SUFFOLK, Va., April 27, 2023 (GLOBE NEWSWIRE) -- TowneBank ("Towne") (NASDAQ: TOWN) today reported earnings for the quarter ended March 31, 2023 of $38.33 million, or $0.52 per diluted share, compared to $45.59 million, or $0.63 per diluted share, for the quarter ended March 31, 2022. Excluding acquisition-related items, core earnings (non-GAAP) for the quarter ended March 31, 2023 were $46.30 million, or $0.62 per diluted share, compared to $45.63 million, or $0.63 per diluted share, for the quarter ended March 31, 2022.
"The quarter presented unexpected industry challenges which highlighted our prudent approach to conservative balance sheet management and growth. Our capital, liquidity and core funding has been a foundational pillar of our Company since inception and remains strong in the current environment. We expect our proven business model, which emphasizes diverse revenues and deep relationships, will provide opportunities to position Towne to successfully navigate volatile market conditions," said G. Robert Aston, Jr., Executive Chairman.
Highlights for First Quarter 2023:
- Total revenues were $184.14 million, an increase of $18.73 million, or 11.32%, compared to first quarter 2022. An increase in net interest income of $24.17 million was partially offset by a $5.44 million decline in noninterest income, primarily related to the decline in residential mortgage banking income.
- Pre-provision, pre-tax, net revenues (non-GAAP) were $59.60 million, an increase of $4.23 million, or 7.65%, compared to the prior year quarter.
- Towne successfully completed the acquisition of Farmers Bankshares, Inc. and its wholly owned subsidiary Farmers Bank ("Farmers"), in January 2023. Included in that acquisition were $277.89 million in loans, $244.89 million in securities, and $514.57 million in deposits.
- Loans held for investment were $11.17 billion, an increase of $1.26 billion, or 12.76%, compared to March 31, 2022, and $379.18 million, or 3.51%, compared to December 31, 2022. Excluding loans acquired in the quarter, total loans increased $0.99 billion, or 9.96%, compared to prior year and $101.29 million, or 3.81% on an annualized basis, compared to the linked quarter.
- Total deposits were $13.60 billion, a marginal decrease of $173.67 million, or 1.26%, compared to prior year but an increase of $303.91 million, or 2.29%, from December 31, 2022. Excluding $514.57 million in acquired deposits, total deposits decreased $688.24 million, or 5.00%, compared to prior year and $210.66 million, or 6.43% on an annualized basis compare to the linked quarter.
- Noninterest bearing deposits decreased 8.37%, to $5.07 billion, compared to prior year and represented 37.28% of total deposits. Compared to the linked quarter, noninterest bearing deposits decreased 3.72%.
- Annualized return on common shareholders' equity was 8.05% compared to 9.81% in first quarter 2022. Annualized return on average tangible common shareholders' equity (non-GAAP) was 11.83% compared to 14.08% in first quarter 2022.
- Net interest margin was 3.36% for the quarter and taxable equivalent net interest margin (non-GAAP) was 3.39% compared to the prior year quarter net interest margin of 2.67% and taxable equivalent net interest margin (non-GAAP) of 2.69%.
- Effective tax rate of 20.03% in the quarter compared to 19.77% in first quarter 2022 and 19.90% in the linked quarter.
"We were pleased to close the Farmers Bank partnership during the quarter and recently completed the systems conversion. Additionally, the growth in tangible book value during the quarter evidenced our well-structured approach to this transaction. Tougher economic conditions could present additional opportunities for us to grow both organically and through acquisition across our various lines of business. Our commitment to being a strong community asset in the markets we serve is unwavering, especially in challenging environments," stated William I. Foster III, President and Chief Executive Officer.
Quarterly Net Interest Income:
- Net interest income was $123.38 million compared to $99.20 million for the quarter ended March 31, 2022. The increase was driven by higher earning asset yields and increases in loan and investment securities balances, partially offset by increased deposit costs.
- Tax-equivalent net interest margin (non-GAAP) was 3.39%, including purchase accounting accretion of 3 basis points, compared to 2.69%, including purchase accounting accretion of 6 basis points for first quarter 2022.
- On an average basis, loans held for investment, with a yield of 4.88%, represented 74.61% of earning assets at March 31, 2023 compared to a yield of 4.01% and 64.26% of earning assets in the first quarter of 2022.
- Total cost of deposits increased to 1.02% from 0.15% for the quarter ended March 31, 2022. Interest expense on deposits increased $29.04 million, or 593.38%, over the prior year quarter driven, primarily, by the increase in rate. Management expects continued pressure on the cost of deposits.
- Rising funding costs continued to negatively impact profitability in our residential mortgage banking business.
- Average interest-earning assets totaled $14.87 billion at March 31, 2023 compared to $15.05 billion at March 31, 2022, a decrease of 1.14%.
- Average interest-bearing liabilities totaled $8.91 billion, an increase of $352.08 million, or 4.11% from prior year. Average short term FHLB borrowings were $263.33 million during the quarter.
Quarterly Provision for Credit Losses:
- The quarterly provision for credit losses was an expense of $11.67 million compared to a provision benefit of $1.45 million one year ago and an expense of $6.07 million in the linked quarter. The provision includes an initial provision for credit losses of $4.01 million related to loans and commitments acquired in the Farmers transaction.
- The allowance for credit losses on loans in first quarter 2023, compared to the linked quarter, increased $9.19 million, $5.05 million of which resulted from the January 2023 acquisition of Farmers. In addition to the initial loan provision discussed above, acquisition accounting for the purchased loan portfolio included an increase in our allowance of $1.38 million on acquired loans with purchase credit deteriorated loan marks. Additional allowance increases were driven by loan growth, changes in our portfolio composition and updates in the macroeconomic forecast scenarios.
- Net loan charge-offs were $3.87 million, driven primarily by the charge-off of a single credit relationship, compared to $0.13 million one year prior and $2.90 million in the linked quarter. The ratio of net charge-offs to average loans on an annualized basis was 0.14% in first quarter 2023, 0.01% in first quarter 2022, and 0.11% in the linked quarter.
- The allowance for credit losses on loans represented 1.07% of total loans at March 31, 2023, 1.05% at March 31, 2022, and 1.03% on December 31, 2022. The allowance for credit losses on loans was 12.87 times nonperforming loans compared to 21.52 times at March 31, 2022 and 17.67 times at December 31, 2022.
Quarterly Noninterest Income:
- Total noninterest income was $60.77 million compared to $66.21 million in 2022, a decrease of $5.44 million, or 8.22%.
- Residential mortgage banking income was $9.37 million compared to $14.64 million in first quarter 2022. Loan volume decreased to $416.22 million in first quarter 2023 from $819.99 million in 2022. The prolonged increase in mortgage rates has resulted in refinance activities dropping to 5% of total mortgage production volume, the lowest level since second quarter 2018. Residential purchase activity comprised 94.99% of production volume in the first quarter of 2023 compared to 77.93% in the prior year quarter.
- Gross margins on residential mortgages increased 10 basis points from 3.01% in first quarter 2022 to 3.11% in the current quarter.
- Total net insurance commissions increased $3.75 million, or 19.66%, to $22.82 million in first quarter 2023 compared to 2022. This resulted from increases in property and casualty commissions, which were driven by organic growth, higher contingency income, and commissions from two recent acquisitions.
- Property management fee revenue decreased 9.40%, or $1.61 million, to $15.54 million in first quarter 2023 compared to 2022. Reservation income is down compared to the prior year due to decreased bookings at our property management locations.
- Real estate brokerage income declined driven by a 29.04% decline in sale volume. The combination of higher mortgage loan rates and continued low home sales inventories impacted income in first quarter 2023.
Quarterly Noninterest Expense:
- Total noninterest expense was $124.40 million compared to $109.38 million in 2022, an increase of $15.02 million, or 13.73%. Increases in salaries and employee benefits of $5.46 million, acquisition-related expenses of $5.91 million, software expense of $1.13 million, and charitable contributions of $1.03 million were the primary sources of the increase.
- Salaries and benefits expense increases were driven by annual base salary adjustments that went into effect July 2022 and an increase in the year-over-year number of employees, primarily related to the Farmers acquisition.
- Software expense increased due to a number of ongoing projects related to recent acquisitions, our loan portfolio and mortgage.
Consolidated Balance Sheet Highlights:
- Total assets were $16.73 billion for the quarter ended March 31, 2023, an $0.89 billion increase compared to $15.85 billion at December 31, 2022. Total assets increased $63.89 million, or 0.38%, from $16.67 billion at March 31, 2022.
- Loans held for investment increased $1.26 billion, or 12.76%, compared to prior year and $379.18 million, or 3.51%, compared to the linked quarter. Excluding loans acquired in the quarter, total loans increased $0.99 billion, or 9.96%, compared to prior year and $101.29 million, or 3.81% on an annualized basis, compared to the linked quarter.
- Mortgage loans held for sale decreased $77.46 million, or 33.01%, compared to prior year but increased $54.82 million, or 53.57%, compared to the linked quarter.
