||||||||||||||||||
Interest expense as a percent of average earning assets | 0.52 | % | 0.65 | % | 1.07 | % | ||||||||||||||||||||||||||||||||
Net interest margin (tax equivalent basis) (3)(4) | 2.72 | % | 2.87 | % | 3.43 | % | ||||||||||||||||||||||||||||||||
Total cost of deposits | 0.46 | % | 0.58 | % | 1.01 | % | ||||||||||||||||||||||||||||||||
(1) Includes average PPP balances of $1.10 billion and related interest and fee income of $9.82 million.
(2) Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities. Fully tax equivalent.
(3) Net interest margin is net interest income expressed as a percentage of average earning assets. Fully tax equivalent.
(4) Non-GAAP.
TOWNEBANK | |||||||||||||||||||||||||||||||||||||||||
Average Balances, Yields and Rate Paid (unaudited) | |||||||||||||||||||||||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||
Nine Months Ended | Nine Months Ended | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||
September 30, 2020 | September 30, 2019 | 2020 Compared with 2019 | |||||||||||||||||||||||||||||||||||||||
Interest | Average | Interest | Average | ||||||||||||||||||||||||||||||||||||||
Average | Income/ | Yield/ | Average | Income/ | Yield/ | Increase | Change Due to | ||||||||||||||||||||||||||||||||||
Balance | Expense | Rate | Balance | Expense | Rate | (Decrease) | Rate | Volume | |||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||||||
Loans (net of unearned income and deferred costs), excluding nonaccrual loans (1) | $ | 9,309,256 | $ | 306,622 | 4.40 | % | $ | 8,067,894 | $ | 305,007 | 5.05 | % | $ | 1,615 | $ | (42,206 | ) | $ | 43,822 | ||||||||||||||||||||||
Taxable investment securities | 1,253,783 | 23,304 | 2.48 | % | 1,158,611 | 24,962 | 2.87 | % | (1,658 | ) | (3,603 | ) | 1,945 | ||||||||||||||||||||||||||||
Tax-exempt investment securities | 140,248 | 2,476 | 2.35 | % | 97,485 | 2,519 | 3.45 | % | (43 | ) | (944 | ) | 902 | ||||||||||||||||||||||||||||
Total securities | 1,394,031 | 25,780 | 2.47 | % | 1,256,096 | 27,481 | 2.92 | % | (1,701 | ) | (4,547 | ) | 2,847 | ||||||||||||||||||||||||||||
Interest-bearing deposits | 615,466 | 2,168 | 0.47 | % | 700,840 | 11,758 | 2.24 | % | (9,590 | ) | (8,309 | ) | (1,281 | ) | |||||||||||||||||||||||||||
Loans held for sale | 477,964 | 11,386 | 3.18 | % | 290,384 | 8,966 | 4.12 | % | 2,420 | (2,394 | ) | 4,814 | |||||||||||||||||||||||||||||
Total earning assets | 11,796,717 | 345,956 | 3.92 | % | 10,315,214 | 353,212 | 4.58 | % | (7,256 | ) | (57,456 | ) | 50,202 | ||||||||||||||||||||||||||||
Less: allowance for loan losses | (73,538 | ) | (53,703 | ) | |||||||||||||||||||||||||||||||||||||
Total nonearning assets | 2,264,295 | 1,264,976 | |||||||||||||||||||||||||||||||||||||||
Total assets | $ | 13,987,474 | $ | 11,526,487 | |||||||||||||||||||||||||||||||||||||
Liabilities and Equity: | |||||||||||||||||||||||||||||||||||||||||
Interest-bearing deposits | |||||||||||||||||||||||||||||||||||||||||
Demand and money market | $ | 3,898,642 | $ | 10,472 | 0.36 | % | $ | 3,289,539 | $ | 20,488 | 0.83 | % | $ | (10,016 | ) | $ | (13,287 | ) | $ | 3,271 | |||||||||||||||||||||
Savings | 290,684 | 1,702 | 0.78 | % | 281,562 | 2,658 | 1.26 | % | (956 | ) | (1,040 | ) | 84 | ||||||||||||||||||||||||||||
Certificates of deposit | 2,451,715 | 34,925 | 1.90 | % | 2,456,360 | 41,364 | 2.25 | % | (6,439 | ) | (6,362 | ) | (78 | ) | |||||||||||||||||||||||||||
Total interest-bearing deposits | 6,641,041 | 47,099 | 0.95 | % | 6,027,461 | 64,510 | 1.43 | % | (17,411 | ) | (20,689 | ) | 3,277 | ||||||||||||||||||||||||||||
Borrowings | 1,452,652 | 8,661 | 0.78 | % | 661,216 | 9,559 | 1.91 | % | (898 | ) | (7,871 | ) | 6,973 | ||||||||||||||||||||||||||||
Subordinated debt, net | 248,660 | 8,885 | 4.76 | % | 248,064 | 8,885 | 4.78 | % | — | (22 | ) | 21 | |||||||||||||||||||||||||||||
Total interest-bearing liabilities | 8,342,353 | 64,645 | 1.04 | % | 6,936,741 | 82,954 | 1.60 | % | (18,309 | ) | (28,582 | ) | 10,271 | ||||||||||||||||||||||||||||
Demand deposits | 3,687,791 | 2,787,727 | |||||||||||||||||||||||||||||||||||||||
Other noninterest-bearing liabilities | 252,337 | 221,806 | |||||||||||||||||||||||||||||||||||||||
Total liabilities | 12,282,481 | 9,946,274 | |||||||||||||||||||||||||||||||||||||||
Shareholders’ equity | 1,704,993 | 1,580,213 | |||||||||||||||||||||||||||||||||||||||
Total liabilities and equity | $ | 13,987,474 | $ | 11,526,487 | |||||||||||||||||||||||||||||||||||||
Net interest income (tax-equivalent basis) | $ | 281,311 | $ | 270,258 | $ | 11,053 | $ | (28,874 | ) | $ | 39,931 | ||||||||||||||||||||||||||||||
Reconcilement of Non-GAAP Financial Measures | |||||||||||||||||||||||||||||||||||||||||
