SUFFOLK, Va., July 29, 2021 (GLOBE NEWSWIRE) -- TowneBank (the "Company") (NASDAQ: TOWN) today reported earnings for the quarter ended June 30, 2021 of $55.80 million, or $0.77 per diluted share, compared to $34.61 million, or $0.48 per diluted share, for the quarter ended June 30, 2020.

"Towne delivered another strong financial performance for the quarter with solid contributions across each of our business segments.  Continued improvements in economic conditions led to an increase of nearly $50 million, or 16%, in total revenues.  In fact, CNBC recently recognized Virginia and North Carolina as the #1 and #2 top states, respectively, in our country for doing business.  As our economy continues to normalize, our Company is well-positioned to capitalize on the opportunities to drive future growth," said G. Robert Aston, Jr., Executive Chairman.

Highlights for Second Quarter 2021 Compared to Second Quarter 2020:

  • Total revenues were $167.32 million, an increase of $4.67 million, or 2.87%.
  • Pre-provision, pre-tax, net revenues (non-GAAP) were $59.73 million, a decrease of $9.29 million, or 13.46%.
  • Loans held for investment were $9.42 billion, a decrease of $0.38 billion, or 3.86%, from June 30, 2020, and  $0.31 billion, or 3.19%, from March 31, 2021.  Excluding the decline in loans from the  Paycheck Protection Program ("PPP"), loans held for investment increased $186.81 million, or 2.14%, compared to June 30, 2020, and $62.46 million, or 2.84%, on an annualized basis from the linked quarter.  Total loans at June 30, 2021, June 30, 2020, and March 31, 2021 included $0.52 billion, $1.09 billion, and $0.90 billion, respectively, of PPP loans.
  • Total deposits were $12.96 billion, an increase of $1.70 billion, or 15.09%, compared to prior year and $0.82 billion, or 27.26% on an annualized basis, from March 31, 2021.
  • Noninterest bearing deposits increased by 24.06%, to $5.24 billion, representing 40.44% of total deposits.  Compared to the linked quarter, noninterest bearing deposits increased 8.31%, or 33.34%, on an annualized basis.
  • Annualized return on common shareholders' equity was 12.31% and annualized return on average tangible common shareholders' equity was 17.57% (non-GAAP).
  • Net interest margin for the quarter was 2.92% and taxable equivalent net interest margin (non-GAAP) was 2.94%.
  • Nonperforming assets were $15.22 million, or 0.10% of total assets, compared to $29.25 million, or 0.19%, at June 30, 2020, primarily due to the sale of several OREO properties.
  • Effective tax rate of 20.03% in the quarter compared to 17.74% in second quarter 2020.

"We were pleased to deliver more than $62 million in core loan growth, excluding PPP, during the quarter.  Strong credit performance and continued reductions in loan deferrals coupled with an improving economic forecast led to a modest release in loan loss reserves.  Looking ahead, as liquidity continues to build we would expect continued pressure on our net interest margins, highlighting the importance of our fee-based business lines and diversified business model," stated J. Morgan Davis, President and Chief Executive Officer.

Quarterly Net Interest Income Compared to Second Quarter 2020:

  • Net interest income was $101.14 million compared to $93.27 million at June 30, 2020.
  • Tax-equivalent net interest margin (non-GAAP) was 2.94%, including purchase accounting accretion of 5 basis points and PPP interest and fees of 10 basis points, compared to 2.87%, including purchase accounting accretion of 8 basis points and a 16 basis point decline in interest and fees related to PPP, for second quarter 2020.
  • On an average basis, loans held for investment, with a yield of 4.24%, represented 69.02% of earning assets at June 30, 2021 compared to a yield of 4.29% and 73.10% of earning assets in the second quarter of 2020.  Excluding PPP loans, loan yields were 4.15% in second quarter 2021 compared to 4.42% in second quarter 2020.
  • Interest and fee income on PPP loans was $10.02 million in second quarter 2021, compared to $11.63 million in the linked quarter, and $5.81 million in second quarter 2020.
  • Total cost of deposits decreased to 0.23% from 0.58% at June 30, 2020.
  • Average interest-earning assets totaled $13.92 billion at June 30, 2021 compared to $13.16 billion at June 30, 2020, an increase of 5.74%.
  • Average interest-bearing liabilities totaled $8.07 billion, a decrease of $0.57 billion from prior year.
  • Interest expense on the Federal Reserve Bank ("FRB") PPP lending facility was $0.12 million in second quarter 2021, compared to $0.16 million in the linked quarter, and $0.54 million in second quarter 2020.  The Company repaid the entire balance of the facility during second quarter 2021.

Quarterly Provision for Credit Losses:

  • The quarterly provision for credit losses for on-balance-sheet loans was a benefit of $8.09 million compared to a provision expense of $25.99 million one year ago and a benefit of $3.41 million in the linked quarter.  The second quarter 2021 included a release in the allowance for credit losses of $7.95 million that was driven by a combination of net recoveries, reduction in loans deferred under the CARES Act, and improvements in the economic forecast, offset by modest core loan growth.
  • Net loan recoveries were $0.14 million compared to net recoveries of $0.10 million one year prior and net charge-offs of $0.67 million in the linked quarter.  The ratio of net loan charge-offs to average loans on an annualized basis was (0.01)% in second quarter 2021, 0.00% in 2020, and 0.03% in the linked quarter.
  • The provision for credit losses on off-balance-sheet commitments was a benefit of $1.89 million compared to a provision expense of $1.08 million in the second quarter of 2020, and a benefit of $0.48 million in the linked quarter.
  • The allowance for credit losses on loans represented 1.15% of total loans compared to 1.19% at March 31, 2021 and 0.92% at June 30, 2020.  Excluding PPP loans, which are fully government guaranteed, the allowance for credit losses (non-GAAP) was 1.22%, compared to 1.31% at March 31, 2021 and 1.04% at June 30, 2020.  The allowance for credit losses on loans was 9.67 times nonperforming loans compared to 9.09 times at March 31, 2021 and 5.34 times at June 30, 2020.
  • 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.

Quarterly Noninterest Income Compared to Second Quarter 2020:

  • Total noninterest income was $66.18 million compared to $69.38 million in 2020, a decrease of $3.21 million, or 4.62%.  Residential mortgage banking income decreased $4.19 million, investment income increased $0.88 million, insurance commissions and other title fees increased $0.72 million, and real estate brokerage and property management income increased $0.20 million.  Also included in noninterest income are net gains on investment securities of $0.25 million as compared to net gains of $2.93 million in the prior year.
  • Residential mortgage banking recorded income of $25.52 million compared to $29.72 million in second quarter 2020.  Loan volume in the current quarter was $1.45 billion, with purchase activity comprising 76.95% of that volume, compared to volume in second quarter 2020 of $1.47 billion, with purchase activity comprising 51.26%.  Offsetting this 1.36% decline in volume between quarters, margins improved 47 basis points.  The primary driver of the decline in income between quarters was the income statement impact of a net loss on derivative instruments of $7.88 million, including a loss on interest rate-locks of $4.76 million, compared to a net gain on derivative instruments of $6.43 million, including a gain on interest rate-locks of $3.51 million in second quarter 2020.
  • In the quarterly comparison, margins on residential mortgages declined 37 basis points from the linked quarter after peaking in December 2020.  Management expects margin compression to continue through the end of the year.
  • Total Insurance segment revenue increased $1.03 million, or 4.93% to $21.90 million in second quarter 2021 compared to 2020.  The Company acquired a property and casualty insurance agency in December 2020, which brought in $0.53 million in additional revenue in second quarter 2021.  The new agency revenues, combined with organic growth, outpaced the impact of the reduction in revenues due to the sale of its travel insurance joint venture in third quarter 2020, which contributed revenue of $0.86 million in second quarter 2020.
  • Property management fee revenue decreased 12.69%, or $1.03 million, to $7.09 million compared to second quarter 2020.  The earnings streams between years has been impacted by the emergence of the COVID-19 pandemic, which put travel at a standstill in first quarter 2020 and resulted in heavier reservation activities in second quarter 2020.  Due to record first quarter 2021 reservations, occupancy levels are currently at near-maximum and year-to-date reservation income is $9.38 million, or 71.08% ahead of 2020.
  • The Company acquired Venture Resorts, the largest cabin rental company in the Smoky Mountains of Tennessee, in July 2021.  Based on the timing of this acquisition, management does not expect the impact to earnings for the remainder of 2021 to be material.

