TowneBank (the “Company”) (NASDAQ: TOWN) today reported earnings for the quarter ended September 30, 2020 of $34.46 million, or $0.48 per diluted share, compared to $37.66 million, or $0.52 per diluted share, for the quarter ended September 30, 2019.

“Our third quarter results were highlighted by strong performance across our fee-based business lines.  Total revenues exceeded $192 million despite challenges from historically low interest rates.  Credit metrics remained stable reflecting our relationship-based credit culture.  Once again, strong deposit growth led to TowneBank earning the top spot in Hampton Roads market share according to recently released FDIC data,” said G. Robert Aston, Jr., Executive Chairman.

Highlights for Third Quarter 2020 Compared to Third Quarter 2019:

  • Total revenues were a record $192.14 million, an increase of $46.26 million, or 31.71%.
  • Pre-provision, pre-tax, net revenues (non-GAAP) were $73.90 million, an increase of $27.05 million, or 57.74%.
  • Loans held for investment were $9.77 billion, an increase of $1.59 billion, or 19.40%, from September 30, 2019, but a decrease of  $0.03 billion, or 0.32%, from June 30, 2020.  The balance at September 30, 2020 and June 30, 2020 included $1.10 billion and $1.09 billion, respectively, of loans originated under the Small Business Administration’s Paycheck Protection Program (“PPP”).
  • Total deposits were $11.70 billion, an increase of $2.27 billion, or 24.02%, compared to prior year and $0.44 billion, or 3.91%, from June 30, 2020.
  • Noninterest bearing deposits increased by 47.31%, to $4.46 billion, representing 38.14% of total deposits.  Compared to the linked quarter, noninterest bearing deposits increased 5.63%.
  • Annualized return on common shareholders' equity was 7.91% and annualized return on average tangible common shareholders' equity was 11.79% (non-GAAP).
  • Net interest margin for the quarter was 2.70% and taxable equivalent net interest margin (non-GAAP) was 2.72%.
  • Nonperforming assets were $28.74 million, or 0.19% of total assets, compared to $31.04 million, or 0.26%, at September 30, 2019.
  • Effective tax rate of 18.53% in the quarter compared to 16.95% in the third quarter of 2019.

“Despite the many headwinds impacting the nation in 2020, our team at Towne has been working diligently behind the scenes to enhance and improve our member experience through our Towne 20.20 initiative.  In early October, as part of that initiative, we implemented a new robust banking system that sets the stage for new and innovative technology, enhanced digital solutions, and a greater variety of financial services,” stated J. Morgan Davis, President and Chief Executive Officer.

Quarterly Net Interest Income Compared to Third Quarter 2019:

  • Net interest income was $96.76 million compared to $91.10 million at September 30, 2019.
  • Taxable equivalent net interest margin (non-GAAP) was 2.72%, including accretion of 5 basis points, compared to 3.43%, including accretion of 11 basis points, for third quarter 2019.
  • Average loans held for investment, with an average yield of 4.22%, represented 68.38% of average earning assets at September 30, 2020 compared to an average yield of 5.02% and 76.35% of average earning assets in the third quarter of 2019.  Excluding PPP, loan yields were 4.30% in third quarter 2020.
  • Interest and fee income on PPP loans was $9.82 million in third quarter 2020, compared to $5.83 million in the linked quarter, and zero in third quarter 2019.
  • Total cost of deposits decreased to 0.46% from 1.01% at September 30, 2019.
  • Average interest-earning assets totaled $14.26 billion at September 30, 2020 compared to $10.60 billion at September 30, 2019, an increase of 34.49%.
  • Average interest-bearing liabilities totaled $9.21 billion, an increase of $2.18 billion from prior year.
  • Interest expense on the FRB PPP lending facility was $0.91 million in third quarter, compared to $0.54 million in the linked quarter, and zero in third quarter 2019.

Quarterly Provision for Credit Losses:

  • Recorded a quarterly provision for credit losses for on-balance-sheet loans of $28.26 million compared to $1.51 million one year ago and $25.99 million in the linked quarter.  This increase is primarily attributable to a heavier weighting given to adverse economic forecasts in our credit loss models due to expectation of continued economic weakness driven by a number of uncertainties impacting the local and national economy.  These macroeconomic forecasts were impacted by the notable weakening of small businesses in the wake of the extended COVID-19 pandemic, major layoff announcements, and the deterioration in the U.S. trade relationship with China.  Expected loss estimates consider various factors including the impacts of the decreased economic activity and higher unemployment rates, customer specific credit information, and the potential mitigating benefits of government stimulus and industry wide loan modification efforts.
  • Net loan recoveries were $0.33 million compared to charge-offs of $0.61 million one year prior.  The ratio of net loan charge-offs (recoveries) to average loans on an annualized basis was (0.01)% in third quarter 2020 and  0.03% in third quarter  2019.  The Company has proactively supported members by providing payment deferrals when needed, which, combined with government stimulus, has prevented a significant deterioration in asset quality metrics.  We will continue to closely monitor credit quality as the effects of government stimulus lessen and the economic impact of the pandemic becomes clearer over time.
  • Recorded a provision for credit losses on off-balance-sheet commitments of $3.50 million compared to $1.08 million in the linked quarter.
  • The allowance for credit losses on loans represented 1.22% of total loans compared to 0.92% at June 30, 2020 and 0.68% at September 30, 2019.  Excluding PPP loans, which are fully government guaranteed, the allowance for credit losses (non-GAAP) was 1.37%, compared to 1.04% at June 30, 2020.  The allowance for credit losses on loans was 7.31 times nonperforming loans compared to 5.34 times at June 30, 2020 and 3.95 times at September 30, 2019.

Quarterly Noninterest Income Compared to Third Quarter 2019:

  • Total noninterest income was $95.38 million compared to $54.78 million in 2019, an increase of $40.60 million, or 74.12%.  Residential mortgage banking income increased $18.68 million and real estate brokerage and property management income increased $1.86 million.  Also included in noninterest income are net gains on investment securities of $1.70 million as compared to net losses of $0.07 million in the prior year and a gain of $17.63 million on the sale of Red Sky Travel Insurance ("Red Sky"), a travel insurance joint venture.
  • Residential mortgage banking recorded income of $37.53 million compared to $18.86 million in third quarter 2019.  Loan volume in the current quarter was $1.79 billion, with purchase activity comprising 61.18% of that volume.  Loan volume in third quarter 2019 was $0.96 billion, with purchase activity comprising 68.83%.  Though still an increase over the prior year, refinancing activity has declined compared to the linked quarter.  Increased volume and a continued low mortgage rate environment coupled with improved margins were the drivers of improvement compared to the prior year quarter.
  • Total Insurance segment revenue increased 95.11% to $38.27 million in the third quarter due to the sale of a joint venture, organic growth, and expense control measures.  The Company sold Red Sky mid-third quarter 2020.  A gain on the sale of Red Sky totaling $17.63 million was recorded in other income.  After distributions to noncontrolling interests, Towne retained $6.52 million of the pre-tax gain.  In 2019, Red Sky contributed $4.09 million to insurance revenue, with an annual net income after noncontrolling interest of $0.94 million.
  • Property management fee revenue increased 16.02%, or $1.05 million, compared to third quarter 2019.  The lifting of local travel restrictions in second quarter related to COVID-19, coupled with businesses and schools continuing to operate remotely, has resulted in an extended vacation season and increased reservation activity during the quarter.

