TowneBank Reports Second Quarter 2020 Earnings

TowneBank
·30 mins read

SUFFOLK, Va., July 23, 2020 (GLOBE NEWSWIRE) -- TowneBank (the Company) (NASDAQ: TOWN) today reported earnings for the quarter ended June 30, 2020 of $34.61 million, or $0.48 per diluted share, compared to $34.64 million, or $0.48 per diluted share, for the quarter ended June 30, 2019.

Our second quarter performance demonstrated the benefits of our diverse revenue model.  Despite the headwinds from economic uncertainty and increased credit provisions, we delivered a solid quarter highlighted by rebounds in noninterest income from our Realty segment.  Our deposits climbed to record levels enhancing liquidity and strong capital ratios position us well to navigate the challenging environment.  We will also continue to be diligent in our focus on credit risk management, said G. Robert Aston, Jr., Executive Chairman.

Highlights for Second Quarter 2020 Compared to Second Quarter 2019:

  • Total revenues were a record $162.66 million, an increase of $18.12 million, or 12.54%.

  • Loans held for investment were $9.80 billion, an increase of $1.68 billion, or 20.61%, from June 30, 2019, and $1.02 billion, or 11.59%, from March 31, 2020.  The balance at June 30, 2020 included $1.09 billion of loans originated under the Small Business Administrations Paycheck Protection Program (PPP).

  • Total deposits were $11.26 billion, an increase of $2.00 billion, or 21.54%, compared to prior year and $1.96 billion, or 21.02%, from March 31, 2020.

  • Noninterest bearing deposits increased by 43.23%, to $4.23 billion, representing 37.52% of total deposits.  Compared to the linked quarter, noninterest bearing deposits increased 38.09%.

  • Annualized return on common shareholders' equity was 8.24% and annualized return on average tangible common shareholders' equity was 12.44% (non-GAAP).

  • Net interest margin for the quarter was 2.85% and taxable equivalent net interest margin (non-GAAP) was 2.87%.

  • Effective tax rate of 17.74% in the quarter compared to 20.47% in the second quarter of 2019.

I am especially proud of the outstanding service our teammates delivered to our members and the communities we serve.  At Towne, we delivered over $1 billion in PPP funding to support businesses in our communities helping to save nearly 130,000 jobs for local families.  In addition, we created more than 650 new relationships out of the PPP process, stated J. Morgan Davis, President and Chief Executive Officer.

Quarterly Net Interest Income Compared to Second Quarter 2019:

  • Net interest income was $93.27 million compared to $89.82 million at June 30, 2019.

  • Taxable equivalent net interest margin (non-GAAP) was 2.87%, including accretion of 8 basis points, compared to 3.52%, including accretion of 11 basis points, for second quarter 2019.

  • Average loans held for investment, with an average yield of 4.29%, represented 73.10% of average earning assets at June 30, 2020 compared to an average yield of 5.08% and 78.27% of average earning assets in the second quarter of 2019.  Excluding PPP, loan yields were 4.42% in second quarter 2020.

  • Total cost of deposits decreased to 0.58% from 0.99% at June 30, 2019.

  • Average interest-earning assets totaled $13.16 billion at June 30, 2020 compared to $10.32 billion at June 30, 2019, an increase of 27.56%.

  • Average interest-bearing liabilities totaled $8.64 billion, an increase of $1.69 billion from prior year.

Quarterly Provision for Credit Losses:

  • Recorded a quarterly provision for credit losses for on-balance-sheet loans of $25.99 million compared to $2.82 million one year ago and $5.76 million in the linked quarter.  This increase is primarily attributable to management's expectation of continued economic weakness driven by the impact of the COVID-19 pandemic.  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 $0.10 million compared to charge-offs of $1.60 million one year prior.  The ratio of net loan charge-offs to average loans on an annualized basis was 0.03% in the linked quarter and 0.08% in the second quarter of 2019.

  • Recorded a provision for credit losses on off-balance-sheet commitments of $1.08 million compared to $1.10 million in the linked quarter.

  • Recorded a recovery of credit losses on debt securities of $0.13 million compared to a credit loss of $0.16 million in the linked quarter.

  • The allowance for credit losses on loans represented 0.92% of total loans compared to 0.73% at March 31, 2020 and 0.67% at June 30, 2019.  Excluding PPP loans, which are fully government guaranteed, the allowance for credit losses was 1.04%.  The allowance for credit losses on loans was 5.34 times nonperforming loans compared to 3.85 times at March 31, 2020 and 3.00 times at June 30, 2019.

Quarterly Noninterest Income Compared to Second Quarter 2019:

  • Total noninterest income was $69.38 million compared to $54.72 million in 2019, an increase of $14.66 million, or 26.80%.  Residential mortgage banking income increased $11.15 million and real estate brokerage and property management income increased $1.94 million, while service charges on deposit accounts decreased $1.30 million.  Also included in noninterest income are net gains on investment securities of $2.93 million as compared to no gains or losses in the prior year.

  • Residential mortgage banking recorded income of $29.72 million compared to $18.57 million in second quarter 2019.  Loan volume in the current quarter was $1.47 billion, with purchase activity comprising 51.26% of that volume.  Loan volume in second quarter 2019 was $821.13 million, with purchase activity comprising 84.97%.  Increased refinancing activity due to the mortgage rate environment in second quarter 2020, coupled with improved margins were the primary drivers of improvement compared to the prior year quarter.

  • Total Insurance segment revenue increased 3.30% to $20.87 million in the second quarter due to organic growth and additional income from a third quarter 2019 agency acquisition.

  • Property management fee revenue increased 36.05%, or $2.15 million, compared to second quarter 2019.  Reservations were down significantly in first quarter 2020 due to travel restrictions driven by COVID-19 and the uncertainty surrounding summer travel.  The lifting of local travel restrictions, in the areas of our vacation rental companies, drove increased reservation activity during the quarter.

  • Service charges are down $1.30 million, or 40.72%, compared to second quarter 2019 primarily due to a decrease in interchange fees related to Durbin Amendment compliance, combined with a lower transaction volumes and fees waived for members experiencing financial hardships.

Quarterly Noninterest Expense Compared to Second Quarter 2019:

  • Total noninterest expense was $91.03 million compared to $96.56 million in 2019, a decrease of $5.53 million, or 5.73%.  Declines across most expense categories were partially offset by increases in salary and benefits expense of $2.66 million and software expense of $0.70 million.

  • Market expansion and infrastructure enhancements, 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.

Quarterly Income Taxes Compared to Second Quarter 2019:

  • Income tax expense was $7.46 million compared to $8.92 million one year prior.  This represents an effective tax rate of 17.74% compared to 20.47% in the second quarter of 2019.