Tax-equivalent basis adjustment | (1,781 | ) | (1,862 | ) | 81 | ||||||||||||||||||||||||||||||||||||
Net interest income (GAAP) | $ | 279,530 | $ | 268,396 | $ | 11,134 | |||||||||||||||||||||||||||||||||||
Interest rate spread (2)(4) | 2.88 | % | 2.98 | % | |||||||||||||||||||||||||||||||||||||
Interest expense as a percent of average earning assets | 0.73 | % | 1.08 | % | |||||||||||||||||||||||||||||||||||||
Net interest margin (tax equivalent basis) (3)(4) | 3.19 | % | 3.50 | % | |||||||||||||||||||||||||||||||||||||
Total cost of deposits | 0.61 | % | 0.98 | % | |||||||||||||||||||||||||||||||||||||
(1) Includes average PPP balances of $0.64 billion and related interest income of $15.65 million | |||||||||||||||||||||||||||||||||||||||||
(2) Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities. Fully tax equivalent. | |||||||||||||||||||||||||||||||||||||||||
(3) Net interest margin is net interest income expressed as a percentage of average earning assets. Fully tax equivalent. | |||||||||||||||||||||||||||||||||||||||||
(4) Non-GAAP. |
TOWNEBANK | |||||||||
Consolidated Balance Sheets | |||||||||
(dollars in thousands, except share data) | |||||||||
September 30, | December 31, | ||||||||
2020 | 2019 | ||||||||
(unaudited) | (audited) | ||||||||
ASSETS | |||||||||
Cash and due from banks | $ | 114,604 | $ | 97,593 | |||||
Interest-bearing deposits at FRB - Richmond | 1,670,186 | 322,505 | |||||||
Interest-bearing deposits in financial institutions | 24,890 | 22,518 | |||||||
Total Cash and Cash Equivalents | 1,809,680 | 442,616 | |||||||
Securities available for sale, at fair value (amortized cost $1,249,254, allowance for credit losses of $4) (1) | 1,310,683 | 1,441,308 | |||||||
Securities held to maturity, at amortized cost (fair value $19,102 )(1) | 17,131 | 43,688 | |||||||
Less: allowance for credit losses | (90 | ) | — | ||||||
Securities held to maturity, net of allowance for credit losses | 17,041 | 43,688 | |||||||
Other equity securities | 6,497 | 6,462 | |||||||
FHLB stock | 41,829 | 30,094 | |||||||
Total Securities | 1,376,050 | 1,521,552 | |||||||
Mortgage loans held for sale | 669,020 | 419,233 | |||||||
Loans, net of unearned income and deferred costs | 9,770,570 | 8,419,288 | |||||||
Less: allowance for credit losses | (119,058 | ) | (58,234 | ) | |||||
Net Loans | 9,651,512 | 8,361,054 | |||||||
Premises and equipment, net | 256,909 | 231,806 | |||||||
Goodwill | 446,725 | 446,816 | |||||||
Other intangible assets, net | 45,781 | 54,399 | |||||||
BOLI | 244,103 | 243,062 | |||||||
Other assets | 295,637 | 227,125 | |||||||
TOTAL ASSETS | $ | 14,795,417 | $ | 11,947,663 | |||||
LIABILITIES AND EQUITY | |||||||||
Deposits: | |||||||||
Noninterest-bearing demand | $ | 4,464,178 | $ | 2,951,225 | |||||
Interest-bearing: | |||||||||
Demand and money market accounts | 4,642,482 | 3,586,364 | |||||||
Savings | 312,444 | 276,205 | |||||||
Certificates of deposit | 2,285,859 | 2,457,123 | |||||||
Total Deposits | 11,704,963 | 9,270,917 | |||||||
Advances from the FHLB | 731,202 | 471,687 | |||||||
Subordinated debt, net | 248,906 | 248,458 | |||||||
Repurchase agreements and other borrowings | 58,061 | 52,391 | |||||||
Total Borrowings | 1,038,169 | 772,536 | |||||||
Other liabilities | 303,582 | 250,516 | |||||||
TOTAL LIABILITIES | 13,046,714 | 10,293,969 | |||||||
Preferred stock | |||||||||
Authorized and unissued shares - 2,000,000 | — | — | |||||||
Common stock, $1.667 par: 150,000,000 shares authorized 72,656,729 and 72,649,682 shares issued at September 30, 2020 and December 31, 2019, respectively | 121,115 | 121,107 | |||||||
Capital surplus | 1,045,170 | 1,041,160 | |||||||
Retained earnings | 520,888 | 467,186 | |||||||
Common stock issued to deferred compensation trust, at cost 872,498 and 818,578 shares at September 30, 2020 and December 31, 2019, respectively | (16,951 | ) | (15,555 | ) | |||||
Deferred compensation trust | 16,951 | 15,555 | |||||||
Accumulated other comprehensive income (loss) | 44,569 | 11,302 | |||||||
TOTAL SHAREHOLDERS’ EQUITY | 1,731,742 | 1,640,755 | |||||||
Noncontrolling interest | 16,961 | 12,939 | |||||||
TOTAL EQUITY | 1,748,703 | 1,653,694 | |||||||
TOTAL LIABILITIES AND EQUITY | $ | 14,795,417 | $ | 11,947,663 | |||||
(1) For 2020, disclosures are presented in compliance with ASC 326. |
TOWNEBANK | |||||||||||||||||||
Consolidated Statements of Income (unaudited) | |||||||||||||||||||
(dollars in thousands, except per share data) | |||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||
INTEREST INCOME: | |||||||||||||||||||
Loans, including fees | $ | 102,869 | $ | 102,047 | $ | 305,070 | $ | 303,616 | |||||||||||