Quarterly Noninterest Expense Compared to Third Quarter 2019:

  • Total noninterest expense was $101.98 million compared to $97.29 million in 2019, an increase of $4.69 million, or 4.82%.  Increases in salary and benefits expense of $5.62 million, data processing expense of $0.58 million, and software expense of $0.36 million, offset the declines across most other expense categories.
  • During the first three quarters of the year, the Company has been focused on its Towne 20.20 initiative which centered around our early October core conversion.  This core conversion will allow the Company to provide a greater variety of financial services to our members through new technologies and enhanced digital solutions.  Preparation for this conversion began in 2019 and necessitated long hours and dedication from team members, which the Company chose to recognize through one-time bonuses and vacation carry-overs of approximately $2.84 million in the quarter.  Other conversion expenses in the quarter totaled $0.71 million.
  • Other infrastructure enhancements and market expansion, that occurred in 2019, have resulted in generally higher levels of salary and benefits expense and software expense, while quarantines, travel restrictions, and other decreases in business activity related to COVID-19 have resulted in lower general spending.
  • Write-downs related to a Company-owned building and lots in North Carolina totaled $1.06 million in the quarter.

Quarterly Income Taxes Compared to Third Quarter 2019:

  • Income tax expense was $7.84 million compared to $7.68 million one year prior.  This represents an effective tax rate of 18.53% compared to 16.95% in the third quarter of 2019.

Consolidated Balance Sheet Highlights:

  • Total assets were $14.80 billion for the quarter ended September 30, 2020, a decrease of $0.78 billion, or 5.04%, compared to $15.58 billion at June 30, 2020.  Total assets increased $2.77 billion, or 23.08%, from $12.02 billion at September 30, 2019.  The year-over-year increase was driven primarily by growth in cash and cash equivalents and loans held for investment tied to PPP lending activities.
  • Loans held for investment increased $1.59 billion, or 19.40%, compared to prior year but decreased $0.03 billion compared the linked quarter.  Excluding PPP loans of $1.10 billion in the third quarter, and $1.09 billion in the second quarter of 2020, loans held for investment increased $484.60 million, or 5.92%, compared to prior year, but declined $44.47 million, or 0.51%, compared to the linked quarter.
  • Mortgage loans held for sale increased  $212.30 million, or 46.48%, compared to the prior year and $58.65 million, or 9.61%, compared to the linked quarter.
  • Total deposits increased $2.3 billion, or 24.02%, compared to the prior year and $0.44 billion, or 3.91%, compared to the linked quarter.
  • Total borrowings increased $0.37 billion, or 54.23%, from prior year but decreased $1.29 billion, or 55.39%, compared to the linked quarter.  During the third quarter of 2020, the Company repaid $1.11 billion in borrowings under the FRB PPP lending facility, which had initially been used to facilitate funding of the PPP loans.  Additionally, we restructured our FHLB borrowing facilities for future reductions in borrowing costs of approximately $2.66 million over the life of those borrowings.

Investment Securities:

  • Total investment securities were $1.38 billion compared to $1.36 billion at June 30, 2020 and $1.41 billion at September 30, 2019.  The weighted average duration of the portfolio at September 30, 2020 was 4.1 years.  The carrying value of the AFS debt securities portfolio included $61.43 million in net unrealized gains compared to $19.73 million in net unrealized gains at December 31, 2019.  During the third quarter of 2020, we sold $81.8 million in AFS debt securities at a gain of $1.70 million to reposition the portfolio.

Loans and Asset Quality:

  • Total loans held for investment were $9.77 billion at September 30, 2020 compared to $9.80 billion at June 30, 2020 and $8.18 billion at September 30, 2019.
  • Nonperforming assets were $28.74 million, or 0.19% of total assets, compared to $31.04 million, or 0.26%, at September 30, 2019.
  • Nonperforming loans were 0.17% of period end loans, unchanged from September 30, 2019.
  • Foreclosed property decreased to $11.70 million from $15.52 million at September 30, 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 changes to the reserve in future periods.

Deposits and Borrowings:

  • Total deposits were $11.70 billion compared to $11.26 billion at June 30, 2020 and $9.44 billion at September 30, 2019.
  • Total loans to deposits were 83.47% compared to 87.01% at June 30, 2020 and 86.70% at September 30, 2019.
  • Non-interest bearing deposits were 38.14% of total deposits at September 30, 2020 compared to 37.52% at June 30, 2020 and 32.11% at September 30, 2019.
  • Total borrowings were $1.04 billion compared to $2.33 billion at June 30, 2020 and $0.67 billion at  September 30, 2019.

Capital:

  • Common equity tier 1 capital ratio of 11.75%.
  • Tier 1 leverage capital ratio of 8.89%.
  • Tier 1 risk-based capital ratio of 11.91%.
  • Total risk-based capital ratio of 15.33%.
  • Book value was $23.83 compared to $23.50 at June 30, 2020 and $22.38 at September 30, 2019.
  • Tangible book value (non-GAAP) was $17.06 compared to $16.68 at June 30, 2020 and $15.44 at September 30, 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 $14.80 billion as of September 30, 2020, TowneBank is one of the largest banks headquartered in Virginia.

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

Forward-Looking Statements:Certain statements contained in this release constitute forward-looking statements within the meaning of U.S. federal securities laws.  These forward-looking statements speak only as of the date of this release, are based on current expectations, and involve a number of assumptions. These include statements regarding TowneBank’s future economic performance, financial condition, prospects, growth, strategies and expectations, and objectives of management, and are generally identified by the use of words such as “believe,” “expect,” “intend,” “anticipate,” “estimate,” or “project” or similar expressions.  TowneBank intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is including this statement for purposes of these safe harbor provisions. You should not place undue reliance on forward-looking statements, which are subject to assumptions that are subject to change. TowneBank’s ability to predict results, or the actual effect of future plans or strategies, is inherently uncertain. These forward-looking statements are subject to a number of factors and uncertainties that could cause actual results to differ from those indicated or implied in the forward-looking statements and such differences may be material.  Factors which could have a material effect on the operations and future prospects of TowneBank include but are not limited to: the impacts of the ongoing coronavirus (COVID-19) pandemic, changes in interest rates, general economic and business conditions; legislative/regulatory changes; the monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System; the quality and composition of TowneBank’s loan and securities portfolios; demand for loan products; deposit flows; competition; demand for financial services in TowneBank’s market area; implementation of new technologies and the ability to develop and maintain secure and reliable electronic systems; changes in the securities markets; changes in accounting principles, policies and guidelines; and other risk factors detailed from time to time in filings made by TowneBank with the Federal Deposit Insurance Corporation.  TowneBank undertakes no obligation to update or clarify these forward-looking statements, whether as a result of new information, future events or otherwise.