- Excluding $0.51 billion in acquired deposits, total deposits decreased $0.69 billion, or 5.00%, compared to prior year and $0.21 billion, or 1.58%, compared to the linked quarter.
- Total borrowings increased $178.31 million, or 28.40%, over prior year and $488.24 million, or 153.53%, compared to the linked quarter. FHLB advances increased $474.82 million in the quarter.
Investment Securities:
- Total investment securities were $2.67 billion compared to $2.41 billion at December 31, 2022 and $2.30 billion at March 31, 2022. The weighted average duration of the portfolio at March 31, 2023 was 3.6 years. The carrying value of the available for sale debt securities portfolio included net unrealized losses of $165.71 million at March 31, 2023, compared to $191.05 million at December 31, 2022 and $70.32 million at March 31, 2022, related to rising rates rather than credit quality issues.
Loans and Asset Quality:
- Total loans held for investment were $11.17 billion at March 31, 2023 compared to $10.79 billion at December 31, 2022 and $9.91 billion at March 31, 2022.
- Nonperforming assets were $9.89 million, or 0.06% of total assets, compared to $5.39 million, or 0.03%, at March 31, 2022.
- Nonperforming loans were 0.08% of period end loans compared to 0.05% at March 31, 2022.
- Foreclosed property increased marginally to $563.85 thousand from $560.15 thousand at March 31, 2022.
Deposits and Borrowings:
- Total deposits were $13.60 billion compared to $13.29 billion at December 31, 2022 and $13.77 billion at March 31, 2022.
- Total loans held for investment to deposits were 82.17% compared to 81.20% at December 31, 2022 and 71.95% at March 31, 2022.
- Noninterest-bearing deposits were 37.28% of total deposits at March 31, 2023 compared to 39.61% at December 31, 2022 and 40.17% at March 31, 2022.
- Total borrowings were $0.81 billion compared to $0.32 billion at December 31, 2022 and $0.63 billion at March 31, 2022.
Capital:
- Common equity tier 1 capital ratio of 11.68%.
- Tier 1 leverage capital ratio of 9.86%.
- Tier 1 risk-based capital ratio of 11.80%.
- Total risk-based capital ratio of 14.55%.
- Book value per common share was $26.40 compared to $25.73 at December 31, 2022 and $25.61 at March 31, 2022.
- Tangible book value per common share (non-GAAP) was $19.04 compared to $18.84 at December 31, 2022 and $18.67 at March 31, 2022.
About TowneBank:
Founded in 1999, TowneBank is a company built on relationships, offering a full range of banking and other financial services, with a focus of serving others and enriching lives. Dedicated to a culture of caring, Towne values all employees and members by embracing their diverse talents, perspectives, and experiences.
TowneBank operates over 45 banking offices throughout Hampton Roads and Central Virginia, as well as Northeastern and Central North Carolina – serving as a local leader in promoting the social, cultural, and economic growth in each community. Towne offers a competitive array of business and personal banking solutions, delivered with only the highest ethical standards. Experienced local bankers providing a higher level of expertise and personal attention with local decision-making are key to the TowneBank strategy. TowneBank has grown its capabilities beyond banking to provide expertise through its controlled divisions and subsidiaries that include 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. With total assets of $16.73 billion as of March 31, 2023, TowneBank is one of the largest banks headquartered in Virginia.
Non-GAAP Financial Measures:
This press release contains certain financial measures determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Such non-GAAP financial measures include the following: fully tax-equivalent net interest margin, core operating earnings, core net income, tangible book value per common share, pre-provision, pre-tax net revenues, total risk-based capital ratio, tier one leverage ratio, tier one capital ratio, and the tangible common equity to tangible assets ratio. Management uses these non-GAAP financial measures to assess the performance of TowneBank’s core business and the strength of its capital position. Management believes that these non-GAAP financial measures provide meaningful additional information about TowneBank to assist investors in evaluating operating results, financial strength, and capitalization. The non-GAAP financial measures should be considered as additional views of the way our financial measures are affected by significant charges for credit costs and other factors. These non-GAAP financial measures should not be considered as a substitute for operating results determined in accordance with GAAP and may not be comparable to other similarly titled measures of other companies. The computations of the non-GAAP financial measures used in this presentation are referenced in a footnote or in the appendix to this presentation.
Forward-Looking Statements:
This press release contains certain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts, but instead represent only the beliefs, expectations, or opinions of TowneBank and its management regarding future events, many of which, by their nature, are inherently uncertain. Forward-looking statements may be identified by the use of such words as: "believe," "expect," "anticipate," "intend," "plan,” "estimate," or words of similar meaning, or future or conditional terms, such as "will," "would," "should," "could," "may," "likely," "probably," or "possibly." These statements may address issues that involve significant risks, uncertainties, estimates, and assumptions made by management. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include competitive pressures in the banking industry that may increase significantly; changes in the interest rate environment that may reduce margins and/or the volumes and values of loans made or held as well as the value of other financial assets held; changes in the creditworthiness of customers and the possible impairment of the collectability of loans; general economic conditions, either nationally or regionally, that may be less favorable than expected, resulting in, among other things, a deterioration in credit quality and/or a reduced demand for credit or other services; unusual and infrequently occurring events, such as weather-related or natural disasters, acts of war or terrorism, or public health events (such as the COVID-19 pandemic); changes in the legislative or regulatory environment, including changes in accounting standards and tax laws, that may adversely affect our business; costs or difficulties related to the integration of the businesses we have acquired may be greater than expected; expected cost savings associated with pending or recently completed acquisitions may not be fully realized or realized within the expected time frame; cybersecurity threats or attacks, the implementation of new technologies, and the ability to develop and maintain reliable electronic systems; our competitors may have greater financial resources and develop products that enable them to compete more successfully; changes in business conditions; changes in the securities market; and changes in our local economy with regard to our market area. Any forward-looking statements made by us or on our behalf speak only as of the date they are made or as of the date indicated, and we do not undertake any obligation to update forward-looking statements as a result of new information, future events, or otherwise. For additional information on factors that could materially influence forward-looking statements included in this report, see the "Risk Factors" in TowneBank’s Annual Report on Form 10-K for the year ended December 31, 2022 and related disclosures in other filings that have been, or will be, filed by TowneBank with the Federal Deposit Insurance Corporation.