Investment securities | 7,440 | 9,889 | 25,553 | 27,010 | |||||||||||||||
Interest-bearing deposits in financial institutions and federal funds sold | 632 | 3,745 | 2,168 | 11,758 | |||||||||||||||
Mortgage loans held for sale | 4,587 | 3,956 | 11,385 | 8,966 | |||||||||||||||
Total interest income | 115,528 | 119,637 | 344,176 | 351,350 | |||||||||||||||
INTEREST EXPENSE: | |||||||||||||||||||
Deposits | 12,966 | 23,552 | 47,099 | 64,510 | |||||||||||||||
Advances from the FHLB | 1,901 | 1,935 | 6,990 | 9,288 | |||||||||||||||
Subordinated debt, net | 2,962 | 2,962 | 8,885 | 8,885 | |||||||||||||||
Repurchase agreements and other borrowings | 940 | 85 | 1,672 | 271 | |||||||||||||||
Total interest expense | 18,769 | 28,534 | 64,646 | 82,954 | |||||||||||||||
Net interest income | 96,759 | 91,103 | 279,530 | 268,396 | |||||||||||||||
PROVISION FOR CREDIT LOSSES | 31,598 | 1,508 | 65,559 | 5,770 | |||||||||||||||
Net interest income after provision for credit losses | 65,161 | 89,595 | 213,971 | 262,626 | |||||||||||||||
NONINTEREST INCOME: | |||||||||||||||||||
Residential mortgage banking income, net | 37,531 | 18,855 | 74,662 | 50,929 | |||||||||||||||
Insurance commissions and other title fees and income, net | 17,468 | 16,681 | 51,973 | 49,477 | |||||||||||||||
Real estate brokerage and property management income, net | 11,301 | 9,444 | 29,020 | 27,555 | |||||||||||||||
Service charges on deposit accounts | 1,986 | 2,253 | 6,314 | 8,299 | |||||||||||||||
Credit card merchant fees, net | 1,506 | 1,514 | 3,793 | 3,357 | |||||||||||||||
BOLI | 1,605 | 2,117 | 6,295 | 5,350 | |||||||||||||||
Other income | 22,278 | 3,981 | 31,268 | 11,754 | |||||||||||||||
Net gain/(loss) on investment securities | 1,701 | (69 | ) | 9,632 | (845 | ) | |||||||||||||
Total noninterest income | 95,376 | 54,776 | 212,957 | 155,876 | |||||||||||||||
NONINTEREST EXPENSE: | |||||||||||||||||||
Salaries and employee benefits | 61,408 | 55,784 | 174,201 | 162,907 | |||||||||||||||
Occupancy expense | 8,396 | 7,953 | 23,124 | 23,866 | |||||||||||||||
Furniture and equipment | 3,247 | 3,805 | 10,451 | 10,753 | |||||||||||||||
Amortization - intangibles | 2,851 | 3,059 | 8,702 | 9,364 | |||||||||||||||
Software expense | 3,572 | 3,208 | 10,556 | 8,742 | |||||||||||||||
Data processing | 3,113 | 2,533 | 8,622 | 9,316 | |||||||||||||||
Professional fees | 2,637 | 3,566 | 8,677 | 9,952 | |||||||||||||||
Advertising and marketing | 1,870 | 3,429 | 7,440 | 9,440 | |||||||||||||||
Other expenses | 14,887 | 13,950 | 38,121 | 41,627 | |||||||||||||||
Total noninterest expense | 101,981 | 97,287 | 289,894 | 285,967 | |||||||||||||||
Income before income tax expense and noncontrolling interest | 58,556 | 47,084 | 137,034 | 132,535 | |||||||||||||||
Provision for income tax expense | 7,841 | 7,684 | 21,492 | 24,810 | |||||||||||||||
Net income | $ | 50,715 | $ | 39,400 | $ | 115,542 | $ | 107,725 | |||||||||||
Net income attributable to noncontrolling interest | (16,251 | ) | (1,741 | ) | (20,089 | ) | (4,018 | ) | |||||||||||
Net income attributable to TowneBank | $ | 34,464 | $ | 37,659 | $ | 95,453 | $ | 103,707 | |||||||||||
Per common share information | |||||||||||||||||||
Basic earnings | $ | 0.48 | $ | 0.52 | $ | 1.32 | $ | 1.44 | |||||||||||
Diluted earnings | $ | 0.48 | $ | 0.52 | $ | 1.32 | $ | 1.44 | |||||||||||
Cash dividends declared | $ | 0.18 | $ | 0.18 | $ | 0.54 | $ | 0.52 |
TOWNEBANK | ||||||||||||||||||||||||
Consolidated Balance Sheets - Five Quarter Trend | ||||||||||||||||||||||||
(dollars in thousands, except share data) | ||||||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||||||
2020 | 2020 | 2020 | 2019 | 2019 | ||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (audited) | (unaudited) | ||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
Cash and due from banks | $ | 114,604 | $ | 115,724 | $ | 108,929 | $ | 97,593 | $ | 124,439 | ||||||||||||||
Interest-bearing deposits at FRB - Richmond | 1,670,186 | 2,511,152 | 753,643 | 322,505 | 675,288 | |||||||||||||||||||
Interest-bearing deposits in financial institutions | 24,890 | 24,374 | 23,564 | 22,518 | 21,663 | |||||||||||||||||||
Total Cash and Cash Equivalents | 1,809,680 | 2,651,250 | 886,136 | 442,616 | 821,390 | |||||||||||||||||||
Securities available for sale | 1,310,683 | 1,266,624 | 1,248,420 | 1,441,308 | 1,337,395 | |||||||||||||||||||
Securities held to maturity | 17,131 | 41,595 | 42,431 | 43,688 | 44,494 | |||||||||||||||||||
Less: allowance for credit losses | (90 | ) | (121 | ) | (133 | ) | — | — | ||||||||||||||||
Securities held to maturity, net of allowance for credit losses | 17,041 | 41,474 | 42,298 | 43,688 | 44,494 | |||||||||||||||||||