Media contact:G. Robert Aston, Jr., Executive Chairman, 757-638-6780J. 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
    September 30,   June 30,   March 31,   December 31,   September 30,
  2020   2020   2020   2019   2019
Income and Performance Ratios:                  
  Total Revenue $ 192,135     $ 162,656     $ 137,696     $ 139,671     $ 145,879  
  Net income 50,715     37,222     27,605     35,948     39,400  
  Net income available to common shareholders 34,464     34,605     26,384     35,075     37,659  
  Pre-provision, pre-tax, net revenues (non-GAAP) 73,903     69,014     39,587     46,462     46,851  
  Net income per common share - diluted 0.48     0.48     0.36     0.49     0.52  
  Book value per common share 23.83     23.50     22.77     22.58     22.38  
  Book value per common share - tangible (non-GAAP) 17.06     16.68     15.91     15.69     15.44  
  Return on average assets 0.89 %   0.97 %   0.88 %   1.16 %   1.26 %
  Return on average assets - tangible (non-GAAP) 0.97 %   1.07 %   1.00 %   1.30 %   1.40 %
  Return on average equity 7.85 %   8.18 %   6.37 %   8.44 %   9.22 %
  Return on average equity - tangible (non-GAAP) 11.66 %   12.32 %   9.91 %   12.97 %   14.20 %
  Return on average common equity 7.91 %   8.24 %   6.42 %   8.51 %   9.29 %
  Return on average common equity - tangible (non-GAAP) 11.79 %   12.44 %   10.01 %   13.12 %   14.36 %
  Noninterest income as a percentage of total revenue 49.64 %   42.66 %   35.00 %   35.59 %   37.55 %
                     
Regulatory Capital Ratios (1):                  
  Common equity tier 1 11.75 %   11.54 %   11.23 %   11.46 %   11.52 %
  Tier 1 11.91 %   11.67 %   11.35 %   11.49 %   11.55 %
  Total 15.33 %   14.91 %   14.40 %   14.58 %   14.70 %
  Tier 1 leverage ratio 8.89 %   9.05 %   10.11 %   9.95 %   9.84 %
                     
Asset Quality:                  
  Allowance for credit losses on loans to nonperforming loans 7.31x     5.34x     3.85x     3.34x     3.95x  
  Allowance for credit losses on loans to period end loans 1.22 %   0.92 %   0.73 %   0.69 %   0.68 %
  Allowance for credit losses on loans to period end loans excluding PPP loans (non-GAAP) 1.37 %   1.04 %   0.73 %   0.69 %   0.68 %
  Nonperforming loans to period end loans 0.17 %   0.17 %   0.19 %   0.21 %   0.17 %
  Nonperforming assets to period end assets 0.19 %   0.19 %   0.24 %   0.27 %   0.26 %
  Net charge-offs (recoveries) to average loans (annualized) (0.01 )%   %   0.03 %   0.04 %   0.03 %
                     
  Nonperforming loans $ 16,295     $ 16,935     $ 16,700     $ 17,437     $ 14,016  
  Former bank premises 750             1,521     1,510  
  Foreclosed property 11,695     12,315     13,053     13,839     15,517  
  Total nonperforming assets $ 28,740     $ 29,250     $ 29,753     $ 32,797     $ 31,043  
  Loans past due 90 days and still accruing interest $ 19     $ 464     $ 91     $ 309     $ 636  
  Allowance for credit losses on loans $ 119,058     $ 90,467     $ 64,372     $ 58,234     $ 55,428  
                     
Mortgage Banking:                  
  Loans originated, mortgage $ 1,292,801     $ 1,116,782     $ 718,681     $ 628,279     $ 703,922  
  Loans originated, joint venture 498,100     357,815     204,522     231,879     259,742  
  Total loans originated $ 1,790,901     $ 1,474,597     $ 923,203     $ 860,158     $ 963,664  
  Number of loans originated 5,817     4,818     3,025     2,984     3,360  
  Number of originators 224     216     223     217     225  
  Purchase % 61.21 %   51.26 %   61.31 %   70.32 %   68.83 %
  Loans sold $ 1,833,590     $ 1,398,649     $ 809,834     $ 879,910     $ 925,058  
  Gross realized gain on sales and fees as a % of loans originated 3.65 %   3.17 %   1.80 %   3.38 %   3.45 %
Other Ratios:                  
  Net interest margin 2.70 %   2.85 %   3.35 %   3.33 %   3.41 %
  Net interest margin-fully tax equivalent (non-GAAP) 2.72 %   2.87 %   3.37 %   3.35 %   3.43 %
  Average earning assets/total average assets 92.09 %   91.33 %   89.15 %   89.57 %   89.53 %
  Average loans/average deposits 86.29 %   91.81 %   92.99 %   88.41 %   87.63 %
  Average noninterest deposits/total average deposits 37.76 %   36.52 %   32.21 %   32.14 %   31.82 %
  Period end equity/period end total assets 11.82 %   11.05 %   13.19 %   13.84 %   13.63 %
  Efficiency ratio (non-GAAP) 53.55 %   56.99 %   73.02 %   66.11 %   66.66 %
                     
  (1) Current reporting period regulatory capital ratios are preliminary            
 
TOWNEBANK
Selected Data (unaudited)
(dollars in thousands)
 
Investment Securities             % Change
  Q3   Q3   Q2   Q3 20 vs.   Q3 20 vs.
Available-for-sale securities, at fair value 2020   2019   2020   Q3 19   Q2 20
U.S. agency securities $ 167,275       $ 152,581       $ 118,176       9.63 %   41.55 %
U.S. Treasury notes 1,006       999       1,010       0.70 %   (0.40 )%
Municipal securities 292,792       173,519       313,322       68.74 %   (6.55 )%
Trust preferred and other corporate securities 24,236       52,006       59,598       (53.40 )%   (59.33 )%
Mortgage-backed securities issued by GSE and GNMA 825,378       958,290       774,658       (13.87 )%   6.55 %
Allowance for credit losses (4 )     n/a   (140 )     n/a   (97.14 )%
Total $ 1,310,683       $ 1,337,395       $ 1,266,624       (2.00 )%   3.48 %
                   
Gross unrealized gains (losses) reflected in financial statements                              
Total gross unrealized gains $ 62,206       $ 28,114       $ 61,559       121.26 %   1.05 %
Total gross unrealized losses (773 )     (2,046 )     (1,674 )     (62.22 )%   (53.82 )%
Net unrealized gains (losses) and other adjustments on AFS securities $ 61,433       $ 26,068       $ 59,885            
                   
Held-to-maturity securities, at amortized cost                  
Municipal securities $ 2,333       $ 29,166       $ 28,855       (92.00 )%   (91.91 )%
Trust preferred corporate securities 4,992       2,381       2,345       109.66 %   112.88 %
Mortgage-backed securities issued by GSE and GNMA 9,806       12,947       10,395       (24.26 )%   (5.67 )%
Allowance for credit losses (90 )     n/a   (121 )     n/a   (25.62 )%
Total $ 17,041       $ 44,494       $ 41,474       (61.70 )%   (58.91 )%
                   
Gross unrealized gains (losses) not reflected in financial statements                        
Total gross unrealized gains $ 1,971       $ 1,688       $ 1,980       16.77 %   (0.45 )%
Total gross unrealized losses       (5 )           (100.00 )%   %
Net unrealized gains (losses) in HTM securities $ 1,971       $ 1,683       $ 1,980            
                   
Loans Held For Investment (1)             % Change
  Q3   Q3   Q2   Q3 20 vs.   Q3 20 vs.
  2020   2019   2020   Q3 19   Q2 20
Real estate - construction and development $ 1,143,202       $ 1,142,225       $ 1,178,832       0.09 %   (3.02 )%
Commercial real estate - non owner occupied 2,338,532       2,070,317       2,332,447       12.96 %   0.26 %
Commercial real estate - owner occupied 1,378,443       1,286,137       1,383,294       7.18 %   (0.35 )%
Real estate - multifamily 289,270       219,901       277,947       31.55 %   4.07 %
Real estate - residential 1-4 family and HELOC 1,660,535       1,621,175       1,670,530       2.43 %   (0.60 )%
Commercial and industrial business 2,499,801       1,527,515       2,503,161       63.65 %   (0.13 )%
Consumer and other loans 460,787       315,559       455,678       46.02 %   1.12 %
Total $ 9,770,570        $ 8,182,829        $ 9,801,889        19.40  %   (0.32 )%
(1) Paycheck Protection Program loans totaling $1.10 billion and $1.09 billion, primarily in C&I, are included in Q3 2020 and Q2 2020, respectively.
                   
