SUFFOLK, Va., April 27, 2020 (GLOBE NEWSWIRE) -- TowneBank (the “Company”) (NASDAQ: TOWN) today reported earnings for the quarter ended March 31, 2020 of $26.38 million, or $0.36 per diluted share, compared to $31.41 million, or $0.44 per diluted share, for the quarter ended March 31, 2019.
“Our Company began 2020 on strong footing with loan demand exceeding expectations. However, traditional performance measures such as growth and profitability were temporarily superseded by challenges that are unprecedented in the history of this country. Our slogan of “Serving Others and Enriching Lives” emerged center stage as we engaged our members, communities and colleagues to understand how we can help them navigate the current environment. Through our participation in the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), we assisted our members with nearly 5,000 loans totaling $1 billion while also providing safe access to our banking offices and providing work at home solutions for a large number of Towne teammates. Our strong liquidity and capital positions enabled us to help our members manage through these difficult times,” said G. Robert Aston, Jr., Executive Chairman.
Highlights for the First Quarter of 2020 Compared to the First Quarter of 2019:
- Total revenues were $137.70 million, an increase of $3.84 million, or 2.87%.
- Loans held for investment increased $678.83 million, or 8.38%, from March 31, 2019, and $364.91 million, or 4.33%, from December 31, 2019, or 17.43% on an annualized basis.
- Total deposits were $9.31 billion, an increase of $0.58 billion, or 6.60%, compared to prior year and $0.04 billion, or 0.40%, from December 31, 2019, or 1.61% on an annualized basis.
- Noninterest bearing deposits increased by 8.77%, to $3.06 billion, representing 32.88% of total deposits. Compared to the linked quarter, noninterest bearing deposits increased 3.70%, or 14.89% on an annualized basis.
- Annualized return on common shareholders' equity was 6.42% and annualized return on average tangible common shareholders' equity was 10.01% (non-GAAP).
- Net interest margin for the quarter was 3.35% and taxable equivalent net interest margin was 3.37% (non-GAAP).
- Effective tax rate of 19.00% in the quarter compared to 20.72% in the first quarter of 2019.
“Now more than ever it is important to know Your Banker; not your Bank. Our style of Hometown Banking was redefined when social distancing and quarantines became daily buzz-words in our vocabulary, workplace and social activities. Under challenging conditions our colleagues are providing uninterrupted services and offering solutions to help businesses and households. We appreciate the trust and confidence of the communities we serve and our stakeholders,” stated J. Morgan Davis, President and Chief Executive Officer.
Quarterly Net Interest Income Compared to the First Quarter of 2019:
- Net interest income was $89.50 million compared to $87.47 million at March 31, 2019.
- Taxable equivalent net interest margin (non-GAAP) was 3.37%, including accretion of 13 basis points, compared to 3.57%, including accretion of 11 basis points, for 2019.
- Average loans held for investment, with an average yield of 4.73%, represented 79.60% of average earning assets at March 31, 2020 compared to an average yield of 5.06% and 80.16% of average earning assets in the first quarter of 2019.
- Total cost of deposits decreased to 0.83% from 0.93% at March 31, 2019.
- Average interest-earning assets totaled $10.74 billion at March 31, 2020 compared to $10.02 billion at March 31, 2019, an increase of 7.22%.
- Average interest-bearing liabilities totaled $7.16 billion, an increase of $0.34 billion from prior year.
Quarterly Provision for Credit Losses:
- Effective January 1, 2020, we adopted the current expected credit loss (CECL) accounting standard, which requires an allowance for loans and unfunded commitments, as well as credit losses for debt securities. The cumulative effect adjustment from the change in accounting policies resulted in an increase in our allowance of $3.01 million for loans and unfunded commitments and $0.23 million for debt securities, with a corresponding decrease in retained earnings (pre-tax).
- Recorded a quarterly provision for credit losses for on-balance sheet loans of $5.76 million compared to $1.44 million one year ago and $3.60 million in the linked quarter. This increase is primarily attributable to forecasted credit weaknesses due to deteriorating economic conditions driven by the current COVID-19 pandemic. Expected loss estimates consider the impacts of decreased economic activity and higher unemployment and the mitigating benefits of government stimulus and industry wide loan modification efforts.
- Net loan charge-offs were $0.56 million compared to $0.23 million one year prior. The ratio of net loan charge-offs to average loans on an annualized basis was 0.03% compared to 0.04% in the linked quarter and 0.01% in the first quarter of 2019.
- Recorded a provision for credit losses on off-balance sheet commitments of $1.10 million.
- Recorded a provision for credit losses on debt securities of $0.16 million.
- The on-balance sheet allowance for loan losses represented 0.73% of total loans compared to 0.69% at December 31, 2019 and 0.66% at March 31, 2019. The allowance for on-balance sheet loan losses was 3.85 times nonperforming loans compared to 3.34 times at December 31, 2019 and 9.36 times at March 31, 2019.
Quarterly Noninterest Income Compared to the First Quarter of 2019:
- Total noninterest income was $48.20 million compared to $46.38 million in 2019, an increase of $1.82 million, or 3.92%. Insurance commissions and other title fees increased $1.31 million in the quarter, while residential mortgage banking income decreased $6.09 million, real estate brokerage and property management income decreased $2.33 million, and service charges on deposit accounts decreased $0.42 million. Also included in noninterest income are net gains on investment securities of $5.00 million as compared to net losses of $0.78 million in the prior year.
- Residential mortgage banking recorded income of $7.42 million compared to $13.51 million in first quarter 2019. Loan volume in the current quarter was $923.20 million, with purchase activity comprising 61.31% of that volume. Loan volume in first quarter 2019 was $513.53 million, with purchase activity of 86.08%. The notable increase in income from loan production between periods, was partially offset by net losses on derivative instruments of $10.89 million for the quarter.
- Total Insurance segment revenue increased 9.42% to $20.24 million in the first quarter due to organic growth and additional income from a third quarter 2019 agency acquisition.
- Property management fee revenue decreased 34.19%, or $2.64 million, as compared to first quarter 2019 due to decreases in reservation levels driven by current travel restrictions related to COVID-19.
- Bank owned life insurance and other noninterest income increased $3.58 million, or 75.23%, as compared to first quarter 2019 due to proceeds from life insurance policies and investment commission income.
Quarterly Noninterest Expense Compared to the First Quarter of 2019:
- Total noninterest expense was $96.89 million compared to $92.12 million in 2019, an increase of $4.77 million, or 5.17%. This reflects increases of $3.01 million in salary and benefits expense, $0.76 million in advertising and marketing, $0.75 million in software expense, $0.39 million in professional fees, $0.27 million in furniture and equipment expense, and a decline in occupancy expense of $0.75 million.
- Market expansion and infrastructure enhancements, that occurred after first quarter 2019, have resulted in generally higher levels of salary and benefits expense, software expense, and professional fees. Advertising and marketing increased due to focused advertising in our new North Carolina markets. The decline in occupancy expense is attributable to one time expenses related to the adoption of the new leasing standard in first quarter 2019.
Quarterly Income Taxes Compared to the First Quarter of 2019:
- Income tax expense was $6.19 million compared to $8.21 million one year prior. This represents an effective tax rate of 19.00% compared to 20.72% in the first quarter of 2019.
Consolidated Balance Sheet Highlights:
- Total assets were $12.62 billion for the quarter ended March 31, 2020, an increase of 5.66%, or 22.51% on an annualized basis, compared to $11.95 billion at December 31, 2019. Total assets increased $1.06 billion, or 9.12%, from $11.57 billion at March 31, 2019. The linked quarter increase was driven primarily by growth in cash and cash equivalents and loans held for investment.
- Loans held for investment increased $0.36 billion, or 4.33%, or 17.43% on an annualized basis, compared to year end 2019.
- Mortgage loans held for sale increased $33.91 million, or 8.09%, over December 31, 2019.
- Total deposits increased $37.08 million, or 0.40%, or 1.61% on an annualized basis, over December 31, 2019.
- Total borrowings increased $0.62 billion, or 80.17%, from December 31, 2019. This increase was primarily attributable to the Company taking actions to shore up liquidity sources in response to the current economic environment.