Media contact:
G. Robert Aston, Jr., Executive Chairman, 757-638-6780
William I. Foster III, Chief Executive Officer, 757-417-6482
Investor contact:
William B. Littreal, Chief Financial Officer, 757-638-6813
| TOWNEBANK | ||||||||||||||||||||
| Selected Financial Highlights (unaudited) | ||||||||||||||||||||
| (dollars in thousands, except per share data) | ||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | ||||||||||||||||
| Income and Performance Ratios: | ||||||||||||||||||||
| Total revenue | $ | 184,144 | $ | 175,307 | $ | 179,236 | $ | 166,980 | $ | 165,412 | ||||||||||
| Net income | 38,478 | 46,494 | 50,671 | 47,054 | 46,250 | |||||||||||||||
| Net income available to common shareholders | 38,333 | 46,685 | 50,169 | 46,547 | 45,586 | |||||||||||||||
| Pre-provision, pre-tax, net revenues (non-GAAP) | 59,602 | 64,357 | 66,700 | 57,748 | 55,369 | |||||||||||||||
| Net income per common share - diluted | 0.52 | 0.64 | 0.69 | 0.64 | 0.63 | |||||||||||||||
| Book value per common share | 26.40 | 25.73 | 25.08 | 25.48 | 25.61 | |||||||||||||||
| Book value per common share - tangible (non-GAAP) | 19.04 | 18.84 | 18.17 | 18.58 | 18.67 | |||||||||||||||
| Return on average assets | 0.95 | % | 1.16 | % | 1.22 | % | 1.13 | % | 1.13 | % | ||||||||||
| Return on average assets - tangible (non-GAAP) | 1.05 | % | 1.25 | % | 1.31 | % | 1.22 | % | 1.23 | % | ||||||||||
| Return on average equity | 7.99 | % | 9.98 | % | 10.60 | % | 9.94 | % | 9.73 | % | ||||||||||
| Return on average equity - tangible (non-GAAP) | 11.71 | % | 14.26 | % | 15.08 | % | 14.20 | % | 13.91 | % | ||||||||||
| Return on average common equity | 8.05 | % | 10.07 | % | 10.69 | % | 10.03 | % | 9.81 | % | ||||||||||
| Return on average common equity - tangible (non-GAAP) | 11.83 | % | 14.44 | % | 15.27 | % | 14.37 | % | 14.08 | % | ||||||||||
| Noninterest income as a percentage of total revenue | 33.00 | % | 26.54 | % | 30.80 | % | 34.52 | % | 40.03 | % | ||||||||||
| Regulatory Capital Ratios (1): | ||||||||||||||||||||
| Common equity tier 1 | 11.68 | % | 11.92 | % | 11.92 | % | 11.83 | % | 12.16 | % | ||||||||||
| Tier 1 | 11.80 | % | 12.04 | % | 12.05 | % | 11.97 | % | 12.31 | % | ||||||||||
| Total | 14.55 | % | 14.80 | % | 14.80 | % | 16.76 | % | 17.34 | % | ||||||||||
| Tier 1 leverage ratio | 9.86 | % | 9.87 | % | 9.52 | % | 9.19 | % | 9.16 | % | ||||||||||
| Asset Quality: | ||||||||||||||||||||
| Allowance for credit losses on loans to nonperforming loans | 12.87x | 17.67x | 20.48x | 18.94x | 21.52x | |||||||||||||||
| Allowance for credit losses on loans to period end loans | 1.07 | % | 1.03 | % | 1.02 | % | 1.00 | % | 1.05 | % | ||||||||||
| Nonperforming loans to period end loans | 0.08 | % | 0.06 | % | 0.05 | % | 0.05 | % | 0.05 | % | ||||||||||
| Nonperforming assets to period end assets | 0.06 | % | 0.04 | % | 0.03 | % | 0.04 | % | 0.03 | % | ||||||||||
| Net charge-offs (recoveries) to average loans (annualized) | 0.14 | % | 0.11 | % | (0.01) | % | — | % | 0.01 | % | ||||||||||
| Net charge-offs (recoveries) | $ | 3,874 | $ | 2,904 | $ | (187 | ) | $ | (80 | ) | $ | 126 | ||||||||
| Nonperforming loans | $ | 9,322 | $ | 6,273 | $ | 5,250 | $ | 5,493 | $ | 4,825 | ||||||||||
| Foreclosed property | 564 | 560 | 186 | 563 | 560 | |||||||||||||||
| Total nonperforming assets | $ | 9,886 | $ | 6,833 | $ | 5,436 | $ | 6,056 | $ | 5,385 | ||||||||||
| Loans past due 90 days and still accruing interest | $ | 206 | $ | 324 | $ | 725 | $ | 232 | $ | 40 | ||||||||||
| Allowance for credit losses on loans | $ | 120,002 | $ | 110,816 | $ | 107,497 | $ | 104,019 | $ | 103,833 | ||||||||||
| Mortgage Banking: | ||||||||||||||||||||
| Loans originated, mortgage | $ | 280,401 | $ | 299,298 | $ | 458,254 | $ | 588,529 | $ | 583,008 | ||||||||||
| Loans originated, joint venture | 135,818 | 157,511 | 234,443 | 249,279 | 236,980 | |||||||||||||||
| Total loans originated | $ | 416,219 | $ | 456,809 | $ | 692,697 | $ | 837,808 | $ | 819,988 | ||||||||||
| Number of loans originated | 1,249 | 1,355 | 1,983 | 2,282 | 2,237 | |||||||||||||||
| Number of originators | 194 | 186 | 194 | 201 | 207 | |||||||||||||||
| Purchase % | 94.99 | % | 95.08 | % | 93.20 | % | 92.27 | % | 77.93 | % | ||||||||||
| Loans sold | $ | 346,288 | $ | 483,254 | $ | 701,908 | $ | 759,073 | $ | 853,808 | ||||||||||
| Rate lock asset | $ | 1,435 | $ | 482 | $ | 859 | $ | 1,935 | $ | 3,009 | ||||||||||
| Gross realized gain on sales and fees as a % of loans originated | 3.11 | % | 2.93 | % | 3.02 | % | 2.92 | % | 3.01 | % | ||||||||||
| Other Ratios: | ||||||||||||||||||||
| Net interest margin | 3.36 | % | 3.51 | % | 3.28 | % | 2.88 | % | 2.67 | % | ||||||||||
| Net interest margin-fully tax equivalent (non-GAAP) | 3.39 | % | 3.53 | % | 3.31 | % | 2.89 | % | 2.69 | % | ||||||||||
| Average earning assets/total average assets | 90.98 | % | 91.51 | % | 91.92 | % | 92.22 | % | 92.24 | % | ||||||||||
| Average loans/average deposits | 82.40 | % | 80.14 | % | 76.82 | % | 74.57 | % | 71.61 | % | ||||||||||
| Average noninterest deposits/total average deposits | 38.35 | % | 41.07 | % | 41.77 | % | 40.56 | % | 40.49 | % | ||||||||||
| Period end equity/period end total assets | 11.89 | % | 11.92 | % | 11.56 | % | 11.09 | % | 11.28 | % | ||||||||||
| Efficiency ratio (non-GAAP) | 65.64 | % | 61.99 | % | 61.03 | % | 63.51 | % | 64.42 | % | ||||||||||
| (1) Current reporting period regulatory capital ratios are preliminary. | ||||||||||||||||||||
| TOWNEBANK | |||||||||||||||||||
| Selected Data (unaudited) | |||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||
| Investment Securities | % Change | ||||||||||||||||||
| Q1 | Q1 | Q4 | Q1 23 vs. | Q1 23 vs. | |||||||||||||||
| Available-for-sale securities, at fair value | 2023 | 2022 | 2022 | Q1 22 | Q4 22 | ||||||||||||||
| U.S. agency securities | $ | 334,211 | $ | 338,490 | $ | 293,894 | (1.26) | % | 13.72 | % | |||||||||
| U.S. Treasury notes | 27,272 | 970 | 26,693 | 2,711.55 | % | 2.17 | % | ||||||||||||
| Municipal securities | 508,439 | 400,200 | 431,299 | 27.05 | % | 17.89 | % | ||||||||||||
| Trust preferred and other corporate securities | 76,965 | 85,792 | 78,436 | (10.29) | % | (1.88) | % | ||||||||||||
| Mortgage-backed securities issued by GSE | 1,132,746 | 1,022,169 | 1,011,666 | 10.82 | % | 11.97 | % | ||||||||||||
| Allowance for credit losses | (1,150 | ) | (1,081 | ) | (1,086 | ) | 6.38 | % | 5.89 | % | |||||||||
| Total | $ | 2,078,483 | $ | 1,846,540 | $ | 1,840,902 | 12.56 | % | 12.91 | % | |||||||||
| Gross unrealized gains (losses) reflected in financial statements | |||||||||||||||||||
| Total gross unrealized gains | $ | 2,218 | $ | 3,443 | $ | 1,111 | (35.58) | % | 99.64 | % | |||||||||
| Total gross unrealized losses | (167,929 | ) | (73,758 | ) | (192,163 | ) | 127.68 | % | (12.61) | % | |||||||||
| Net unrealized gains (losses) and other adjustments on AFS securities | $ | (165,711 | ) | $ | (70,315 | ) | $ | (191,052 | ) | 135.67 | % | (13.26) | % | ||||||
| Held-to-maturity securities, at amortized cost | |||||||||||||||||||
| U.S. agency securities | $ | 101,281 | $ | 83,004 | $ | 101,092 | 22.02 | % | 0.19 | % | |||||||||
| U.S. Treasury notes | 433,584 | 336,193 | 433,866 | 28.97 | % | (0.06) | % | ||||||||||||