Other equity securities | 6,497 | 6,497 | 6,462 | 6,462 | 5,697 | |||||||||||||||||||
FHLB stock | 41,829 | 49,277 | 52,042 | 30,094 | 26,282 | |||||||||||||||||||
Total Securities | 1,376,050 | 1,363,872 | 1,349,222 | 1,521,552 | 1,413,868 | |||||||||||||||||||
Mortgage loans held for sale | 669,020 | 610,369 | 453,143 | 419,233 | 456,719 | |||||||||||||||||||
Loans, net of unearned income and deferred costs | 9,770,570 | 9,801,889 | 8,784,195 | 8,419,288 | 8,182,829 | |||||||||||||||||||
Less: allowance for credit losses | (119,058 | ) | (90,467 | ) | (64,372 | ) | (58,234 | ) | (55,428 | ) | ||||||||||||||
Net Loans | 9,651,512 | 9,711,422 | 8,719,823 | 8,361,054 | 8,127,401 | |||||||||||||||||||
Premises and equipment, net | 256,909 | 257,533 | 236,735 | 231,806 | 231,060 | |||||||||||||||||||
Goodwill | 446,725 | 446,725 | 446,725 | 446,816 | 446,423 | |||||||||||||||||||
Other intangible assets, net | 45,781 | 48,632 | 51,448 | 54,399 | 57,404 | |||||||||||||||||||
BOLI | 244,103 | 242,493 | 240,924 | 243,062 | 241,652 | |||||||||||||||||||
Other assets | 295,637 | 247,962 | 239,670 | 227,125 | 225,374 | |||||||||||||||||||
TOTAL ASSETS | $ | 14,795,417 | $ | 15,580,258 | $ | 12,623,826 | $ | 11,947,663 | $ | 12,021,291 | ||||||||||||||
LIABILITIES AND EQUITY | ||||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||||
Noninterest-bearing demand | $ | 4,464,178 | $ | 4,226,208 | $ | 3,060,515 | $ | 2,951,225 | $ | 3,030,505 | ||||||||||||||
Interest-bearing: | ||||||||||||||||||||||||
Demand and money market accounts | 4,642,482 | 4,223,391 | 3,573,926 | 3,586,364 | 3,534,252 | |||||||||||||||||||
Savings | 312,444 | 298,673 | 280,807 | 276,205 | 280,552 | |||||||||||||||||||
Certificates of deposit | 2,285,859 | 2,516,666 | 2,392,744 | 2,457,123 | 2,592,705 | |||||||||||||||||||
Total Deposits | 11,704,963 | 11,264,938 | 9,307,992 | 9,270,917 | 9,438,014 | |||||||||||||||||||
Advances from the FHLB | 731,202 | 906,365 | 971,527 | 471,687 | 381,846 | |||||||||||||||||||
Subordinated debt, net | 248,906 | 248,756 | 248,607 | 248,458 | 248,309 | |||||||||||||||||||
FRB PPP lending facility | — | 1,111,429 | — | — | — | |||||||||||||||||||
Repurchase agreements and other borrowings | 58,061 | 60,913 | 171,762 | 52,391 | 42,971 | |||||||||||||||||||
Total Borrowings | 1,038,169 | 2,327,463 | 1,391,896 | 772,536 | 673,126 | |||||||||||||||||||
Other liabilities | 303,582 | 266,314 | 258,306 | 250,516 | 271,617 | |||||||||||||||||||
TOTAL LIABILITIES | 13,046,714 | 13,858,715 | 10,958,194 | 10,293,969 | 10,382,757 | |||||||||||||||||||
Preferred stock | ||||||||||||||||||||||||
Authorized shares - 2,000,000 | — | — | — | — | — | |||||||||||||||||||
Common stock, $1.667 par value | 121,115 | 121,101 | 121,057 | 121,107 | 121,080 | |||||||||||||||||||
Capital surplus | 1,045,170 | 1,043,774 | 1,041,870 | 1,041,160 | 1,039,156 | |||||||||||||||||||
Retained earnings | 520,888 | 499,502 | 477,972 | 467,186 | 445,186 | |||||||||||||||||||
Common stock issued to deferred compensation trust, at cost | (16,951 | ) | (16,776 | ) | (15,562 | ) | (15,555 | ) | (15,317 | ) | ||||||||||||||
Deferred compensation trust | 16,951 | 16,776 | 15,562 | 15,555 | 15,317 | |||||||||||||||||||
Accumulated other comprehensive income (loss) | 44,569 | 43,218 | 12,301 | 11,302 | 19,958 | |||||||||||||||||||
TOTAL SHAREHOLDERS’ EQUITY | 1,731,742 | 1,707,595 | 1,653,200 | 1,640,755 | 1,625,380 | |||||||||||||||||||
Noncontrolling interest | 16,961 | 13,948 | 12,432 | 12,939 | 13,154 | |||||||||||||||||||
TOTAL EQUITY | 1,748,703 | 1,721,543 | 1,665,632 | 1,653,694 | 1,638,534 | |||||||||||||||||||
TOTAL LIABILITIES AND EQUITY | $ | 14,795,417 | $ | 15,580,258 | $ | 12,623,826 | $ | 11,947,663 | $ | 12,021,291 |
TOWNEBANK | ||||||||||||||||||||||||
Consolidated Statements of Income - Five Quarter Trend (unaudited) | ||||||||||||||||||||||||
(dollars in thousands, except share data) | ||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||||||
2020 | 2020 | 2020 | 2019 | 2019 | ||||||||||||||||||||
INTEREST INCOME: | ||||||||||||||||||||||||
Loans, including fees | $ | 102,869 | $ | 102,139 | $ | 100,062 | $ | 100,059 | $ | 102,047 | ||||||||||||||
Investment securities | 7,440 | 8,163 | 9,949 | 9,936 | 9,889 | |||||||||||||||||||
Interest-bearing deposits in financial institutions and federal funds sold | 632 | 433 | 1,102 | 2,067 | 3,745 | |||||||||||||||||||
Mortgage loans held for sale | 4,587 | 3,811 | 2,988 | 4,413 | 3,956 | |||||||||||||||||||
Total interest income | 115,528 | 114,546 | 114,101 | 116,475 | 119,637 | |||||||||||||||||||
INTEREST EXPENSE: | ||||||||||||||||||||||||