Investment Securities:
- Total investment securities were $1.35 billion compared to $1.52 billion at December 31, 2019 and $1.20 billion at March 31, 2019. The weighted average duration of the portfolio at March 31, 2020 was 4.31 years. The Company established credit loss reserves related to the HTM and AFS debt securities portfolios of $0.39 million during the quarter. The carrying value of the AFS debt securities portfolio included $20.70 million in net unrealized gains compared to $19.73 million at December 31, 2019. During the first quarter of 2020, we sold $211.70 million in AFS debt securities at a gain of $5.00 million, in order to take advantage of interest rate fluctuations in the market in response to concerns over COVID-19.
Loans and Asset Quality:
- Total loans held for investment were $8.78 billion at March 31, 2020 compared to $8.42 billion at December 31, 2019 and $8.11 billion at March 31, 2019.
- Nonperforming assets were $29.75 million, or 0.24% of total assets, compared to $24.99 million, or 0.22%, at March 31, 2019.
- Nonperforming loans were 0.19% of period end loans.
- Foreclosed property decreased to $13.05 million from $17.07 million at March 31, 2019. The Company sold the remainder of its former bank premises during the first quarter of 2020 for a reduction of $2.22 million compared to March 31, 2019.
- Expected loss estimates are subject to change based on continuing review of models and assumptions, portfolio performance, changes in forecasted macroeconomic conditions and loan mix which could result in material additions to the reserve in future periods.
Deposits and Borrowings:
- Total deposits were $9.31 billion compared to $9.27 billion at December 31, 2019 and $8.73 billion at March 31, 2019.
- Total loans to deposits were 94.37% compared to 90.81% at December 31, 2019 and 92.83% at March 31, 2019.
- Non-interest bearing deposits were 32.88% of total deposits at March 31, 2020 compared to 31.83% at December 31, 2019 and 32.23% at March 31, 2019.
- Total borrowings were $1.39 billion compared to $0.77 billion and $1.03 billion at December 31, 2019 and March 31, 2019, respectively.
Capital:
- Common equity tier 1 capital ratio of 10.98%.
- Tier 1 leverage capital ratio of 10.11%.
- Tier 1 risk-based capital ratio of 11.10%.
- Total risk-based capital ratio of 14.07%.
- Book value was $22.77 compared to $22.58 at December 31, 2019 and $21.40 at March 31, 2019.
- Tangible book value (non-GAAP) was $15.91 compared to $15.69 at December 31, 2019 and $14.46 at March 31, 2019.
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 $12.62 billion as of March 31, 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, 757-638-6780J. Morgan Davis, President and Chief Executive Officer, 757-673-1673
Investor contact:William B. Littreal, Chief Financial Officer, 757-638-6813
| TOWNEBANK | ||||||||||||||||||||
| Selected Financial Highlights (unaudited) | ||||||||||||||||||||
| (dollars in thousands, except per share data) | ||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
| 2020 | 2019 | 2019 | 2019 | 2019 | ||||||||||||||||
| Income and Performance Ratios: | ||||||||||||||||||||
| Total Revenue | $ | 137,696 | $ | 139,671 | $ | 145,879 | $ | 144,537 | $ | 133,854 | ||||||||||
| Net income | 27,605 | 35,948 | 39,400 | 36,242 | 32,082 | |||||||||||||||
| Net income attributable to TowneBank | 26,384 | 35,075 | 37,659 | 34,638 | 31,409 | |||||||||||||||
| Net income per common share - diluted | 0.36 | 0.49 | 0.52 | 0.48 | 0.44 | |||||||||||||||
| Book value per common share | 22.77 | 22.58 | 22.38 | 21.95 | 21.4 | |||||||||||||||
| Book value per common share - tangible (non-GAAP) | 15.91 | 15.69 | 15.44 | 15.05 | 14.46 | |||||||||||||||
| Return on average assets | 0.88 | % | 1.16 | % | 1.26 | % | 1.2 | % | 1.14 | % | ||||||||||
| Return on average assets - tangible (non-GAAP) | 1 | % | 1.3 | % | 1.4 | % | 1.35 | % | 1.29 | % | ||||||||||
| Return on average equity | 6.37 | % | 8.44 | % | 9.22 | % | 8.83 | % | 8.24 | % | ||||||||||
| Return on average equity - tangible (non-GAAP) | 9.91 | % | 12.97 | % | 14.2 | % | 13.9 | % | 13.24 | % | ||||||||||
| Return on average common equity | 6.42 | % | 8.51 | % | 9.29 | % | 8.89 | % | 8.3 | % | ||||||||||
| Return on average common equity - tangible (non-GAAP) | 10.01 | % | 13.12 | % | 14.36 | % | 14.05 | % | 13.39 | % | ||||||||||
| Noninterest income as a percentage of total revenue | 35 | % | 35.59 | % | 37.55 | % | 37.86 | % | 34.65 | % | ||||||||||
| Regulatory Capital Ratios (1): | ||||||||||||||||||||
| Common equity tier 1 | 10.98 | % | 11.46 | % | 11.52 | % | 11.58 | % | 11.49 | % | ||||||||||
| Tier 1 | 11.1 | % | 11.49 | % | 11.55 | % | 11.62 | % | 11.52 | % | ||||||||||
| Total | 14.07 | % | 14.58 | % | 14.7 | % | 14.85 | % | 14.79 | % | ||||||||||
| Tier 1 leverage ratio | 10.11 | % | 9.95 | % | 9.84 | % | 9.86 | % | 9.92 | % | ||||||||||
| Asset Quality: | ||||||||||||||||||||
| Allowance for credit losses on loans to nonperforming loans | 3.85x | 3.34x | 3.95x | 3.00x | 9.36x | |||||||||||||||
| Allowance for credit losses on loans to period end loans | 0.73 | % | 0.69 | % | 0.68 | % | 0.67 | % | 0.66 | % | ||||||||||
| Nonperforming loans to period end loans | 0.19 | % | 0.21 | % | 0.17 | % | 0.22 | % | 0.07 | % | ||||||||||
| Nonperforming assets to period end assets | 0.24 | % | 0.27 | % | 0.26 | % | 0.29 | % | 0.22 | % | ||||||||||
| Net charge-offs to average loans (annualized) | 0.03 | % | 0.04 | % | 0.03 | % | 0.08 | % | 0.01 | % | ||||||||||
| Nonperforming loans | $ | 16,700 | $ | 17,437 | $ | 14,016 | $ | 18,202 | $ | 5,696 | ||||||||||
| Former bank premises | — | 1,521 | 1,510 | 1,510 | 2,223 | |||||||||||||||
| Foreclosed property | 13,053 | 13,839 | 15,517 | 14,517 | 17,071 | |||||||||||||||
| Total nonperforming assets | $ | 29,753 | $ | 32,797 | $ | 31,043 | $ | 34,229 | $ | 24,990 | ||||||||||
| Loans past due 90 days and still accruing interest | $ | 91 | $ | 309 | $ | 636 | $ | 415 | $ | 117 | ||||||||||
| Allowance for credit losses on loans | $ | 64,372 | $ | 58,234 | $ | 55,428 | $ | 54,527 | $ | 53,303 | ||||||||||
| Mortgage Banking: | ||||||||||||||||||||
| Loans originated, mortgage | $ | 718,681 | $ | 628,279 | $ | 703,922 | $ | 574,638 | $ | 366,643 | ||||||||||
| Loans originated, joint venture | 204,522 | 231,879 | 259,742 | 246,491 | 146,884 | |||||||||||||||
| Total loans originated | $ | 923,203 | $ | 860,158 | $ | 963,664 | $ | 821,129 | $ | 513,527 | ||||||||||
