TOWN - TowneBank Reports Third Quarter 2021 Earnings
SUFFOLK, Va., Oct. 28, 2021 (GLOBE NEWSWIRE) -- TowneBank (the "Company" or "Towne") (NASDAQ: TOWN) today reported earnings for the quarter ended September 30, 2021 of $50.40 million, or $0.69 per diluted share, compared to $34.46 million, or $0.48 per diluted share, for the quarter ended September 30, 2020.
"TowneBank had another successful quarter highlighted by solid organic loan growth despite headwinds from historically low levels of line utilization. Our credit quality metrics are excellent, and our Company is poised to capitalize on growth opportunities across our markets. The strong momentum in our fee-based businesses continued during the quarter as we explore additional strategies to accelerate noninterest income growth," said G. Robert Aston, Jr., Executive Chairman.
Highlights for Third Quarter 2021 Compared to Third Quarter 2020:
- Total revenues were $170.08 million, a decrease of $22.06 million, or 11.48%. This year-over-year decrease was driven by a 2020 gain on the sale of Red Sky Travel Insurance ("Red Sky"), totaling $17.63 million.
- Pre-provision, pre-tax, net revenues (non-GAAP), were $63.65 million, an increase of $7.37 million, or 13.09%, excluding the 2020 gain on sale of Red Sky.
- Loans held for investment were $9.30 billion, a decrease of $0.47 billion, or 4.84%, from September 30, 2020, and $0.13 billion, or 1.34%, from June 30, 2021. Excluding the decline in loans from the Paycheck Protection Program ("PPP"), loans held for investment increased $378.69 million, or 4.37%, compared to September 30, 2020, and $147.41 million, or 6.57%, on an annualized basis, from the linked quarter. Total loans at September 30, 2021, September 30, 2020, and June 30, 2021 included $0.25 billion, $1.10 billion, and $0.52 billion, respectively, of PPP loans.
- Total deposits were $13.01 billion, an increase of $1.31 billion, or 11.18% compared to prior year and $0.05 billion, or 1.51% on an annualized basis, from June 30, 2021.
- Noninterest bearing deposits increased by 20.85%, to $5.39 billion, representing 41.45% of total deposits. Compared to the linked quarter, noninterest bearing deposits increased 11.17%, on an annualized basis.
- Annualized return on common shareholders' equity was 10.68% and annualized return on average tangible common shareholders' equity was 15.27% (non-GAAP).
- Net interest margin for the quarter was 2.76% and taxable equivalent net interest margin (non-GAAP) was 2.78%.
- Nonperforming assets were $13.86 million, or 0.09% of total assets, compared to $28.74 million, or 0.19%, at September 30, 2020, primarily due to the sale of several foreclosed properties.
- Effective tax rate of 22.73% in the quarter compared to 18.53% in third quarter 2020, and 20.03% in the linked quarter.
"While facing continued pressure from the current rate environment on net interest margins, our Company delivered another strong performance for the quarter. Our diversified revenue model has afforded us the opportunity to patiently deploy excess liquidity and the recent rise in rates should provide more attractive entry points potentially increasing security purchases over the next several quarters," stated J. Morgan Davis, Chief Executive Officer.
Quarterly Net Interest Income Compared to Third Quarter 2020:
- Net interest income was $100.44 million compared to $96.76 million as of September 30, 2020.
- Tax-equivalent net interest margin (non-GAAP) was 2.78%, including purchase accounting accretion of 4 basis points and PPP interest and fees of 15 basis points, compared to 2.72%, including purchase accounting accretion of 5 basis points and a 17 basis point increase in PPP interest and fees, for third quarter 2020.
- On an average basis, loans held for investment, with a yield of 4.24%, represented 64.01% of earning assets at September 30, 2021 compared to a yield of 4.22% and 68.38% of earning assets in the third quarter of 2020. Excluding PPP loans, loan yields were 4.06% in third quarter 2021 compared to 4.30% in third quarter 2020.
- Interest and fee income on PPP loans was $7.77 million in third quarter 2021, compared to $10.02 million in the linked quarter, and $9.82 million in third quarter 2020.
- Total cost of deposits decreased to 0.19% from 0.46% at September 30, 2020.
- Average interest-earning assets totaled $14.43 billion at September 30, 2021 compared to $14.26 billion at September 30, 2020, an increase of 1.20%.