Deposits             % Change
  Q3   Q3   Q2   Q3 20 vs.   Q3 20 vs.
  2020   2019   2020   Q3 19   Q2 20
Noninterest-bearing demand $ 4,464,178       $ 3,030,505       $ 4,226,208       47.31 %   5.63 %
Interest-bearing:                  
Demand and money market accounts 4,642,482       3,534,252       4,223,391       31.36 %   9.92 %
Savings 312,444       280,552       298,673       11.37 %   4.61 %
Certificates of deposits 2,285,859       2,592,705       2,516,666       (11.83 )%   (9.17 )%
Total $ 11,704,963       $ 9,438,014       $ 11,264,938       24.02 %   3.91 %
TOWNEBANK
Average Balances, Yields and Rate Paid (unaudited)
(dollars in thousands)
 
  Three Months Ended   Three Months Ended   Three Months Ended
  September 30, 2020   June 30, 2020   September 30, 2019
      Interest   Average       Interest   Average       Interest   Average
  Average   Income/   Yield/   Average   Income/   Yield/   Average   Income/   Yield/
  Balance   Expense   Rate   Balance   Expense   Rate   Balance   Expense   Rate
Assets:                                  
Loans (net of unearned income and deferred costs), excluding nonaccrual loans (1) $ 9,752,746       $ 103,401       4.22 %   $ 9,619,931       $ 102,656       4.29 %   $ 8,096,908       $ 102,495       5.02 %
Taxable investment securities 1,206,679       6,726       2.23 %   1,198,776       7,367       2.46 %   1,266,447       9,087       2.87 %
Tax-exempt investment securities 144,999       779       2.15 %   147,489       836       2.27 %   121,738       997       3.28 %
Total securities 1,351,678       7,505       2.22 %   1,346,265       8,203       2.44 %   1,388,185       10,084       2.91 %
Interest-bearing deposits 2,523,644       632       0.10 %   1,729,140       433       0.10 %   711,030       3,745       2.09 %
Loans held for sale 634,309       4,587       2.89 %   464,796       3,811       3.28 %   408,377       3,956       3.87 %
Total earning assets 14,262,377       116,125       3.24 %   13,160,132       115,103       3.52 %   10,604,500       120,280       4.50 %
Less: allowance for credit losses (95,594 )             (69,451 )             (54,858 )          
Total nonearning assets 1,320,369               1,318,787               1,295,640            
Total assets $ 15,487,152               $ 14,409,468               $ 11,845,282            
Liabilities and Equity:                                  
Interest-bearing deposits                                  
Demand and money market $ 4,311,920       $ 2,663       0.25 %   $ 3,857,757       $ 2,491       0.26 %   $ 3,379,888       $ 7,223       0.85 %
Savings 304,753       555       0.72 %   290,201       554       0.77 %   278,048       702       1.00 %
Certificates of deposit 2,417,772       9,747       1.60 %   2,503,648       12,027       1.93 %   2,641,681       15,627       2.35 %
Total interest-bearing deposits 7,034,445       12,965       0.73 %   6,651,606       15,072       0.91 %   6,299,617       23,552       1.48 %
Borrowings 1,931,120       2,841       0.58 %   1,741,832       3,238       0.74 %   486,644       2,020       1.62 %
Subordinated debt, net 248,807       2,962       4.76 %   248,660       2,962       4.76 %   248,210       2,962       4.77 %
Total interest-bearing liabilities 9,214,372       18,768       0.81 %   8,642,098       21,272       0.99 %   7,034,471       28,534       1.61 %
Demand deposits 4,268,443               3,826,439               2,940,370            
Other noninterest-bearing liabilities 257,304               239,154               250,371            
Total liabilities 13,740,119               12,707,691               10,225,212            
Shareholders’ equity 1,747,033               1,701,777               1,620,070            
Total liabilities and equity $ 15,487,152               $ 14,409,468               $ 11,845,282            
Net interest income (tax-equivalent basis)     $ 97,357               $ 93,831               $ 91,746        
Reconcilement of Non-GAAP Financial Measures                                        
Tax-equivalent basis adjustment     (598 )             (557 )             (643 )      
Net interest income (GAAP)     $ 96,759               $ 93,274               $ 91,103        
                                   
Interest rate spread (2)(4)         2.43 %           2.53 %           2.89 %
Interest expense as a percent of average earning assets               0.52 %           0.65 %           1.07 %
Net interest margin (tax equivalent basis) (3)(4)               2.72 %           2.87 %           3.43 %
Total cost of deposits         0.46 %           0.58 %           1.01 %
                                   

(1) Includes average PPP balances of $1.10 billion and related interest and fee income of $9.82 million.(2) Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities.  Fully tax equivalent.(3) Net interest margin is net interest income expressed as a percentage of average earning assets.  Fully tax equivalent.(4) Non-GAAP.

 
TOWNEBANK
Average Balances, Yields and Rate Paid (unaudited)
(dollars in thousands)
 
    Nine Months Ended   Nine Months Ended   Nine Months Ended September 30,
    September 30, 2020   September 30, 2019   2020 Compared with 2019
        Interest   Average       Interest   Average        
    Average   Income/   Yield/   Average   Income/   Yield/   Increase   Change Due to
    Balance   Expense   Rate   Balance   Expense   Rate   (Decrease)   Rate   Volume
Assets:                                    
Loans (net of unearned income and deferred costs), excluding nonaccrual loans (1)   $ 9,309,256       $ 306,622       4.40 %   $ 8,067,894       $ 305,007       5.05 %   $ 1,615       $ (42,206 )     $ 43,822    
Taxable investment securities   1,253,783       23,304       2.48 %   1,158,611       24,962       2.87 %   (1,658 )     (3,603 )     1,945    
Tax-exempt investment securities   140,248       2,476       2.35 %   97,485       2,519       3.45 %   (43 )     (944 )     902    
Total securities   1,394,031       25,780       2.47 %   1,256,096       27,481       2.92 %   (1,701 )     (4,547 )     2,847    
Interest-bearing deposits   615,466       2,168       0.47 %   700,840       11,758       2.24 %   (9,590 )     (8,309 )     (1,281 )  
Loans held for sale   477,964       11,386       3.18 %   290,384       8,966       4.12 %   2,420       (2,394 )     4,814    
Total earning assets   11,796,717       345,956       3.92 %   10,315,214       353,212       4.58 %   (7,256 )     (57,456 )     50,202    
Less: allowance for loan losses   (73,538 )             (53,703 )                      
Total nonearning assets   2,264,295               1,264,976                        
Total assets   $ 13,987,474               $ 11,526,487                        
Liabilities and Equity:                                    
Interest-bearing deposits                                    
Demand and money market   $ 3,898,642       $ 10,472       0.36 %   $ 3,289,539       $ 20,488       0.83 %   $ (10,016 )     $ (13,287 )     $ 3,271    
Savings   290,684       1,702       0.78 %   281,562       2,658       1.26 %   (956 )     (1,040 )     84    
Certificates of deposit   2,451,715       34,925       1.90 %   2,456,360       41,364       2.25 %   (6,439 )     (6,362 )     (78 )  
Total interest-bearing deposits   6,641,041       47,099       0.95 %   6,027,461       64,510       1.43 %   (17,411 )     (20,689 )     3,277    
Borrowings   1,452,652       8,661       0.78 %   661,216       9,559       1.91 %   (898 )     (7,871 )     6,973    
Subordinated debt, net   248,660       8,885       4.76 %   248,064       8,885       4.78 %         (22 )     21    
Total interest-bearing liabilities   8,342,353       64,645       1.04 %   6,936,741       82,954       1.60 %   (18,309 )     (28,582 )     10,271    
Demand deposits   3,687,791               2,787,727                        
Other noninterest-bearing liabilities   252,337               221,806                        
Total liabilities   12,282,481               9,946,274                        
Shareholders’ equity   1,704,993               1,580,213                        
Total liabilities and equity   $ 13,987,474               $ 11,526,487                        
Net interest income (tax-equivalent basis)       $ 281,311               $ 270,258           $ 11,053       $ (28,874 )     $ 39,931    
Reconcilement of Non-GAAP Financial Measures                                          
Tax-equivalent basis adjustment       (1,781 )             (1,862 )         81            
Net interest income (GAAP)       $ 279,530               $ 268,396           $ 11,134            
                                     