| Number of loans originated | 3,025 | 2,984 | 3,360 | 3,121 | 1,977 | |||||||||||||||
| Number of originators | 221 | 217 | 225 | 229 | 240 | |||||||||||||||
| Purchase % | 61.31 | % | 70.32 | % | 68.83 | % | 84.97 | % | 86.08 | % | ||||||||||
| Loans sold | $ | 809,834 | $ | 879,910 | $ | 925,058 | $ | 694,832 | $ | 473,068 | ||||||||||
| Gross realized gain on sales and fees as a % of loans originated | 1.8 | % | 3.38 | % | 3.45 | % | 3.43 | % | 3.58 | % | ||||||||||
| Other Ratios: | ||||||||||||||||||||
| Net interest margin | 3.35 | % | 3.33 | % | 3.41 | % | 3.49 | % | 3.54 | % | ||||||||||
| Net interest margin-fully tax equivalent (non-GAAP) | 3.37 | % | 3.35 | % | 3.43 | % | 3.52 | % | 3.57 | % | ||||||||||
| Average earning assets/total average assets | 89.15 | % | 89.57 | % | 89.53 | % | 89.46 | % | 89.5 | % | ||||||||||
| Average loans/average deposits | 92.99 | % | 88.41 | % | 87.63 | % | 91.6 | % | 95.83 | % | ||||||||||
| Average noninterest deposits/total average deposits | 32.21 | % | 32.14 | % | 31.82 | % | 31.63 | % | 31.39 | % | ||||||||||
| Period end equity/period end total assets | 13.19 | % | 13.84 | % | 13.63 | % | 13.45 | % | 13.53 | % | ||||||||||
| Efficiency ratio | 73.02 | % | 66.11 | % | 66.66 | % | 66.8 | % | 68.43 | % | ||||||||||
| (1) Current reporting period regulatory capital ratios are preliminary | ||||||||||||||||||||
| TOWNEBANK | |||||||||||||||||||||||||||||||||||||||||||||
| Selected Data (unaudited) | |||||||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||
| Investment Securities | % Change | ||||||||||||||||||||||||||||||||||||||||||||
| Q1 | Q1 | Q4 | Q1 20 vs. | Q1 20 vs. | |||||||||||||||||||||||||||||||||||||||||
| Available-for-sale securities, at fair value | 2020 | 2019 | 2019 | Q1 19 | Q4 19 | ||||||||||||||||||||||||||||||||||||||||
| U.S. agency securities | $ | 121,857 | $ | 260,152 | $ | 129,038 | (53.16 | )% | (5.57 | )% | |||||||||||||||||||||||||||||||||||
| U.S. Treasury notes | 1,014 | 2,229 | 1,000 | (54.51 | )% | 1.40 | % | ||||||||||||||||||||||||||||||||||||||
| Municipal securities | 266,489 | 107,278 | 223,106 | 148.41 | % | 19.45 | % | ||||||||||||||||||||||||||||||||||||||
| Trust preferred and other corporate securities | 59,606 | 35,003 | 53,367 | 70.29 | % | 11.69 | % | ||||||||||||||||||||||||||||||||||||||
| Mortgage-backed securities issued by GSE and GNMA | 799,713 | 695,115 | 1,034,797 | 15.05 | % | (22.72 | )% | ||||||||||||||||||||||||||||||||||||||
| Allowance for credit losses | (259 | ) | n/a | n/a | n/a | n/a | |||||||||||||||||||||||||||||||||||||||
| Total | $ | 1,248,420 | $ | 1,099,777 | $ | 1,441,308 | 13.52 | % | (13.38 | )% | |||||||||||||||||||||||||||||||||||
| Gross unrealized gains (losses) reflected in financial statements | |||||||||||||||||||||||||||||||||||||||||||||
| Total gross unrealized gains | $ | 30,545 | $ | 6,736 | $ | 23,950 | 353.46 | % | 27.54 | % | |||||||||||||||||||||||||||||||||||
| Total gross unrealized losses | (9,848 | ) | (8,955 | ) | (4,215 | ) | 9.97 | % | 133.64 | % | |||||||||||||||||||||||||||||||||||
| Net unrealized gains (losses) and other adjustments on AFS securities | $ | 20,697 | $ | (2,219 | ) | $ | 19,735 | ||||||||||||||||||||||||||||||||||||||
| Held-to-maturity securities, at amortized cost | |||||||||||||||||||||||||||||||||||||||||||||
| Municipal securities | $ | 28,852 | $ | 34,472 | $ | 29,167 | (16.30 | )% | (1.08 | )% | |||||||||||||||||||||||||||||||||||
| Trust preferred corporate securities | 2,357 | 500 | 2,369 | 371.40 | % | (0.51 | )% | ||||||||||||||||||||||||||||||||||||||
| Mortgage-backed securities issued by GSE and GNMA | 11,222 | 14,715 | 12,152 | (23.74 | )% | (7.65 | )% | ||||||||||||||||||||||||||||||||||||||
| Less: Allowance for credit losses | (133 | ) | n/a | n/a | n/a | n/a | |||||||||||||||||||||||||||||||||||||||
| Total | $ | 42,298 | $ | 49,687 | $ | 43,688 | (14.87 | )% | (3.18 | )% | |||||||||||||||||||||||||||||||||||
| Gross unrealized gains (losses) not reflected in financial statements | |||||||||||||||||||||||||||||||||||||||||||||
| Total gross unrealized gains | $ | 964 | $ | 1,445 | $ | 1,520 | (33.29 | )% | (36.58 | )% | |||||||||||||||||||||||||||||||||||
| Total gross unrealized losses | — | (410 | ) | (37 | ) | (100.00 | )% | (100.00 | )% | ||||||||||||||||||||||||||||||||||||
| Net unrealized gains (losses) in HTM securities | $ | 964 | $ | 1,035 | $ | 1,483 | |||||||||||||||||||||||||||||||||||||||
| Loans Held For Investment | % Change | ||||||||||||||||||||||||||||||||||||||||||||
| Q1 | Q1 | Q4 | Q1 20 vs. | Q1 20 vs. | |||||||||||||||||||||||||||||||||||||||||
| 2020 | 2019 | 2019 | Q1 19 | Q4 19 | |||||||||||||||||||||||||||||||||||||||||
| Real estate - construction and development | $ | 1,060,834 | $ | 1,111,360 | $ | 1,120,533 | (4.55 | )% | (5.33 | )% | |||||||||||||||||||||||||||||||||||
| Commercial real estate - non owner occupied | 2,305,971 | 1,951,292 | 2,183,232 | 18.18 | % | 5.62 | % | ||||||||||||||||||||||||||||||||||||||
| Commercial real estate - owner occupied | 1,398,216 | 1,279,039 | 1,329,144 | 9.32 | % | 5.20 | % | ||||||||||||||||||||||||||||||||||||||
| Real estate - multifamily | 283,514 | 255,649 | 243,041 | 10.90 | % | 16.65 | % | ||||||||||||||||||||||||||||||||||||||
| Real estate - residential 1-4 family and HELOC | 1,693,562 | 1,637,579 | 1,653,084 | 3.42 | % | 2.45 | % | ||||||||||||||||||||||||||||||||||||||
| Commercial and industrial business | 1,636,244 | 1,547,623 | 1,574,275 | 5.73 | % | 3.94 | % | ||||||||||||||||||||||||||||||||||||||
| Consumer and other loans | 405,854 | 322,828 | 315,979 | 25.72 | % | 28.44 | % | ||||||||||||||||||||||||||||||||||||||
| Total | $ | 8,784,195 | $ | 8,105,370 | $ | 8,419,288 | 8.38 | % | 4.33 | % | |||||||||||||||||||||||||||||||||||
| Deposits | % Change | ||||||||||||||||||||||||||||||||||||||||||||
| Q1 | Q1 | Q4 | Q1 20 vs. | Q1 20 vs. | |||||||||||||||||||||||||||||||||||||||||
| 2020 | 2019 | 2019 | Q1 19 | Q4 19 | |||||||||||||||||||||||||||||||||||||||||
| Noninterest-bearing demand | $ | 3,060,515 | $ | 2,813,857 | $ | 2,951,225 | 8.77 | % | 3.70 | % | |||||||||||||||||||||||||||||||||||
| Interest-bearing: | |||||||||||||||||||||||||||||||||||||||||||||
| Demand and money market accounts | 3,573,926 | 3,290,907 | 3,586,364 | 8.60 | % | (0.35 | )% | ||||||||||||||||||||||||||||||||||||||
| Savings | 280,807 | 285,790 | 276,205 | (1.74 | )% | 1.67 | % | ||||||||||||||||||||||||||||||||||||||