| Municipal securities | 5,203 | 5,116 | 5,181 | 1.70 | % | 0.42 | % | ||||||||||||
| Trust preferred corporate securities | 2,210 | 2,260 | 2,223 | (2.21) | % | (0.58) | % | ||||||||||||
| Mortgage-backed securities issued by GSE | 5,948 | 6,811 | 6,113 | (12.67) | % | (2.70) | % | ||||||||||||
| Allowance for credit losses | (88 | ) | (92 | ) | (83 | ) | (4.35) | % | 6.02 | % | |||||||||
| Total | $ | 548,138 | $ | 433,292 | $ | 548,392 | 26.51 | % | (0.05) | % | |||||||||
| Total gross unrealized gains | $ | 392 | $ | 714 | $ | 320 | (45.10) | % | 22.50 | % | |||||||||
| Total gross unrealized losses | (24,018 | ) | (11,915 | ) | (29,802 | ) | 101.58 | % | (19.41) | % | |||||||||
| Net unrealized gains (losses) in HTM securities | $ | (23,626 | ) | $ | (11,201 | ) | $ | (29,482 | ) | 110.93 | % | (19.86) | % | ||||||
| Total unrealized (losses) gains on AFS and HTM securities | $ | (189,337 | ) | $ | (81,516 | ) | $ | (220,534 | ) | 132.27 | % | (14.15) | % | ||||||
| % Change | |||||||||||||||||||
| Loans Held For Investment | Q1 | Q1 | Q4 | Q1 23 vs. | Q1 23 vs. | ||||||||||||||
| 2023 | 2022 | 2022 | Q1 22 | Q4 22 | |||||||||||||||
| Real estate - construction and development | $ | 1,473,034 | $ | 1,236,294 | $ | 1,428,376 | 19.15 | % | 3.13 | % | |||||||||
| Commercial real estate - owner occupied | 1,675,119 | 1,561,117 | 1,580,099 | 7.30 | % | 6.01 | % | ||||||||||||
| Commercial real estate - non owner occupied | 2,908,791 | 2,697,929 | 2,830,620 | 7.82 | % | 2.76 | % | ||||||||||||
| Real estate - multifamily | 505,237 | 339,220 | 496,190 | 48.94 | % | 1.82 | % | ||||||||||||
| Residential 1-4 family | 1,734,698 | 1,392,052 | 1,634,062 | 24.61 | % | 6.16 | % | ||||||||||||
| HELOC | 387,967 | 376,480 | 395,526 | 3.05 | % | (1.91) | % | ||||||||||||
| Commercial and industrial business (C&I) | 1,297,707 | 1,212,973 | 1,256,697 | 6.99 | % | 3.26 | % | ||||||||||||
| Government | 510,494 | 518,839 | 512,265 | (1.61) | % | (0.35) | % | ||||||||||||
| Indirect | 582,306 | 485,620 | 568,190 | 19.91 | % | 2.48 | % | ||||||||||||
| Consumer loans and other | 98,432 | 88,784 | 92,577 | 10.87 | % | 6.32 | % | ||||||||||||
| Total | $ | 11,173,785 | $ | 9,909,308 | $ | 10,794,602 | 12.76 | % | 3.51 | % | |||||||||
| % Change | |||||||||||||||||||
| Deposits | Q1 | Q1 | Q4 | Q1 23 vs. | Q1 23 vs. | ||||||||||||||
| 2023 | 2022 | 2022 | Q1 22 | Q4 22 | |||||||||||||||
| Noninterest-bearing demand | $ | 5,069,363 | $ | 5,532,337 | $ | 5,265,186 | (8.37) | % | (3.72) | % | |||||||||
| Interest-bearing: | |||||||||||||||||||
| Demand and money market accounts | 6,284,184 | 6,432,005 | 6,185,075 | (2.30) | % | 1.60 | % | ||||||||||||
| Savings | 389,173 | 393,119 | 374,987 | (1.00) | % | 3.78 | % | ||||||||||||
| Certificates of deposits | 1,855,411 | 1,414,339 | 1,468,975 | 31.19 | % | 26.31 | % | ||||||||||||
| Total | 13,598,131 | 13,771,800 | 13,294,223 | (1.26) | % | 2.29 | % | ||||||||||||
| TOWNEBANK | ||||||||||||||||||||||||||||||||
| Average Balances, Yields and Rate Paid (unaudited) | ||||||||||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||||||||
| Three Months Ended | Three Months Ended | Three Months Ended | ||||||||||||||||||||||||||||||
| March 31, 2023 | December 31, 2022 | March 31, 2022 | ||||||||||||||||||||||||||||||
| Interest | Average | Interest | Average | Interest | Average | |||||||||||||||||||||||||||
| Average | Income/ | Yield/ | Average | Income/ | Yield/ | Average | Income/ | Yield/ | ||||||||||||||||||||||||
| Balance | Expense | Rate (1) | Balance | Expense | Rate (1) | Balance | Expense | Rate (1) | ||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||
| Loans (net of unearned income and deferred costs) | $ | 11,097,626 | $ | 133,536 | 4.88 | % | $ | 10,701,612 | $ | 124,064 | 4.60 | % | $ | 9,668,724 | $ | 95,596 | 4.01 | % | ||||||||||||||
| Taxable investment securities | 2,438,489 | 16,816 | 2.76 | % | 2,288,344 | 14,251 | 2.49 | % | 2,059,614 | 9,013 | 1.75 | % | ||||||||||||||||||||
| Tax-exempt investment securities | 188,033 | 1,887 | 4.01 | % | 140,108 | 1,262 | 3.60 | % | 110,698 | 777 | 2.81 | % | ||||||||||||||||||||
| Total securities | 2,626,522 | 18,703 | 2.85 | % | 2,428,452 | 15,513 | 2.56 | % | 2,170,312 | 9,790 | 1.80 | % | ||||||||||||||||||||
| Interest-bearing deposits | 1,044,538 | 10,649 | 4.13 | % | 1,321,964 | 11,387 | 3.42 | % | 2,929,929 | 1,347 | 0.19 | % | ||||||||||||||||||||
| Loans held for sale | 105,018 | 1,604 | 6.11 | % | 124,949 | 1,842 | 5.90 | % | 276,448 | 2,375 | 3.44 | % | ||||||||||||||||||||
| Total earning assets | 14,873,704 | 164,492 | 4.49 | % | 14,576,977 | 152,806 | 4.16 | % | 15,045,413 | 109,108 | 2.94 | % | ||||||||||||||||||||
| Less: allowance for credit losses | (114,447 | ) | (108,288 | ) | (106,172 | ) | ||||||||||||||||||||||||||
| Total nonearning assets | 1,589,783 | 1,461,067 | 1,372,757 | |||||||||||||||||||||||||||||
| Total assets | $ | 16,349,040 | $ | 15,929,756 | $ | 16,311,998 | ||||||||||||||||||||||||||
| Liabilities and Equity: | ||||||||||||||||||||||||||||||||
| Interest-bearing deposits | ||||||||||||||||||||||||||||||||
| Demand and money market | $ | 6,217,754 | $ | 23,302 | 1.52 | % | $ | 6,022,582 | $ | 13,903 | 0.92 | % | $ | 6,178,217 | $ | 2,262 | 0.15 | % | ||||||||||||||
| Savings | 401,776 | 844 | 0.85 | % | 378,816 | 763 | 0.80 | % | 382,839 | 511 | 0.54 | % | ||||||||||||||||||||
| Certificates of deposit | 1,683,354 | 9,788 | 2.36 | % | 1,468,589 | 5,452 | 1.47 | % | 1,472,942 | 2,121 | 0.58 | % | ||||||||||||||||||||
| Total interest-bearing deposits | 8,302,884 | 33,934 | 1.66 | % | 7,869,987 | 20,118 | 1.01 | % | 8,033,998 | 4,894 | 0.25 | % | ||||||||||||||||||||
| Borrowings | 355,833 | 3,915 | 4.40 | % | 138,510 | 909 | 2.57 | % | 135,775 | 137 | 0.40 | % | ||||||||||||||||||||
| Subordinated debt, net | 250,066 | 2,169 | 3.47 | % | 247,319 | 2,108 | 3.41 | % | 386,934 | 4,120 | 4.26 | % | ||||||||||||||||||||
| Total interest-bearing liabilities | 8,908,783 | 40,018 | 1.82 | % | 8,255,816 | 23,135 | 1.11 | % | 8,556,707 | 9,151 | 0.43 | % | ||||||||||||||||||||
| Demand deposits | 5,164,415 | 5,484,477 | 5,467,153 | |||||||||||||||||||||||||||||
| Other noninterest-bearing liabilities | 329,840 | 334,033 | 387,871 | |||||||||||||||||||||||||||||
| Total liabilities | 14,403,038 | 14,074,326 | 14,411,731 | |||||||||||||||||||||||||||||
| Shareholders’ equity | 1,946,002 | 1,855,430 | 1,900,267 | |||||||||||||||||||||||||||||
| Total liabilities and equity | $ | 16,349,040 | $ | 15,929,756 | $ | 16,311,998 | ||||||||||||||||||||||||||
| Net interest income (tax-equivalent basis) (4) | $ | 124,474 | $ | 129,671 | $ | 99,957 | ||||||||||||||||||||||||||
| Reconciliation of Non-GAAP Financial Measures | ||||||||||||||||||||||||||||||||
| Tax-equivalent basis adjustment | (1,096 | ) | (888 | ) | (753 | ) | ||||||||||||||||||||||||||
| Net interest income (GAAP) | $ | 123,378 | $ | 128,783 | $ | 99,204 | ||||||||||||||||||||||||||
| Interest rate spread (2)(4) | 2.67 | % | 3.05 | % | 2.51 | % | ||||||||||||||||||||||||||
| Interest expense as a percent of average earning assets | 1.09 | % | 0.63 | % | 0.25 | % | ||||||||||||||||||||||||||
| Net interest margin (tax equivalent basis) (3)(4) | 3.39 | % | 3.53 | % | 2.69 | % | ||||||||||||||||||||||||||
| Total cost of deposits | 1.02 | % | 0.60 | % | 0.15 | % | ||||||||||||||||||||||||||
(1) Yields and interest income are presented on a taxable-equivalent basis using the federal statutory tax rate of 21%.