Deposits | 12,966 | 15,072 | 19,062 | 21,744 | 23,552 | |||||||||||||||||||
Advances from the FHLB | 1,901 | 2,595 | 2,492 | 1,730 | 1,935 | |||||||||||||||||||
Subordinated debt | 2,962 | 2,962 | 2,962 | 2,962 | 2,962 | |||||||||||||||||||
Repurchase agreements and other borrowings | 940 | 643 | 89 | 80 | 85 | |||||||||||||||||||
Total interest expense | 18,769 | 21,272 | 24,605 | 26,516 | 28,534 | |||||||||||||||||||
Net interest income | 96,759 | 93,274 | 89,496 | 89,959 | 91,103 | |||||||||||||||||||
PROVISION FOR CREDIT LOSSES | 31,598 | 26,945 | 7,016 | 3,601 | 1,508 | |||||||||||||||||||
Net interest income after provision for credit losses | 65,161 | 66,329 | 82,480 | 86,358 | 89,595 | |||||||||||||||||||
NONINTEREST INCOME: | ||||||||||||||||||||||||
Residential mortgage banking income, net | 37,531 | 29,715 | 7,416 | 15,884 | 18,855 | |||||||||||||||||||
Insurance commissions and other title fees and income, net | 17,468 | 17,612 | 16,893 | 15,001 | 16,681 | |||||||||||||||||||
Real estate brokerage and property management income, net | 11,301 | 10,781 | 6,938 | 6,737 | 9,444 | |||||||||||||||||||
Service charges on deposit accounts | 1,986 | 1,888 | 2,440 | 2,245 | 2,253 | |||||||||||||||||||
Credit card merchant fees, net | 1,506 | 1,109 | 1,179 | 1,389 | 1,514 | |||||||||||||||||||
BOLI | 1,605 | 1,584 | 3,105 | 3,865 | 2,117 | |||||||||||||||||||
Other income | 22,278 | 3,763 | 5,227 | 4,591 | 3,981 | |||||||||||||||||||
Net gain/(loss) on investment securities | 1,701 | 2,930 | 5,002 | — | (69 | ) | ||||||||||||||||||
Total noninterest income | 95,376 | 69,382 | 48,200 | 49,712 | 54,776 | |||||||||||||||||||
NONINTEREST EXPENSE: | ||||||||||||||||||||||||
Salaries and employee benefits | 61,408 | 56,926 | 55,867 | 56,013 | 55,784 | |||||||||||||||||||
Occupancy expense | 8,396 | 7,227 | 7,502 | 7,516 | 7,953 | |||||||||||||||||||
Furniture and equipment | 3,247 | 3,564 | 3,640 | 3,598 | 3,805 | |||||||||||||||||||
Amortization - intangibles | 2,851 | 2,901 | 2,950 | 3,005 | 3,059 | |||||||||||||||||||
Software expense | 3,572 | 3,492 | 3,492 | 2,976 | 3,208 | |||||||||||||||||||
Data processing | 3,113 | 2,718 | 2,791 | 2,510 | 2,533 | |||||||||||||||||||
Professional fees | 2,637 | 2,972 | 3,067 | 2,990 | 3,566 | |||||||||||||||||||
Advertising and marketing | 1,870 | 1,986 | 3,584 | 2,839 | 3,429 | |||||||||||||||||||
Other expenses | 14,887 | 9,239 | 13,995 | 10,889 | 13,950 | |||||||||||||||||||
Total noninterest expense | 101,981 | 91,025 | 96,888 | 92,336 | 97,287 | |||||||||||||||||||
Income before income tax expense and noncontrolling interest | 58,556 | 44,686 | 33,792 | 43,734 | 47,084 | |||||||||||||||||||
Provision for income tax expense | 7,841 | 7,464 | 6,187 | 7,786 | 7,684 | |||||||||||||||||||
Net income | 50,715 | 37,222 | 27,605 | 35,948 | 39,400 | |||||||||||||||||||
Net income attributable to noncontrolling interest | (16,251 | ) | (2,617 | ) | (1,221 | ) | (873 | ) | (1,741 | ) | ||||||||||||||
Net income attributable to TowneBank | $ | 34,464 | $ | 34,605 | $ | 26,384 | $ | 35,075 | $ | 37,659 | ||||||||||||||
Per common share information | ||||||||||||||||||||||||
Basic earnings | $ | 0.48 | $ | 0.48 | $ | 0.37 | $ | 0.49 | $ | 0.52 | ||||||||||||||
Diluted earnings | $ | 0.48 | $ | 0.48 | $ | 0.36 | $ | 0.49 | $ | 0.52 | ||||||||||||||
Basic weighted average shares outstanding | 72,307,961 | 72,280,555 | 72,206,228 | 72,122,476 | 72,091,221 | |||||||||||||||||||
Diluted weighted average shares outstanding | 72,344,284 | 72,317,988 | 72,299,721 | 72,302,414 | 72,222,934 | |||||||||||||||||||
Cash dividends declared | $ | 0.18 | $ | 0.18 | $ | 0.18 | $ | 0.18 | $ | 0.18 | ||||||||||||||
TOWNEBANK | |||||||||||||||||||||||||||||||
Banking Segment Financial Information (unaudited) | |||||||||||||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | Increase/(Decrease) | |||||||||||||||||||||||||||||
September 30, | June 30, | September 30, | 2020 over 2019 | ||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2020 | 2019 | Amount | Percent | |||||||||||||||||||||||||
Revenue | |||||||||||||||||||||||||||||||
Net interest income | $ | 92,869 | $ | 89,490 | $ | 89,665 | $ | 269,941 | $ | 264,332 | $ | 5,609 | 2.12 | % | |||||||||||||||||
Service charges on deposit accounts | 1,986 | 2,253 | 1,888 | 6,315 | 8,299 | (1,984 | ) | (23.91 | )% | ||||||||||||||||||||||
Credit card merchant fees | 1,506 | 1,514 | 1,109 | 3,793 | 3,357 | 436 | 12.99 | % | |||||||||||||||||||||||
Other income | 4,876 | 5,152 | 3,888 | 15,826 | 14,350 | 1,476 | 10.29 | % | |||||||||||||||||||||||
Subtotal | 8,368 | 8,919 | 6,885 | 25,934 | 26,006 | (72 | ) | (0.28 | )% | ||||||||||||||||||||||