Interest rate spread (2)(4)           2.88 %           2.98 %            
Interest expense as a percent of average earning assets                 0.73 %           1.08 %            
Net interest margin (tax equivalent basis) (3)(4)                 3.19 %           3.50 %            
Total cost of deposits           0.61 %           0.98 %            
                                     
(1)  Includes average PPP balances of  $0.64 billion and related interest income of $15.65 million
(2)  Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities.  Fully tax equivalent.
(3)  Net interest margin is net interest income expressed as a percentage of average earning assets.  Fully tax equivalent.
(4) Non-GAAP.
 
TOWNEBANK
Consolidated Balance Sheets
(dollars in thousands, except share data)
   
     
  September 30,   December 31,
  2020   2019
  (unaudited)   (audited)
ASSETS      
Cash and due from banks $ 114,604       $ 97,593    
Interest-bearing deposits at FRB - Richmond 1,670,186       322,505    
Interest-bearing deposits in financial institutions 24,890       22,518    
Total Cash and Cash Equivalents 1,809,680       442,616    
Securities available for sale, at fair value (amortized cost $1,249,254, allowance for credit losses of $4) (1) 1,310,683       1,441,308    
Securities held to maturity, at amortized cost (fair value $19,102 )(1) 17,131       43,688    
Less:  allowance for credit losses (90 )        
Securities held to maturity, net of allowance for credit losses 17,041       43,688    
Other equity securities 6,497       6,462    
FHLB stock 41,829       30,094    
Total Securities 1,376,050       1,521,552    
Mortgage loans held for sale 669,020       419,233    
Loans, net of unearned income and deferred costs 9,770,570       8,419,288    
Less: allowance for credit losses (119,058 )     (58,234 )  
Net Loans 9,651,512       8,361,054    
Premises and equipment, net 256,909       231,806    
Goodwill 446,725       446,816    
Other intangible assets, net 45,781       54,399    
BOLI 244,103       243,062    
Other assets 295,637       227,125    
TOTAL ASSETS $ 14,795,417       $ 11,947,663    
LIABILITIES AND EQUITY      
       
Deposits:      
Noninterest-bearing demand $ 4,464,178       $ 2,951,225    
Interest-bearing:      
Demand and money market accounts 4,642,482       3,586,364    
Savings 312,444       276,205    
Certificates of deposit 2,285,859       2,457,123    
Total Deposits 11,704,963       9,270,917    
Advances from the FHLB 731,202       471,687    
Subordinated debt, net 248,906       248,458    
Repurchase agreements and other borrowings 58,061       52,391    
Total Borrowings 1,038,169       772,536    
Other liabilities 303,582       250,516    
TOTAL LIABILITIES 13,046,714       10,293,969    
Preferred stock      
Authorized and unissued shares - 2,000,000          
Common stock, $1.667 par: 150,000,000 shares authorized 72,656,729 and 72,649,682 shares issued at September 30, 2020 and December 31, 2019, respectively 121,115       121,107    
Capital surplus 1,045,170       1,041,160    
Retained earnings 520,888       467,186    
Common stock issued to deferred compensation trust, at cost 872,498 and 818,578 shares at September 30, 2020 and December 31, 2019, respectively (16,951 )     (15,555 )  
Deferred compensation trust 16,951       15,555    
Accumulated other comprehensive income (loss) 44,569       11,302    
TOTAL SHAREHOLDERS’ EQUITY 1,731,742       1,640,755    
Noncontrolling interest 16,961       12,939    
TOTAL EQUITY 1,748,703       1,653,694    
TOTAL LIABILITIES AND EQUITY $ 14,795,417       $ 11,947,663    
(1) For 2020, disclosures are presented in compliance with ASC 326.
 
TOWNEBANK
Consolidated Statements of Income (unaudited)
(dollars in thousands, except per share data)
               
               
  Three Months Ended   Nine Months Ended
  September 30,   September 30,
  2020   2019   2020   2019
INTEREST INCOME:              
Loans, including fees $ 102,869       $ 102,047       $ 305,070       $ 303,616    
Investment securities 7,440       9,889       25,553       27,010    
Interest-bearing deposits in financial institutions and federal funds sold 632       3,745       2,168       11,758    
Mortgage loans held for sale 4,587       3,956       11,385       8,966    
Total interest income 115,528       119,637       344,176       351,350    
INTEREST EXPENSE:              
Deposits 12,966       23,552       47,099       64,510    
Advances from the FHLB 1,901       1,935       6,990       9,288    
Subordinated debt, net 2,962       2,962       8,885       8,885    
Repurchase agreements and other borrowings 940       85       1,672       271    
Total interest expense 18,769       28,534       64,646       82,954    
Net interest income 96,759       91,103       279,530       268,396    
               
PROVISION FOR CREDIT LOSSES 31,598       1,508       65,559       5,770    
Net interest income after provision for credit losses 65,161       89,595       213,971       262,626    
NONINTEREST INCOME:              
Residential mortgage banking income, net 37,531       18,855       74,662       50,929    
Insurance commissions and other title fees and income, net 17,468       16,681       51,973       49,477    
Real estate brokerage and property management income, net 11,301       9,444       29,020       27,555    
Service charges on deposit accounts 1,986       2,253       6,314       8,299    
Credit card merchant fees, net 1,506       1,514       3,793       3,357    
BOLI 1,605       2,117       6,295       5,350    
Other income 22,278       3,981       31,268       11,754    
Net gain/(loss) on investment securities 1,701       (69 )     9,632       (845 )  
Total noninterest income 95,376       54,776       212,957       155,876    
NONINTEREST EXPENSE:              
Salaries and employee benefits 61,408       55,784       174,201       162,907    
Occupancy expense 8,396       7,953       23,124       23,866    
Furniture and equipment 3,247       3,805       10,451       10,753    
Amortization - intangibles 2,851       3,059       8,702       9,364    
Software expense 3,572       3,208       10,556       8,742    
Data processing 3,113       2,533       8,622       9,316    
Professional fees 2,637       3,566       8,677       9,952    
Advertising and marketing 1,870       3,429       7,440       9,440    
Other expenses 14,887       13,950       38,121       41,627    
Total noninterest expense 101,981       97,287       289,894       285,967    
Income before income tax expense and noncontrolling interest 58,556       47,084       137,034       132,535    
Provision for income tax expense 7,841       7,684       21,492       24,810    
Net income $ 50,715       $ 39,400       $ 115,542       $ 107,725    
Net income attributable to noncontrolling interest (16,251 )     (1,741 )     (20,089 )     (4,018 )  
Net income attributable to TowneBank $ 34,464       $ 37,659       $ 95,453       $ 103,707    
Per common share information              
Basic earnings $ 0.48       $ 0.52       $ 1.32       $ 1.44    
Diluted earnings $ 0.48       $ 0.52       $ 1.32       $ 1.44    
Cash dividends declared $ 0.18       $ 0.18       $ 0.54       $ 0.52    
 