Quarterly Noninterest Expense Compared to Second Quarter 2020:

  • Total noninterest expense was $105.39 million compared to $91.03 million in 2020, an increase of $14.37 million, or 15.79%.  The higher level of expenses were attributable to increases in salary and benefits expense of $4.44 million, and production or performance related items such as advertising and marketing expense of $1.27 million, software expense of $1.0 million, charitable contributions of $3.43 million, and data processing expense of $0.70 million.
  • The quarterly increase in salaries and benefits was primarily driven by across-the-board cost of living increases in the second quarter of 2021.
  • Noninterest expenses across most major categories have increased compared to 2020, due to the pandemic impact in the prior year, and have begun to normalize in 2021.
  • Higher credit card fees on vacation property reservation activities drove the increase in data processing expense, while increased costs associated with our core banking platform resulted in higher software expenses.

Consolidated Balance Sheet Highlights:

  • Total assets were $15.80 billion for the quarter ended June 30, 2021, an increase of $0.72 billion, or 4.80%, compared to $15.08 billion at March 31, 2021.  Total assets increased $0.22 billion, or 1.44%, from $15.58 billion at June 30, 2020.  The year-over-year increase was driven primarily by higher liquidity levels and loans held for investment tied to PPP lending activities.
  • Loans held for investment decreased $0.38 billion, or 3.86%, compared to prior year and $0.31 billion, or 3.19%, compared the linked quarter.  Excluding PPP loans of $0.52 billion in second quarter 2021, $1.09 billion in second quarter 2020, and $0.90 billion in the linked quarter, loans held for investment increased $186.81 million, or 2.14%, compared to prior year, and $62.46 million, or 0.71%, compared to March 31, 2021, or 2.84% on an annualized basis.
  • Average loans held for investment, excluding PPP loans, were $8.85 billion in the second quarter of 2021, an increase of $19.19 million, or 0.22% compared to prior year.  In the linked quarter comparison, average loans held for investment, excluding PPP loans, increased 0.79%, or $68.96 million, 3.15% on an annualized basis.
  • Unamortized fee income related to PPP loans was $14.33 million at June 30, 2021.
  • Mortgage loans held for sale decreased $55.92 million, or 9.16%, compared to the prior year and $28.46 million, or 4.88%, compared to the linked quarter.
  • Total deposits increased $1.70 billion, or 15.09%, compared to the prior year and $0.82 billion, or 6.80%, compared to the linked quarter.
  • Total borrowings decreased $1.74 billion, or 74.65%, from prior year and $0.17 billion, or 22.02%, compared to the linked quarter.

Investment Securities:

  • Total investment securities were $1.49 billion compared to $1.46 billion at March 31, 2021 and $1.36 billion at June 30, 2020.  The weighted average duration of the portfolio at June 30, 2021 was 4.3 years.  The carrying value of the AFS debt securities portfolio included $42.18 million, $59.89 million, and $28.12 million in net unrealized gains at June 30, 2021, June 30, 2020, and March 31, 2021, respectively.

Loans and Asset Quality:

  • Total loans held for investment were $9.42 billion at June 30, 2021 compared to $9.73 billion at March 31, 2021 and $9.80 billion at June 30, 2020.
  • Nonperforming assets were $15.22 million, or 0.10% of total assets, compared to $29.25 million, or 0.19%, at June 30, 2020.
  • Nonperforming loans were 0.12% of period end loans compared to 0.17% at June 30, 2020.
  • Foreclosed property decreased to $4.04 million from $12.32 million at June 30, 2020.
  • At June 30, 2021, we had $61.02 million in loan modifications made in accordance with section 4013 of the CARES Act, a decline of $1.92 billion, or 96.92%, from a reported peak of $1.98 billion at April 30, 2020.

Deposits and Borrowings:

  • Total deposits were $12.96 billion compared to $12.14 billion at March 31, 2021 and $11.26 billion at June 30, 2020.
  • Total loans to deposits were 72.69% compared to 80.19% at March 31, 2021 and 87.01% at June 30, 2020.
  • Non-interest bearing deposits were 40.44% of total deposits at June 30, 2021 compared to 39.87% at March 31, 2021 and 37.52% at June 30, 2020.
  • Total borrowings were $0.59 billion compared to $0.76 billion at March 31, 2021 and $2.33 billion at June 30, 2020.

Capital:

  • Common equity tier 1 capital ratio of 12.42%.
  • Tier 1 leverage capital ratio of 9.44%.
  • Tier 1 risk-based capital ratio of 12.57%.
  • Total risk-based capital ratio of 15.76%.
  • Book value per common share was $25.51 compared to $24.78 at March 31, 2021 and $23.50 at June 30, 2020.
  • Tangible book value per common share (non-GAAP) was $18.70 compared to $17.94 at March 31, 2021 and $16.68 at June 30, 2020.

About TowneBank:
Founded in 1999, TowneBank is a company built on relationships, offering a full range of banking and other financial services, with a mission of serving others and enriching lives.  Dedicated to a culture of caring, Towne values all employees and members by embracing their diverse talents, perspectives, and experiences.

Today, TowneBank operates over 40 banking offices throughout Hampton Roads and Central Virginia, as well as Northeastern and Central North Carolina – serving as a local leader in promoting the social, cultural, and economic growth in each community.  Towne offers a competitive array of business and personal banking solutions, delivered with only the highest ethical standards.  Experienced local bankers providing a higher level of expertise and personal attention with local decision-making are key to the TowneBank strategy.  TowneBank has grown its capabilities beyond banking to provide expertise through its controlled divisions and subsidiaries that include Towne 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.  With total assets of $15.80 billion as of June 30, 2021, 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 that may cause actual results to differ materially from those contemplated by such forward-looking statements include the impact of the COVID-19 pandemic and the associated efforts to limit its spread; competitive pressures in the banking industry that may increase significantly; changes in the interest rate environment that may reduce margins and/or the volumes and values of loans made or held as well as the value of other financial assets held; changes in the creditworthiness of customers and the possible impairment of the collectability of loans; general economic conditions, either nationally or regionally, that may be less favorable than expected, resulting in, among other things, a deterioration in credit quality and/or a reduced demand for credit or other services; changes in the legislative or regulatory environment, including changes in accounting standards and tax laws, that may adversely affect TowneBank’s business; costs or difficulties related to the integration of the businesses TowneBank has acquired may be greater than expected; expected revenue growth or cost savings associated with pending or recently completed acquisitions may not be fully realized or realized within the expected time frame; cybersecurity threats or attacks, the implementation of new technologies, and the ability to develop and maintain reliable electronic systems; TowneBank’s competitors may have greater financial resources and develop products that enable them to compete more successfully; changes in business conditions; changes in the securities market; changes in the local economy with regard to TowneBank’s market areas; and other risk factors detailed from time to time in filings made by TowneBank with the Federal Deposit Insurance Corporation.  TowneBank undertakes no obligation to update or clarify these forward-looking statements, whether as a result of new information, future events or otherwise.