Net gain/(loss) on investment securities | 1,701 | (69 | ) | 2,930 | 9,632 | (845 | ) | 10,477 | 1,239.88 | % | |||||||||||||||||||||
Total noninterest income | 10,069 | 8,850 | 9,815 | 35,566 | 25,161 | 10,405 | 41.35 | % | |||||||||||||||||||||||
Total revenue | 102,938 | 98,340 | 99,480 | 305,507 | 289,493 | 16,014 | 5.53 | % | |||||||||||||||||||||||
Provision for credit losses | 31,070 | 1,508 | 26,059 | 64,170 | 5,770 | 58,400 | 1,012.13 | % | |||||||||||||||||||||||
Expenses | |||||||||||||||||||||||||||||||
Salaries and employee benefits | 36,535 | 33,526 | 35,209 | 104,970 | 96,966 | 8,004 | 8.25 | % | |||||||||||||||||||||||
Occupancy expense | 5,829 | 5,209 | 4,812 | 15,557 | 15,460 | 97 | 0.63 | % | |||||||||||||||||||||||
Furniture and equipment | 2,424 | 2,779 | 2,715 | 7,800 | 7,662 | 138 | 1.80 | % | |||||||||||||||||||||||
Amortization of intangibles | 1,063 | 1,265 | 1,114 | 3,341 | 3,946 | (605 | ) | (15.33 | )% | ||||||||||||||||||||||
Other expenses | 15,793 | 17,098 | 10,718 | 45,214 | 52,218 | (7,004 | ) | (13.41 | )% | ||||||||||||||||||||||
Total expenses | 61,644 | 59,877 | 54,568 | 176,882 | 176,252 | 630 | 0.36 | % | |||||||||||||||||||||||
Income before income tax, corporate allocation and noncontrolling interest | 10,224 | 36,955 | 18,853 | 64,455 | 107,471 | (43,016 | ) | (40.03 | )% | ||||||||||||||||||||||
Corporate allocation | 595 | 384 | 627 | 1,891 | 1,383 | 508 | 36.73 | % | |||||||||||||||||||||||
Income before income tax provision and noncontrolling interest | 10,819 | 37,339 | 19,480 | 66,346 | 108,854 | (42,508 | ) | (39.05 | )% | ||||||||||||||||||||||
Provision for income tax expense | 474 | 5,495 | 2,167 | 9,304 | 19,337 | (10,033 | ) | (51.88 | )% | ||||||||||||||||||||||
Net income | 10,345 | 31,844 | 17,313 | 57,042 | 89,517 | (32,475 | ) | (36.28 | )% | ||||||||||||||||||||||
Noncontrolling interest | (2 | ) | — | 5 | 2 | 4 | (2 | ) | (50.00 | )% | |||||||||||||||||||||
Net income attributable to TowneBank | $ | 10,343 | $ | 31,844 | $ | 17,318 | $ | 57,044 | $ | 89,521 | $ | (32,477 | ) | (36.28 | )% | ||||||||||||||||
Efficiency ratio | 60.89 | % | 60.85 | % | 56.52 | % | 59.78 | % | 60.71 | % | (0.93 | )% | (1.53 | )% |
TOWNEBANK | |||||||||||||||||||||||||||||||||
Realty Segment Financial Information (unaudited) | |||||||||||||||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | Increase/(Decrease) | |||||||||||||||||||||||||||||||
September 30, | June 30, | September 30, | 2020 over 2019 | ||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2020 | 2019 | Amount | Percent | |||||||||||||||||||||||||||
Revenue | |||||||||||||||||||||||||||||||||
Residential mortgage brokerage income, net | $ | 38,074 | $ | 19,171 | $ | 30,468 | $ | 76,549 | $ | 51,826 | $ | 24,723 | 47.70 | % | |||||||||||||||||||
Real estate brokerage income, net | 3,688 | 2,882 | 2,659 | 8,212 | 7,315 | 897 | 12.26 | % | |||||||||||||||||||||||||
Title insurance and settlement fees | 654 | 617 | 639 | 1,728 | 1,581 | 147 | 9.30 | % | |||||||||||||||||||||||||
Property management fees, net | 7,613 | 6,562 | 8,122 | 20,808 | 20,240 | 568 | 2.81 | % | |||||||||||||||||||||||||
Income from unconsolidated subsidiary | 451 | 185 | 301 | 938 | 441 | 497 | 112.70 | % | |||||||||||||||||||||||||
Net interest and other income | 4,101 | 1,885 | 3,765 | 10,262 | 4,937 | 5,325 | 107.86 | % | |||||||||||||||||||||||||
Total revenue | 54,581 | 31,302 | 45,954 | 118,497 | 86,340 | 32,157 | 37.24 | % | |||||||||||||||||||||||||
Provision for credit losses | 528 | — | 886 | 1,389 | — | 1,389 | n/m | ||||||||||||||||||||||||||
Expenses | |||||||||||||||||||||||||||||||||
Salaries and employee benefits | 15,744 | 13,474 | 13,059 | 42,095 | 39,678 | 2,417 | 6.09 | % | |||||||||||||||||||||||||
Occupancy expense | 1,906 | 2,055 | 1,763 | 5,595 | 6,428 | (833 | ) | (12.96 | )% | ||||||||||||||||||||||||
Furniture and equipment | 620 | 754 | 626 | 2,007 | 2,326 | (319 | ) | (13.71 | )% | ||||||||||||||||||||||||
Amortization of intangible assets | 658 | 666 | 658 | 1,973 | 2,086 | (113 | ) | (5.42 | )% | ||||||||||||||||||||||||
Other expenses | 9,226 | 7,478 | 8,270 | 24,366 | 20,953 | 3,413 | 16.29 | % | |||||||||||||||||||||||||
Total expenses | 28,154 | 24,427 | 24,376 | 76,036 | 71,471 | 4,565 | 6.39 | % | |||||||||||||||||||||||||
Income (loss) before income tax, corporate allocation and noncontrolling interest | 25,899 | 6,875 | 20,692 | 41,072 | 14,869 | 26,203 | 176.23 | % | |||||||||||||||||||||||||
Corporate allocation | (356 | ) | (208 | ) | (370 | ) | (1,119 | ) | (800 | ) | (319 | ) | 39.88 | % | |||||||||||||||||||