- Average interest-bearing liabilities totaled $8.24 billion, a decrease of $0.98 billion from prior year.
Quarterly Provision for Credit Losses:
- The quarterly provision for credit losses for on-balance-sheet loans was a benefit of $1.60 million compared to a provision expense of $28.26 million one year ago and a benefit of $8.08 million in the linked quarter.
- The third quarter 2021 included a release in the allowance for credit losses of $0.95 million that was driven by a combination of net recoveries and a slight improvement in the quarterly economic forecast, offset by modest core loan growth.
- Net loan recoveries were $0.64 million compared to $0.33 million one year prior and $0.14 million in the linked quarter. The ratio of net loan recoveries to average loans on an annualized basis was (0.03)% in third quarter 2021, (0.01)% in third quarter 2020, and (0.01)% in the linked quarter.
- The provision expense for credit losses on off-balance-sheet commitments was $0.01 million compared to $3.50 million in the third quarter of 2020, and a benefit of $1.89 million in the linked quarter.
- The allowance for credit losses on loans represented 1.15% of total loans at September 30, 2021 and June 30, 2021, compared to 1.22% at September 30, 2020. Excluding PPP loans, which are fully government guaranteed, the allowance for credit losses (non-GAAP) was 1.18%, compared to 1.22% at June 30, 2021 and 1.37% at September 30, 2020. The allowance for credit losses on loans was 12.68 times nonperforming loans compared to 9.67 times at June 30, 2021 and 7.31 times at September 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 Third Quarter 2020:
- Total noninterest income was $69.63 million compared to $95.38 million in 2020, a decrease of $25.74 million, or 26.99%. Residential mortgage banking income decreased $12.11 million, while real estate brokerage and property management income increased $2.98 million. In the third quarter of 2020, noninterest income included a gain of $17.63 million on the sale of Red Sky, a travel insurance joint venture.
- Residential mortgage banking recorded income of $25.42 million compared to $37.53 million in third quarter 2020. Margins declined 4 basis points between quarters and loan volume decreased to $1.31 billion in third quarter 2021 compared to $1.79 billion in 2020. Residential purchase activity comprised 77.45% of production volume in the third quarter of 2021 compared to 61.21% in the prior year quarter. In addition to the declines related to margin and volume, the income statement impact of derivative instruments in third quarter 2021 was a net loss of $0.77 million compared to a net gain on derivative instruments of $3.33 million in third quarter 2020. Included in the third quarter 2021 derivative instrument loss was a loss on interest rate-locks of $1.67 million, compared to a gain of $3.28 million in third quarter 2020.
- Margins on residential mortgages declined 41 basis points from the peak in December 2020. Management expects margin compression to continue through the end of the year to more normalized levels.
- Total Insurance segment revenue decreased $17.24 million, or 45.06%, to $21.03 million in third quarter 2021 compared to 2020. This decline is attributable to the sale of Red Sky mid-third quarter 2020 and the gain on sale totaling $17.63 million that was recorded in other income in that quarter. After distributions to noncontrolling interests, Towne retained $6.52 million of the pre-tax gain. Partially offsetting the decline was the acquisition of a property and casualty insurance agency in December 2020, which brought in $0.73 million in additional revenue in third quarter 2021.
- Property management fee revenue increased 37.95%, or $2.89 million, to $10.50 million compared to third quarter 2020. Demand for vacation rentals remains strong, keeping levels high. In July 2021, the Company acquired Venture Resorts, the largest cabin rental company in the Smoky Mountains of Tennessee, which brought in an additional $3.0 million in management fee revenue in the quarter.
Qua rterly Noninterest Expense Compared to Third Quarter 2020:
- Total noninterest expense was $104.09 million compared to $101.98 million in 2020, an increase of $2.11 million, or 2.06%. The higher level of expenses was attributable to increases in advertising and marketing expense of $2.0 million, software expense of $0.64 million, and data processing expense of $0.49 million.
- Advertising and marketing expense increases, related primarily to our Realty segment, were driven by production based advertising programs in our property management companies and consumer mortgage advertising in our residential mortgage operations.
- Increased costs associated with our core banking platform resulted in higher software expenses, and higher credit card fees on vacation property reservation activities drove the increase in data processing expense.