Media contact:
G. Robert Aston, Jr., Executive Chairman, 757-638-6780
J. Morgan Davis, President and Chief Executive Officer, 757-673-1673

Investor contact:
William B. Littreal, Chief Financial Officer, 757-638-6813

                             
TOWNEBANK
Selected Financial Highlights (unaudited)
(dollars in thousands, except per share data)
                             
  Three Months Ended
  June 30,   March 31,   December 31,   September 30,   June 30,
  2021   2021   2020   2020   2020
Income and Performance Ratios:                            
Total Revenue $ 167,321     $ 182,509     $ 171,848     $ 192,135     $ 162,656  
Net income 58,002     72,631     53,891     50,715     37,222  
Net income available to common shareholders 55,803     68,995     50,082     34,464     34,605  
Pre-provision, pre-tax, net revenues (non-GAAP) 59,728     81,547     62,107     73,903     69,014  
Net income per common share - diluted 0.77     0.95     0.69     0.48     0.48  
Book value per common share 25.51     24.78     24.31     23.83     23.50  
Book value per common share - tangible (non-GAAP) 18.70     17.94     17.46     17.06     16.68  
Return on average assets 1.48 %   1.92 %   1.35 %   0.89 %   0.97 %
Return on average assets - tangible (non-GAAP) 1.59 %   2.05 %   1.46 %   0.97 %   1.07 %
Return on average equity 12.21 %   15.56 %   11.26 %   7.85 %   8.18 %
Return on average equity - tangible (non-GAAP) 17.38 %   22.19 %   16.28 %   11.66 %   12.32 %
Return on average common equity 12.31 %   15.70 %   11.36 %   7.91 %   8.24 %
Return on average common equity - tangible (non-GAAP) 17.57 %   22.45 %   16.48 %   11.79 %   12.44 %
Noninterest income as a percentage of total revenue 39.55 %   45.21 %   41.45 %   49.64 %   42.66 %
Regulatory Capital Ratios (1):                            
Common equity tier 1 12.42 %   12.15 %   11.87 %   11.75 %   11.54 %
Tier 1 12.57 %   12.30 %   12.04 %   11.91 %   11.67 %
Total 15.76 %   15.59 %   15.42 %   15.35 %   14.91 %
Tier 1 leverage ratio 9.44 %   9.54 %   8.99 %   8.89 %   9.05 %
Asset Quality:                            
Allowance for credit losses on loans to nonperforming loans 9.67x     9.09x     10.74x     7.31x     5.34x  
Allowance for credit losses on loans to period end loans 1.15 %   1.19 %   1.25 %   1.22 %   0.92 %
Allowance for credit losses on loans to period end loans excluding PPP loans (non-GAAP) 1.22 %   1.31 %   1.37 %   1.37 %   1.04 %
Nonperforming loans to period end loans 0.12 %   0.13 %   0.12 %   0.17 %   0.17 %
Nonperforming assets to period end assets 0.10 %   0.11 %   0.11 %   0.19 %   0.19 %
Net charge-offs (recoveries) to average loans (annualized) (0.01 )%   0.03 %   %   (0.01 )%   %
Net charge-offs (recoveries) $ (137 )   $ 669     $ 109     $ (328 )   $ (102 )
                             
Nonperforming loans $ 11,178     $ 12,768     $ 11,188     $ 16,295     $ 16,935  
Former bank premises     750     750     750      
Foreclosed property 4,041     3,748     4,276     11,695     12,315  
Total nonperforming assets $ 15,219     $ 17,266     $ 16,214     $ 28,740     $ 29,250  
Loans past due 90 days and still accruing interest $ 1,584     $ 108     $ 528     $ 19     $ 464  
Allowance for credit losses on loans $ 108,130     $ 116,077     $ 120,157     $ 119,058     $ 90,467  
Mortgage Banking:                            
Loans originated, mortgage $ 1,050,663     $ 1,187,595     $ 1,257,963     $ 1,292,801     $ 1,116,782  
Loans originated, joint venture 403,864     417,177     429,848     498,100     357,815  
Total loans originated $ 1,454,527     $ 1,604,772     $ 1,687,811     $ 1,790,901     $ 1,474,597  
Number of loans originated 4,514     5,164     5,481     5,817     4,818  
Number of originators 222     229     228     224     216  
Purchase % 76.95 %   53.45 %   59.76 %   61.21 %   51.26 %
Loans sold $ 1,485,057     $ 1,601,480     $ 1,845,926     $ 1,833,590     $ 1,398,649  
Rate lock asset $ 7,760     $ 12,522     $ 11,781     $ 10,480     $ 7,202  
Gross realized gain on sales and fees as a % of loans originated 3.64 %   4.01 %   4.02 %   3.65 %   3.17 %
Other Ratios:                            
Net interest margin 2.92 %   3.04 %   2.97 %   2.70 %   2.85 %
Net interest margin-fully tax equivalent (non-GAAP) 2.94 %   3.06 %   2.98 %   2.72 %   2.87 %
Average earning assets/total average assets 91.89 %   91.47 %   91.59 %   92.09 %   91.33 %
Average loans/average deposits 78.22 %   82.71 %   83.42 %   86.29 %   91.81 %
Average noninterest deposits/total average deposits 40.21 %   38.39 %   39.61 %   37.76 %   36.52 %
Period end equity/period end total assets 11.83 %   12.04 %   12.20 %   11.82 %   11.05 %
Efficiency ratio (non-GAAP) 61.46 %   52.11 %   60.02 %   57.36 %   55.17 %
(1) Current reporting period regulatory capital ratios are preliminary              


TOWNEBANK
Selected Data (unaudited)
(dollars in thousands)
                             
Investment Securities                   % Change
  Q2   Q2   Q1   Q2 21 vs.   Q2 21 vs.
Available-for-sale securities, at fair value 2021   2020   2021   Q2 20   Q1 21
U.S. agency securities $ 206,151     $ 118,176     $ 201,787     74.44 %   2.16 %
U.S. Treasury notes 1,013     1,010     1,019     0.30 %   (0.59 )%
Municipal securities 334,633     313,322     334,751     6.80 %   (0.04 )%
Trust preferred and other corporate securities 31,680     59,598     31,241     (46.84 )%   1.41 %
Mortgage-backed securities issued by GSE and GNMA 881,078     774,658     849,418     13.74 %   3.73 %
Allowance for credit losses (134 )   (140 )   (210 )   (4.29 )%   (36.19 )%
Total $ 1,454,421     $ 1,266,624     $ 1,418,006     14.83 %   2.57 %
Gross unrealized gains (losses) reflected in financial statements                            
Total gross unrealized gains $ 65,152     $ 61,559     $ 38,751     5.84 %   68.13 %
Total gross unrealized losses (22,968 )   (1,674 )   (10,632 )   1,272.04 %   116.03 %
Net unrealized gains (losses) and other adjustments on AFS securities $ 42,184     $ 59,885     $ 28,119     (29.56 )%   50.02 %
Held-to-maturity securities, at amortized cost                            
Trust preferred corporate securities $ 2,297     $ 2,345     $ 2,309     (2.05 )%   (0.52 )%
Municipal securities 5,053     28,854     5,032     (82.49 )%   0.42 %
Mortgage-backed securities issued by GSE and GNMA 8,039     10,395     8,639     (22.66 )%   (6.95 )%
Allowance for credit losses (97 )   (121 )   (97 )   (19.83 )%    
Total $ 15,292     $ 41,473     $ 15,883     (63.13 )%   (3.72 )%
                             