TOWNEBANK
Consolidated Balance Sheets - Five Quarter Trend
(dollars in thousands, except share data)
 
                   
  September 30,   June 30,   March 31,   December 31,   September 30,
  2020   2020   2020   2019   2019
  (unaudited)   (unaudited)   (unaudited)   (audited)   (unaudited)
ASSETS                  
Cash and due from banks $ 114,604       $ 115,724       $ 108,929       $ 97,593       $ 124,439    
Interest-bearing deposits at FRB - Richmond 1,670,186       2,511,152       753,643       322,505       675,288    
Interest-bearing deposits in financial institutions 24,890       24,374       23,564       22,518       21,663    
Total Cash and Cash Equivalents 1,809,680       2,651,250       886,136       442,616       821,390    
Securities available for sale 1,310,683       1,266,624       1,248,420       1,441,308       1,337,395    
Securities held to maturity 17,131       41,595       42,431       43,688       44,494    
Less:  allowance for credit losses (90 )     (121 )     (133 )              
Securities held to maturity, net of allowance for credit losses 17,041       41,474       42,298       43,688       44,494    
Other equity securities 6,497       6,497       6,462       6,462       5,697    
FHLB stock 41,829       49,277       52,042       30,094       26,282    
Total Securities 1,376,050       1,363,872       1,349,222       1,521,552       1,413,868    
Mortgage loans held for sale 669,020       610,369       453,143       419,233       456,719    
Loans, net of unearned income and deferred costs 9,770,570       9,801,889       8,784,195       8,419,288       8,182,829    
Less: allowance for credit losses (119,058 )     (90,467 )     (64,372 )     (58,234 )     (55,428 )  
Net Loans 9,651,512       9,711,422       8,719,823       8,361,054       8,127,401    
Premises and equipment, net 256,909       257,533       236,735       231,806       231,060    
Goodwill 446,725       446,725       446,725       446,816       446,423    
Other intangible assets, net 45,781       48,632       51,448       54,399       57,404    
BOLI 244,103       242,493       240,924       243,062       241,652    
Other assets 295,637       247,962       239,670       227,125       225,374    
TOTAL ASSETS $ 14,795,417       $ 15,580,258       $ 12,623,826       $ 11,947,663       $ 12,021,291    
LIABILITIES AND EQUITY                  
Deposits:                  
Noninterest-bearing demand $ 4,464,178       $ 4,226,208       $ 3,060,515       $ 2,951,225       $ 3,030,505    
Interest-bearing:                  
Demand and money market accounts 4,642,482       4,223,391       3,573,926       3,586,364       3,534,252    
Savings 312,444       298,673       280,807       276,205       280,552    
Certificates of deposit 2,285,859       2,516,666       2,392,744       2,457,123       2,592,705    
Total Deposits 11,704,963       11,264,938       9,307,992       9,270,917       9,438,014    
Advances from the FHLB 731,202       906,365       971,527       471,687       381,846    
Subordinated debt, net 248,906       248,756       248,607       248,458       248,309    
FRB PPP lending facility       1,111,429                      
Repurchase agreements and other borrowings 58,061       60,913       171,762       52,391       42,971    
Total Borrowings 1,038,169       2,327,463       1,391,896       772,536       673,126    
Other liabilities 303,582       266,314       258,306       250,516       271,617    
TOTAL LIABILITIES 13,046,714       13,858,715       10,958,194       10,293,969       10,382,757    
Preferred stock                  
Authorized shares - 2,000,000                            
Common stock, $1.667 par value 121,115       121,101       121,057       121,107       121,080    
Capital surplus 1,045,170       1,043,774       1,041,870       1,041,160       1,039,156    
Retained earnings 520,888       499,502       477,972       467,186       445,186    
Common stock issued to deferred compensation trust, at cost (16,951 )     (16,776 )     (15,562 )     (15,555 )     (15,317 )  
Deferred compensation trust 16,951       16,776       15,562       15,555       15,317    
Accumulated other comprehensive income (loss) 44,569       43,218       12,301       11,302       19,958    
TOTAL SHAREHOLDERS’ EQUITY 1,731,742       1,707,595       1,653,200       1,640,755       1,625,380    
Noncontrolling interest 16,961       13,948       12,432       12,939       13,154    
TOTAL EQUITY 1,748,703       1,721,543       1,665,632       1,653,694       1,638,534    
TOTAL LIABILITIES AND EQUITY $ 14,795,417       $ 15,580,258       $ 12,623,826       $ 11,947,663       $ 12,021,291    
 
TOWNEBANK
Consolidated Statements of Income - Five Quarter Trend (unaudited)
(dollars in thousands, except share data)
   
   
  Three Months Ended
  September 30,   June 30,   March 31,   December 31,   September 30,
  2020   2020   2020   2019   2019
INTEREST INCOME:                  
Loans, including fees $ 102,869       $ 102,139       $ 100,062       $ 100,059       $ 102,047    
Investment securities 7,440       8,163       9,949       9,936       9,889    
Interest-bearing deposits in financial institutions and federal funds sold 632       433       1,102       2,067       3,745    
Mortgage loans held for sale 4,587       3,811       2,988       4,413       3,956    
Total interest income 115,528       114,546       114,101       116,475       119,637    
INTEREST EXPENSE:                  
Deposits 12,966       15,072       19,062       21,744       23,552    
Advances from the FHLB 1,901       2,595       2,492       1,730       1,935    
Subordinated debt 2,962       2,962       2,962       2,962       2,962    
Repurchase agreements and other borrowings 940       643       89       80       85    
Total interest expense 18,769       21,272       24,605       26,516       28,534    
Net interest income 96,759       93,274       89,496       89,959       91,103    
                   
PROVISION FOR CREDIT LOSSES 31,598       26,945       7,016       3,601       1,508    
Net interest income after provision for credit losses 65,161       66,329       82,480       86,358       89,595    
NONINTEREST INCOME:                  
Residential mortgage banking income, net 37,531       29,715       7,416       15,884       18,855    
Insurance commissions and other title fees and income, net 17,468       17,612       16,893       15,001       16,681    
Real estate brokerage and property management income, net 11,301       10,781       6,938       6,737       9,444    
Service charges on deposit accounts 1,986       1,888       2,440       2,245       2,253    
Credit card merchant fees, net 1,506       1,109       1,179       1,389       1,514    
BOLI 1,605       1,584       3,105       3,865       2,117    
Other income 22,278       3,763       5,227       4,591       3,981    
Net gain/(loss) on investment securities 1,701       2,930       5,002             (69 )  
Total noninterest income 95,376       69,382       48,200       49,712       54,776    
NONINTEREST EXPENSE:                  
Salaries and employee benefits 61,408       56,926       55,867       56,013       55,784    
Occupancy expense 8,396       7,227       7,502       7,516       7,953    
Furniture and equipment 3,247       3,564       3,640       3,598       3,805    
Amortization - intangibles 2,851       2,901       2,950       3,005       3,059    
Software expense 3,572       3,492       3,492       2,976       3,208    
Data processing 3,113       2,718       2,791       2,510       2,533    
Professional fees 2,637       2,972       3,067       2,990       3,566    
Advertising and marketing 1,870       1,986       3,584       2,839       3,429    
Other expenses 14,887       9,239       13,995       10,889       13,950    
Total noninterest expense 101,981       91,025       96,888       92,336       97,287    
Income before income tax expense and noncontrolling interest 58,556       44,686       33,792       43,734       47,084    
Provision for income tax expense 7,841       7,464       6,187       7,786       7,684    
Net income 50,715       37,222       27,605       35,948       39,400    
Net income attributable to noncontrolling interest (16,251 )     (2,617 )     (1,221 )     (873 )     (1,741 )  
Net income attributable to TowneBank $ 34,464       $ 34,605       $ 26,384       $ 35,075       $ 37,659    
Per common share information                  
Basic earnings $ 0.48       $ 0.48       $ 0.37       $ 0.49       $ 0.52    
Diluted earnings $ 0.48       $ 0.48       $ 0.36       $ 0.49       $ 0.52    
Basic weighted average shares outstanding 72,307,961       72,280,555       72,206,228       72,122,476       72,091,221    
Diluted weighted average shares outstanding 72,344,284       72,317,988       72,299,721       72,302,414       72,222,934    
Cash dividends declared $ 0.18       $ 0.18       $ 0.18       $ 0.18       $ 0.18    
                   