| Certificates of deposits | 2,392,744 | 2,341,134 | 2,457,123 | 2.20 | % | (2.62 | )% | ||||||||||||||||||||||||||||||||||||||
| Total | $ | 9,307,992 | $ | 8,731,688 | $ | 9,270,917 | 6.60 | % | 0.40 | % | |||||||||||||||||||||||||||||||||||
| TOWNEBANK | ||||||||||||||||||||||||||||||||
| Average Balances, Yields and Rate Paid (unaudited) | ||||||||||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||||||||
| Three Months Ended | Three Months Ended | Three Months Ended | ||||||||||||||||||||||||||||||
| March 31, 2020 | December 31, 2019 | March 31, 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 | $ | 8,550,216 | $ | 100,566 | 4.73 | % | $ | 8,283,388 | $ | 100,504 | 4.81 | % | $ | 8,030,994 | $ | 100,146 | 5.06 | % | ||||||||||||||
| and deferred costs), excluding | ||||||||||||||||||||||||||||||||
| nonaccrual loans | ||||||||||||||||||||||||||||||||
| Taxable investment securities | 1,356,411 | 9,211 | 2.72 | % | 1,331,175 | 9,179 | 2.76 | % | 1,036,645 | 7,529 | 2.91 | % | ||||||||||||||||||||
| Tax-exempt investment securities | 128,204 | 861 | 2.69 | % | 118,298 | 908 | 3.07 | % | 79,310 | 765 | 3.86 | % | ||||||||||||||||||||
| Total securities | 1,484,615 | 10,072 | 2.71 | % | 1,449,473 | 10,087 | 2.78 | % | 1,115,955 | 8,294 | 2.97 | % | ||||||||||||||||||||
| Interest-bearing deposits | 373,984 | 1,102 | 1.19 | % | 519,737 | 2,067 | 1.58 | % | 693,365 | 3,998 | 2.34 | % | ||||||||||||||||||||
| Loans held for sale | 333,070 | 2,988 | 3.59 | % | 469,725 | 4,413 | 3.76 | % | 178,475 | 2,003 | 4.49 | % | ||||||||||||||||||||
| Total earning assets | 10,741,885 | 114,728 | 4.3 | % | 10,722,323 | 117,071 | 4.33 | % | 10,018,789 | 114,441 | 4.63 | % | ||||||||||||||||||||
| Less: allowance for credit losses | (55,331 | ) | (56,766 | ) | (52,844 | ) | ||||||||||||||||||||||||||
| Total nonearning assets | 1,362,769 | 1,305,036 | 1,228,808 | |||||||||||||||||||||||||||||
| Total assets | $ | 12,049,323 | $ | 11,970,593 | $ | 11,194,753 | ||||||||||||||||||||||||||
| Liabilities and Equity: | ||||||||||||||||||||||||||||||||
| Interest-bearing deposits | ||||||||||||||||||||||||||||||||
| Demand and money market | $ | 3,521,707 | $ | 5,319 | 0.61 | % | $ | 3,533,912 | $ | 6,421 | 0.72 | % | $ | 3,174,157 | $ | 6,240 | 0.8 | % | ||||||||||||||
| Savings | 276,947 | 593 | 0.86 | % | 278,910 | 638 | 0.91 | % | 285,499 | 1,027 | 1.46 | % | ||||||||||||||||||||
| Certificates of deposit | 2,434,098 | 13,150 | 2.17 | % | 2,544,845 | 14,685 | 2.29 | % | 2,290,056 | 11,907 | 2.11 | % | ||||||||||||||||||||
| Total interest-bearing deposits | 6,232,752 | 19,062 | 1.23 | % | 6,357,667 | 21,744 | 1.36 | % | 5,749,712 | 19,174 | 1.35 | % | ||||||||||||||||||||
| Borrowings | 679,745 | 2,581 | 1.5 | % | 454,621 | 1,810 | 1.56 | % | 821,889 | 4,221 | 2.05 | % | ||||||||||||||||||||
| Subordinated debt, net | 248,510 | 2,962 | 4.77 | % | 248,361 | 2,962 | 4.77 | % | 247,913 | 2,962 | 4.78 | % | ||||||||||||||||||||
| Total interest-bearing liabilities | 7,161,007 | 24,605 | 1.38 | % | 7,060,649 | 26,516 | 1.49 | % | 6,819,514 | 26,357 | 1.57 | % | ||||||||||||||||||||
| Demand deposits | 2,962,110 | 3,011,688 | 2,630,813 | |||||||||||||||||||||||||||||
| Other noninterest-bearing liabilities | 260,500 | 250,327 | 198,527 | |||||||||||||||||||||||||||||
| Total liabilities | 10,383,617 | 10,322,664 | 9,648,854 | |||||||||||||||||||||||||||||
| Shareholders’ equity | 1,665,706 | 1,647,929 | 1,545,899 | |||||||||||||||||||||||||||||
| Total liabilities and equity | $ | 12,049,323 | $ | 11,970,593 | $ | 11,194,753 | ||||||||||||||||||||||||||
| Net interest income (tax-equivalent basis) | $ | 90,123 | $ | 90,555 | $ | 88,084 | ||||||||||||||||||||||||||
| Reconcilement of Non-GAAP Financial Measures | ||||||||||||||||||||||||||||||||
| Tax-equivalent basis adjustment | (627 | ) | (596 | ) | (611 | ) | ||||||||||||||||||||||||||
| Net interest income (GAAP) | $ | 89,496 | $ | 89,959 | $ | 87,473 | ||||||||||||||||||||||||||
| Interest rate spread (1)(3) | 2.92 | % | 2.84 | % | 3.06 | % | ||||||||||||||||||||||||||
| Interest expense as a percent of average earning assets | 0.92 | % | 0.98 | % | 1.07 | % | ||||||||||||||||||||||||||
| Net interest margin (tax equivalent basis) (2)(3) | 3.37 | % | 3.35 | % | 3.57 | % | ||||||||||||||||||||||||||
| Total cost of deposits | 0.83 | % | 0.92 | % | 0.93 | % | ||||||||||||||||||||||||||
(1) Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities. Fully tax equivalent.(2) Net interest margin is net interest income expressed as a percentage of average earning assets. Fully tax equivalent.(3) Non-GAAP.
| TOWNEBANK | |||||||
| Consolidated Balance Sheets | |||||||
| (dollars in thousands, except share data) | |||||||
| March 31, | December 31, | ||||||
| 2020 | 2019 | ||||||
| (unaudited) | (audited) | ||||||
| ASSETS | |||||||
| Cash and due from banks | $ | 108,929 | $ | 97,593 | |||
| Interest-bearing deposits at FRB - Richmond | 753,643 | 322,505 | |||||
| Interest-bearing deposits in financial institutions | 23,564 | 22,518 | |||||
| Total Cash and Cash Equivalents | 886,136 | 442,616 | |||||
| Securities available for sale, at fair value (amortized cost $1,227,982, allowance for credit losses of $259) (1) | 1,248,420 | 1,441,308 | |||||
| Securities held to maturity, at amortized cost (fair value $43,395 )(1) | 42,431 | 43,688 | |||||
| Less: allowance for credit losses | (133 | ) | — | ||||
| Securities held to maturity, net of allowance for credit losses | 42,298 | 43,688 | |||||
| Other equity securities | 6,462 | 6,462 | |||||
| FHLB stock | 52,042 | 30,094 | |||||
| Total Securities | 1,349,222 | 1,521,552 | |||||
| Mortgage loans held for sale | 453,143 | 419,233 | |||||
| Loans, net of unearned income and deferred costs | 8,784,195 | 8,419,288 | |||||
| Less: allowance for credit losses | (64,372 | ) | (58,234 | ) | |||
| Net Loans | 8,719,823 | 8,361,054 | |||||
| Premises and equipment, net | 236,735 | 231,806 | |||||
| Goodwill | 446,725 | 446,816 | |||||
| Other intangible assets, net | 51,448 | 54,399 | |||||
| BOLI | 240,924 | 243,062 | |||||
| Other assets | 239,670 | 227,125 | |||||
| TOTAL ASSETS | $ | 12,623,826 | $ | 11,947,663 | |||
| LIABILITIES AND EQUITY | |||||||
| Deposits: | |||||||
| Noninterest-bearing demand | $ | 3,060,515 | $ | 2,951,225 | |||
| Interest-bearing: | |||||||
| Demand and money market accounts | 3,573,926 | 3,586,364 | |||||
| Savings | 280,807 | 276,205 | |||||