Gross unrealized gains (losses) not reflected in financial statements                            
Total gross unrealized gains $ 1,708     $ 1,980     $ 1,598     (13.74 )%   6.88 %
Total gross unrealized losses                  
Net unrealized gains (losses) in HTM securities $ 1,708     $ 1,980     $ 1,598     (13.74 )%   6.88 %
                             
Loans Held For Investment (1)                   % Change
  Q2   Q2   Q1   Q2 21 vs.   Q2 21 vs.
  2021   2020   2021   Q2 20   Q1 21
Real estate - construction and development $ 1,029,811     $ 1,178,832     $ 1,031,267     (12.64 )%   (0.14 )%
Commercial real estate - owner occupied 1,445,328     1,383,294     1,439,412     4.48 %   0.41 %
Commercial real estate - non owner occupied 2,597,405     2,332,447     2,477,315     11.36 %   4.85 %
Real estate - multifamily 343,764     277,947     360,125     23.68 %   (4.54 )%
Residential 1-4 family 1,166,898     1,227,961     1,173,761     (4.97 )%   (0.58 )%
HELOC 390,726     442,569     400,314     (11.71 )%   (2.40 )%
Commercial and industrial business (C&I) 1,529,788     2,156,428     2,005,558     (29.06 )%   (23.72 )%
Government 479,664     346,734     398,579     38.34 %   20.34 %
Indirect 310,492     270,321     278,567     14.86 %   11.46 %
Consumer loans and other 129,702     185,356     169,685     (30.03 )%   (23.56 )%
Total $ 9,423,578     $ 9,801,889     $ 9,734,583     (3.86 )%   (3.19 )%
 
(1) Paycheck Protection Program loans totaling $0.52 billion, $1.09 billion, and $0.90 billion, primarily in C&I, are included in Q2 2021, Q2 2020, and Q1 2021, respectively.
Deposits                   % Change
  Q2   Q2   Q1   Q2 21 vs.   Q2 21 vs.
  2021   2020   2021   Q2 20   Q1 21
Noninterest-bearing demand $ 5,243,074     $ 4,226,208     $ 4,840,678     24.06 %   8.31 %
Interest-bearing:                            
Demand and money market accounts 5,373,146     4,223,391     5,062,461     27.22 %   6.14 %
Savings 349,552     298,673     342,554     17.04 %   2.04 %
Certificates of deposits 1,998,828     2,516,666     1,893,951     (20.58 )%   5.54 %
Total $ 12,964,600     $ 11,264,938     $ 12,139,644     15.09 %   6.80 %
                             


TOWNEBANK
Average Balances, Yields and Rate Paid (unaudited)
(dollars in thousands)
                                                     
  Three Months Ended   Three Months Ended   Three Months Ended
  June 30, 2021   March 31, 2021   June 30, 2020
        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) $ 9,604,805     $ 101,490     4.24 %   $ 9,647,129     $ 101,960     4.29 %   $ 9,619,931     $ 102,656     4.29 %
Taxable investment securities 1,351,922     6,476     1.92 %   1,303,535     6,604     2.03 %   1,198,776     7,367     2.46 %
Tax-exempt investment securities 128,094     434     1.36 %   139,859     542     1.55 %   147,489     836     2.27 %
Total securities 1,480,016     6,910     1.87 %   1,443,394     7,146     1.98 %   1,346,265     8,203     2.44 %
Interest-bearing deposits 2,327,310     619     0.11 %   1,715,110     416     0.10 %   1,729,140     433     0.10 %
Loans held for sale 503,706     3,711     2.95 %   536,997     3,361     2.50 %   464,796     3,811     3.28 %
Total earning assets 13,915,837     112,730     3.25 %   13,342,630     112,883     3.44 %   13,160,132     115,103     3.52 %
Less: allowance for credit losses (116,025
)               (120,934
)               (69,451
)            
Total nonearning assets 1,344,076                 1,370,720                 1,318,787              
Total assets $ 15,143,888                 $ 14,592,416                 $ 14,409,468              
Liabilities and Equity:                                                    
Interest-bearing deposits                                                    
Demand and money market $ 5,179,907     $ 2,004     0.16 %   $ 4,904,885     $ 2,075     0.17 %   $ 3,857,757     $ 2,491     0.26 %
Savings 346,177     528     0.61 %   332,006     522     0.64 %   290,201     554     0.77 %
Certificates of deposit 1,816,283     4,612     1.02 %   1,959,225     5,951     1.23 %   2,503,648     12,027     1.93 %
Total interest-bearing deposits 7,342,367     7,144     0.39 %   7,196,116     8,548     0.48 %   6,651,606     15,072     0.91 %
Borrowings 476,122     565     0.47 %   562,451     822     0.58 %   1,741,832     3,238     0.74 %
Subordinated debt, net 249,260     2,962     4.75 %   249,114     2,930     4.70 %   248,660     2,962     4.76 %
Total interest-bearing liabilities 8,067,749     10,671     0.53 %   8,007,681     12,300     0.62 %   8,642,098     21,272     0.99 %
Demand deposits 4,937,754                 4,483,444                 3,826,439              
Other noninterest-bearing liabilities 304,793                 303,524                 239,154              
Total liabilities 13,310,296                 12,794,649                 12,707,691              
Shareholders’ equity 1,833,592                 1,797,767                 1,701,777              
Total liabilities and equity $ 15,143,888                 $ 14,592,416                 $ 14,409,468              
Net interest income (tax-equivalent basis)       $ 102,059                 $ 100,583                 $ 93,831        
Reconciliation of Non-GAAP Financial Measures                                                    
Tax-equivalent basis adjustment       (915
)               (593
)               (557
)      
Net interest income (GAAP)       $ 101,144                 $ 99,990                 $ 93,274        
                                                     
Interest rate spread (2)(3)             2.72 %               2.81 %               2.53 %
Interest expense as a percent of average earning assets             0.31 %               0.37 %               0.65 %
Net interest margin (tax equivalent basis) (3)(4)             2.94 %               3.06 %               2.87 %
Total cost of deposits             0.23 %               0.30 %               0.58 %
                                                     


(1) June 30, 2021, June 30, 2020, and March 31, 2021 includes average PPP balances of $0.77 billion, $0.81 billion and $0.88 billion, and related interest and fee income of $10.02 million, $5.81 million, and $11.29 million, respectively.
(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)
                                                     