- We expect the fourth quarter 2021 noninterest expense run rate to be consistent with the current quarter.
Consolidated Balance Sheet Highlights:
- Total assets were $15.81 billion for the quarter ended September 30, 2021, a marginal increase compared to $15.80 billion at June 30, 2021. Total assets increased $1.02 billion, or 6.87%, from $14.80 billion at September 30, 2020. The year-over-year increase was driven by higher liquidity levels due to deposit growth.
- Loans held for investment decreased $0.47 billion, or 4.84%, compared to prior year and $0.13 billion, or 1.34%, compared the linked quarter. Excluding PPP loans of $0.25 billion in third quarter 2021, $1.10 billion in third quarter 2020, and $0.52 billion in the linked quarter, loans held for investment increased $378.69 million, or 4.37%, compared to prior year, and $147.41 million, or 1.66%, compared to June 30, 2021, or 6.57% on an annualized basis.
- Average loans held for investment, excluding PPP loans, were $8.88 billion in the third quarter of 2021, an increase of $220.80 million, or 2.55%, compared to prior year. In the linked quarter comparison, average loans held for investment, excluding PPP loans, increased 0.47%, or $41.38 million, 1.86% on an annualized basis.
- Unamortized fee income related to PPP loans was $7.50 million at September 30, 2021.
- Mortgage loans held for sale decreased $237.17 million, or 35.45%, compared to the prior year and $122.60 million, or 22.11%, compared to the linked quarter.
- Total deposits increased $1.31 billion, or 11.18%, compared to the prior year and $0.05 billion, or 0.38%, compared to the linked quarter.
- Total borrowings decreased $0.55 billion, or 53.05%, from prior year and $0.10 billion, or 17.40%, compared to the linked quarter.
Investment Securities:
- Total investment securities were $1.59 billion compared to $1.49 billion at June 30, 2021 and $1.38 billion at September 30, 2020. The weighted average duration of the portfolio at September 30, 2021 was 4.0 years. The carrying value of the available for sale debt securities portfolio included $32.06 million, $61.43 million, and $42.18 million in net unrealized gains at September 30, 2021, September 30, 2020, and June 30, 2021, respectively.
Loans and Asset Quality:
- Total loans held for investment were $9.30 billion at September 30, 2021 compared to $9.42 billion at June 30, 2021 and $9.77 billion at September 30, 2020.
- Nonperforming assets were $13.86 million, or 0.09% of total assets, compared to $28.74 million, or 0.19%, at September 30, 2020.
- Nonperforming loans were 0.09% of period end loans compared to 0.17% at September 30, 2020.
- Foreclosed property decreased to $5.41 million from $11.69 million at September 30, 2020.
- At September 30, 2021, we had $50.95 million in loan modifications made in accordance with section 4013 of the CARES Act, a decline of $1.82 billion, or 97.27%, from a reported peak of $1.87 billion at April 30, 2020.
Deposits and Borrowings:
- Total deposits were $13.01 billion compared to $12.96 billion at June 30, 2021 and $11.70 billion at September 30, 2020.
- Total loans held for investment to deposits were 71.44% compared to 72.69% at June 30, 2021 and 83.47% at September 30, 2020.
- Non-interest bearing deposits were 41.45% of total deposits at September 30, 2021 compared to 40.44% at June 30, 2021 and 38.14% at September 30, 2020.
- Total borrowings were $0.49 billion compared to $0.59 billion at June 30, 2021 and $1.04 billion at September 30, 2020.
Capital:
- Common equity tier 1 capital ratio of 12.53%.
- Tier 1 leverage capital ratio of 9.18%.
- Tier 1 risk-based capital ratio of 12.69%.
- Total risk-based capital ratio of 15.85%.
- Book value per common share was $25.91 compared to $25.51 at June 30, 2021 and $23.83 at September 30, 2020.
- Tangible book value per common share (non-GAAP) was $18.92 compared to $18.70 at June 30, 2021 and $17.06 at September 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 $15.81 billion as of September 30, 2021, TowneBank is one of the largest banks headquartered in Virginia.