Consolidated Balance Sheet Highlights:

  • Total assets were $15.58 billion for the quarter ended June 30, 2020, an increase of $3.63 billion, or 30.40%, compared to $12.62 billion at March 31, 2020.  Total assets increased $3.64 billion, or 30.46%, from $11.94 billion at June 30, 2019.  The year-to-date 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 $1.68 billion, or 20.61%, compared to prior year and $1.02 billion compared the linked quarter.  Excluding PPP loans of $1.09 billion, loans held for investment increased $0.59 billion, or 7.20%, compared to prior year, but declined $72.31 million, or 0.82%, compared to the linked quarter.

  • Mortgage loans held for sale increased  $247.60 million, or 68.25%, compared to the prior year and $157.23 million, or 34.70%, compared to the linked quarter.

  • Total deposits increased $2.0 billion, or 21.54%, compared to the prior year and $1.96 billion, or 21.02%, compared to the linked quarter.

  • Total borrowings increased $1.49 billion, or 178.23%, from prior year and $0.94 billion, or 67.22%, compared to the linked quarter.  These increases were driven by $1.11 billion in borrowings under the FRB PPP lending facility, which we used to facilitate funding of the PPP loans.

Investment Securities:

  • Total investment securities were $1.36 billion compared to $1.35 billion at March 31, 2020 and $1.35 billion at June 30, 2019.  The weighted average duration of the portfolio at June 30, 2020 was 4.1 years.  The carrying value of the AFS debt securities portfolio included $59.89 million in net unrealized gains compared to $19.73 million in net unrealized gains at December 31, 2019.  During the second quarter of 2020, we sold $40.0 million in AFS debt securities at a gain of $2.93 million to reposition the portfolio.

Loans and Asset Quality:

  • Total loans held for investment were $9.80 billion at June 30, 2020 compared to $8.78 billion at March 31, 2020 and $8.13 billion at June 30, 2019.

  • Nonperforming assets were $29.25 million, or 0.19% of total assets, compared to $34.23 million, or 0.29%, at June 30, 2019.

  • Nonperforming loans were 0.17% of period end loans compared to 0.22% at June 30, 2019.

  • Foreclosed property decreased to $12.32 million from $14.52 million at June 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 $11.26 billion compared to $9.31 billion at March 31, 2020 and $9.27 billion at June 30, 2019.

  • Total loans to deposits were 87.01% compared to 94.37% at March 31, 2020 and 87.68% at June 30, 2019.

  • Non-interest bearing deposits were 37.52% of total deposits at June 30, 2020 compared to 32.88% at March 31, 2020 and 31.83% at June 30, 2019.

  • Total borrowings were $2.33 billion compared to $1.39 billion at March 31, 2020 and $0.84 billion at  June 30, 2019.

Capital:

  • Common equity tier 1 capital ratio of 11.54%.

  • Tier 1 leverage capital ratio of 9.05%.

  • Tier 1 risk-based capital ratio of 11.67%.

  • Total risk-based capital ratio of 14.91%.

  • Book value was $23.50 compared to $22.77 at March 31, 2020 and $21.95 at June 30, 2019.

  • Tangible book value (non-GAAP) was $16.68 compared to $15.91 at March 31, 2020 and $15.05 at June 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 groups President and Board of Directors.  With total assets of $15.58 billion as of June 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 Companys 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 TowneBanks 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. TowneBanks 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 TowneBanks loan and securities portfolios; demand for loan products; deposit flows; competition; demand for financial services in TowneBanks market area; implementation of new technologies and the ability to develop and maintain secure and reliable electronic systems; changes in the securities markets; changes in accounting principles, policies and guidelines; and other risk factors detailed from time to time in filings made by TowneBank with the Federal Deposit Insurance Corporation.  TowneBank undertakes no obligation to update or clarify these forward-looking statements, whether as a result of new information, future events or otherwise.

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

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

TOWNEBANK

Selected Financial Highlights (unaudited)

(dollars in thousands, except per share data)

 

 

 

 

 

Three Months Ended

 

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

2020

 

2020

 

2019

 

2019

 

2019

Income and Performance Ratios:

 

 

 

 

 

 

 

 

 

 

Total Revenue

$

162,656

 

 

$

137,696

 

 

$

139,671

 

 

$

145,879

 

 

$

144,537

 

 

Net income

37,222

 

 

27,605

 

 

35,948

 

 

39,400

 

 

36,242

 

 

Net income attributable to TowneBank

34,605

 

 

26,384

 

 

35,075

 

 

37,659

 

 

34,638

 

 

Net income per common share - diluted

0.48

 

 

0.36

 

 

0.49

 

 

0.52

 

 

0.48

 

 

Book value per common share

23.50

 

 

22.77

 

 

22.58

 

 

22.38

 

 

21.95

 

 

Book value per common share - tangible (non-GAAP)

16.68

 

 

15.91

 

 

15.69

 

 

15.44

 

 

15.05

 

 

Return on average assets

0.97

%

 

0.88

%

 

1.16

%

 

1.26

%

 

1.20

%

 

Return on average assets - tangible (non-GAAP)

1.07

%

 

1.00

%

 

1.30

%

 

1.40

%

 

1.35

%

 

Return on average equity

8.18

%

 

6.37

%

 

8.44

%

 

9.22

%

 

8.83

%

 

Return on average equity - tangible (non-GAAP)

12.32

%

 

9.91

%

 

12.97

%

 

14.20

%

 

13.90

%

 

Return on average common equity

8.24

%

 

6.42

%

 

8.51

%

 

9.29

%

 

8.89

%

 

Return on average common equity - tangible (non-GAAP)

12.44

%

 

10.01

%

 

13.12

%

 

14.36

%

 

14.05

%

 

Noninterest income as a percentage of total revenue

42.66

%

 

35.00

%

 

35.59

%

 

37.55

%

 

37.86

%

 

 

 

 

 

 

 

 

 

 

 

Regulatory Capital Ratios (1):

 

 

 

 

 

 

 

 

 

 

Common equity tier 1

11.54

%

 

11.23

%

 

11.46

%

 

11.52

%

 

11.58

%

 

Tier 1

11.67

%

 

11.35

%

 

11.49

%

 

11.55

%

 

11.62

%

 

Total

14.91

%

 

14.40

%

 

14.58

%

 

14.70

%

 

14.85

%

 

Tier 1 leverage ratio

9.05

%

 

10.11

%

 

9.95

%

 

9.84

%

 

9.86

%

 

 

 

 

 

 

 

 

 

 

 

Asset Quality:

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses on loans to nonperforming loans

5.34x

 

 

3.85x

 

 

3.34x

 

 

3.95x

 

 

3.00x

 

 

Allowance for credit losses on loans to period end loans

0.92

%

 