(Loss) income before income tax provision and noncontrolling interest | 25,543 | 6,667 | 20,322 | 39,953 | 14,069 | 25,884 | 183.98 | % | |||||||||||||||||||||||||
Provision for income tax (benefit) expense | 4,780 | 1,454 | 4,127 | 7,614 | 3,292 | 4,322 | 131.29 | % | |||||||||||||||||||||||||
Net (loss) income | 20,763 | 5,213 | 16,195 | 32,339 | 10,777 | 21,562 | 200.07 | % | |||||||||||||||||||||||||
Noncontrolling interest | (4,790 | ) | (1,496 | ) | (2,415 | ) | (7,996 | ) | (2,997 | ) | (4,999 | ) | 166.80 | % | |||||||||||||||||||
Net (loss) income attributable to TowneBank | $ | 15,973 | $ | 3,717 | $ | 13,780 | $ | 24,343 | $ | 7,780 | $ | 16,563 | 212.89 | % | |||||||||||||||||||
Efficiency ratio | 51.58 | % | 78.04 | % | 53.04 | % | 64.17 | % | 82.78 | % | (18.61 | )% | (22.48 | )% | |||||||||||||||||||
TOWNEBANK | ||||||||||||||||||||||||||||||||||
Insurance Segment Financial Information (unaudited) | ||||||||||||||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | Increase/(Decrease) | ||||||||||||||||||||||||||||||||
September 30, | June 30, | September 30, | 2020 over 2019 | |||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2020 | 2019 | Amount | Percent | ||||||||||||||||||||||||||||
Commission and fee income | ||||||||||||||||||||||||||||||||||
Property and casualty | $ | 14,072 | $ | 13,481 | $ | 13,926 | $ | 40,784 | $ | 38,421 | $ | 2,363 | 6.15 | % | ||||||||||||||||||||
Employee benefits | 3,825 | 3,629 | 3,791 | 11,534 | 10,968 | 566 | 5.16 | % | ||||||||||||||||||||||||||
Travel insurance | 1,399 | 834 | 861 | 3,526 | 3,292 | 234 | 7.11 | % | ||||||||||||||||||||||||||
Specialized benefit services | 165 | 166 | 157 | 489 | 499 | (10 | ) | (2.00 | )% | |||||||||||||||||||||||||
Total commissions and fees | 19,461 | 18,110 | 18,735 | 56,333 | 53,180 | 3,153 | 5.93 | % | ||||||||||||||||||||||||||
Contingency and bonus revenue | 1,112 | 1,431 | 2,009 | 5,144 | 4,910 | 234 | 4.77 | % | ||||||||||||||||||||||||||
Other income * | 17,697 | 74 | 127 | 17,906 | 227 | 17,679 | 7,788.11 | % | ||||||||||||||||||||||||||
Total revenue | 38,270 | 19,615 | 20,871 | 79,383 | 58,317 | 21,066 | 36.12 | % | ||||||||||||||||||||||||||
Employee commission expense | 3,654 | 3,378 | 3,649 | 10,900 | 9,878 | 1,022 | 10.35 | % | ||||||||||||||||||||||||||
Revenue, net of commission expense | 34,616 | 16,237 | 17,222 | 68,483 | 48,439 | 20,044 | 41.38 | % | ||||||||||||||||||||||||||
Salaries and employee benefits | 9,129 | 8,784 | 8,658 | 27,136 | 26,263 | 873 | 3.32 | % | ||||||||||||||||||||||||||
Occupancy expense | 661 | 689 | 652 | 1,972 | 1,978 | (6 | ) | (0.30 | )% | |||||||||||||||||||||||||
Furniture and equipment | 203 | 272 | 223 | 644 | 765 | (121 | ) | (15.82 | )% | |||||||||||||||||||||||||
Amortization of intangible assets | 1,130 | 1,128 | 1,129 | 3,388 | 3,332 | 56 | 1.68 | % | ||||||||||||||||||||||||||
Other expenses | 1,060 | 2,110 | 1,419 | 3,836 | 5,906 | (2,070 | ) | (35.05 | )% | |||||||||||||||||||||||||
Total operating expenses | 12,183 | 12,983 | 12,081 | 36,976 | 38,244 | (1,268 | ) | (3.32 | )% | |||||||||||||||||||||||||
Income before income tax, corporate allocation and noncontrolling interest | 22,433 | 3,254 | 5,141 | 31,507 | 10,195 | 21,312 | 209.04 | % | ||||||||||||||||||||||||||
Corporate allocation | (239 | ) | (176 | ) | (257 | ) | (772 | ) | (583 | ) | (189 | ) | 32.42 | % | ||||||||||||||||||||
Income before income tax provision and noncontrolling interest | 22,194 | 3,078 | 4,884 | 30,735 | 9,612 | 21,123 | 219.76 | % | ||||||||||||||||||||||||||
Provision for income tax expense | 2,587 | 735 | 1,170 | 4,574 | 2,181 | 2,393 | 109.72 | % | ||||||||||||||||||||||||||
Net income | 19,607 | 2,343 | 3,714 | 26,161 | 7,431 | 18,730 | 252.05 | % | ||||||||||||||||||||||||||
Noncontrolling interest | (11,459 | ) | (245 | ) | (207 | ) | (12,095 | ) | (1,025 | ) | (11,070 | ) | 1,080.00 | % | ||||||||||||||||||||
Net income attributable to TowneBank | $ | 8,148 | $ | 2,098 | $ | 3,507 | $ | 14,066 | $ | 6,406 | $ | 7,660 | 119.58 | % | ||||||||||||||||||||
Provision for income taxes | 2,587 | 735 | 1,170 | 4,574 | 2,181 | 2,393 | 109.72 | % | ||||||||||||||||||||||||||
Depreciation, amortization and interest expense | 1,285 | 1,325 | 1,291 | 3,875 | 3,943 | (68 | ) | (1.72 | )% | |||||||||||||||||||||||||
EBITDA (non-GAAP) | $ | 12,020 | $ | 4,158 | $ | 5,968 | $ | 22,515 | $ | 12,530 | $ | 9,985 | 79.69 | % | ||||||||||||||||||||
Efficiency ratio | 35.19 | % | 79.96 | % | 70.15 | % | 53.99 | % | 78.95 | % | $ | (0.25 | ) | (31.67 | )% | |||||||||||||||||||
*Included in other income is the gross gain on the sale of Red Sky | $ | 17,626 | — | % | n/m | $ | 17,626 | — | % | n/m | ||||||||||||||||||||||||