(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) | |||||||
| March 31, | December 31, | ||||||
| 2023 | 2022 | ||||||
| (unaudited) | (audited) | ||||||
| ASSETS | |||||||
| Cash and due from banks | $ | 97,502 | $ | 55,381 | |||
| Interest-bearing deposits at FRB - Richmond | 1,040,112 | 1,000,205 | |||||
| Federal funds sold and interest-bearing deposits in financial institutions | 104,924 | 97,244 | |||||
| Total Cash and Cash Equivalents | 1,242,538 | 1,152,830 | |||||
| Securities available for sale, at fair value (amortized cost of $2,245,344 and $2,033,040, and allowance for credit losses of $1,150 and $1,086 at March 31, 2023 and December 31, 2022, respectively) | 2,078,483 | 1,840,902 | |||||
| Securities held to maturity, at amortized cost (fair value $524,600 and $518,993 at March 31, 2023 and December 31, 2022, respectively) | 548,226 | 548,475 | |||||
| Less: allowance for credit losses | (88 | ) | (83 | ) | |||
| Securities held to maturity, net of allowance for credit losses | 548,138 | 548,392 | |||||
| Other equity securities | 13,341 | 6,424 | |||||
| FHLB stock | 29,837 | 9,617 | |||||
| Total Securities | 2,669,799 | 2,405,335 | |||||
| Mortgage loans held for sale | 157,161 | 102,339 | |||||
| Loans, net of unearned income and deferred costs | 11,173,785 | 10,794,602 | |||||
| Less: allowance for credit losses | (120,002 | ) | (110,816 | ) | |||
| Net Loans | 11,053,783 | 10,683,786 | |||||
| Premises and equipment, net | 321,944 | 304,802 | |||||
| Goodwill | 477,234 | 458,482 | |||||
| Other intangible assets, net | 73,238 | 43,163 | |||||
| BOLI | 271,704 | 258,069 | |||||
| Other assets | 463,076 | 436,461 | |||||
| TOTAL ASSETS | $ | 16,730,477 | $ | 15,845,267 | |||
| LIABILITIES AND EQUITY | |||||||
| Deposits: | |||||||
| Noninterest-bearing demand | $ | 5,069,363 | $ | 5,265,186 | |||
| Interest-bearing: | |||||||
| Demand and money market accounts | 6,284,184 | 6,185,075 | |||||
| Savings | 389,173 | 374,987 | |||||
| Certificates of deposit | 1,855,411 | 1,468,975 | |||||
| Total Deposits | 13,598,131 | 13,294,223 | |||||
| Advances from the FHLB | 504,497 | 29,674 | |||||
| Subordinated debt, net | 255,151 | 247,420 | |||||
| Repurchase agreements and other borrowings | 46,602 | 40,918 | |||||
| Total Borrowings | 806,250 | 318,012 | |||||
| Other liabilities | 336,201 | 344,275 | |||||
| TOTAL LIABILITIES | 14,740,582 | 13,956,510 | |||||
| Preferred stock, authorized and unissued shares - 2,000,000 | — | — | |||||
| Common stock, $1.667 par value: 150,000,000 shares authorized | |||||||
| 74,804,431 and 72,841,379 shares issued at | |||||||
| March 31, 2023 and December 31, 2022, respectively | 124,682 | 121,426 | |||||
| Capital surplus | 1,109,387 | 1,052,262 | |||||
| Retained earnings | 861,905 | 840,777 | |||||
| Common stock issued to deferred compensation trust, at cost | |||||||
| 926,727 and 931,030 shares at March 31, 2023 and December 31, 2022, respectively | (18,839 | ) | (18,974 | ) | |||
| Deferred compensation trust | 18,839 | 18,974 | |||||
| Accumulated other comprehensive income (loss) | (121,297 | ) | (140,505 | ) | |||
| TOTAL SHAREHOLDERS’ EQUITY | 1,974,677 | 1,873,960 | |||||
| Noncontrolling interest | 15,218 | 14,797 | |||||
| TOTAL EQUITY | 1,989,895 | 1,888,757 | |||||
| TOTAL LIABILITIES AND EQUITY | $ | 16,730,477 | $ | 15,845,267 | |||
| TOWNEBANK | |||||||
| Consolidated Statements of Income (unaudited) | |||||||
| (dollars in thousands, except per share data) | |||||||
| Three Months Ended | |||||||
| March 31, | |||||||
| 2023 | 2022 | ||||||
| INTEREST INCOME: | |||||||
| Loans, including fees | $ | 132,768 | $ | 94,962 | |||
| Investment securities | 18,375 | 9,671 | |||||
| Interest-bearing deposits in financial institutions and federal funds sold | 10,649 | 1,347 | |||||
| Mortgage loans held for sale | 1,604 | 2,375 | |||||
| Total interest income | 163,396 | 108,355 | |||||
| INTEREST EXPENSE: | |||||||
| Deposits | 33,934 | 4,894 | |||||
| Advances from the FHLB | 2,992 | 92 | |||||
| Subordinated debt, net | 2,169 | 4,120 | |||||
| Repurchase agreements and other borrowings | 923 | 45 | |||||
| Total interest expense | 40,018 | 9,151 | |||||
| Net interest income | 123,378 | 99,204 | |||||
| PROVISION FOR CREDIT LOSSES | 11,670 | (1,449 | ) | ||||
| Net interest income after provision for credit losses | 111,708 | 100,653 | |||||
| NONINTEREST INCOME: | |||||||
| Residential mortgage banking income, net | 9,372 | 14,638 | |||||
| Insurance commissions and other title fees and income, net | 22,823 | 19,074 | |||||
| Property management income, net | 15,535 | 17,147 | |||||
| Real estate brokerage income, net | 1,791 | 2,554 | |||||
| Service charges on deposit accounts | 2,851 | 2,574 | |||||
| Credit card merchant fees, net | 1,545 | 1,375 | |||||
| BOLI | 1,672 | 1,717 | |||||
| Other income | 5,177 | 7,129 | |||||
| Total noninterest income | 60,766 | 66,208 | |||||
| NONINTEREST EXPENSE: | |||||||
| Salaries and employee benefits | 69,420 | 63,963 | |||||
| Occupancy | 9,064 | 8,327 | |||||
| Furniture and equipment | 4,244 | 3,690 | |||||
| Amortization - intangibles | 3,524 | 2,817 | |||||
| Software expense | 5,624 | 4,492 | |||||
| Data processing | 3,353 | 3,594 | |||||
| Professional fees | 3,011 | 2,027 | |||||
| Advertising and marketing | 4,401 | 4,127 | |||||
| Other expenses | 21,756 | 16,342 | |||||
| Total noninterest expense | 124,397 | 109,379 | |||||
| Income before income tax expense and noncontrolling interest | 48,077 | 57,482 | |||||
| Provision for income tax expense | 9,599 | 11,232 | |||||
| Net income | $ | 38,478 | $ | 46,250 | |||
| Net income attributable to noncontrolling interest | (145 | ) | (664 | ) | |||
| Net income attributable to TowneBank | $ | 38,333 | $ | 45,586 | |||
| Per common share information | |||||||
| Basic earnings | $ | 0.52 | $ | 0.63 | |||
| Diluted earnings | $ | 0.52 | $ | 0.63 | |||
| Cash dividends declared | $ | 0.23 | $ | 0.20 | |||
| TOWNEBANK | |||||||||||||||||||
| Consolidated Balance Sheets - Five Quarter Trend | |||||||||||||||||||
| (dollars in thousands, except share data) | |||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | |||||||||||||||
| (unaudited) | (audited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||||
| ASSETS | |||||||||||||||||||
| Cash and due from banks | $ | 97,502 | $ | 55,381 | $ | 97,290 | $ | 72,592 | $ | 74,991 | |||||||||
| Interest-bearing deposits at FRB - Richmond | 1,040,112 | 1,000,205 | 1,245,067 | 2,341,942 | 2,857,327 | ||||||||||||||
| Federal funds sold and interest-bearing deposits in financial institutions | 104,924 | 97,244 | 96,862 | 35,087 | 34,684 | ||||||||||||||
| Total Cash and Cash Equivalents | 1,242,538 | 1,152,830 | 1,439,219 | 2,449,621 | 2,967,002 | ||||||||||||||
| Securities available for sale | 2,078,483 | 1,840,902 | 1,890,136 | 1,914,011 | 1,846,540 | ||||||||||||||
| Securities held to maturity | 548,226 | 548,475 | 548,745 | 549,083 | 433,384 | ||||||||||||||
| Less: allowance for credit losses | (88 | ) | (83 | ) | (83 | ) | (85 | ) | (92 | ) | |||||||||