0.73

%

 

0.69

%

 

0.68

%

 

0.67

%

 

Allowance for credit losses on loans to period end loans excluding PPP loans (non-GAAP)

1.04

%

 

0.73

%

 

0.69

%

 

0.68

%

 

0.67

%

 

Nonperforming loans to period end loans

0.17

%

 

0.19

%

 

0.21

%

 

0.17

%

 

0.22

%

 

Nonperforming assets to period end assets

0.19

%

 

0.24

%

 

0.27

%

 

0.26

%

 

0.29

%

 

Net charge-offs to average loans (annualized)

%

 

0.03

%

 

0.04

%

 

0.03

%

 

0.08

%

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans

$

16,935

 

 

$

16,700

 

 

$

17,437

 

 

$

14,016

 

 

$

18,202

 

 

Former bank premises

 

 

 

 

1,521

 

 

1,510

 

 

1,510

 

 

Foreclosed property

12,315

 

 

13,053

 

 

13,839

 

 

15,517

 

 

14,517

 

 

Total nonperforming assets

$

29,250

 

 

$

29,753

 

 

$

32,797

 

 

$

31,043

 

 

$

34,229

 

 

Loans past due 90 days and still accruing interest

$

464

 

 

$

91

 

 

$

309

 

 

$

636

 

 

$

415

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses on loans

$

90,467

 

 

$

64,372

 

 

$

58,234

 

 

$

55,428

 

 

$

54,527

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage Banking:

 

 

 

 

 

 

 

 

 

 

Loans originated, mortgage

$

1,116,782

 

 

$

718,681

 

 

$

628,279

 

 

$

703,922

 

 

$

574,638

 

 

Loans originated, joint venture

357,815

 

 

204,522

 

 

231,879

 

 

259,742

 

 

246,491

 

 

Total loans originated

$

1,474,597

 

 

$

923,203

 

 

$

860,158

 

 

$

963,664

 

 

$

821,129

 

 

Number of loans originated

4,818

 

 

3,025

 

 

2,984

 

 

3,360

 

 

3,121

 

 

Number of originators

216

 

 

223

 

 

217

 

 

225

 

 

229

 

 

Purchase %

51.26

%

 

61.31

%

 

70.32

%

 

68.83

%

 

84.97

%

 

Loans sold

$

1,398,649

 

 

$

809,834

 

 

$

879,910

 

 

$

925,058

 

 

$

694,832

 

 

Gross realized gain on sales and fees as a % of loans originated

3.17

%

 

1.80

%

 

3.38

%

 

3.45

%

 

3.43

%

 

 

 

 

 

 

 

 

 

 

 

Other Ratios:

 

 

 

 

 

 

 

 

 

 

Net interest margin

2.85

%

 

3.35

%

 

3.33

%

 

3.41

%

 

3.49

%

 

Net interest margin-fully tax equivalent (non-GAAP)

2.87

%

 

3.37

%

 

3.35

%

 

3.43

%

 

3.52

%

 

Average earning assets/total average assets

91.33

%

 

89.15

%

 

89.57

%

 

89.53

%

 

89.46

%

 

Average loans/average deposits

91.81

%

 

92.99

%

 

88.41

%

 

87.63

%

 

91.60

%

 

Average noninterest deposits/total average deposits

36.52

%

 

32.21

%

 

32.14

%

 

31.82

%

 

31.63

%

 

Period end equity/period end total assets

11.05

%

 

13.19

%

 

13.84

%

 

13.63

%

 

13.45

%

 

Efficiency ratio

56.99

%

 

73.02

%

 

66.11

%

 

66.66

%

 

66.80

%

 

 

 

 

 

 

 

 

 

 

 

 

(1) Current reporting period regulatory capital ratios are preliminary

 

 

 

 

 

 

 

 

 

 

 

 

 

 


TOWNEBANK

Selected Data (unaudited)

(dollars in thousands)

 

Investment Securities

 

 

 

 

 

 

% Change

 

Q2

 

Q2

 

Q1

 

Q2 20 vs.

 

Q2 20 vs.

Available-for-sale securities, at fair value

2020

 

2019

 

2020

 

Q2 19

 

Q1 20

U.S. agency securities

$

118,176

 

 

$

261,960

 

 

$

121,857

 

 

(54.89

)%

 

(3.02

)%

U.S. Treasury notes

1,010

 

 

2,241

 

 

1,014

 

 

(54.93

)%

 

(0.39

)%

Municipal securities

313,322

 

 

167,466

 

 

266,489

 

 

87.10

%

 

17.57

%

Trust preferred and other corporate securities

59,598

 

 

43,799

 

 

59,606

 

 

36.07

%

 

(0.01

)%

Mortgage-backed securities issued by GSE and GNMA

774,658

 

 

785,355

 

 

799,713

 

 

(1.36

)%

 

(3.13

)%

Allowance for credit losses

(140

)

 

n/a

 

(259

)

 

n/a

 

(45.95

)%

Total

$

1,266,624

 

 

$

1,260,821

 

 

$

1,248,420

 

 

0.46

%

 

1.46

%

 

 

 

 

 

 

 

 

 

 

Gross unrealized gains (losses) reflected in financial statements

 

 

 

 

 

 

Total gross unrealized gains

$

61,559

 

 

$

22,119

 

 

$

30,545

 

 

178.31

%

 

101.54

%

Total gross unrealized losses

(1,674

)

 

(2,456

)

 

(9,848

)

 

(31.84

)%

 

(83.00

)%

Net unrealized gains (losses) and other adjustments on AFS securities

$

59,885

 

 

$

19,663

 

 

$

20,697

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Held-to-maturity securities, at amortized cost

 

 

 

 

 

 

 

 

 

Municipal securities

$

28,855

 

 

$

34,458

 

 

$

28,852

 

 

(16.26

)%

 

0.01

%

Trust preferred corporate securities

2,345

 

 

2,393

 

 

2,357

 

 

(2.01

)%

 

(0.51

)%

Mortgage-backed securities issued by GSE and GNMA

10,395

 

 

13,723

 

 

11,222

 

 

(24.25

)%

 

(7.37

)%

Less: Allowance for credit losses

(121

)

 

n/a

 

(133

)

 

n/a

 

(9.02

)%

Total

$

41,474

 

 

$

50,574

 

 

$

42,298

 

 

(17.99

)%

 

(1.95

)%

 

 

 

 

 

 

 

 

 

 

Gross unrealized gains (losses) not reflected in financial statements

 

 

 

 

 

 

 

 

Total gross unrealized gains

$

1,980

 

 

$

1,636

 

 

$

964

 

 

21.03

%

 

105.39

%

Total gross unrealized losses

 

 

(57

)

 

 

 

(100.00

)%

 

%

Net unrealized gains (losses) in HTM securities

$

1,980

 

 

$

1,579

 

 

$

964

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans Held For Investment (1)

 

 

 

 

 

 

% Change

 

Q2

 

Q2

 

Q1

 

Q2 20 vs.