| Certificates of deposit | 2,392,744 | 2,457,123 | |||||
| Total Deposits | 9,307,992 | 9,270,917 | |||||
| Advances from the FHLB | 971,527 | 471,687 | |||||
| Subordinated debt, net | 248,607 | 248,458 | |||||
| Repurchase agreements and other borrowings | 171,762 | 52,391 | |||||
| Total Borrowings | 1,391,896 | 772,536 | |||||
| Other liabilities | 258,306 | 250,516 | |||||
| TOTAL LIABILITIES | 10,958,194 | 10,293,969 | |||||
| Preferred stock | |||||||
| Authorized and unissued shares - 2,000,000 | — | — | |||||
| Common stock, $1.667 par: 150,000,000 shares authorized | |||||||
| 72,619,938 and 72,469,682 shares issued at | |||||||
| March 31, 2020 and December 31, 2019, respectively | 121,057 | 121,107 | |||||
| Capital surplus | 1,041,870 | 1,041,160 | |||||
| Retained earnings | 477,972 | 467,186 | |||||
| Common stock issued to deferred compensation trust, at cost | |||||||
| 811,419 and 818,578 shares at | |||||||
| March 31, 2020 and December 31, 2019, respectively | (15,562 | ) | (15,555 | ) | |||
| Deferred compensation trust | 15,562 | 15,555 | |||||
| Accumulated other comprehensive income (loss) | 12,301 | 11,302 | |||||
| TOTAL SHAREHOLDERS’ EQUITY | 1,653,200 | 1,640,755 | |||||
| Noncontrolling interest | 12,432 | 12,939 | |||||
| TOTAL EQUITY | 1,665,632 | 1,653,694 | |||||
| TOTAL LIABILITIES AND EQUITY | $ | 12,623,826 | $ | 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 | |||||||
| March 31, | |||||||
| 2020 | 2019 | ||||||
| INTEREST INCOME: | |||||||
| Loans, including fees | $ | 100,062 | $ | 99,695 | |||
| Investment securities | 9,949 | 8,134 | |||||
| Interest-bearing deposits in financial institutions and federal funds sold | 1,102 | 3,998 | |||||
| Mortgage loans held for sale | 2,988 | 2,003 | |||||
| Total interest income | 114,101 | 113,830 | |||||
| INTEREST EXPENSE: | |||||||
| Deposits | 19,062 | 19,174 | |||||
| Advances from the FHLB | 2,492 | 4,153 | |||||
| Subordinated debt, net | 2,962 | 2,962 | |||||
| Repurchase agreements and other borrowings | 89 | 68 | |||||
| Total interest expense | 24,605 | 26,357 | |||||
| Net interest income | 89,496 | 87,473 | |||||
| PROVISION FOR CREDIT LOSSES | 7,016 | 1,438 | |||||
| Net interest income after provision for credit losses | 82,480 | 86,035 | |||||
| NONINTEREST INCOME: | |||||||
| Residential mortgage banking income, net | 7,416 | 13,508 | |||||
| Insurance commissions and other title fees and income, net | 16,893 | 15,582 | |||||
| Real estate brokerage and property management income, net | 6,938 | 9,268 | |||||
| Service charges on deposit accounts | 2,440 | 2,861 | |||||
| Credit card merchant fees, net | 1,179 | 1,183 | |||||
| BOLI | 3,105 | 1,598 | |||||
| Other income | 5,227 | 3,157 | |||||
| Net gain/(loss) on investment securities | 5,002 | (776 | ) | ||||
| Total noninterest income | 48,200 | 46,381 | |||||
| NONINTEREST EXPENSE: | |||||||
| Salaries and employee benefits | 55,867 | 52,860 | |||||
| Occupancy expense | 7,502 | 8,251 | |||||
| Furniture and equipment | 3,640 | 3,371 | |||||
| Amortization - intangibles | 2,950 | 3,192 | |||||
| Software expense | 3,492 | 2,745 | |||||
| Data processing | 2,791 | 3,166 | |||||
| Professional fees | 3,067 | 2,679 | |||||
| Advertising and marketing | 3,584 | 2,829 | |||||
| Other expenses | 13,995 | 13,030 | |||||
| Total noninterest expense | 96,888 | 92,123 | |||||
| Income before income tax expense and noncontrolling interest | 33,792 | 40,293 | |||||
| Provision for income tax expense | 6,187 | 8,211 | |||||
| Net income | $ | 27,605 | $ | 32,082 | |||
| Net income attributable to noncontrolling interest | (1,221 | ) | (673 | ) | |||
| Net income attributable to TowneBank | $ | 26,384 | $ | 31,409 | |||
| Per common share information | |||||||
| Basic earnings | $ | 0.37 | $ | 0.44 | |||
| Diluted earnings | $ | 0.36 | $ | 0.44 | |||
| Cash dividends declared | $ | 0.18 | $ | 0.16 | |||
| TOWNEBANK | |||||||||||||||||||
| Consolidated Balance Sheets - Five Quarter Trend | |||||||||||||||||||
| (dollars in thousands, except share data) | |||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
| 2020 | 2019 | 2019 | 2019 | 2019 | |||||||||||||||
| (unaudited) | (audited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||||
| ASSETS | |||||||||||||||||||
| Cash and due from banks | $ | 108,929 | $ | 97,593 | $ | 124,439 | $ | 110,580 | $ | 104,091 | |||||||||
| Interest-bearing deposits at FRB - Richmond | 753,643 | 322,505 | 675,288 | 834,505 | 775,208 | ||||||||||||||
| Interest-bearing deposits in financial institutions | 23,564 | 22,518 | 21,663 | 21,527 | 21,001 | ||||||||||||||
| Total Cash and Cash Equivalents | 886,136 | 442,616 | 821,390 | 966,612 | 900,300 | ||||||||||||||
| Securities available for sale, at fair value (amortized cost $1,227,982, allowance for credit losses of $259) (1) | 1,248,420 | 1,441,308 | 1,337,395 | 1,260,821 | 1,099,777 | ||||||||||||||
| Securities held to maturity, at amortized cost (fair value $43,395 )(1) | 42,431 | 43,688 | 44,494 | 50,574 | 49,687 | ||||||||||||||
| Less: allowance for credit losses | (133 | ) | — | — | — | — | |||||||||||||
| Securities held to maturity, net of allowance for credit losses | 42,298 | 43,688 | 44,494 | 50,574 | 49,687 | ||||||||||||||
| Other equity securities | 6,462 | 6,462 | 5,697 | 5,396 | 5,022 | ||||||||||||||
| FHLB stock | 52,042 | 30,094 | 26,282 | 32,657 | 41,464 | ||||||||||||||
| Total Securities | 1,349,222 | 1,521,552 | 1,413,868 | 1,349,448 | 1,195,950 | ||||||||||||||
| Mortgage loans held for sale | 453,143 | 419,233 | 456,719 | 362,773 | 247,021 | ||||||||||||||
| Loans, net of unearned income and deferred costs | 8,784,195 | 8,419,288 | 8,182,829 | 8,126,729 | 8,105,370 | ||||||||||||||
| Less: allowance for credit losses | (64,372 | ) | (58,234 | ) | (55,428 | ) | (54,527 | ) | (53,303 | ) | |||||||||
| Net Loans | 8,719,823 | 8,361,054 | 8,127,401 | 8,072,202 | 8,052,067 | ||||||||||||||
| Premises and equipment, net | 236,735 | 231,806 | 231,060 | 230,177 | 227,458 | ||||||||||||||
| Goodwill | 446,725 | 446,816 | 446,423 | 442,881 | 442,881 | ||||||||||||||
| Other intangible assets, net | 51,448 | 54,399 | 57,404 | 58,391 | 61,333 | ||||||||||||||
| BOLI | 240,924 | 243,062 | 241,652 | 240,621 | 238,977 | ||||||||||||||
| Other assets | 239,670 | 227,125 | 225,374 | 219,375 | 202,276 | ||||||||||||||
| TOTAL ASSETS | $ | 12,623,826 | $ | 11,947,663 | $ | 12,021,291 | $ | 11,942,480 | $ | 11,568,263 | |||||||||