| Securities held to maturity, net of allowance for credit losses | 548,138 | 548,392 | 548,662 | 548,998 | 433,292 | ||||||||||||||
| Other equity securities | 13,341 | 6,424 | 6,360 | 6,679 | 6,789 | ||||||||||||||
| FHLB stock | 29,837 | 9,617 | 9,475 | 10,432 | 10,432 | ||||||||||||||
| Total Securities | 2,669,799 | 2,405,335 | 2,454,633 | 2,480,120 | 2,297,053 | ||||||||||||||
| Mortgage loans held for sale | 157,161 | 102,339 | 165,023 | 211,716 | 234,620 | ||||||||||||||
| Loans, net of unearned income and deferred costs | 11,173,785 | 10,794,602 | 10,559,611 | 10,425,760 | 9,909,308 | ||||||||||||||
| Less: allowance for credit losses | (120,002 | ) | (110,816 | ) | (107,497 | ) | (104,019 | ) | (103,833 | ) | |||||||||
| Net Loans | 11,053,783 | 10,683,786 | 10,452,114 | 10,321,741 | 9,805,475 | ||||||||||||||
| Premises and equipment, net | 321,944 | 304,802 | 295,345 | 289,753 | 277,764 | ||||||||||||||
| Goodwill | 477,234 | 458,482 | 458,482 | 457,162 | 457,162 | ||||||||||||||
| Other intangible assets, net | 73,238 | 43,163 | 44,854 | 44,878 | 47,562 | ||||||||||||||
| BOLI | 271,704 | 258,069 | 256,074 | 254,478 | 253,112 | ||||||||||||||
| Other assets | 463,076 | 436,461 | 386,053 | 354,570 | 326,838 | ||||||||||||||
| TOTAL ASSETS | $ | 16,730,477 | $ | 15,845,267 | $ | 15,951,797 | $ | 16,864,039 | $ | 16,666,588 | |||||||||
| LIABILITIES AND EQUITY | |||||||||||||||||||
| Deposits: | |||||||||||||||||||
| Noninterest-bearing demand | $ | 5,069,363 | $ | 5,265,186 | $ | 5,574,528 | $ | 5,723,415 | $ | 5,532,337 | |||||||||
| Interest-bearing: | |||||||||||||||||||
| Demand and money market accounts | 6,284,184 | 6,185,075 | 6,042,417 | 6,384,818 | 6,432,005 | ||||||||||||||
| Savings | 389,173 | 374,987 | 387,622 | 388,364 | 393,119 | ||||||||||||||
| Certificates of deposit | 1,855,411 | 1,468,975 | 1,407,495 | 1,499,514 | 1,414,339 | ||||||||||||||
| Total Deposits | 13,598,131 | 13,294,223 | 13,412,062 | 13,996,111 | 13,771,800 | ||||||||||||||
| Advances from the FHLB | 504,497 | 29,674 | 29,850 | 55,024 | 55,196 | ||||||||||||||
| Subordinated debt, net | 255,151 | 247,420 | 247,265 | 497,061 | 496,757 | ||||||||||||||
| Repurchase agreements and other borrowings | 46,602 | 40,918 | 43,165 | 47,922 | 75,988 | ||||||||||||||
| Total Borrowings | 806,250 | 318,012 | 320,280 | 600,007 | 627,941 | ||||||||||||||
| Other liabilities | 336,201 | 344,275 | 375,869 | 397,388 | 387,087 | ||||||||||||||
| TOTAL LIABILITIES | 14,740,582 | 13,956,510 | 14,108,211 | 14,993,506 | 14,786,828 | ||||||||||||||
| Preferred stock | — | — | — | — | — | ||||||||||||||
| Common stock, $1.667 par value | 124,682 | 121,426 | 121,423 | 121,265 | 121,231 | ||||||||||||||
| Capital surplus | 1,109,387 | 1,052,262 | 1,052,374 | 1,051,384 | 1,050,387 | ||||||||||||||
| Retained earnings | 861,905 | 840,777 | 810,845 | 777,430 | 747,614 | ||||||||||||||
| Common stock issued to deferred compensation | |||||||||||||||||||
| trust, at cost | (18,839 | ) | (18,974 | ) | (18,862 | ) | (19,349 | ) | (18,323 | ) | |||||||||
| Deferred compensation trust | 18,839 | 18,974 | 18,862 | 19,349 | 18,323 | ||||||||||||||
| Accumulated other comprehensive income (loss) | (121,297 | ) | (140,505 | ) | (157,980 | ) | (96,358 | ) | (56,712 | ) | |||||||||
| TOTAL SHAREHOLDERS’ EQUITY | 1,974,677 | 1,873,960 | 1,826,662 | 1,853,721 | 1,862,520 | ||||||||||||||
| Noncontrolling interest | 15,218 | 14,797 | 16,924 | 16,812 | 17,240 | ||||||||||||||
| TOTAL EQUITY | 1,989,895 | 1,888,757 | 1,843,586 | 1,870,533 | 1,879,760 | ||||||||||||||
| TOTAL LIABILITIES AND EQUITY | $ | 16,730,477 | $ | 15,845,267 | $ | 15,951,797 | $ | 16,864,039 | $ | 16,666,588 | |||||||||
| TOWNEBANK | |||||||||||||||||||
| Consolidated Statements of Income - Five Quarter Trend (unaudited) | |||||||||||||||||||
| (dollars in thousands, except share data) | |||||||||||||||||||
| Three Months Ended | |||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | |||||||||||||||
| INTEREST INCOME: | |||||||||||||||||||
| Loans, including fees | $ | 132,768 | $ | 123,395 | $ | 111,590 | $ | 101,043 | $ | 94,962 | |||||||||
| Investment securities | 18,375 | 15,294 | 13,979 | 12,263 | 9,671 | ||||||||||||||
| Interest-bearing deposits in financial institutions and federal funds sold | 10,649 | 11,387 | 9,509 | 4,616 | 1,347 | ||||||||||||||
| Mortgage loans held for sale | 1,604 | 1,842 | 2,446 | 2,217 | 2,375 | ||||||||||||||
| Total interest income | 163,396 | 151,918 | 137,524 | 120,139 | 108,355 | ||||||||||||||
| INTEREST EXPENSE: | |||||||||||||||||||
| Deposits | 33,934 | 20,118 | 10,230 | 5,573 | 4,894 | ||||||||||||||
| Advances from the FHLB | 2,992 | 665 | 83 | 86 | 92 | ||||||||||||||
| Subordinated debt, net | 2,169 | 2,108 | 3,117 | 5,091 | 4,120 | ||||||||||||||
| Repurchase agreements and other borrowings | 923 | 244 | 56 | 49 | 45 | ||||||||||||||
| Total interest expense | 40,018 | 23,135 | 13,486 | 10,799 | 9,151 | ||||||||||||||
| Net interest income | 123,378 | 128,783 | 124,038 | 109,340 | 99,204 | ||||||||||||||
| PROVISION FOR CREDIT LOSSES | 11,670 | 6,074 | 3,925 | 56 | (1,449 | ) | |||||||||||||
| Net interest income after provision for credit losses | 111,708 | 122,709 | 120,113 | 109,284 | 100,653 | ||||||||||||||
| NONINTEREST INCOME: | |||||||||||||||||||
| Residential mortgage banking income, net | 9,372 | 7,368 | 11,968 | 13,176 | 14,638 | ||||||||||||||
| Insurance commissions and other title fees and income, net | 22,823 | 17,324 | 19,435 | 19,746 | 19,074 | ||||||||||||||
| Property management income, net | 15,535 | 7,756 | 9,891 | 9,452 | 17,147 | ||||||||||||||
| Real estate brokerage income, net | 1,791 | 2,355 | 2,932 | 3,412 | 2,554 | ||||||||||||||
| Service charges on deposit accounts | 2,851 | 2,655 | 2,455 | 2,446 | 2,574 | ||||||||||||||
| Credit card merchant fees, net | 1,545 | 1,653 | 1,658 | 1,906 | 1,375 | ||||||||||||||
| BOLI | 1,672 | 1,985 | 1,585 | 1,853 | 1,717 | ||||||||||||||
| Other income | 5,177 | 5,428 | 5,274 | 5,649 | 7,129 | ||||||||||||||
| Total noninterest income | 60,766 | 46,524 | 55,198 | 57,640 | 66,208 | ||||||||||||||
| NONINTEREST EXPENSE: | |||||||||||||||||||
| Salaries and employee benefits | 69,420 | 61,307 | 65,463 | 64,892 | 63,963 | ||||||||||||||
| Occupancy | 9,064 | 9,252 | 8,748 | 8,342 | 8,327 | ||||||||||||||
| Furniture and equipment | 4,244 | 3,983 | 3,764 | 3,643 | 3,690 | ||||||||||||||
| Amortization - intangibles | 3,524 | 2,475 | 2,644 | 2,684 | 2,817 | ||||||||||||||
| Software expense | 5,624 | 5,111 | 4,594 | 4,762 | 4,492 | ||||||||||||||
| Data processing | 3,353 | 3,096 | 3,628 | 3,556 | 3,594 | ||||||||||||||
| Professional fees | 3,011 | 3,605 | 2,627 | 1,761 | 2,027 | ||||||||||||||
| Advertising and marketing | 4,401 | 3,489 | 4,290 | 4,091 | 4,127 | ||||||||||||||
| Other expenses | 21,756 | 18,823 | 16,276 | 14,994 | 16,342 | ||||||||||||||
| Total noninterest expense | 124,397 | 111,141 | 112,034 | 108,725 | 109,379 | ||||||||||||||
| Income before income tax expense and noncontrolling interest | 48,077 | 58,092 | 63,277 | 58,199 | 57,482 | ||||||||||||||