TOWNEBANK
Banking Segment Financial Information (unaudited)
(dollars in thousands)
 
                   
  Three Months Ended   Nine Months Ended   Increase/(Decrease)
  September 30,   June 30,   September 30,   2020 over 2019
  2020   2019   2020   2020   2019   Amount   Percent
Revenue                          
Net interest income $ 92,869       $ 89,490       $ 89,665     $ 269,941     $ 264,332       $ 5,609       2.12 %
Service charges on deposit accounts 1,986       2,253       1,888     6,315     8,299       (1,984 )     (23.91 )%
Credit card merchant fees 1,506       1,514       1,109     3,793     3,357       436       12.99 %
Other income 4,876       5,152       3,888     15,826     14,350       1,476       10.29 %
Subtotal 8,368       8,919       6,885     25,934     26,006       (72 )     (0.28 )%
Net gain/(loss) on investment securities 1,701       (69 )     2,930     9,632     (845 )     10,477       1,239.88 %
Total noninterest income 10,069       8,850       9,815     35,566     25,161       10,405       41.35 %
Total revenue 102,938       98,340       99,480     305,507     289,493       16,014       5.53 %
                           
Provision for credit losses 31,070       1,508       26,059     64,170     5,770       58,400       1,012.13 %
                           
Expenses                          
Salaries and employee benefits 36,535       33,526       35,209     104,970     96,966       8,004       8.25 %
Occupancy expense 5,829       5,209       4,812     15,557     15,460       97       0.63 %
Furniture and equipment 2,424       2,779       2,715     7,800     7,662       138       1.80 %
Amortization of intangibles 1,063       1,265       1,114     3,341     3,946       (605 )     (15.33 )%
Other expenses 15,793       17,098       10,718     45,214     52,218       (7,004 )     (13.41 )%
Total expenses 61,644       59,877       54,568     176,882     176,252       630       0.36 %
Income before income tax, corporate allocation and noncontrolling interest 10,224       36,955       18,853     64,455     107,471       (43,016 )     (40.03 )%
Corporate allocation 595       384       627     1,891     1,383       508       36.73 %
Income before income tax provision and noncontrolling interest 10,819       37,339       19,480     66,346     108,854       (42,508 )     (39.05 )%
Provision for income tax expense 474       5,495       2,167     9,304     19,337       (10,033 )     (51.88 )%
Net income 10,345       31,844       17,313     57,042     89,517       (32,475 )     (36.28 )%
Noncontrolling interest (2 )           5     2     4       (2 )     (50.00 )%
Net income attributable to TowneBank $ 10,343       $ 31,844       $ 17,318     $ 57,044     $ 89,521       $ (32,477 )     (36.28 )%
                           
Efficiency ratio 60.89 %     60.85 %     56.52 %   59.78 %   60.71 %     (0.93 )%     (1.53 )%
 
TOWNEBANK
Realty Segment Financial Information (unaudited)
(dollars in thousands)
 
       
  Three Months Ended   Nine Months Ended   Increase/(Decrease)
  September 30,   June 30,   September 30,   2020 over 2019
  2020   2019   2020   2020   2019   Amount   Percent
Revenue                          
Residential mortgage brokerage income, net $ 38,074       $ 19,171       $ 30,468       $ 76,549       $ 51,826       $ 24,723       47.70 %
Real estate brokerage income, net 3,688       2,882       2,659       8,212       7,315       897       12.26 %
Title insurance and settlement fees 654       617       639       1,728       1,581       147       9.30 %
Property management fees, net 7,613       6,562       8,122       20,808       20,240       568       2.81 %
Income from unconsolidated subsidiary 451       185       301       938       441       497       112.70 %
Net interest and other income 4,101       1,885       3,765       10,262       4,937       5,325       107.86 %
Total revenue 54,581       31,302       45,954       118,497       86,340       32,157       37.24 %
                           
Provision for credit losses 528             886       1,389             1,389       n/m    
                           
Expenses                          
Salaries and employee benefits 15,744       13,474       13,059       42,095       39,678       2,417       6.09 %
Occupancy expense 1,906       2,055       1,763       5,595       6,428       (833 )     (12.96 )%
Furniture and equipment 620       754       626       2,007       2,326       (319 )     (13.71 )%
Amortization of intangible assets 658       666       658       1,973       2,086       (113 )     (5.42 )%
Other expenses 9,226       7,478       8,270       24,366       20,953       3,413       16.29 %
Total expenses 28,154       24,427       24,376       76,036       71,471       4,565       6.39 %
                           
Income (loss) before income tax, corporate allocation and noncontrolling interest 25,899       6,875       20,692       41,072       14,869       26,203       176.23 %
Corporate allocation (356 )     (208 )     (370 )     (1,119 )     (800 )     (319 )     39.88 %
(Loss) income before income tax provision and noncontrolling interest 25,543       6,667       20,322       39,953       14,069       25,884       183.98 %
Provision for income tax (benefit) expense 4,780       1,454       4,127       7,614       3,292       4,322       131.29 %
Net (loss) income 20,763       5,213       16,195       32,339       10,777       21,562       200.07 %
Noncontrolling interest (4,790 )     (1,496 )     (2,415 )     (7,996 )     (2,997 )     (4,999 )     166.80 %
Net (loss) income attributable to TowneBank $ 15,973       $ 3,717       $ 13,780       $ 24,343       $ 7,780       $ 16,563       212.89 %
                           
Efficiency ratio 51.58 %     78.04 %     53.04 %     64.17 %     82.78 %     (18.61 )%     (22.48 )%
                           
TOWNEBANK
Insurance Segment Financial Information (unaudited)
(dollars in thousands)
 
                   
  Three Months Ended   Nine Months Ended   Increase/(Decrease)
  September 30,   June 30,   September 30,   2020 over 2019
  2020   2019   2020   2020   2019     Amount   Percent
Commission and fee income                          
Property and casualty $ 14,072       $ 13,481       $ 13,926       $ 40,784       $ 38,421       $ 2,363       6.15 %
Employee benefits 3,825       3,629       3,791       11,534       10,968       566       5.16 %
Travel insurance 1,399       834       861       3,526       3,292       234       7.11 %
Specialized benefit services 165       166       157       489       499       (10 )     (2.00 )%
Total commissions and fees 19,461       18,110       18,735       56,333       53,180       3,153       5.93 %
                           