  Six Months Ended
  Six Months Ended
  Six Months Ended June 30,
  June 30, 2021
  June 30, 2020
  2021 Compared with 2020
      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) $ 9,625,850     $ 203,451     4.26 %   $ 9,085,074     $ 203,221     4.50 %   $ 230     $ (11,198 )   $ 11,427  
Taxable investment securities 1,327,862     13,080     1.97 %   1,277,593     16,578     2.60 %   (3,498
)   (4,128
)   630  
Tax-exempt investment securities 133,944     976     1.46 %   137,846     1,698     2.46 %   (722
)   (675
)   (47
)
Total securities 1,461,806     14,056     1.92 %   1,415,439     18,276     2.58 %   (4,220
)   (4,803
)   583  
Interest-bearing deposits 2,022,901     1,035     0.10 %   472,589     1,535     0.65 %   (500
)   (2,153
)   1,653  
Loans held for sale 520,260     7,072     2.72 %   398,933     6,799     3.41 %   273     (1,543
)   1,816  
Total earning assets 13,630,817     225,614     3.34 %   11,372,035     229,831     4.06 %   (4,217
)   (19,697
)   15,479  
Less: allowance for credit losses (118,466
)               (62,390
)                              
Total nonearning assets 1,357,324                 1,919,751                                
Total assets $ 14,869,675                 $ 13,229,396                                
Liabilities and Equity:                                                    
Interest-bearing deposits                                                    
Demand and money market $ 5,043,155     $ 4,080     0.16 %   $ 3,689,732     $ 7,809     0.43 %   $ (3,729 )   $ (5,920 )   $ 2,191  
Savings 339,131     1,050     0.62 %   283,574     1,147     0.81 %   (97
)   (296
)   199  
Certificates of deposit 1,887,359     10,563     1.13 %   2,468,873     25,177     2.05 %   (14,614
)   (9,590
)   (5,024
)
Total interest-bearing deposits 7,269,645     15,693     0.44 %   6,442,179     34,133     1.07 %   (18,440
)   (15,806
)   (2,634
)
Borrowings 519,048     1,387     0.53 %   1,210,789     5,820     0.95 %   (4,433
)   (1,931
)   (2,502
)
Subordinated debt, net 249,188     5,892     4.73 %   248,585     5,923     4.77 %   (31
)   (45
)   14  
Total interest-bearing liabilities 8,037,881     22,972     0.58 %   7,901,553     45,876     1.17 %   (22,904
)   (17,782
)   (5,122
)
Demand deposits 4,711,854                 3,394,275                                
Other noninterest-bearing
   liabilities
304,162                 249,827                                
Total liabilities 13,053,897                 11,545,655                                
Shareholders’ equity 1,815,778                 1,683,741                                
Total liabilities and equity $ 14,869,675                 $ 13,229,396                                
Net interest income (tax-equivalent basis)       $ 202,642                 $ 183,955           $ 18,687     $ (1,915 )   $ 20,601  
Reconciliation of Non-GAAP Financial Measures                                                    
Tax-equivalent basis adjustment       (1,508
)               (1,185
)         (323
)            
Net interest income (GAAP)       $ 201,134                 $ 182,770           $ 18,364              
                                                     
Interest rate spread (2)(4)             2.76 %               2.90 %                  
Interest expense as a percent of average earning assets             0.34 %               0.81 %                  
Net interest margin (tax equivalent basis) (3)(4)             3.00 %               3.25 %                  
Total cost of deposits             0.26 %               0.70 %                  
                                                     
(1)  June 30, 2021 and June 30, 2020 includes average PPP balances of  $0.79 billion and $0.40 billion and related interest income of $17.44 million  and $5.81 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)
   
     
  June 30,   December 31,
  2021   2020
  (unaudited)   (audited)
ASSETS      
Cash and due from banks $ 117,797     $ 41,514  
Interest-bearing deposits at FRB - Richmond 2,970,490     1,795,241  
Interest-bearing deposits in financial institutions 31,971     27,532  
Total Cash and Cash Equivalents 3,120,258     1,864,287  
Securities available for sale, at fair value (amortized cost of $1,412,371 and $1,310,250, and allowance for credit losses of $134 and $348 at June 30, 2021 and December 31, 2020, respectively.) 1,454,421     1,368,224  
Securities held to maturity, at amortized cost (fair value $17,097 and $18,469 at June 30, 2021 and December 31, 2020, respectively.) 15,389     16,512  
Less:  allowance for credit losses (97 )   (97 )
Securities held to maturity, net of allowance for credit losses 15,292     16,415  
Other equity securities 6,395     6,492  
FHLB stock 16,909     30,135  
Total Securities 1,493,017     1,421,266  
Mortgage loans held for sale 554,447     540,798  
Loans, net of unearned income and deferred costs 9,423,578     9,629,068  
Less: allowance for credit losses (108,130 )   (120,157 )
Net Loans 9,315,448     9,508,911  
Premises and equipment, net 265,644     260,242  
Goodwill 452,328     452,328  
Other intangible assets, net 42,271     45,533  
BOLI 249,213     246,109  
Other assets 311,209     286,970  
TOTAL ASSETS $ 15,803,835     $ 14,626,444  
       
LIABILITIES AND EQUITY      
Deposits:      
Noninterest-bearing demand $ 5,243,074     $ 4,374,566  
Interest-bearing:      
Demand and money market accounts 5,373,146     4,819,604  
Savings 349,552     330,091  
Certificates of deposit 1,998,828     2,048,905  
Total Deposits 12,964,600     11,573,166  
Advances from the FHLB 255,706     456,038  
Subordinated debt, net 249,353     249,055  
FRB PPP lending facility     182,852  
Repurchase agreements and other borrowings 85,042     67,786  
Total Borrowings 590,101     955,731  
Other liabilities 379,278     313,719  
TOTAL LIABILITIES 13,933,979     12,842,616  
Preferred stock, authorized and unissued shares - 2,000,000      
Common stock, $1.667 par: 150,000,000 shares authorized      
72,671,891 and 72,667,541 shares issued at      
June 30, 2021 and December 31, 2020, respectively 121,144     121,132  
Capital surplus 1,048,332     1,046,642  
Retained earnings 655,095     557,889  
Common stock issued to deferred compensation trust, at cost      
905,484 and 873,486 shares at June 30, 2021 and December 31, 2020, respectively (18,076 )   (16,969 )
Deferred compensation trust 18,076     16,969  
Accumulated other comprehensive income (loss) 29,273     41,184  
TOTAL SHAREHOLDERS’ EQUITY 1,853,844     1,766,847  
Noncontrolling interest 16,012     16,981  
TOTAL EQUITY 1,869,856     1,783,828  
TOTAL LIABILITIES AND EQUITY $ 15,803,835     $ 14,626,444  
               


TOWNEBANK
Consolidated Statements of Income (unaudited)
(dollars in thousands, except per share data)
               