| LIABILITIES AND EQUITY | |||||||||||||||||||
| Deposits: | |||||||||||||||||||
| Noninterest-bearing demand | $ | 3,060,515 | $ | 2,951,225 | $ | 3,030,505 | $ | 2,950,615 | $ | 2,813,857 | |||||||||
| Interest-bearing: | |||||||||||||||||||
| Demand and money market accounts | 3,573,926 | 3,586,364 | 3,534,252 | 3,409,322 | 3,290,907 | ||||||||||||||
| Savings | 280,807 | 276,205 | 280,552 | 277,495 | 285,790 | ||||||||||||||
| Certificates of deposit | 2,392,744 | 2,457,123 | 2,592,705 | 2,631,386 | 2,341,134 | ||||||||||||||
| Total Deposits | 9,307,992 | 9,270,917 | 9,438,014 | 9,268,818 | 8,731,688 | ||||||||||||||
| Advances from the FHLB | 971,527 | 471,687 | 381,846 | 532,004 | 739,160 | ||||||||||||||
| Subordinated debt, net | 248,607 | 248,458 | 248,309 | 248,160 | 248,010 | ||||||||||||||
| Repurchase agreements and other borrowings | 171,762 | 52,391 | 42,971 | 56,355 | 44,775 | ||||||||||||||
| Total Borrowings | 1,391,896 | 772,536 | 673,126 | 836,519 | 1,031,945 | ||||||||||||||
| Other liabilities | 258,306 | 250,516 | 271,617 | 230,691 | 238,974 | ||||||||||||||
| TOTAL LIABILITIES | 10,958,194 | 10,293,969 | 10,382,757 | 10,336,028 | 10,002,607 | ||||||||||||||
| Preferred stock | |||||||||||||||||||
| Authorized shares - 2,000,000 | — | — | — | — | — | ||||||||||||||
| Common stock, $1.667 par value | 121,057 | 121,107 | 121,080 | 121,038 | 121,047 | ||||||||||||||
| Capital surplus | 1,041,870 | 1,041,160 | 1,039,156 | 1,036,982 | 1,035,563 | ||||||||||||||
| Retained earnings | 477,972 | 467,186 | 445,186 | 420,600 | 399,030 | ||||||||||||||
| Common stock issued to deferred compensation | |||||||||||||||||||
| trust, at cost | (15,562 | ) | (15,555 | ) | (15,317 | ) | (15,160 | ) | (14,067 | ) | |||||||||
| Deferred compensation trust | 15,562 | 15,555 | 15,317 | 15,160 | 14,067 | ||||||||||||||
| Accumulated other comprehensive income (loss) | 12,301 | 11,302 | 19,958 | 15,143 | (1,792 | ) | |||||||||||||
| TOTAL SHAREHOLDERS’ EQUITY | 1,653,200 | 1,640,755 | 1,625,380 | 1,593,763 | 1,553,848 | ||||||||||||||
| Noncontrolling interest | 12,432 | 12,939 | 13,154 | 12,689 | 11,808 | ||||||||||||||
| TOTAL EQUITY | 1,665,632 | 1,653,694 | 1,638,534 | 1,606,452 | 1,565,656 | ||||||||||||||
| TOTAL LIABILITIES AND EQUITY | $ | 12,623,826 | $ | 11,947,663 | $ | 12,021,291 | $ | 11,942,480 | $ | 11,568,263 | |||||||||
| (1) For 2020, disclosures are presented in compliance with ASC 326. | |||||||||||||||||||
| 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, | ||||||||||||||||
| 2020 | 2019 | 2019 | 2019 | 2019 | ||||||||||||||||
| INTEREST INCOME: | ||||||||||||||||||||
| Loans, including fees | $ | 100,062 | $ | 100,059 | $ | 102,047 | $ | 101,874 | $ | 99,695 | ||||||||||
| Investment securities | 9,949 | 9,936 | 9,889 | 8,987 | 8,134 | |||||||||||||||
| Interest-bearing deposits in financial institutions and federal funds sold | 1,102 | 2,067 | 3,745 | 4,015 | 3,998 | |||||||||||||||
| Mortgage loans held for sale | 2,988 | 4,413 | 3,956 | 3,007 | 2,003 | |||||||||||||||
| Total interest income | 114,101 | 116,475 | 119,637 | 117,883 | 113,830 | |||||||||||||||
| INTEREST EXPENSE: | ||||||||||||||||||||
| Deposits | 19,062 | 21,744 | 23,552 | 21,784 | 19,174 | |||||||||||||||
| Advances from the FHLB | 2,492 | 1,730 | 1,935 | 3,201 | 4,153 | |||||||||||||||
| Subordinated debt | 2,962 | 2,962 | 2,962 | 2,962 | 2,962 | |||||||||||||||
| Repurchase agreements and other borrowings | 89 | 80 | 85 | 117 | 68 | |||||||||||||||
| Total interest expense | 24,605 | 26,516 | 28,534 | 28,064 | 26,357 | |||||||||||||||
| Net interest income | 89,496 | 89,959 | 91,103 | 89,819 | 87,473 | |||||||||||||||
| PROVISION FOR CREDIT LOSSES | 7,016 | 3,601 | 1,508 | 2,824 | 1,438 | |||||||||||||||
| Net interest income after provision for credit losses | 82,480 | 86,358 | 89,595 | 86,995 | 86,035 | |||||||||||||||
| NONINTEREST INCOME: | ||||||||||||||||||||
| Residential mortgage banking income, net | 7,416 | 15,884 | 18,855 | 18,565 | 13,508 | |||||||||||||||
| Insurance commissions and other title fees and income, net | 16,893 | 15,001 | 16,681 | 17,213 | 15,582 | |||||||||||||||
| Real estate brokerage and property management income, net | 6,938 | 6,737 | 9,444 | 8,843 | 9,268 | |||||||||||||||
| Service charges on deposit accounts | 2,440 | 2,245 | 2,253 | 3,185 | 2,861 | |||||||||||||||
| Credit card merchant fees, net | 1,179 | 1,389 | 1,514 | 660 | 1,183 | |||||||||||||||
| BOLI | 3,105 | 3,865 | 2,117 | 1,635 | 1,598 | |||||||||||||||
| Other income | 5,227 | 4,591 | 3,981 | 4,617 | 3,157 | |||||||||||||||
| Net gain/(loss) on investment securities | 5,002 | — | (69 | ) | — | (776 | ) | |||||||||||||
| Total noninterest income | 48,200 | 49,712 | 54,776 | 54,718 | 46,381 | |||||||||||||||
| NONINTEREST EXPENSE: | ||||||||||||||||||||
| Salaries and employee benefits | 55,867 | 56,013 | 55,784 | 54,263 | 52,860 | |||||||||||||||
| Occupancy expense | 7,502 | 7,516 | 7,953 | 7,662 | 8,251 | |||||||||||||||
| Furniture and equipment | 3,640 | 3,598 | 3,805 | 3,578 | 3,371 | |||||||||||||||
| Amortization - intangibles | 2,950 | 3,005 | 3,059 | 3,113 | 3,192 | |||||||||||||||
| Software expense | 3,492 | 2,976 | 3,208 | 2,788 | 2,745 | |||||||||||||||
| Data processing | 2,791 | 2,510 | 2,533 | 3,616 | 3,166 | |||||||||||||||
| Professional fees | 3,067 | 2,990 | 3,566 | 3,707 | 2,679 | |||||||||||||||
| Advertising and marketing | 3,584 | 2,839 | 3,429 | 3,182 | 2,829 | |||||||||||||||
| Other expenses | 13,995 | 10,889 | 13,950 | 14,647 | 13,030 | |||||||||||||||
| Total noninterest expense | 96,888 | 92,336 | 97,287 | 96,556 | 92,123 | |||||||||||||||
| Income before income tax expense and noncontrolling interest | 33,792 | 43,734 | 47,084 | 45,157 | 40,293 | |||||||||||||||
| Provision for income tax expense | 6,187 | 7,786 | 7,684 | 8,915 | 8,211 | |||||||||||||||
| Net income | 27,605 | 35,948 | 39,400 | 36,242 | 32,082 | |||||||||||||||
| Net income attributable to noncontrolling interest | (1,221 | ) | (873 | ) | (1,741 | ) | (1,604 | ) | (673 | ) | ||||||||||
| Net income attributable to TowneBank | $ | 26,384 | $ | 35,075 | $ | 37,659 | $ | 34,638 | $ | 31,409 | ||||||||||
| Per common share information | ||||||||||||||||||||
| Basic earnings | $ | 0.37 | $ | 0.49 | $ | 0.52 | $ | 0.48 | $ | 0.44 | ||||||||||
| Diluted earnings | $ | 0.36 | $ | 0.49 | $ | 0.52 | $ | 0.48 | $ | 0.44 | ||||||||||