Non-GAAP Financial Measures:
This press release contains certain financial measures determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Such non-GAAP financial measures include the following: fully tax-equivalent net interest margin, core operating earnings, core net income, tangible book value per common share, total risk-based capital ratio, tier one leverage ratio, tier one capital ratio, and the tangible common equity to tangible assets ratio. Management uses these non-GAAP financial measures to assess the performance of TowneBank’s core business and the strength of its capital position. Management believes that these non-GAAP financial measures provide meaningful additional information about TowneBank to assist investors in evaluating operating results, financial strength, and capitalization. The non-GAAP financial measures should be considered as additional views of the way our financial measures are affected by significant charges for credit costs and other factors. These non-GAAP financial measures should not be considered as a substitute for operating results determined in accordance with GAAP and may not be comparable to other similarly titled measures of other companies. The computations of the non-GAAP financial measures used in this presentation are referenced in a footnote or in the appendix to this presentation.
Forward-Looking Statements:
This press release contains certain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts, but instead represent only the beliefs, expectations, or opinions of TowneBank and its management regarding future events, many of which, by their nature, are inherently uncertain. Forward-looking statements may be identified by the use of such words as: "believe," "expect," "anticipate," "intend," "plan,” "estimate," or words of similar meaning, or future or conditional terms, such as "will," "would," "should," "could," "may," "likely," "probably," or "possibly." These statements may address issues that involve significant risks, uncertainties, estimates, and assumptions made by management. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include the impacts of the ongoing 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 credit worthiness 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 our business; costs or difficulties related to the integration of the businesses we have acquired may be greater than expected; expected cost savings associated with pending or recently completed acquisitions may not be fully realized or realized within the expected time frame; cybersecurity threats or attacks, the implementation of new technologies, and the ability to develop and maintain reliable electronic systems; our competitors may have greater financial resources and develop products that enable them to compete more successfully; changes in business conditions; changes in the securities market; and changes in our local economy with regard to our market area. Any forward-looking statements made by us or on our behalf speak only as of the date they are made or as of the date indicated, and we do not undertake any obligation to update forward-looking statements as a result of new information, future events, or otherwise. For additional information on factors that could materially influence forward-looking statements included in this report, see the "Risk Factors" in TowneBank’s Annual Report on Form 10-K for the year ended December 31, 2020 and related disclosures in other filings that have been, or will be, filed by TowneBank with the Federal Deposit Insurance Corporation.
Media contact:
G. Robert Aston, Jr., Executive Chairman, 757-638-6780
J. Morgan Davis, Chief Executive Officer, 757-673-1673
Investor contact:
William B. Littreal, Chief Financial Officer, 757-638-6813
| TOWNEBANK |
| Selected Financial Highlights (unaudited) |