               
  Three Months Ended   Six Months Ended
  June 30,   June 30,
  2021   2020   2021   2020
INTEREST INCOME:              
Loans, including fees $ 100,614     $ 102,139     $ 202,011     $ 202,201  
Investment securities 6,871     8,163     13,988     18,112  
Interest-bearing deposits in financial institutions and federal funds sold 619     433     1,035     1,535  
Mortgage loans held for sale 3,711     3,811     7,072     6,799  
Total interest income 111,815     114,546     224,106     228,647  
INTEREST EXPENSE:              
Deposits 7,144     15,072     15,693     34,134  
Advances from the FHLB 274     2,595     771     5,088  
Subordinated debt, net 2,962     2,962     5,892     5,923  
Repurchase agreements and other borrowings 291     643     616     732  
Total interest expense 10,671     21,272     22,972     45,877  
Net interest income 101,144     93,274     201,134     182,770  
PROVISION FOR CREDIT LOSSES (10,055 )   26,945     (14,082 )   33,961  
Net interest income after provision for credit losses 111,199     66,329     215,216     148,809  
NONINTEREST INCOME:              
Residential mortgage banking income, net 25,524     29,715     62,937     37,131  
Insurance commissions and other title fees and income, net 18,331     17,612     34,656     34,505  
Real estate brokerage and property management income, net 10,984     10,781     28,918     17,719  
Service charges on deposit accounts 2,391     1,888     4,580     4,328  
Credit card merchant fees, net 1,667     1,109     2,969     2,287  
BOLI 1,541     1,584     3,060     4,690  
Other income 5,487     3,763     10,324     8,990  
Net gain/(loss) on investment securities 252     2,930     1,252     7,932  
Total noninterest income 66,177     69,382     148,696     117,582  
NONINTEREST EXPENSE:              
Salaries and employee benefits 61,365     56,926     119,801     112,793  
Occupancy expense 7,559     7,227     15,630     14,728  
Furniture and equipment 3,622     3,564     7,134     7,205  
Amortization - intangibles 2,719     2,901     5,442     5,851  
Software expense 4,494     3,492     8,688     6,984  
Data processing 3,414     2,718     6,652     5,509  
Professional fees 2,259     2,972     4,598     6,040  
Advertising and marketing 3,257     1,986     6,225     5,570  
Other expenses 16,705     9,239     28,549     23,233  
Total noninterest expense 105,394     91,025     202,719     187,913  
Income before income tax expense and noncontrolling interest 71,982     44,686     161,193     78,478  
Provision for income tax expense 13,980     7,464     30,559     13,651  
Net income $ 58,002     $ 37,222     $ 130,634     $ 64,827  
Net income attributable to noncontrolling interest (2,199 )   (2,617 )   (5,835 )   (3,838 )
Net income attributable to TowneBank $ 55,803     $ 34,605     $ 124,799     $ 60,989  
Per common share information              
Basic earnings $ 0.77     $ 0.48     $ 1.72     $ 0.84  
Diluted earnings $ 0.77     $ 0.48     $ 1.72     $ 0.84  
Cash dividends declared $ 0.20     $ 0.18     $ 0.38     $ 0.36  
                               


TOWNEBANK
Consolidated Balance Sheets - Five Quarter Trend
(dollars in thousands, except share data)
                                       
                   
  June 30,   March 31,   December 31,   September 30,   June 30,
  2021   2021   2020   2020   2020
  (unaudited)   (unaudited)   (audited)   (unaudited)   (unaudited)
ASSETS                  
Cash and due from banks $ 117,797     $ 141,545     $ 41,514     $ 114,604     $ 115,724  
Interest-bearing deposits at FRB - Richmond 2,970,490     1,936,458     1,795,241     1,670,186     2,511,152  
Interest-bearing deposits in financial institutions 31,971     30,031     27,532     24,890     24,374  
Total Cash and Cash Equivalents 3,120,258     2,108,034     1,864,287     1,809,680     2,651,250  
Securities available for sale 1,454,421     1,418,006     1,368,224     1,310,683     1,266,624  
Securities held to maturity 15,389     15,980     16,512     17,131     41,595  
Less:  allowance for credit losses (97 )   (97 )   (97 )   (90 )   (121 )
Securities held to maturity, net of allowance for credit losses 15,292     15,883     16,415     17,041     41,474  
Other equity securities 6,395     6,355     6,492     6,497     6,497  
FHLB stock 16,909     16,909     30,135     41,829     49,277  
Total Securities 1,493,017     1,457,153     1,421,266     1,376,050     1,363,872  
Mortgage loans held for sale 554,447     582,905     540,798     669,020     610,369  
Loans, net of unearned income and deferred costs 9,423,578     9,734,583     9,629,068     9,770,570     9,801,889  
Less: allowance for credit losses (108,130 )   (116,077 )   (120,157 )   (119,058 )   (90,467 )
Net Loans 9,315,448     9,618,506     9,508,911     9,651,512     9,711,422  
Premises and equipment, net 265,644     261,831     260,242     256,909     257,533  
Goodwill 452,328     452,328     452,328     446,725     446,725  
Other intangible assets, net 42,271     44,808     45,533     45,781     48,632  
BOLI 249,213     247,655     246,109     244,103     242,493  
Other assets 311,209     306,176     286,970     295,637     247,962  
TOTAL ASSETS $ 15,803,835     $ 15,079,396     $ 14,626,444     $ 14,795,417     $ 15,580,258  
LIABILITIES AND EQUITY                  
Deposits:                  
Noninterest-bearing demand $ 5,243,074     $ 4,840,678     $ 4,374,566     $ 4,464,178     $ 4,226,208  
Interest-bearing:                  
Demand and money market accounts 5,373,146     5,062,461     4,819,604     4,642,482     4,223,391  
Savings 349,552     342,554     330,091     312,444     298,673  
Certificates of deposit 1,998,828     1,893,951     2,048,905     2,285,859     2,516,666  
Total Deposits 12,964,600     12,139,644     11,573,166     11,704,963     11,264,938  
Advances from the FHLB 255,706     255,872     456,038     731,202     906,365  
Subordinated debt, net 249,353     249,204     249,055     248,906     248,756  
FRB PPP lending facility     183,164     182,852         1,111,429  
Repurchase agreements and other borrowings 85,042     68,509     67,786     58,061     60,913  
Total Borrowings 590,101     756,749     955,731     1,038,169     2,327,463  
Other liabilities 379,278     366,697     313,719     303,582     266,314  
TOTAL LIABILITIES 13,933,979     13,263,090     12,842,616     13,046,714     13,858,715  
Preferred stock                  
Authorized shares - 2,000,000                  
Common stock, $1.667 par value 121,144     121,108     121,132     121,115     121,101  
Capital surplus 1,048,332     1,047,312     1,046,642     1,045,170     1,043,774  
Retained earnings 655,095     613,826     557,889     520,888     499,502  
Common stock issued to deferred compensation                  
trust, at cost (18,076 )   (17,063 )   (16,969 )   (16,951 )   (16,776 )
Deferred compensation trust 18,076     17,063     16,969     16,951     16,776  
Accumulated other comprehensive income (loss) 29,273     17,969     41,184     44,569     43,218  
TOTAL SHAREHOLDERS’ EQUITY 1,853,844     1,800,215     1,766,847     1,731,742     1,707,595  
Noncontrolling interest 16,012     16,091     16,981     16,961     13,948  
TOTAL EQUITY 1,869,856     1,816,306     1,783,828     1,748,703     1,721,543  
TOTAL LIABILITIES AND EQUITY $ 15,803,835     $ 15,079,396     $ 14,626,444     $ 14,795,417     $ 15,580,258  
                                       


TOWNEBANK
Consolidated Statements of Income - Five Quarter Trend (unaudited)
(dollars in thousands, except share data)
   