Contingency and bonus revenue 1,112       1,431       2,009       5,144       4,910       234       4.77 %
Other income * 17,697       74       127       17,906       227       17,679       7,788.11 %
Total revenue 38,270       19,615       20,871       79,383       58,317       21,066       36.12 %
                           
Employee commission expense 3,654       3,378       3,649       10,900       9,878       1,022       10.35 %
Revenue, net of commission expense 34,616       16,237       17,222       68,483       48,439       20,044       41.38 %
                           
Salaries and employee benefits 9,129       8,784       8,658       27,136       26,263       873       3.32 %
Occupancy expense 661       689       652       1,972       1,978       (6 )     (0.30 )%
Furniture and equipment 203       272       223       644       765       (121 )     (15.82 )%
Amortization of intangible assets 1,130       1,128       1,129       3,388       3,332       56       1.68 %
Other expenses 1,060       2,110       1,419       3,836       5,906       (2,070 )     (35.05 )%
Total operating expenses 12,183       12,983       12,081       36,976       38,244       (1,268 )     (3.32 )%
Income before income tax, corporate allocation and noncontrolling interest 22,433       3,254       5,141       31,507       10,195       21,312       209.04 %
Corporate allocation (239 )     (176 )     (257 )     (772 )     (583 )     (189 )     32.42 %
Income before income tax provision and noncontrolling interest 22,194       3,078       4,884       30,735       9,612       21,123       219.76 %
Provision for income tax expense 2,587       735       1,170       4,574       2,181       2,393       109.72 %
Net income 19,607       2,343       3,714       26,161       7,431       18,730       252.05 %
Noncontrolling interest (11,459 )     (245 )     (207 )     (12,095 )     (1,025 )     (11,070 )     1,080.00 %
Net income attributable to TowneBank $ 8,148       $ 2,098       $ 3,507       $ 14,066       $ 6,406       $ 7,660       119.58 %
                           
Provision for income taxes 2,587       735       1,170       4,574       2,181       2,393       109.72 %
Depreciation, amortization and interest expense 1,285       1,325       1,291       3,875       3,943       (68 )     (1.72 )%
EBITDA (non-GAAP) $ 12,020       $ 4,158       $ 5,968       $ 22,515       $ 12,530       $ 9,985       79.69 %
                           
Efficiency ratio 35.19 %     79.96 %     70.15 %     53.99 %     78.95 %     $ (0.25 )     (31.67 )%
*Included in other income is the gross gain on the sale of Red Sky $ 17,626       %     n/m       $ 17,626       %       n/m        
Efficiency ratio excluding gain 71.71 %     79.96 %     70.15 %     72.71 %     78.95 %     $ (0.06 )     (7.60 )%
 
TOWNEBANK
Reconcilement of Non-GAAP Financial Measures
(dollars in thousands)
         
                   
  Three Months Ended   Nine Months Ended
  September 30,   September 30,   June 30,   September 30,   September 30,
  2020   2019   2020   2020   2019
                   
Return on average assets (GAAP) 0.89 %   1.26 %   0.97 %   0.91 %   1.17 %
Impact of excluding average goodwill and other intangibles and amortization 0.08 %   0.14 %   0.10 %   0.10 %   0.15 %
Return on average tangible assets (non-GAAP) 0.97 %   1.40 %   1.07 %   1.01 %   1.32 %
                   
Return on average equity (GAAP) 7.85 %   9.22 %   8.18 %   7.48 %   8.54 %
Impact of excluding average goodwill and other intangibles and amortization 3.81 %   4.98 %   4.14 %   3.84 %   5.03 %
Return on average tangible equity (non-GAAP) 11.66 %   14.20 %   12.32 %   11.32 %   13.57 %
                   
Return on average common equity (GAAP) 7.91 %   9.29 %   8.24 %   7.53 %   8.60 %
Impact of excluding average goodwill and other intangibles and amortization 3.88 %   5.07 %   4.20 %   3.91 %   5.13 %
Return on average tangible common equity (non-GAAP) 11.79 %   14.36 %   12.44 %   11.44 %   13.73 %
                   
Book value (GAAP) $ 23.83       $ 22.38       $ 23.50       $ 23.83       $ 21.95    
Impact of excluding average goodwill and other intangibles and amortization (6.77 )     (6.94 )     (6.82 )     (6.77 )     (6.90 )  
Tangible book value (non-GAAP) $ 17.06       $ 15.44       $ 16.68       $ 17.06       $ 15.05    
                   
Efficiency ratio (GAAP) 53.08 %   55.96 %   66.69 %   58.86 %   67.40 %
Impact of excluding gain/loss on investments (0.47 )%   (1.03 )%   0.03 %   (1.18 )%   0.13 %
Efficiency ratio (non-GAAP) 53.55 %   56.99 %   66.66 %   60.04 %   67.27 %
                   
Average assets (GAAP) $ 15,487,152       $ 11,845,282       $ 14,409,468       $ 13,987,474       $ 11,526,487    
Less: average goodwill 446,725       442,919       446,725       446,762       442,890    
Less: average intangible assets 47,513       57,327       50,352       50,373       60,333    
Average tangible assets (non-GAAP) $ 14,992,914       $ 11,345,036       $ 13,912,391       $ 13,490,339       $ 11,023,264    
                   
Average equity (GAAP) $ 1,747,033       $ 1,620,070       $ 1,701,777       $ 1,704,993       $ 1,580,213    
Less: average goodwill 446,725       442,919       446,725       446,762       442,890    
Less: average intangible assets 47,513       57,327       50,352       50,373       60,333    
Average tangible equity (non-GAAP) $ 1,252,795       $ 1,119,824       $ 1,204,700       $ 1,207,858       $ 1,076,990    
                   
Average common equity (GAAP) $ 1,732,881       $ 1,607,853       $ 1,689,603       $ 1,692,202       1,568,336    
Less: average goodwill 446,725       442,919       446,725       446,762       442,890    
Less: average intangible assets 47,513       57,327       50,352       50,373       60,333    
Average tangible common equity (non-GAAP) $ 1,238,643       $ 1,107,607       $ 1,192,526       $ 1,195,067       $ 1,065,113    
                   
Net Income (GAAP) $ 34,464       $ 37,659       34,605       95,453       103,707    
Amortization of Intangibles, net of tax 2,252       2,417       2,292       6,875       7,398    
Tangible Net Income (non-GAAP) $ 36,716       $ 40,076       $ 36,897       $ 102,328       $ 111,105    
                   
Net Income (GAAP) $ 34,464       $ 37,659       $ 34,605       $ 95,453       $ 103,707    
Provision for credit losses 31,598       1,508       26,945       65,559       5,770    
Provision for income tax 7,841       7,684       7,464       21,492       24,810    
Pre-provision, pre-tax net revenues (non-GAAP) $ 73,903       $ 46,851       $ 69,014       $ 182,504       $ 134,287    
                   
Total Revenue (GAAP) $ 192,135       $ 162,656       $ 145,879       $ 492,487       $ 424,272    
Net (gain)/loss on investment securities (1,701 )     (2,930 )     69       (9,632 )     845    
Total Revenue for Efficiency calculation (non-GAAP) $ 190,434       $ 159,726       $ 145,948       $ 482,855       $ 425,117    

 

TowneBank (NASDAQ:TOWN)
Historical Stock Chart
From Sep 2021 to Oct 2021 Click Here for more TowneBank Charts.
TowneBank (NASDAQ:TOWN)
Historical Stock Chart
From Oct 2020 to Oct 2021 Click Here for more TowneBank Charts.