| Basic weighted average shares outstanding | 72,206,228 | 72,122,476 | 72,091,221 | 72,044,817 | 71,992,330 | |||||||||||||||
| Diluted weighted average shares outstanding | 72,299,721 | $ | 72,302,414 | 72,222,934 | 72,145,600 | 72,099,558 | ||||||||||||||
| Cash dividends declared | $ | 0.18 | $ | 0.18 | $ | 0.18 | $ | 0.18 | $ | 0.16 | ||||||||||
| TOWNEBANK | ||||||||||||||||||
| Banking Segment Financial Information (unaudited) | ||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||
| Three Months Ended | Increase/(Decrease) | |||||||||||||||||
| March 31, | December 31, | 2020 over 2019 | ||||||||||||||||
| 2020 | 2019 | 2019 | Amount | Percent | ||||||||||||||
| Revenue | ||||||||||||||||||
| Net interest income | $ | 87,406 | $ | 86,400 | $ | 87,637 | $ | 1,006 | 1.16 | % | ||||||||
| Service charges on deposit | ||||||||||||||||||
| accounts | 2,440 | 2,861 | 2,245 | (421 | ) | (14.72 | )% | |||||||||||
| Credit card merchant fees | 1,179 | 1,183 | 1,389 | (4 | ) | (0.34 | )% | |||||||||||
| Other income | 7,061 | 3,927 | 5,271 | 3,134 | 79.81 | % | ||||||||||||
| Subtotal | 10,680 | 7,971 | 8,905 | 2,709 | 33.99 | % | ||||||||||||
| Net gain/(loss) on investment securities | 5,002 | (776 | ) | — | 5,778 | (744.59 | )% | |||||||||||
| Total noninterest income | 15,682 | 7,195 | 8,905 | 8,487 | 117.96 | % | ||||||||||||
| Total revenue | 103,088 | 93,595 | 96,542 | 9,493 | 10.14 | % | ||||||||||||
| Provision for credit losses | 7,041 | 1,438 | 3,601 | 5,603 | 389.64 | % | ||||||||||||
| Expenses | ||||||||||||||||||
| Salaries and employee benefits | 33,225 | 31,087 | 34,183 | 2,138 | 6.88 | % | ||||||||||||
| Occupancy expense | 4,916 | 5,244 | 4,959 | (328 | ) | (6.25 | )% | |||||||||||
| Furniture and equipment | 2,660 | 2,367 | 2,577 | 293 | 12.38 | % | ||||||||||||
| Amortization of intangibles | 1,164 | 1,366 | 1,214 | (202 | ) | (14.79 | )% | |||||||||||
| Other expenses | 18,705 | 16,181 | 14,078 | 2,524 | 15.6 | % | ||||||||||||
| Total expenses | 60,670 | 56,245 | 57,011 | 4,425 | 7.87 | % | ||||||||||||
| Income before income tax, corporate allocation and noncontrolling interest | 35,377 | 35,912 | 35,930 | (535 | ) | (1.49 | )% | |||||||||||
| Corporate allocation | 670 | 452 | 627 | 218 | 48.23 | % | ||||||||||||
| Income before income tax provision and noncontrolling interest | 36,047 | 36,364 | 36,557 | (317 | ) | (0.87 | )% | |||||||||||
| Provision for income tax expense | 6,663 | 7,192 | 6,368 | (529 | ) | (7.36 | )% | |||||||||||
| Net income | 29,384 | 29,172 | 30,189 | 212 | 0.73 | % | ||||||||||||
| Noncontrolling interest | (1 | ) | 2 | (1 | ) | (3 | ) | (150.00 | )% | |||||||||
| Net income attributable to TowneBank | $ | 29,383 | $ | 29,174 | $ | 30,188 | $ | 209 | 0.72 | % | ||||||||
| Efficiency ratio | 61.85 | % | 59.6 | % | 59.05 | % | 2.25 | % | 3.78 | % | ||||||||
| TOWNEBANK | ||||||||||||||||||
| Realty Segment Financial Information (unaudited) | ||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||
| Three Months Ended | Increase/(Decrease) | |||||||||||||||||
| March 31, | December 31, | 2020 over 2019 | ||||||||||||||||
| 2020 | 2019 | 2019 | Amount | Percent | ||||||||||||||
| Revenue | ||||||||||||||||||
| Residential mortgage brokerage | $ | 8,007 | $ | 13,756 | $ | 16,617 | $ | (5,749 | ) | (41.79 | )% | |||||||
| income, net | ||||||||||||||||||
| Real estate brokerage income, net | 1,865 | 1,561 | 2,550 | 304 | 19.47 | % | ||||||||||||
| Title insurance and settlement fees | 436 | 368 | 531 | 68 | 18.48 | % | ||||||||||||
| Property management fees, net | 5,073 | 7,708 | 4,187 | (2,635 | ) | (34.19 | )% | |||||||||||
| Income from unconsolidated | 186 | 94 | 75 | 92 | 97.87 | % | ||||||||||||
| subsidiary | ||||||||||||||||||
| Net interest and other income | 2,421 | 1,372 | 2,787 | 1,049 | 76.46 | % | ||||||||||||
| Total revenue | 17,988 | 24,859 | 26,747 | (6,871 | ) | (27.64 | )% | |||||||||||
| Expenses | ||||||||||||||||||
| Salaries and employee benefits | 13,293 | 12,895 | 12,941 | 398 | 3.09 | % | ||||||||||||
| Occupancy expense | 1,927 | 2,345 | 1,857 | (418 | ) | (17.83 | )% | |||||||||||
| Furniture and equipment | 762 | 768 | 773 | (6 | ) | (0.78 | )% | |||||||||||
| Amortization of intangible assets | 657 | 725 | 655 | (68 | ) | (9.38 | )% | |||||||||||
| Other expenses | 6,867 | 6,241 | 7,030 | 626 | 10.03 | % | ||||||||||||
| Total expenses | 23,506 | 22,974 | 23,256 | 532 | 2.32 | % | ||||||||||||
| (Loss) income before income tax, corporate allocation and noncontrolling interest | (5,518 | ) | 1,885 | 3,491 | (7,403 | ) | (392.73 | )% | ||||||||||
| Corporate allocation | (393 | ) | (263 | ) | (362 | ) | (130 | ) | 49.43 | % | ||||||||
| (Loss) income before income tax provision and noncontrolling interest | (5,911 | ) | 1,622 | 3,129 | (7,533 | ) | (464.43 | )% | ||||||||||
| Provision for income tax (benefit) expense | (1,292 | ) | 551 | 416 | (1,843 | ) | (334.48 | )% | ||||||||||
| Net (loss) income | (4,619 | ) | 1,071 | 2,713 | (5,690 | ) | (531.28 | )% | ||||||||||
| Noncontrolling interest | (791 | ) | (252 | ) | (715 | ) | (539 | ) | 213.89 | % | ||||||||
| Net (loss) income attributable to TowneBank | $ | (5,410 | ) | $ | 819 | $ | 1,998 | $ | (6,229 | ) | (760.56 | )% | ||||||
| Efficiency ratio | 130.68 | % | 92.42 | % | 86.95 | % | 38.26 | % | 41.4 | % | ||||||||
| TOWNEBANK | ||||||||||||||||||
| Insurance Segment Financial Information (unaudited) | ||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||
| Three Months Ended | Increase/(Decrease) | |||||||||||||||||
| March 31, | December 31, | 2020 over 2019 | ||||||||||||||||
| 2020 | 2019 | 2019 | Amount | Percent | ||||||||||||||
| Commission and fee income | ||||||||||||||||||
| Property and casualty | $ | 12,786 | $ | 11,873 | $ | 11,957 | $ | 913 | 7.69 | % | ||||||||
| Employee benefits | 3,918 | 3,506 | 3,758 | 412 | 11.75 | % | ||||||||||||
| Travel insurance | 1,266 | 1,289 | 794 | (23 | ) | (1.78 | )% | |||||||||||
| Specialized benefit services | 168 | 170 | 173 | (2 | ) | (1.18 | )% | |||||||||||
| Total commissions and fees | 18,138 | 16,838 | 16,682 | 1,300 | 7.72 | % | ||||||||||||
| Contingency and bonus revenue | 2,022 | 1,585 | 1,396 | 437 | 27.57 | % | ||||||||||||
| Other income | 81 | 75 | 1,805 | 6 | 8 | % | ||||||||||||
| Total revenue | 20,241 | 18,498 | 19,883 | 1,743 | 9.42 | % | ||||||||||||
| Employee commission expense | 3,596 | 3,098 | 3,501 | 498 | 16.07 | % | ||||||||||||
| Revenue, net of commission expense | 16,645 | 15,400 | 16,382 | 1,245 | 8.08 | % | ||||||||||||