Efficiency ratio excluding gain | 71.71 | % | 79.96 | % | 70.15 | % | 72.71 | % | 78.95 | % | $ | (0.06 | ) | (7.60 | )% |
TOWNEBANK | ||||||||||||||||||||||||
Reconcilement of Non-GAAP Financial Measures | ||||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
September 30, | September 30, | June 30, | September 30, | September 30, | ||||||||||||||||||||
2020 | 2019 | 2020 | 2020 | 2019 | ||||||||||||||||||||
Return on average assets (GAAP) | 0.89 | % | 1.26 | % | 0.97 | % | 0.91 | % | 1.17 | % | ||||||||||||||
Impact of excluding average goodwill and other intangibles and amortization | 0.08 | % | 0.14 | % | 0.10 | % | 0.10 | % | 0.15 | % | ||||||||||||||
Return on average tangible assets (non-GAAP) | 0.97 | % | 1.40 | % | 1.07 | % | 1.01 | % | 1.32 | % | ||||||||||||||
Return on average equity (GAAP) | 7.85 | % | 9.22 | % | 8.18 | % | 7.48 | % | 8.54 | % | ||||||||||||||
Impact of excluding average goodwill and other intangibles and amortization | 3.81 | % | 4.98 | % | 4.14 | % | 3.84 | % | 5.03 | % | ||||||||||||||
Return on average tangible equity (non-GAAP) | 11.66 | % | 14.20 | % | 12.32 | % | 11.32 | % | 13.57 | % | ||||||||||||||
Return on average common equity (GAAP) | 7.91 | % | 9.29 | % | 8.24 | % | 7.53 | % | 8.60 | % | ||||||||||||||
Impact of excluding average goodwill and other intangibles and amortization | 3.88 | % | 5.07 | % | 4.20 | % | 3.91 | % | 5.13 | % | ||||||||||||||
Return on average tangible common equity (non-GAAP) | 11.79 | % | 14.36 | % | 12.44 | % | 11.44 | % | 13.73 | % | ||||||||||||||
Book value (GAAP) | $ | 23.83 | $ | 22.38 | $ | 23.50 | $ | 23.83 | $ | 21.95 | ||||||||||||||
Impact of excluding average goodwill and other intangibles and amortization | (6.77 | ) | (6.94 | ) | (6.82 | ) | (6.77 | ) | (6.90 | ) | ||||||||||||||
Tangible book value (non-GAAP) | $ | 17.06 | $ | 15.44 | $ | 16.68 | $ | 17.06 | $ | 15.05 | ||||||||||||||
Efficiency ratio (GAAP) | 53.08 | % | 55.96 | % | 66.69 | % | 58.86 | % | 67.40 | % | ||||||||||||||
Impact of excluding gain/loss on investments | (0.47 | )% | (1.03 | )% | 0.03 | % | (1.18 | )% | 0.13 | % | ||||||||||||||
Efficiency ratio (non-GAAP) | 53.55 | % | 56.99 | % | 66.66 | % | 60.04 | % | 67.27 | % | ||||||||||||||
Average assets (GAAP) | $ | 15,487,152 | $ | 11,845,282 | $ | 14,409,468 | $ | 13,987,474 | $ | 11,526,487 | ||||||||||||||
Less: average goodwill | 446,725 | 442,919 | 446,725 | 446,762 | 442,890 | |||||||||||||||||||
Less: average intangible assets | 47,513 | 57,327 | 50,352 | 50,373 | 60,333 | |||||||||||||||||||
Average tangible assets (non-GAAP) | $ | 14,992,914 | $ | 11,345,036 | $ | 13,912,391 | $ | 13,490,339 | $ | 11,023,264 | ||||||||||||||
Average equity (GAAP) | $ | 1,747,033 | $ | 1,620,070 | $ | 1,701,777 | $ | 1,704,993 | $ | 1,580,213 | ||||||||||||||
Less: average goodwill | 446,725 | 442,919 | 446,725 | 446,762 | 442,890 | |||||||||||||||||||
Less: average intangible assets | 47,513 | 57,327 | 50,352 | 50,373 | 60,333 | |||||||||||||||||||
Average tangible equity (non-GAAP) | $ | 1,252,795 | $ | 1,119,824 | $ | 1,204,700 | $ | 1,207,858 | $ | 1,076,990 | ||||||||||||||
Average common equity (GAAP) | $ | 1,732,881 | $ | 1,607,853 | $ | 1,689,603 | $ | 1,692,202 | 1,568,336 | |||||||||||||||
Less: average goodwill | 446,725 | 442,919 | 446,725 | 446,762 | 442,890 | |||||||||||||||||||
Less: average intangible assets | 47,513 | 57,327 | 50,352 | 50,373 | 60,333 | |||||||||||||||||||
Average tangible common equity (non-GAAP) | $ | 1,238,643 | $ | 1,107,607 | $ | 1,192,526 | $ | 1,195,067 | $ | 1,065,113 | ||||||||||||||
Net Income (GAAP) | $ | 34,464 | $ | 37,659 | 34,605 | 95,453 | 103,707 | |||||||||||||||||
Amortization of Intangibles, net of tax | 2,252 | 2,417 | 2,292 | 6,875 | 7,398 | |||||||||||||||||||
Tangible Net Income (non-GAAP) | $ | 36,716 | $ | 40,076 | $ | 36,897 | $ | 102,328 | $ | 111,105 | ||||||||||||||
Net Income (GAAP) | $ | 34,464 | $ | 37,659 | $ | 34,605 | $ | 95,453 | $ | 103,707 | ||||||||||||||
Provision for credit losses | 31,598 | 1,508 | 26,945 | 65,559 | 5,770 | |||||||||||||||||||
Provision for income tax | 7,841 | 7,684 | 7,464 | 21,492 | 24,810 | |||||||||||||||||||
Pre-provision, pre-tax net revenues (non-GAAP) | $ | 73,903 | $ | 46,851 | $ | 69,014 | $ | 182,504 | $ | 134,287 | ||||||||||||||
Total Revenue (GAAP) | $ | 192,135 | $ | 162,656 | $ | 145,879 | $ | 492,487 | $ | 424,272 | ||||||||||||||
Net (gain)/loss on investment securities | (1,701 | ) | (2,930 | ) | 69 | (9,632 | ) | 845 | ||||||||||||||||
Total Revenue for Efficiency calculation (non-GAAP) | $ | 190,434 | $ | 159,726 | $ | 145,948 | $ | 482,855 | $ | 425,117 |