   
  Three Months Ended
  June 30,   March 31,   December 31,   September 30,   June 30,
  2021   2021   2020   2020   2020
INTEREST INCOME:                  
Loans, including fees $ 100,614     $ 101,396     $ 104,182     $ 102,869     $ 102,139  
Investment securities 6,871     7,117     7,499     7,440     8,163  
Interest-bearing deposits in financial institutions and federal funds sold 619     416     435     632     433  
Mortgage loans held for sale 3,711     3,361     3,867     4,587     3,811  
Total interest income 111,815     112,290     115,983     115,528     114,546  
INTEREST EXPENSE:                  
Deposits 7,144     8,548     10,762     12,966     15,072  
Advances from the FHLB 274     497     1,404     1,901     2,595  
Subordinated debt 2,962     2,930     2,962     2,962     2,962  
Repurchase agreements and other borrowings 291     325     241     940     643  
Total interest expense 10,671     12,300     15,369     18,769     21,272  
Net interest income 101,144     99,990     100,614     96,759     93,274  
PROVISION FOR CREDIT LOSSES (10,055 )   (4,027 )   1,617     31,598     26,945  
Net interest income after provision for credit losses 111,199     104,017     98,997     65,161     66,329  
NONINTEREST INCOME:                  
Residential mortgage banking income, net 25,524     37,412     37,504     37,531     29,715  
Insurance commissions and other title fees and income, net 18,331     16,325     13,868     17,468     17,612  
Real estate brokerage and property management income, net 10,984     17,934     9,229     11,301     10,781  
Service charges on deposit accounts 2,391     2,190     1,707     1,986     1,888  
Credit card merchant fees, net 1,667     1,302     1,377     1,506     1,109  
BOLI 1,541     1,519     1,990     1,605     1,584  
Other income 5,487     4,837     5,559     22,278     3,763  
Net gain/(loss) on investment securities 252     1,000         1,701     2,930  
Total noninterest income 66,177     82,519     71,234     95,376     69,382  
NONINTEREST EXPENSE:                  
Salaries and employee benefits 61,365     58,435     61,475     61,408     56,926  
Occupancy expense 7,559     8,072     8,193     8,396     7,227  
Furniture and equipment 3,622     3,512     3,462     3,247     3,564  
Amortization - intangibles 2,719     2,723     2,797     2,851     2,901  
Software expense 4,494     4,194     4,066     3,572     3,492  
Data processing 3,414     3,239     2,363     3,113     2,718  
Professional fees 2,259     2,339     2,591     2,637     2,972  
Advertising and marketing 3,257     2,968     2,204     1,870     1,986  
Other expenses 16,705     11,844     18,781     14,887     9,239  
Total noninterest expense 105,394     97,326     105,932     101,981     91,025  
Income before income tax expense and noncontrolling interest 71,982     89,210     64,299     58,556     44,686  
Provision for income tax expense 13,980     16,579     10,408     7,841     7,464  
Net income 58,002     72,631     53,891     50,715     37,222  
Net income attributable to noncontrolling interest (2,199 )   (3,636 )   (3,809 )   (16,251 )   (2,617 )
Net income attributable to TowneBank $ 55,803     $ 68,995     $ 50,082     $ 34,464     $ 34,605  
Per common share information                  
Basic earnings $ 0.77     $ 0.95     $ 0.69     $ 0.48     $ 0.48  
Diluted earnings $ 0.77     $ 0.95     $ 0.69     $ 0.48     $ 0.48  
Basic weighted average shares outstanding 72,468,094     72,414,953     72,357,177     72,339,413     72,280,555  
Diluted weighted average shares outstanding 72,560,234     72,517,008     72,455,096     72,375,736     72,317,988  
Cash dividends declared $ 0.20     $ 0.18     $ 0.18     $ 0.18     $ 0.18  
                   


TOWNEBANK
Banking Segment Financial Information (unaudited)
(dollars in thousands)
                                         
                                         
  Three Months Ended
  Six Months Ended
  Increase/(Decrease)
  June 30,
  March 31,   June 30,
  2021 over 2020
  2021   2020   2021   2021   2020   Amount   Percent
Revenue                                        
Net interest income $ 98,134     $ 89,665     $ 97,604     $ 195,739     $ 177,071     $ 18,668     10.54 %
Service charges on deposit                                        
accounts 2,391     1,888     2,190     4,580     4,328     252     5.82 %
Credit card merchant fees 1,667     1,109     1,302     2,969     2,287     682     29.82 %
Other income 5,404     3,888     4,970     10,375     10,950     (575
)   (5.25 )%
Subtotal 9,462     6,885     8,462     17,924     17,565     359     2.04 %
Net gain/(loss) on investment securities 252     2,930     1,000     1,252     7,932     (6,680
)   (84.22 )%
Total noninterest income 9,714     9,815     9,462     19,176     25,497     (6,321
)   (24.79 )%
Total revenue 107,848     99,480     107,066     214,915     202,568     12,347     6.10 %
                                         
Provision for credit losses (9,532
)   26,059     (3,401
)   (12,932
)   33,100     (46,032
)   (139.07 )%
                                         
Expenses                                        
Salaries and employee benefits 35,776     35,209     31,861     67,637     68,434     (797
)   (1.16 )%
Occupancy expense 5,012     4,812     5,546     10,558     9,728     830     8.53 %
Furniture and equipment 2,816     2,715     2,668     5,484     5,375     109     2.03 %
Amortization of intangibles 912     1,114     962     1,875     2,278     (403
)   (17.69 )%
Other expenses 18,392     10,718     14,050     32,441     29,423     3,018     10.26 %
Total expenses 62,908     54,568     55,087     117,995     115,238     2,757     2.39 %
Income before income tax, corporate allocation and noncontrolling interest 54,472     18,853     55,380     109,852     54,230     55,622     102.57 %
Corporate allocation 1,249     627     1,292     2,540     1,297     1,243     95.84 %
Income before income tax provision and noncontrolling interest 55,721     19,480     56,672     112,392     55,527     56,865     102.41 %
Provision for income tax expense 10,535     2,167     9,701     20,236     8,830     11,406     129.17 %
Net income 45,186     17,313     46,971     92,156     46,697     45,459     97.35 %
Noncontrolling interest 1     5     (5
)   (3
)   4     (7
)   (175.00 )%
Net income attributable to TowneBank $ 45,187     $ 17,318     $ 46,966     $ 92,153     $ 46,701     $ 45,452     97.33 %
                                         
Efficiency ratio (non-GAAP) 57.62
%   55.36
%   51.03
%   54.35
%   58.04
%   (3.69
)%   (6.36 )%
                                         


TOWNEBANK
Realty Segment Financial Information (unaudited)
(dollars in thousands)
                                         
                                         
  Three Months Ended
  Six Months Ended
  Increase/(Decrease)
  June 30,
  March 31,   June 30,
  2021 over 2020
  2021   2020   2021   2021   2020   Amount   Percent
Revenue                                        
Residential mortgage brokerage
income, net
$ 26,383     $ 30,468     $ 37,877     $ 64,260     $ 38,475     $ 25,785     67.02 %
Real estate brokerage income, net 3,893     2,659     2,451     6,344     4,524     1,820     40.23 %
Title insurance and settlement fees 684     639     525     1,211     1,075     136     12.65 %
Property management fees, net 7,091     8,122     15,483     22,574     13,195     9,379     71.08 %
Income from unconsolidated
subsidiary
289     301     406     695     487     208     42.71 %
Net interest and other income 3,336     3,765     2,736     6,069     6,161     (92
)   (1.49 )%
Total revenue 41,676     45,954     59,478     101,153     63,917     37,236     58.26 %
                                         
Provision for credit losses (523
)   886     (626
)   (1,150
)   861     (2,011
)   (233.57 )%
                                         
Expenses                                        
Salaries and employee benefits 16,018     13,059     16,847     32,865     26,352     6,513     24.72 %
Occupancy expense 1,935     1,763     1,871     3,806     3,690     116     3.14 %
Furniture and equipment 592     626     649     1,242     1,388     (146
)   (10.52 )%
Amortization of intangible assets 590     658     590     1,180     1,315     (135
)   (10.27 )%
Other expenses 10,442     8,270     9,229     19,669     15,137     4,532     29.94 %
Total expenses 29,577     24,376     29,186     58,762     47,882     10,880     22.72 %
                                         