| Salaries and employee benefits | 9,349 | 8,878 | 8,889 | 471 | 5.31 | % | ||||||||||||
| Occupancy expense | 659 | 662 | 700 | (3 | ) | (0.45 | )% | |||||||||||
| Furniture and equipment | 218 | 236 | 248 | (18 | ) | (7.63 | )% | |||||||||||
| Amortization of intangible assets | 1,129 | 1,101 | 1,136 | 28 | 2.54 | % | ||||||||||||
| Other expenses | 1,357 | 2,027 | 1,096 | (670 | ) | (33.05 | )% | |||||||||||
| Total operating expenses | 12,712 | 12,904 | 12,069 | (192 | ) | (1.49 | )% | |||||||||||
| Income before income tax, corporate allocation and noncontrolling interest | 3,933 | 2,496 | 4,313 | 1,437 | 57.57 | % | ||||||||||||
| Corporate allocation | (277 | ) | (189 | ) | (265 | ) | (88 | ) | 46.56 | % | ||||||||
| Income before income tax provision and noncontrolling interest | 3,656 | 2,307 | 4,048 | 1,349 | 58.47 | % | ||||||||||||
| Provision for income tax expense | 816 | 468 | 1,002 | 348 | 74.36 | % | ||||||||||||
| Net income | 2,840 | 1,839 | 3,046 | 1,001 | 54.43 | % | ||||||||||||
| Noncontrolling interest | (429 | ) | (423 | ) | (157 | ) | (6 | ) | 1.42 | % | ||||||||
| Net income attributable to TowneBank | $ | 2,411 | $ | 1,416 | $ | 2,889 | $ | 995 | 70.27 | % | ||||||||
| Provision for income taxes | 816 | 468 | 1,002 | 348 | 74.36 | % | ||||||||||||
| Depreciation, amortization and interest expense | 1,300 | 1,333 | 1,309 | (33 | ) | (2.48 | )% | |||||||||||
| EBITDA (non-GAAP) | $ | 4,527 | $ | 3,217 | $ | 5,200 | $ | 1,310 | 40.72 | % | ||||||||
| Efficiency ratio | 76.37 | % | 83.79 | % | 73.67 | % | (7.42 | )% | (8.86 | )% | ||||||||
| TOWNEBANK | |||||||||||
| Reconcilement of Non-GAAP Financial Measures | |||||||||||
| (dollars in thousands) | |||||||||||
| Three Months Ended | |||||||||||
| March 31, | March 31, | December 31, | |||||||||
| 2020 | 2019 | 2019 | |||||||||
| Return on average assets (GAAP) | 0.88 | % | 1.14 | % | 1.16 | % | |||||
| Impact of excluding average goodwill and other | 0.12 | % | 0.15 | % | 0.14 | % | |||||
| intangibles and amortization | |||||||||||
| Return on average tangible assets (non-GAAP) | 1 | % | 1.29 | % | 1.3 | % | |||||
| Return on average equity (GAAP) | 6.37 | % | 8.24 | % | 8.44 | % | |||||
| Impact of excluding average goodwill and other | 3.54 | % | 5 | % | 4.53 | % | |||||
| intangibles and amortization | |||||||||||
| Return on average tangible equity (non-GAAP) | 9.91 | % | 13.24 | % | 12.97 | % | |||||
| Return on average common equity (GAAP) | 6.42 | % | 8.3 | % | 8.51 | % | |||||
| Impact of excluding average goodwill and other | 3.59 | % | 5.09 | % | 4.61 | % | |||||
| intangibles and amortization | |||||||||||
| Return on average tangible common equity | 10.01 | % | 13.39 | % | 13.12 | % | |||||
| (non-GAAP) | |||||||||||
| Book value (GAAP) | $ | 22.77 | $ | 21.4 | $ | 22.58 | |||||
| Impact of excluding average goodwill and other | (6.86 | ) | (6.94 | ) | (6.89 | ) | |||||
| intangibles and amortization | |||||||||||
| Tangible book value (non-GAAP) | $ | 15.91 | $ | 14.46 | $ | 15.69 | |||||
| Average assets (GAAP) | $ | 12,049,323 | $ | 11,194,753 | $ | 11,970,593 | |||||
| Less: average goodwill | 446,838 | 442,869 | 446,428 | ||||||||
| Less: average intangible assets | 53,285 | 63,400 | 56,339 | ||||||||
| Average tangible assets (non-GAAP) | $ | 11,549,200 | $ | 10,688,484 | $ | 11,467,826 | |||||
| Average equity (GAAP) | $ | 1,665,706 | $ | 1,545,899 | $ | 1,647,929 | |||||
| Less: average goodwill | 446,838 | 442,869 | 446,428 | ||||||||
| Less: average intangible assets | 53,285 | 63,400 | 56,339 | ||||||||
| Average tangible equity (non-GAAP) | $ | 1,165,583 | $ | 1,039,630 | $ | 1,145,162 | |||||
| Average common equity (GAAP) | $ | 1,653,676 | $ | 1,534,131 | $ | 1,635,394 | |||||
| Less: average goodwill | 446,838 | 442,869 | 446,428 | ||||||||
| Less: average intangible assets | 53,285 | 63,400 | 56,339 | ||||||||
| Average tangible common equity (non-GAAP) | $ | 1,153,553 | $ | 1,027,862 | $ | 1,132,627 | |||||
| Net Income (GAAP) | $ | 26,384 | $ | 31,409 | 35,075 | ||||||
| Amortization of Intangibles, net of tax | 2,331 | 2,521 | 2,374 | ||||||||
| Tangible Net Income (non-GAAP) | $ | 28,715 | $ | 33,930 | $ | 37,449 | |||||
| TOWNEBANK | ||||||||||||||||||||
| Reconcilement of Non-GAAP Financial Measures | ||||||||||||||||||||
| (dollars in thousands, except per share data) | ||||||||||||||||||||
| Reconcilement of GAAP Earnings to Operating Earnings Excluding Certain Items Affecting Comparability | Three Months Ended | |||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
| 2020 | 2019 | 2019 | 2019 | 2019 | ||||||||||||||||
| Net income (GAAP) | $ | 26,384 | $ | 35,075 | $ | 37,659 | $ | 34,638 | $ | 31,409 | ||||||||||
| Acquisition-related expenses | (150 | ) | 19 | 207 | 20 | 411 | ||||||||||||||
| Income tax expense (benefit) - other items | 21 | (3 | ) | (20 | ) | (3 | ) | (52 | ) | |||||||||||
| Total charges, net of taxes | (129 | ) | 16 | 187 | 17 | 359 | ||||||||||||||
| Operating earnings, excluding certain items affecting | $ | 26,255 | $ | 35,091 | $ | 37,846 | $ | 34,655 | $ | 31,768 | ||||||||||
| comparability (non-GAAP) | ||||||||||||||||||||
| Weighted average diluted shares | 72,299,721 | 72,311,979 | 72,222,934 | 72,145,600 | 72,099,558 | |||||||||||||||
| Diluted EPS (GAAP) | $ | 0.36 | $ | 0.49 | $ | 0.52 | $ | 0.48 | $ | 0.44 | ||||||||||
| Diluted EPS, excluding certain items affecting | $ | 0.36 | $ | 0.49 | $ | 0.52 | $ | 0.48 | $ | 0.44 | ||||||||||
| comparability (non-GAAP) | ||||||||||||||||||||
| Average assets | $ | 12,049,323 | $ | 11,970,593 | $ | 11,845,282 | $ | 11,532,278 | $ | 11,194,753 | ||||||||||
| Average tangible equity | $ | 1,165,583 | $ | 1,145,162 | 1,119,824 | $ | 1,070,635 | $ | 1,039,630 | |||||||||||
| Return on average assets, excluding certain items | 0.88 | % | 1.16 | % | 1.27 | % | 1.21 | % | 1.15 | % | ||||||||||
| affecting comparability (non-GAAP) | ||||||||||||||||||||
| Return on average tangible equity, excluding certain items affecting comparability (non-GAAP) | 9.86 | % | 12.98 | % | 14.26 | % | 13.9 | % | 13.38 | % | ||||||||||
| Return on average common tangible equity, excluding certain items affecting comparability (non-GAAP) | 9.97 | % | 13.12 | % | 14.42 | % | 14.06 | % | 13.53 | % | ||||||||||
| Efficiency ratio, excluding certain items affecting | 73.13 | % | 66.1 | % | 66.52 | % | 66.79 | % | 68.12 | % | ||||||||||
| comparability (non-GAAP) | ||||||||||||||||||||