| Provision for income tax expense | 9,599 | 11,598 | 12,606 | 11,145 | 11,232 | ||||||||||||||
| Net income | 38,478 | 46,494 | 50,671 | 47,054 | 46,250 | ||||||||||||||
| Net income attributable to noncontrolling interest | (145 | ) | 191 | (502 | ) | (507 | ) | (664 | ) | ||||||||||
| Net income attributable to TowneBank | $ | 38,333 | $ | 46,685 | $ | 50,169 | $ | 46,547 | $ | 45,586 | |||||||||
| Per common share information | |||||||||||||||||||
| Basic earnings | $ | 0.52 | $ | 0.64 | $ | 0.69 | $ | 0.64 | $ | 0.63 | |||||||||
| Diluted earnings | $ | 0.52 | $ | 0.64 | $ | 0.69 | $ | 0.64 | $ | 0.63 | |||||||||
| Basic weighted average shares outstanding | 74,363,222 | 72,686,303 | 72,578,736 | 72,559,537 | 72,498,075 | ||||||||||||||
| Diluted weighted average shares outstanding | 74,390,614 | 72,724,189 | 72,594,474 | 72,568,886 | 72,562,122 | ||||||||||||||
| Cash dividends declared | $ | 0.23 | $ | 0.23 | $ | 0.23 | $ | 0.23 | $ | 0.20 | |||||||||
| TOWNEBANK | |||||||||||||||||||
| Banking Segment Financial Information (unaudited) | |||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||
| Three Months Ended | Increase/(Decrease) | ||||||||||||||||||
| March 31, | December 31, | 2023 over 2022 | |||||||||||||||||
| 2023 | 2022 | 2022 | Amount | Percent | |||||||||||||||
| Revenue | |||||||||||||||||||
| Net interest income | $ | 123,650 | $ | 96,770 | $ | 128,655 | $ | 26,880 | 27.78 | % | |||||||||
| Service charges on deposit | |||||||||||||||||||
| accounts | 2,851 | 2,574 | 2,656 | 277 | 10.76 | % | |||||||||||||
| Credit card merchant fees | 1,545 | 1,375 | 1,653 | 170 | 12.36 | % | |||||||||||||
| Other income | 5,740 | 6,710 | 5,799 | (970 | ) | (14.46) | % | ||||||||||||
| Total noninterest income | 10,136 | 10,659 | 10,108 | (523 | ) | (4.91) | % | ||||||||||||
| Total revenue | 133,786 | 107,429 | 138,763 | 26,357 | 24.53 | % | |||||||||||||
| Provision for credit losses | 11,754 | (1,833 | ) | 6,312 | 13,587 | (741.24) | % | ||||||||||||
| Expenses | |||||||||||||||||||
| Salaries and employee benefits | 43,193 | 37,059 | 37,788 | 6,134 | 16.55 | % | |||||||||||||
| Occupancy | 6,233 | 5,659 | 6,500 | 574 | 10.14 | % | |||||||||||||
| Furniture and equipment | 3,333 | 2,709 | 3,061 | 624 | 23.03 | % | |||||||||||||
| Amortization of intangible assets | 1,281 | 827 | 676 | 454 | 54.90 | % | |||||||||||||
| Other expenses | 28,444 | 18,228 | 24,141 | 10,216 | 56.05 | % | |||||||||||||
| Total expenses | 82,484 | 64,482 | 72,166 | 18,002 | 27.92 | % | |||||||||||||
| Income before income tax, corporate allocation and noncontrolling interest | 39,548 | 44,780 | 60,285 | (5,232 | ) | (11.68) | % | ||||||||||||
| Corporate allocation | 1,200 | 1,292 | 861 | (92 | ) | (7.12) | % | ||||||||||||
| Income before income tax provision and noncontrolling interest | 40,748 | 46,072 | 61,146 | (5,324 | ) | (11.56) | % | ||||||||||||
| Provision for income tax expense | 7,651 | 8,519 | 12,162 | (868 | ) | (10.19) | % | ||||||||||||
| Net income | 33,097 | 37,553 | 48,984 | (4,456 | ) | (11.87) | % | ||||||||||||
| Noncontrolling interest | — | — | — | — | N/M | ||||||||||||||
| Net income attributable to TowneBank | $ | 33,097 | $ | 37,553 | $ | 48,984 | $ | (4,456 | ) | (11.87) | % | ||||||||
| Efficiency ratio (non-GAAP) | 60.70 | % | 59.25 | % | 51.52 | % | 1.45 | % | 2.45 | % | |||||||||
| TOWNEBANK | ||||||||||||||||||
| Realty Segment Financial Information (unaudited) | ||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||
| Three Months Ended | Increase/(Decrease) | |||||||||||||||||
| March 31, | December 31, | 2023 over 2022 | ||||||||||||||||
| 2023 | 2022 | 2022 | Amount | Percent | ||||||||||||||
| Revenue | ||||||||||||||||||
| Residential mortgage brokerage income, net | $ | 9,794 | $ | 15,906 | $ | 8,292 | $ | (6,112 | ) | (38.43)% | ||||||||
| Real estate brokerage income, net | 1,791 | 2,554 | 2,354 | (763 | ) | (29.87)% | ||||||||||||
| Title insurance and settlement fees | 291 | 504 | 391 | (213 | ) | (42.26)% | ||||||||||||
| Property management fees, net | 15,535 | 17,147 | 7,757 | (1,612 | ) | (9.40)% | ||||||||||||
| Income from unconsolidated subsidiary | 66 | 167 | 10 | (101 | ) | (60.48)% | ||||||||||||
| Net interest and other income | 184 | 2,932 | 626 | (2,748 | ) | (93.72)% | ||||||||||||
| Total revenue | 27,661 | 39,210 | 19,430 | (11,549 | ) | (29.45)% | ||||||||||||
| Provision for credit losses | (84 | ) | 384 | (238 | ) | (468 | ) | (121.88)% | ||||||||||
| Expenses | ||||||||||||||||||
| Salaries and employee benefits | 14,839 | 17,291 | 13,617 | (2,452 | ) | (14.18)% | ||||||||||||
| Occupancy | 2,021 | 1,898 | 1,970 | 123 | 6.48 | % | ||||||||||||
| Furniture and equipment | 693 | 761 | 738 | (68 | ) | (8.94)% | ||||||||||||
| Amortization of intangible assets | 683 | 816 | 653 | (133 | ) | (16.30)% | ||||||||||||
| Other expenses | 8,437 | 10,852 | 8,056 | (2,415 | ) | (22.25)% | ||||||||||||
| Total expenses | 26,673 | 31,618 | 25,034 | (4,945 | ) | (15.64)% | ||||||||||||
| Income before income tax, corporate allocation and noncontrolling interest | 1,072 | 7,208 | (5,366 | ) | (6,136 | ) | (85.13)% | |||||||||||
| Corporate allocation | (600 | ) | (1,000 | ) | (600 | ) | 400 | (40.00)% | ||||||||||
| Income before income tax provision and noncontrolling interest | 472 | 6,208 | (5,966 | ) | (5,736 | ) | (92.40)% | |||||||||||
| Provision for income tax expense | 182 | 1,374 | (1,296 | ) | (1,192 | ) | (86.75)% | |||||||||||
| Net income | 290 | 4,834 | (4,670 | ) | (4,544 | ) | (94.00)% | |||||||||||
| Noncontrolling interest | (145 | ) | (664 | ) | 191 | 519 | (78.16)% | |||||||||||
| Net income attributable to TowneBank | $ | 145 | $ | 4,170 | $ | (4,479 | ) | $ | (4,025 | ) | (96.52)% | |||||||
| Efficiency ratio (non-GAAP) | 93.96 | % | 78.56 | % | 125.48 | % | 15.40 | % | 19.60 | % | ||||||||
| TOWNEBANK | ||||||||||||||||||
| Insurance Segment Financial Information (unaudited) | ||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||
| Three Months Ended | Increase/(Decrease) | |||||||||||||||||
| March 31, | December 31, | 2023 over 2022 | ||||||||||||||||
| 2023 | 2022 | 2022 | Amount | Percent | ||||||||||||||
| Commission and fee income | ||||||||||||||||||
| Property and casualty | $ | 18,129 | $ | 15,337 | $ | 15,221 | $ | 2,792 | 18.20 | % | ||||||||
| Employee benefits | 4,587 | 4,161 | 3,949 | 426 | 10.24 | % | ||||||||||||
| Specialized benefit services | 159 | 170 | 169 | (11 | ) | (6.47) | % | |||||||||||
| Total commissions and fees | 22,875 | 19,668 | 19,339 | 3,207 | 16.31 | % | ||||||||||||
| Contingency and bonus revenue | 4,369 | 3,404 | 2,033 | 965 | 28.35 | % | ||||||||||||
| Other income | 6 | 33 | 12 | (27 | ) | (81.82) | % | |||||||||||
| Total revenue | 27,250 | 23,105 | 21,384 | 4,145 | 17.94 | % | ||||||||||||
| Employee commission expense | 4,553 | 4,332 | 4,270 | 221 | 5.10 | % | ||||||||||||
| Revenue, net of commission expense | 22,697 | 18,773 | 17,114 | 3,924 | 20.90 | % | ||||||||||||
| Salaries and employee benefits | 11,388 | 9,613 | 9,902 | 1,775 | 18.46 | % | ||||||||||||