 

Q2 20 vs.

 

2020

 

2019

 

2020

 

Q2 19

 

Q1 20

Real estate - construction and development

$

1,178,832

 

 

$

1,107,762

 

 

$

1,060,834

 

 

6.42

%

 

11.12

%

Commercial real estate - non owner occupied

2,332,447

 

 

1,985,990

 

 

2,305,971

 

 

17.45

%

 

1.15

%

Commercial real estate - owner occupied

1,383,294

 

 

1,288,478

 

 

1,398,216

 

 

7.36

%

 

(1.07

)%

Real estate - multifamily

277,947

 

 

267,528

 

 

283,514

 

 

3.89

%

 

(1.96

)%

Real estate - residential 1-4 family and HELOC

1,670,530

 

 

1,639,547

 

 

1,693,562

 

 

1.89

%

 

(1.36

)%

Commercial and industrial business

2,503,161

 

 

1,523,607

 

 

1,636,244

 

 

64.29

%

 

52.98

%

Consumer and other loans

455,678

 

 

313,817

 

 

405,854

 

 

45.21

%

 

12.28

%

Total

$

9,801,889

 

 

$

8,126,729

 

 

$

8,784,195

 

 

20.61

%

 

11.59

%

(1) Paycheck Protection Program loans totaling $1.09 billion, primarily in C&I, are included in Q2 2020.

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

% Change

 

Q2

 

Q2

 

Q1

 

Q2 20 vs.

 

Q2 20 vs.

 

2020

 

2019

 

2020

 

Q2 19

 

Q1 20

Noninterest-bearing demand

$

4,226,208

 

 

$

2,950,615

 

 

$

3,060,515

 

 

43.23

%

 

38.09

%

Interest-bearing:

 

 

 

 

 

 

 

 

 

Demand and money market accounts

4,223,391

 

 

3,409,322

 

 

3,573,926

 

 

23.88

%

 

18.17

%

Savings

298,673

 

 

277,495

 

 

280,807

 

 

7.63

%

 

6.36

%

Certificates of deposits

2,516,666

 

 

2,631,386

 

 

2,392,744

 

 

(4.36

)%

 

5.18

%

Total

$

11,264,938

 

 

$

9,268,818

 

 

$

9,307,992

 

 

21.54

%

 

21.02

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


TOWNEBANK

Average Balances, Yields and Rate Paid (unaudited)

(dollars in thousands)

 

 

Three Months Ended

 

Three Months Ended

 

Three Months Ended

 

June 30, 2020

 

March 31, 2020

 

June 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)

$

9,619,931

 

 

$

102,656

 

 

4.29

%

 

$

8,550,216

 

 

$

100,566

 

 

4.73

%

 

$

8,075,054

 

 

$

102,366

 

 

5.08

%

Taxable investment securities

1,198,776

 

 

7,367

 

 

2.46

%

 

1,356,411

 

 

9,211

 

 

2.72

%

 

1,170,215

 

 

8,346

 

 

2.85

%

Tax-exempt investment securities

147,489

 

 

836

 

 

2.27

%

 

128,204

 

 

861

 

 

2.69

%

 

90,942

 

 

756

 

 

3.33

%

Total securities

1,346,265

 

 

8,203

 

 

2.44

%

 

1,484,615

 

 

10,072

 

 

2.71

%

 

1,261,157

 

 

9,102

 

 

2.89

%

Interest-bearing deposits

1,729,140

 

 

433

 

 

0.10

%

 

373,984

 

 

1,102

 

 

1.19

%

 

698,649

 

 

4,016

 

 

2.31

%

Loans held for sale

464,796

 

 

3,811

 

 

3.28

%

 

333,070

 

 

2,988

 

 

3.59

%

 

281,775

 

 

3,007

 

 

4.27

%

Total earning assets

13,160,132

 

 

115,103

 

 

3.52

%

 

10,741,885

 

 

114,728

 

 

4.30

%

 

10,316,635

 

 

118,491

 

 

4.61

%

Less: allowance for credit losses

(69,451

)

 

 

 

 

 

(55,331

)

 

 

 

 

 

(53,386

)

 

 

 

 

Total nonearning assets

1,318,787

 

 

 

 

 

 

1,362,769

 

 

 

 

 

 

1,269,029

 

 

 

 

 

Total assets

$

14,409,468

 

 

 

 

 

 

$

12,049,323

 

 

 

 

 

 

$

11,532,278

 

 

 

 

 

Liabilities and Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand and money market

$

3,857,757

 

 

$

2,491

 

 

0.26

%

 

$

3,521,707

 

 

$

5,319

 

 

0.61

%

 

$

3,312,313

 

 

$

7,025

 

 

0.85

%

Savings

290,201

 

 

554

 

 

0.77

%

 

276,947

 

 

593

 

 

0.86

%

 

281,221

 

 

929

 

 

1.33

%

Certificates of deposit

2,503,648

 

 

12,027

 

 

1.93

%

 

2,434,098

 

 

13,150

 

 

2.17

%

 

2,433,479

 

 

13,830

 

 

2.28

%

Total interest-bearing deposits

6,651,606

 

 

15,072

 

 

0.91

%

 

6,232,752

 

 

19,062

 

 

1.23

%

 

6,027,013

 

 

21,784

 

 

1.45

%

Borrowings

1,741,832

 

 

3,238

 

 

0.74

%

 

679,745

 

 

2,581

 

 

1.50

%

 

678,799

 

 

3,318

 

 

1.93

%

Subordinated debt, net

248,660

 

 

2,962

 

 

4.76

%

 

248,510

 

 

2,962

 

 

4.77

%

 

248,064

 

 

2,962

 

 

4.78

%

Total interest-bearing liabilities

8,642,098

 

 

21,272

 

 

0.99

%

 

7,161,007

 

 

24,605

 

 

1.38

%

 

6,953,876

 

 

28,064

 

 

1.62

%

Demand deposits

3,826,439

 

 

 

 

 

 

2,962,110

 

 

 

 

 

 

2,788,596

 

 

 

 

 

Other noninterest-bearing liabilities

239,154

 

 

 

 

 

 

260,500

 

 

 

 

 

 

215,951

 

 

 

 

 

Total liabilities

12,707,691

 

 

 

 

 

 

10,383,617

 

 

 

 

 

 

9,958,423

 

 

 

 

 

Shareholders equity

1,701,777

 

 

 

 

 

 

1,665,706

 

 

 

 

 