Income before income tax, corporate allocation and noncontrolling interest 12,622     20,692     30,918     43,541     15,174     28,367     186.94 %
Corporate allocation (1,000
)   (370
)   (1,000
)   (2,000
)   (763
)   (1,237
)   162.12 %
Income before income tax provision and noncontrolling interest 11,622     20,322     29,918     41,541     14,411     27,130     188.26 %
Provision for income tax expense 2,255     4,127     6,216     8,471     2,835     5,636     198.80 %
Net  income 9,367     16,195     23,702     33,070     11,576     21,494     185.68 %
Noncontrolling interest (2,200
)   (2,415
)   (3,631
)   (5,832
)   (3,206
)   (2,626
)   81.91 %
Net income attributable to TowneBank $ 7,167     $ 13,780     $ 20,071     $ 27,238     $ 8,370     $ 18,868     225.42 %
                                         
Efficiency ratio (non-GAAP) 69.55 
%   51.61 
%   48.08 
%   56.93 
%   72.86 
%   (15.93
)%   (21.86 )%
                                         


TOWNEBANK
Insurance Segment Financial Information (unaudited)
(dollars in thousands)
                                         
                                         
  Three Months Ended
  Six Months Ended
  Increase/(Decrease)
  June 30,
  March 31,   June 30,
  2021 over 2020
  2021   2020   2021   2021   2020   Amount   Percent
Commission and fee income                                        
Property and casualty $ 14,941     $ 13,926     $ 14,189     $ 29,129     $ 26,712     $ 2,417     9.05 %
Employee benefits 3,430     3,791     3,884     7,315     7,709     (394
)   (5.11 )%
Travel insurance     861             2,127     (2,127
)   (100.00 )%
Specialized benefit services 163     157     167     329     325     4     1.23 %
Total commissions and fees 18,534     18,735     18,240     36,773     36,873     (100
)   (0.27 )%
                                         
Contingency and bonus revenue 3,323     2,009     1,759     5,082     4,031     1,051     26.07 %
Other income 43     127     73     117     208     (91
)   (43.75 )%
Total revenue 21,900     20,871     20,072     41,972     41,112     860     2.09 %
                                         
Employee commission expense 4,103     3,649     4,107     8,210     7,245     965     13.32 %
Revenue, net of commission expense 17,797     17,222     15,965     33,762     33,867     (105
)   (0.31 )%
                                         
Salaries and employee benefits 9,571     8,658     9,727     19,299     18,007     1,292     7.17 %
Occupancy expense 612     652     655     1,266     1,311     (45
)   (3.43 )%
Furniture and equipment 214     223     195     408     441     (33
)   (7.48 )%
Amortization of intangible assets 1,217     1,129     1,171     2,387     2,258     129     5.71 %
Other expenses 1,295     1,419     1,305     2,602     2,776     (174
)   (6.27 )%
Total operating expenses 12,909     12,081     13,053     25,962     24,793     1,169     4.72 %
Income before income tax, corporate allocation and noncontrolling interest 4,888     5,141     2,912     7,800     9,074     (1,274
)   (14.04 )%
Corporate allocation (249
)   (257
)   (292
)   (540
)   (534
)   (6
)   1.12 %
Income before income tax provision and noncontrolling interest 4,639     4,884     2,620     7,260     8,540     (1,280
)   (14.99 )%
Provision for income tax expense 1,190     1,170     662     1,852     1,986     (134
)   (6.75 )%
Net income 3,449     3,714     1,958     5,408     6,554     (1,146
)   (17.49 )%
Noncontrolling interest     (207
)           (636
)   636     (100.00 )%
Net income attributable to TowneBank $ 3,449     $ 3,507     $ 1,958     $ 5,408     $ 5,918     (510
)   (8.62 )%
                                         
Provision for income taxes 1,190     1,170     662     1,852     1,986     (134
)   (6.75 )%
Depreciation, amortization and interest expense 1,361     1,291     1,308     2,669     2,591     78     3.01 %
EBITDA (non-GAAP) $ 6,000     $ 5,968     $ 3,928     $ 9,929     $ 10,495     $ (566 )   (5.39 )%
                                         
Efficiency ratio (non-GAAP) 65.70
%   63.59
%   74.43
%   69.83
%   66.54
%   3.29
%   4.94 %


TOWNEBANK
Reconciliation of Non-GAAP Financial Measures
(dollars in thousands)
                             
  Three Months Ended
  Six Months Ended
  June 30,   June 30,   March 31,   June 30,   June 30,
  2021   2020   2021   2021   2020
                             
Return on average assets (GAAP) 1.48
%   0.97
%   1.92
%   1.69
%   0.93
%
Impact of excluding average goodwill and other
intangibles and amortization
0.11
%   0.10
%   0.13
%   0.12
%   0.11
%
Return on average tangible assets (non-GAAP) 1.59
%   1.07
%   2.05
%   1.81
%   1.04
%
                             
Return on average equity (GAAP) 12.21
%   8.18
%   15.56
%   13.86
%   7.28
%
Impact of excluding average goodwill and other
intangibles and amortization
5.17
%   4.14
%   6.63
%   5.88
%   3.85
%
Return on average tangible equity (non-GAAP) 17.38
%   12.32
%   22.19
%   19.74
%   11.13
%
                             
Return on average common equity (GAAP) 12.31
%   8.24
%   15.70
%   13.98
%   7.34
%
Impact of excluding average goodwill and other
intangibles and amortization
5.26
%   4.20
%   6.75
%   5.98
%   3.91
%
Return on average tangible common equity
(non-GAAP)
17.57
%   12.44
%   22.45
%   19.96
%   11.25
%
                             
Book value (GAAP) $ 25.51     $ 23.50     $ 24.78     $ 25.51     $ 23.50  
Impact of excluding average goodwill and other
intangibles and amortization
(6.81
)   (6.82
)   (6.84
)   (6.81
)   (6.82
)
Tangible book value (non-GAAP) $ 18.70     $ 16.68     $ 17.94     $ 18.70     $ 16.68  
                             
Efficiency ratio (GAAP) 62.99
%   55.96
%   53.33
%   57.95
%   62.56
%
Impact of exclusions (1.53
)%   (0.79
)%   (1.22
)%   (1.36
)%   (0.30
)%
Efficiency ratio (non-GAAP) 61.46
%   55.17
%   52.11
%   56.59
%   62.26
%
                             
Average assets (GAAP) $ 15,143,888     $ 14,409,468     $ 14,592,416     $ 14,869,675     $ 13,229,396  
Less: average goodwill and intangible assets 496,059     497,077     497,446     496,748     498,600  
Average tangible assets (non-GAAP) $ 14,647,829     $ 13,912,391     $ 14,094,970     $ 14,372,927     $ 12,730,796  
                             
Average equity (GAAP) $ 1,833,592     $ 1,701,777     $ 1,797,767     $ 1,815,778     $ 1,683,742  
Less: average goodwill and intangible assets 496,059     497,077     497,446     496,748     498,600  
Average tangible equity (non-GAAP) $ 1,337,533     $ 1,204,700     $ 1,300,321     $ 1,319,030     $ 1,185,142  
                             
Average common equity (GAAP) $ 1,818,664     $ 1,689,603     $ 1,782,795     $ 1,800,829     $ 1,671,640  
Less: average goodwill and intangible assets 496,059     497,077     497,446     496,748     498,600  
Average tangible common equity (non-GAAP) $ 1,322,605     $ 1,192,526     $ 1,285,349     $ 1,304,081     $ 1,173,040  
                             
Net Income (GAAP) $ 55,803     $ 34,605     68,995     124,799     60,989  
Amortization of Intangibles, net of tax 2,148     2,292     2,151     4,299     4,622  
Tangible net income (non-GAAP) $ 57,951     $ 36,897     $ 71,146     $ 129,098     $ 65,611