| Occupancy | 810 | 770 | 782 | 40 | 5.19 | % | ||||||||||||
| Furniture and equipment | 218 | 220 | 184 | (2 | ) | (0.91) | % | |||||||||||
| Amortization of intangible assets | 1,560 | 1,174 | 1,146 | 386 | 32.88 | % | ||||||||||||
| Other expenses | 1,264 | 1,502 | 1,927 | (238 | ) | (15.85) | % | |||||||||||
| Total operating expenses | 15,240 | 13,279 | 13,941 | 1,961 | 14.77 | % | ||||||||||||
| Income before income tax, corporate allocation and noncontrolling interest | 7,457 | 5,494 | 3,173 | 1,963 | 35.73 | % | ||||||||||||
| Corporate allocation | (600 | ) | (292 | ) | (261 | ) | (308 | ) | 105.48 | % | ||||||||
| Income before income tax provision and noncontrolling interest | 6,857 | 5,202 | 2,912 | 1,655 | 31.81 | % | ||||||||||||
| Provision for income tax expense | 1,766 | 1,339 | 732 | 427 | 31.89 | % | ||||||||||||
| Net income | 5,091 | 3,863 | 2,180 | 1,228 | 31.79 | % | ||||||||||||
| Noncontrolling interest | — | — | — | — | N/M | |||||||||||||
| Net income attributable to TowneBank | $ | 5,091 | $ | 3,863 | $ | 2,180 | $ | 1,228 | 31.79 | % | ||||||||
| Provision for income taxes | 1,766 | 1,339 | 732 | 427 | 31.89 | % | ||||||||||||
| Depreciation, amortization and interest expense | 1,706 | 1,319 | 1,285 | 387 | 29.34 | % | ||||||||||||
| EBITDA (non-GAAP) | $ | 8,563 | $ | 6,521 | $ | 4,197 | $ | 2,042 | 31.31 | % | ||||||||
| Efficiency ratio (non-GAAP) | 60.27 | % | 64.48 | % | 74.76 | % | (4.21) | % | (6.53) | % | ||||||||
| TOWNEBANK | |||||||||||
| Reconciliation of Non-GAAP Financial Measures | |||||||||||
| (dollars in thousands) | |||||||||||
| Three Months Ended | |||||||||||
| March 31, | March 31, | December 31, | |||||||||
| 2023 | 2022 | 2022 | |||||||||
| Return on average assets (GAAP) | 0.95 | % | 1.13 | % | 1.16 | % | |||||
| Impact of excluding average goodwill and other intangibles and amortization | 0.10 | % | 0.10 | % | 0.09 | % | |||||
| Return on average tangible assets (non-GAAP) | 1.05 | % | 1.23 | % | 1.25 | % | |||||
| Return on average equity (GAAP) | 7.99 | % | 9.73 | % | 9.98 | % | |||||
| Impact of excluding average goodwill and other intangibles and amortization | 3.72 | % | 4.18 | % | 4.28 | % | |||||
| Return on average tangible equity (non-GAAP) | 11.71 | % | 13.91 | % | 14.26 | % | |||||
| Return on average common equity (GAAP) | 8.05 | % | 9.81 | % | 10.07 | % | |||||
| Impact of excluding average goodwill and other intangibles and amortization | 3.78 | % | 4.27 | % | 4.37 | % | |||||
| Return on average tangible common equity (non-GAAP) | 11.83 | % | 14.08 | % | 14.44 | % | |||||
| Book value (GAAP) | $ | 26.40 | $ | 25.61 | $ | 25.73 | |||||
| Impact of excluding average goodwill and other intangibles and amortization | (7.36 | ) | (6.94 | ) | (6.89 | ) | |||||
| Tangible book value (non-GAAP) | $ | 19.04 | $ | 18.67 | $ | 18.84 | |||||
| Efficiency ratio (GAAP) | 67.55 | % | 66.13 | % | 63.40 | % | |||||
| Impact of exclusions | (1.91) | % | (1.71) | % | (1.41) | % | |||||
| Efficiency ratio (non-GAAP) | 65.64 | % | 64.42 | % | 61.99 | % | |||||
| Average assets (GAAP) | $ | 16,349,040 | $ | 16,311,998 | $ | 15,929,756 | |||||
| Less: average goodwill and intangible assets | 521,972 | 506,496 | 502,539 | ||||||||
| Average tangible assets (non-GAAP) | $ | 15,827,068 | $ | 15,805,502 | $ | 15,427,217 | |||||
| Average equity (GAAP) | $ | 1,946,002 | $ | 1,900,267 | $ | 1,855,430 | |||||
| Less: average goodwill and intangible assets | 521,972 | 506,496 | 502,539 | ||||||||
| Average tangible equity (non-GAAP) | $ | 1,424,030 | $ | 1,393,771 | $ | 1,352,891 | |||||
| Average common equity (GAAP) | $ | 1,931,063 | $ | 1,884,101 | $ | 1,838,895 | |||||
| Less: average goodwill and intangible assets | 521,972 | 506,496 | 502,539 | ||||||||
| Average tangible common equity (non-GAAP) | $ | 1,409,091 | $ | 1,377,605 | $ | 1,336,356 | |||||
| Net income (GAAP) | $ | 38,333 | $ | 45,586 | $ | 46,685 | |||||
| Amortization of intangibles, net of tax | 2,784 | 2,225 | 1,955 | ||||||||
| Tangible net income (non-GAAP) | $ | 41,117 | $ | 47,811 | $ | 48,640 | |||||
| Net income (GAAP) | $ | 38,333 | $ | 45,586 | $ | 46,685 | |||||
| Provision for credit losses | 11,670 | (1,449 | ) | 6,074 | |||||||
| Provision for income tax | 9,599 | 11,232 | 11,598 | ||||||||
| Other nonrecurring (income) loss | — | — | — | ||||||||
| Pre-provision, pre-tax net revenues (non-GAAP) | $ | 59,602 | $ | 55,369 | $ | 64,357 | |||||
| Noninterest expense (GAAP) | $ | 124,397 | $ | 109,379 | $ | 111,141 | |||||
| Less: amortization of intangibles | 3,524 | 2,817 | 2,475 | ||||||||
| Noninterest expense net of amortization (non-GAAP) | $ | 120,873 | $ | 106,562 | $ | 108,666 | |||||
| TOWNEBANK | ||||||||||||||||||||
| Reconciliation of Non-GAAP Financial Measures | ||||||||||||||||||||
| (dollars in thousands, except per share data) | ||||||||||||||||||||
| Reconciliation of GAAP Earnings to Operating Earnings Excluding Certain Items Affecting Comparability | Three Months Ended | |||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
| 2023 | 2022 | 2022 | 2022 | 2022 | ||||||||||||||||
| Net income (GAAP) | $ | 38,333 | $ | 46,685 | $ | 50,169 | $ | 46,547 | $ | 45,586 | ||||||||||
| Acquisition-related items | ||||||||||||||||||||
| Merger expenses | 5,964 | 339 | 616 | 51 | 59 | |||||||||||||||
| Initial provision for credit losses | 4,008 | — | — | — | — | |||||||||||||||
| Income tax expense (benefit) | (2,003 | ) | (19 | ) | (6 | ) | (1 | ) | (12 | ) | ||||||||||
| Total charges, net of taxes | 7,969 | 320 | 610 | 50 | 47 | |||||||||||||||
| Core operating earnings, excluding certain items affecting comparability (non-GAAP) | $ | 46,302 | $ | 47,005 | $ | 50,779 | $ | 46,597 | $ | 45,633 | ||||||||||
| Weighted average diluted shares | 74,390,614 | 72,724,189 | 72,594,474 | 72,568,886 | 72,562,122 | |||||||||||||||
| Diluted EPS (GAAP) | $ | 0.52 | $ | 0.64 | $ | 0.69 | $ | 0.64 | $ | 0.63 | ||||||||||
| Diluted EPS, excluding certain items affecting comparability (non-GAAP) | $ | 0.62 | $ | 0.65 | $ | 0.70 | $ | 0.64 | $ | 0.63 | ||||||||||
| Average assets | $ | 16,349,040 | $ | 15,929,756 | $ | 16,304,294 | $ | 16,529,810 | $ | 16,311,998 | ||||||||||
| Average tangible equity | $ | 1,424,030 | $ | 1,352,891 | 1,374,574 | $ | 1,374,683 | $ | 1,393,771 | |||||||||||
| Average common tangible equity | $ | 1,409,091 | $ | 1,336,356 | $ | 1,357,845 | $ | 1,357,957 | $ | 1,377,605 | ||||||||||
| Return on average assets, excluding certain items affecting comparability (non-GAAP) | 1.15 | % | 1.17 | % | 1.24 | % | 1.13 | % | 1.13 | % | ||||||||||
| Return on average tangible equity, excluding certain items affecting comparability (non-GAAP) | 13.98 | % | 14.36 | % | 15.26 | % | 14.21 | % | 13.93 | % | ||||||||||
| Return on average common tangible equity, excluding certain items affecting comparability (non-GAAP) | 14.13 | % | 14.54 | % | 15.45 | % | 14.39 | % | 14.09 | % | ||||||||||
| Efficiency ratio, excluding certain items affecting comparability (non-GAAP) | 64.32 | % | 63.20 | % | 62.16 | % | 65.08 | % | 66.09 | % | ||||||||||