 

1,573,855

 

 

 

 

 

Total liabilities and equity

$

14,409,468

 

 

 

 

 

 

$

12,049,323

 

 

 

 

 

 

$

11,532,278

 

 

 

 

 

Net interest income (tax-equivalent basis)

 

 

$

93,831

 

 

 

 

 

 

$

90,123

 

 

 

 

 

 

$

90,427

 

 

 

Reconcilement of Non-GAAP Financial Measures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax-equivalent basis adjustment

 

 

(557

)

 

 

 

 

 

(627

)

 

 

 

 

 

(608

)

 

 

Net interest income (GAAP)

 

 

$

93,274

 

 

 

 

 

 

$

89,496

 

 

 

 

 

 

$

89,819

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread (2)(4)

 

 

 

 

2.53

%

 

 

 

 

 

2.92

%

 

 

 

 

 

2.99

%

Interest expense as a percent of average earning assets

 

 

 

0.65

%

 

 

 

 

 

0.92

%

 

 

 

 

 

1.09

%

Net interest margin (tax equivalent basis) (3)(4)

 

 

 

2.87

%

 

 

 

 

 

3.37

%

 

 

 

 

 

3.52

%

Total cost of deposits

 

 

 

 

0.58

%

 

 

 

 

 

0.83

%

 

 

 

 

 

0.99

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes average PPP balances of $0.81 billion and related interest and fee income of $5.8 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)

 

 

Six Months Ended

 

Six Months Ended

 

Six Months Ended June 30,

 

June 30, 2020

 

June 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)

$

9,085,074

 

 

$

203,221

 

 

4.50

%

 

$

8,053,146

 

 

$

202,512

 

 

5.07

%

 

$

709

 

 

$

(24,050

)

 

$

24,759

 

Taxable investment securities

1,277,593

 

 

16,578

 

 

2.60

%

 

1,103,799

 

 

15,875

 

 

2.88

%

 

703

 

 

(1,646

)

 

2,349

 

Tax-exempt investment securities

137,846

 

 

1,698

 

 

2.46

%

 

85,158

 

 

1,522

 

 

3.57

%

 

176

 

 

(571

)

 

747

 

Total securities

1,415,439

 

 

18,276

 

 

2.58

%

 

1,188,957

 

 

17,397

 

 

2.93

%

 

879

 

 

(2,217

)

 

3,096

 

Interest-bearing deposits

472,589

 

 

1,535

 

 

0.65

%

 

695,999

 

 

8,013

 

 

2.32

%

 

(6,478

)

 

(4,478

)

 

(2,000

)

Loans held for sale

398,933

 

 

6,799

 

 

3.41

%

 

230,411

 

 

5,010

 

 

4.35

%

 

1,789

 

 

(1,264

)

 

3,053

 

Total earning assets

11,372,035

 

 

229,831

 

 

4.06

%

 

10,168,513

 

 

232,932

 

 

4.62

%

 

(3,101

)

 

(32,009

)

 

28,908

 

Less: allowance for loan losses

(62,390

)

 

 

 

 

 

(53,117

)

 

 

 

 

 

 

 

 

 

 

Total nonearning assets

1,919,751

 

 

 

 

 

 

1,249,052

 

 

 

 

 

 

 

 

 

 

 

Total assets

$

13,229,396

 

 

 

 

 

 

$

11,364,448

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand and money market

$

3,689,732

 

 

$

7,809

 

 

0.43

%

 

$

3,243,616

 

 

$

13,264

 

 

0.82

%

 

$

(5,455

)

 

$

(7,097

)

 

$

1,642

 

Savings

283,574

 

 

1,147

 

 

0.81

%

 

283,348

 

 

1,956

 

 

1.39

%

 

(809

)

 

(811

)

 

2

 

Certificates of deposit

2,468,873

 

 

25,177

 

 

2.05

%

 

2,362,165

 

 

25,738

 

 

2.20

%

 

(561

)

 

(1,724

)

 

1,163

 

Total interest-bearing deposits

6,442,179

 

 

34,133

 

 

1.07

%

 

5,889,129

 

 

40,958

 

 

1.40

%

 

(6,825

)

 

(9,632

)

 

2,807

 

Borrowings

1,210,789

 

 

5,820

 

 

0.95

%

 

749,948

 

 

7,540

 

 

2.00

%

 

(1,720

)

 

(5,083

)

 

3,363

 

Subordinated debt, net

248,585

 

 

5,923

 

 

4.77

%

 

247,989

 

 

5,923

 

 

4.78

%

 

 

 

(14

)

 

14

 

Total interest-bearing liabilities

7,901,553

 

 

45,876

 

 

1.17

%

 

6,887,066

 

 

54,421

 

 

1.59

%

 

(8,545

)

 

(14,729

)

 

6,184

 

Demand deposits

3,394,275

 

 

 

 

 

 

2,710,141

 

 

 

 

 

 

 

 

 

 

 

Other noninterest-bearing liabilities

249,827

 

 

 

 

 

 

207,287

 

 

 

 

 

 

 

 

 

 

 

Total liabilities

11,545,655

 

 

 

 

 

 

9,804,494

 

 

 

 

 

 

 

 

 

 

 

Shareholders equity

1,683,741

 

 

 

 

 

 

1,559,954

 

 

 

 

 

 

 

 

 

 

 

Total liabilities and equity

$

13,229,396

 

 

 

 

 

 

$

11,364,448

 

 

 

 

 

 

 

 

 

 

 

Net interest income (tax-equivalent basis)

 

 

$

183,955

 

 

 

 

 

 

$

178,511

 

 

 

 

$

5,444

 

 

$

(17,280

)

 

$

22,724

 

Reconcilement of Non-GAAP Financial Measures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax-equivalent basis adjustment

 

 

(1,185

)

 

 

 

 

 

(1,219

)

 

 

 

34

 

 

 

 

 

Net interest income (GAAP)

 

 

$

182,770

 

 

 

 

 

 

$

177,292

 

 

 

 

$

5,478

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread (2)(4)

 

 

 

 

2.90

%

 

 

 

 

 

3.03

%

 

 

 

 

 

 

Interest expense as a percent of average earning assets

 

 

 

0.81

%

 

 

 

 

 

1.08

%

 

 

 

 

 

 

Net interest margin (tax equivalent basis) (3)(4)

 

 

 

3.25

%

 

 

 

 

 

3.54

%

 

 

 

 

 

 

Total cost of deposits

 

 

 

 

0.70

%

 

 

 

 

 

0.96

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes average PPP balances of  $0.40 billion and related interest income of $5.8 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,

 

2020

 

2019

 

(unaudited)

 

(audited)

ASSETS

 

 

 

Cash and due from banks

$

115,724

 

 

$

97,593

 

Interest-bearing deposits at FRB - Richmond

2,511,152

 

 

322,505

 

Interest-bearing deposits in financial institutions

24,374

 

 

22,518

 

Total Cash and Cash Equivalents

2,651,250

 

 

442,616

 

Securities available for sale, at fair value (amortized cost $1,206,878, allowance for credit losses of $140) (1)

1,266,624

 

 

1,441,308

 

Securities held to maturity, at amortized cost (fair value $43,575 )(1)

41,595

 

 

43,688

 

Less:  allowance for credit losses

(121

)

 

 

Securities held to maturity, net of allowance for credit losses

41,474

 

 

43,688

 

Other equity securities

6,497

 

 

6,462

 

FHLB stock

49,277

 

 

30,094

 

Total Securities

1,363,872

 

 

1,521,552

 

Mortgage loans held for sale

610,369

 

 

419,233

 

Loans, net of unearned income and deferred costs

9,801,889

 

 

8,419,288

 

Less: allowance for credit losses

(90,467

)

 

(58,234

)

Net Loans

9,711,422

 

 

8,361,054

 

Premises and equipment, net

257,533

 

 

231,806

 

Goodwill

446,725

 

 

446,816

 

Other intangible assets, net

48,632

 

 

54,399

 

BOLI

242,493

 

 

243,062

 

Other assets

247,962

 

 

227,125

 

TOTAL ASSETS

$

15,580,258

 

 

$

11,947,663

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

Deposits:

 

 

 

Noninterest-bearing demand

$

4,226,208

 

 

$

2,951,225

 

Interest-bearing:

 

 

 

Demand and money market accounts

4,223,391

 

 

3,586,364

 

Savings

298,673

 

 

276,205

 

Certificates of deposit

2,516,666

 

 

2,457,123

 

Total Deposits

11,264,938

 

 

9,270,917

 

Advances from the FHLB

906,365

 

 

471,687

 

Subordinated debt, net

248,756

 

 

248,458

 

FRB PPP lending facility

1,111,429

 

 

 

Repurchase agreements and other borrowings

60,913

 

 

52,391

 

Total Borrowings

2,327,463

 

 

772,536

 

Other liabilities

266,314

 

 

250,516

 

TOTAL LIABILITIES

13,858,715

 

 

10,293,969

 

Preferred stock

 

 

 

Authorized and unissued shares - 2,000,000

 

 

 

Common stock, $1.667 par: 150,000,000 shares authorized

 

 

 

72,645,987 and 72,649,682 shares issued at June 30, 2020 and December 31, 2019, respectively

121,101

 

 

121,107

 

Capital surplus

1,043,774

 

 

1,041,160

 

Retained earnings

499,502

 

 

467,186

 

Common stock issued to deferred compensation trust, at cost

 

 

 

871,634 and 818,578 shares at June 30, 2020 and December 31, 2019, respectively

(16,776

)

 

(15,555

)

Deferred compensation trust

16,776

 

 

15,555

 

Accumulated other comprehensive income (loss)

43,218

 

 

11,302

 

TOTAL SHAREHOLDERS EQUITY

1,707,595

 

 

1,640,755

 

Noncontrolling interest

13,948

 

 

12,939

 

TOTAL EQUITY

1,721,543

 

 

1,653,694

 

TOTAL LIABILITIES AND EQUITY

$

15,580,258

 

 

$

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

 

Six Months Ended

 

June 30,

 

June 30,

 

2020

 

2019

 

2020

 

2019

INTEREST INCOME:

 

 

 

 

 

 

 

Loans, including fees

$

102,139

 

 

$

101,874

 

 

$

202,201

 

 

$

201,569

 

Investment securities

8,163

 

 

8,987

 

 

18,112

 

 

17,121

 

Interest-bearing deposits in financial institutions and federal funds sold

433

 

 

4,015

 

 

1,535

 

 

8,013

 

Mortgage loans held for sale

3,811

 

 

3,007

 

 

6,799

 

 

5,010

 

Total interest income

114,546

 

 

117,883

 

 

228,647

 

 

231,713

 

INTEREST EXPENSE:

 

 

 

 

 

 

 

Deposits

15,072

 

 

21,784

 

 

34,134

 

 

40,958

 

Advances from the FHLB

2,595

 

 

3,201

 

 

5,088

 

 

7,354

 

Subordinated debt, net

2,962

 

 

2,962

 

 

5,923

 

 

5,924

 

Repurchase agreements and other borrowings

643

 

 

117

 

 

732

 

 

185

 

Total interest expense

21,272

 

 

28,064

 

 

45,877

 

 

54,421

 

Net interest income

93,274

 

 

89,819

 

 

182,770

 

 

177,292

 

 

 

 

 

 

 

 

 

PROVISION FOR CREDIT LOSSES

26,945

 

 

2,824

 

 

33,961

 

 

4,262

 

Net interest income after provision for credit losses

66,329

 

 

86,995

 

 

148,809

 

 

173,030

 

NONINTEREST INCOME:

 

 

 

 

 

 

 

Residential mortgage banking income, net

29,715

 

 

18,565

 

 

37,131

 

 

32,073

 

Insurance commissions and other title fees and income, net

17,612

 

 

17,213

 

 

34,505

 

 

32,795

 

Real estate brokerage and property management income, net

10,781

 

 

8,843

 

 

17,719

 

 

18,111

 

Service charges on deposit accounts

1,888

 

 

3,185

 

 

4,328

 

 

6,046

 

Credit card merchant fees, net

1,109

 

 

660

 

 

2,287

 

 

1,843

 

BOLI

1,584

 

 

1,635

 

 

4,690

 

 

3,233

 

Other income

3,763

 

 

4,617

 

 

8,990

 

 

7,774

 

Net gain/(loss) on investment securities

2,930

 

 

 

 

7,932

 

 

(776

)

Total noninterest income

69,382

 

 

54,718

 

 

117,582

 

 

101,099

 

NONINTEREST EXPENSE:

 

 

 

 

 

 

 

Salaries and employee benefits

56,926

 

 

54,263

 

 

112,793

 

 

107,123

 

Occupancy expense

7,227

 

 

7,662

 

 

14,728

 

 

15,913

 

Furniture and equipment

3,564

 

 

3,578

 

7,205 6,949 Amortization - intangibles2,901 3,113 5,851 6,305 Software expense3,492 2,788 6,984 5,533 Data processing2,718 3,616 5,509 6,782 Professional fees2,972 3,707 6,040 6,386 Advertising and marketing1,986 3,182 5,570 6,011 Other expenses9,239 14,647 23,233 27,677 Total noninterest expense91,025 96,556 187,913 188,679 Income before income tax expense and noncontrolling interest44,686 45,157 78,478 85,450 Provision for income tax expense7,464 8,915 13,651 17,126 Net income$37,222 $36,242 $64,827 $68,324 Net income attributable to noncontrolling interest(2,617) (1,604) (3,838) (2,277)Net income attributable to TowneBank$34,605 $34,638 $60,989 $66,047 Per common share information Basic earnings$0.48 $0.48 $0.84 $0.92 Diluted earnings$0.48 $0.48 $0.84 $0.92 Cash dividends declared$0.18 $0.18 $0.36 $0.34


TOWNEBANK

Consolidated Balance Sheets - Five Quarter Trend

(dollars in thousands, except share data)

June 30,

March 31,

December 31,

September 30,

June 30,

2020

2020

2019

2019

2019

(unaudited)

(unaudited)

(audited)

(unaudited)

(unaudited)

ASSETS

Cash and due from banks

$

115,724

$

108,929

$

97,593

$

124,439

$

110,580

Interest-bearing deposits at FRB - Richmond

2,511,152

753,643

322,505

675,288

834,505

Interest-bearing deposits in financial institutions

24,374

23,564

22,518

21,663

21,527

Total Cash and Cash Equivalents

2,651,250

886,136

442,616

821,390

966,612

Securities available for sale

1,266,624

1,248,420

1,441,308

1,337,395

1,260,821

Securities held to maturity

41,595

42,431

43,688

44,494

50,574

Less: allowance for credit losses

(121

)

(133

)

Securities held to maturity, net of allowance for credit losses

41,474

42,298

43,688

44,494

50,574

Other equity securities

6,497

6,462

6,462

5,697

5,396

FHLB stock

49,277

52,042

30,094

26,282

32,657

Total Securities

1,363,872

1,349,222

1,521,552

1,413,868

1,349,448

Mortgage loans held for sale

610,369

453,143

419,233

456,719

362,773

Loans, net of unearned income and deferred costs

9,801,889

8,784,195

8,419,288

8,182,829

8,126,729

Less: allowance for credit losses

(90,467

)

(64,372

)

(58,234

)

(55,428

)

(54,527

)

Net Loans

9,711,422

8,719,823

8,361,054

8,127,401

8,072,202

Premises and equipment, net

257,533

236,735

231,806

231,060

230,177

Goodwill

446,725

446,725

446,816

446,423

442,881

Other intangible assets, net

48,632

51,448

54,399

57,404

58,391

BOLI

242,493

240,924

243,062

241,652

240,621

Other assets

247,962

239,670

227,125

225,374

219,375

TOTAL ASSETS

$

15,580,258

$

12,623,826

$

11,947,663

$

12,021,291

$

11,942,480

LIABILITIES AND EQUITY

Deposits:

Noninterest-bearing demand

$

4,226,208

$

3,060,515

$

2,951,225

$

3,030,505

$

2,950,615

Interest-bearing:

Demand and money market accounts

4,223,391

3,573,926

3,586,364

3,534,252

3,409,322

Savings

298,673

280,807

276,205

280,552

277,495

Certificates of deposit

2,516,666

2,392,744

2,457,123

2,592,705

2,631,386

Total Deposits

11,264,938

9,307,992

9,270,917

9,438,014

9,268,818

Advances from the FHLB

906,365

971,527

471,687

381,846

532,004

Subordinated debt, net

248,756

248,607

248,458

248,309

248,160

FRB PPP lending facility

1,111,429

Repurchase agreements and other borrowings

60,913

171,762

52,391

42,971

56,355

Total Borrowings

2,327,463

1,391,896

772,536

673,126

836,519

Other liabilities

266,314

258,306

250,516

271,617

230,691

TOTAL LIABILITIES

13,858,715

10,958,194

10,293,969

10,382,757

10,336,028

Preferred stock

Authorized shares - 2,000,000

Common stock, $1.667 par value

121,101

121,057

121,107

121,080

121,038

Capital surplus

1,043,774

1,041,870

1,041,160

1,039,156

1,036,982

Retained earnings

499,502

477,972

467,186

445,186

420,600

Common stock issued to deferred compensation trust, at cost

(16,776

)

(15,562

)

(15,555

)

(15,317

)

(15,160

)

Deferred compensation trust

16,776

15,562

15,555

15,317

15,160

Accumulated other comprehensive income (loss)

43,218

12,301

11,302

19,958

15,143

TOTAL SHAREHOLDERS’ EQUITY

1,707,595

1,653,200

1,640,755

1,625,380

1,593,763

Noncontrolling interest

13,948

12,432

12,939

13,154

12,689

TOTAL EQUITY

1,721,543

1,665,632

1,653,694

1,638,534

1,606,452

TOTAL LIABILITIES AND EQUITY

$

15,580,258

$

12,623,826

$

11,947,663

$

12,021,291

$

11,942,480


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,

2020

2020

2019

2019

2019

INTEREST INCOME:

Loans, including fees

$

102,139

$

100,062

$

100,059

$

102,047

$

101,874

Investment securities

8,163

9,949

9,936

9,889

8,987

Interest-bearing deposits in financial institutions and federal funds sold

433

1,102

2,067

3,745

4,015

Mortgage loans held for sale

3,811

2,988

4,413

3,956

3,007

Total interest income

114,546

114,101

116,475

119,637

117,883

INTEREST EXPENSE:

Deposits

15,072

19,062

21,744

23,552

21,784

Advances from the FHLB

2,595

2,492

1,730

1,935

3,201

Subordinated debt

2,962

2,962

2,962

2,962

2,962

Repurchase agreements and other borrowings

643

89

80

85

117

Total interest expense

21,272

24,605

26,516

28,534

28,064

Net interest income

93,274

89,496

89,959

91,103

89,819

PROVISION FOR CREDIT LOSSES

26,945

7,016

3,601

1,508

2,824

Net interest income after provision for credit losses

66,329

82,480

86,358

89,595

86,995

NONINTEREST INCOME:

Residential mortgage banking income, net

29,715

7,416

15,884

18,855

18,565

Insurance commissions and other title fees and income, net

17,612

16,893

15,001

16,681

17,213

Real estate brokerage and property management income, net

10,781

6,938

6,737

9,444

8,843

Service charges on deposit accounts

1,888

2,440

2,245

2,253

3,185

Credit card merchant fees, net

1,109

1,179

1,389

1,514

660

BOLI

1,584

3,105

3,865

2,117

1,635

Other income

3,763

5,227

4,591

3,981

4,617

Net gain/(loss) on investment securities

2,930

5,002

(69

)

Total noninterest income

69,382

48,200

49,712

54,776

54,718

NONINTEREST EXPENSE:

Salaries and employee benefits

56,926

55,867

56,013

55,784

54,263

Occupancy expense

7,227

7,502

7,516

7,953

7,662

Furniture and equipment

3,564

3,640

3,598

3,805

3,578

Amortization - intangibles

2,901

2,950

3,005

3,059

3,113

Software expense

3,492

3,492

2,976

3,208

2,788

Data processing

2,718

2,791

2,510

2,533

3,616

Professional fees

2,972

3,067

2,990

3,566

3,707

Advertising and marketing

1,986

3,584

2,839

3,429

3,182

Other expenses

9,239

13,995

10,889

13,950

14,647

Total noninterest expense

91,025

96,888

92,336

97,287

96,556

Income before income tax expense and noncontrolling interest

44,686

33,792

43,734

47,084

45,157

Provision for income tax expense

7,464

6,187

7,786

7,684

8,915

Net income

37,222

27,605

35,948

39,400

36,242

Net income attributable to noncontrolling interest

(2,617

)

(1,221

)

(873

)

(1,741

)

(1,604

)

Net income attributable to TowneBank

$

34,605

$

26,384

$

35,075

$

37,659

$

34,638

Per common share information

Basic earnings

$

0.48

$

0.37

$

0.49

$

0.52

$

0.48

Diluted earnings

$

0.48

$

0.36

$

0.49

$

0.52

$

0.48

Basic weighted average shares outstanding

72,280,555

72,206,228

72,122,476

72,091,221

72,044,817

Diluted weighted average shares outstanding

72,317,988

$

72,299,721

72,302,414

72,222,934

72,145,600

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

Six Months Ended

Increase/(Decrease)

June 30,

March 31,

June 30,

2020 over 2019

2020

2019

2020

2020

2019

Amount

Percent

Revenue

Net interest income

$

89,665

$

88,442

$

87,406

$

177,071

$

174,842

$

2,229

1.27

%

Service charges on deposit accounts

1,888

3,185

2,440

4,328

6,046

(1,718

)

(28.42

)%

Credit card merchant fees

1,109

660

1,179

2,287

1,843

444

24.09

%

Other income

3,888

5,273

7,061

10,950

9,200

1,750

19.02

%

Subtotal

6,885

9,118

10,680

17,565

17,089

476

2.79

%

Net gain/(loss) on investment securities

2,930

5,002

7,932

(776

)

8,708

1,122.16

%

Total noninterest income

9,815

9,118

15,682

25,497

16,313

9,184

56.30

%

Total revenue

99,480

97,560

103,088

202,568

191,155

11,413

5.97

%

Provision for credit losses

26,059

2,824

7,041

33,100

4,262

28,838

676.63

%

Expenses

Salaries and employee benefits

35,209

32,353

33,225

68,434

63,440

4,994

7.87

%

Occupancy expense

4,812

5,007

4,916

9,728

10,251

(523

)

(5.10

)%

Furniture and equipment

2,715

2,517

2,660

5,375

4,884

491

10.05

%

Amortization of intangibles

1,114

1,315

1,164

2,278

2,681

(403

)

(15.03

)%

Other expenses

10,718

18,938

18,705

29,423

35,119

(5,696

)

(16.22

)%

Total expenses

54,568

60,130

60,670

115,238

116,375

(1,137

)

(0.98

)%

Income before income tax, corporate allocation and noncontrolling interest

18,853

34,606

35,377

54,230

70,518

(16,288

)

(23.10

)%

Corporate allocation

627

546

670

1,297

998

299

29.96

%

Income before income tax provision and noncontrolling interest

19,480

35,152

36,047

55,527

71,516

(15,989

)

(22.36

)%

Provision for income tax expense

2,167

6,650

6,663

8,830

13,842

(5,012

)

(36.21

)%

Net income

17,313

28,502

29,384

46,697

57,674

(10,977

)

(19.03

)%

Noncontrolling interest

5

1

(1

)

4

3

1

33.33

%

Net income attributable to TowneBank

$

17,318

$

28,503

$

29,383

$

46,701

$

57,677

(10,976

)

(19.03

)%

Efficiency ratio

56.52

%

61.63

%

61.85

%

59.21

%

60.63

%

(1.42

)%

(2.34

)%


TOWNEBANK

Realty Segment Financial Information (unaudited)

(dollars in thousands)

Three Months Ended

Six Months Ended

Increase/(Decrease)

June 30,

March 31,

June 30,

2020 over 2019

2020

2019

2020

2020

2019

Amount

Percent

Revenue

Residential mortgage brokerage income, net

$

30,468

$

18,898

$

8,007

$

38,475

$

32,654

$

5,821

17.83

%

Real estate brokerage income, net

2,659

2,873

1,865

4,524

4,434

90

2.03

%

Title insurance and settlement fees

639

594

436

1,075

962

113

11.75

%

Property management fees, net

8,122

5,970

5,073

13,195

13,678

(483

)

(3.53

)%

Income from unconsolidated subsidiary

301

162

186

487

256

231

90.23

%

Net interest and other income

3,765

1,677

2,396

6,161

3,049

3,112

102.07

%

Total revenue

45,954

30,174

17,963

63,917

55,033

8,884

16.14

%

Provision for credit losses

886

(25

)

861

861

n/m

Expenses

Salaries and employee benefits

13,059

13,309

13,293

26,352

26,204

148

0.56

%

Occupancy expense

1,763

2,028

1,927

3,690

4,373

(683

)

(15.62

)%

Furniture and equipment

626

803

762

1,388

1,571

(183

)

(11.65

)%

Amortization of intangible assets

658

695

657

1,315

1,420

(105

)

(7.39

)%

Other expenses

8,270

7,234

6,867

15,137

13,475

1,662

12.33

%

Total expenses

24,376

24,069

23,506

47,882

47,043

839

1.78

%

Income (loss) before income tax, corporate allocation and noncontrolling interest

20,692

6,105

(5,518

)

15,174

7,990

7,184

89.91

%

Corporate allocation

(370

)

(328

)

(393

)

(763

)

(591

)

(172

)

29.10

%

(Loss) income before income tax provision and noncontrolling interest

20,322

5,777

(5,911

)

14,411

7,399

7,012

94.77

%

Provision for income tax (benefit) expense

4,127

1,287

(1,292

)

2,835

1,838

997

54.24

%

Net (loss) income

16,195

4,490

(4,619

)

11,576

5,561

6,015

108.16

%

Noncontrolling interest

(2,415

)

(1,248

)

(791

)

(3,206

)

(1,500

)

(1,706

)

113.73

%

Net (loss) income attributable to TowneBank

$

13,780

$

3,242

$

(5,410

)

$

8,370

$

4,061

4,309

106.11

%

Efficiency ratio

53.04

%

79.77

%

130.86

%

74.91

%