| (dollars in thousands, except per share data) |
| Three Months Ended |
| September 30, |
| June 30, |
| March 31, |
| December 31, |
| September 30, |
| 2021 |
| 2021 |
| 2021 |
| 2020 |
| 2020 |
| Income and Performance Ratios: |
| Total Revenue |
| $ |
| 170,076 |
| $ |
| 167,321 |
| $ |
| 182,509 |
| $ |
| 171,848 |
| $ |
| 192,135 |
| Net income |
| 52,743 |
| 58,002 |
| 72,631 |
| 53,891 |
| 50,715 |
| Net income available to common shareholders |
| 50,400 |
| 55,803 |
| 68,995 |
| 50,082 |
| 34,464 |
| Pre-provision, pre-tax, net revenues (non-GAAP) |
| 63,647 |
| 59,728 |
| 81,577 |
| 62,107 |
| 56,278 |
| Net income per common share - diluted |
| 0.69 |
| 0.77 |
| 0.95 |
| 0.69 |
| 0.48 |
| Book value per common share |
| 25.91 |
| 25.51 |
| 24.78 |
| 24.31 |
| 23.83 |
| Book value per common share - tangible (non-GAAP) |
| 18.92 |
| 18.70 |
| 17.94 |
| 17.46 |
| 17.06 |
| Return on average assets |
| 1.27 |
| % |
| 1.48 |
| % |
| 1.92 |
| % |
| 1.35 |
| % |
| 0.89 |
| % |
| Return on average assets - tangible (non-GAAP) |
| 1.37 |
| % |
| 1.59 |
| % |
| 2.05 |
| % |
| 1.46 |
| % |
| 0.97 |
| % |
| Return on average equity |
| 10.59 |
| % |
| 12.21 |
| % |
| 15.56 |
| % |
| 11.26 |
| % |
| 7.85 |
| % |
| Return on average equity - tangible (non-GAAP) |
| 15.09 |
| % |
| 17.38 |
| % |
| 22.19 |
| % |
| 16.28 |
| % |
| 11.66 |
| % |
| Return on average common equity |
| 10.68 |
| % |
| 12.31 |
| % |
| 15.70 |
| % |
| 11.36 |
| % |
| 7.91 |
| % |
| Return on average common equity - tangible (non-GAAP) |
| 15.27 |
| % |
| 17.57 |
| % |
| 22.45 |
| % |
| 16.48 |
| % |
| 11.79 |
| % |
| Noninterest income as a percentage of total revenue |
| 40.94 |
| % |
| 39.55 |
| % |
| 45.21 |
| % |
| 41.45 |
| % |
| 49.64 |
| % |
| Regulatory Capital Ratios (1): |
| Common equity tier 1 |
| 12.53 |
| % |
| 12.42 |
| % |
| 12.15 |
| % |
| 11.87 |
| % |
| 11.75 |
| % |
| Tier 1 |
| 12.69 |
| % |
| 12.57 |
| % |
| 12.30 |
| % |
| 12.04 |
| % |
| 11.91 |
| % |
| Total |
| 15.85 |
| % |
| 15.76 |
| % |
| 15.59 |
| % |
| 15.42 |
| % |
| 15.35 |
| % |
| Tier 1 leverage ratio |
| 9.18 |
| % |
| 9.44 |
| % |
| 9.54 |
| % |
| 8.99 |
| % |
| 8.89 |
| % |
| Asset Quality: |
| Allowance for credit losses on loans to nonperforming loans |
| 12.68x |
| 9.67x |
| 9.09x |
| 10.74x |
| 7.31x |
| Allowance for credit losses on loans to period end loans |
| 1.15 |
| % |
| 1.15 |
| % |
| 1.19 |
| % |
| 1.25 |
| % |
| 1.22 |
| % |
| Allowance for credit losses on loans to period end loans excluding PPP loans (non-GAAP) |
| 1.18 |
| % |
| 1.22 |
| % |
| 1.31 |
| % |
| 1.37 |
| % |
| 1.37 |
| % |
| Nonperforming loans to period end loans |
| 0.09 |
| % |
| 0.12 |
| % |
| 0.13 |
| % |
| 0.12 |
| % |
| 0.17 |
| % |
| Nonperforming assets to period end assets |
| 0.09 |
| % |
| 0.10 |
| % |
| 0.11 |
| % |
| 0.11 |
| % |
| 0.19 |
| % |
| Net charge-offs (recoveries) to average loans (annualized) |
| (0.03 |
| )% |
| (0.01 |
| )% |
| 0.03 |
| % |
| — |
| % |
| (0.01 |
| )% |
| Net charge-offs (recoveries) |
| $ |
| (644 |
| ) |
| $ |
| (137 |
| ) |
| $ |
| 669 |
| $ |
| 109 |
| $ |
| (328 |
| ) |
| Nonperforming loans |
| $ |
| 8,451 |
| $ |
| 11,178 |
| $ |
| 12,768 |
| $ |
| 11,188 |
| $ |
| 16,295 |
| Former bank premises |
| — |
| — |
| 750 |
| 750 |
| 750 |
| Foreclosed property |
| 5,409 |
| 4,041 |
| 3,748 |
| 4,276 |
| 11,695 |
| Total nonperforming assets |
| $ |
| 13,860 |
| $ |
| 15,219 |
| $ |
| 17,266 |
| $ |
| 16,214 |
| $ |
| 28,740 |
| Loans past due 90 days and still accruing interest |
| $ |
| 143 |
| $ |
| 1,584 |
| $ |
| 108 |
| $ |
| 528 |
| $ |
| 19 |
| Allowance for credit losses on loans |
| $ |
| 107,177 |
| $ |
| 108,130 |
| $ |
| 116,077 |
| $ |
| 120,157 |
| $ |
| 119,058 |
| Mortgage Banking: |
| Loans originated, mortgage |
| $ |
| 939,272 |
| $ |
| 1,050,663 |
| $ |
| 1,187,595 |
| $ |
| 1,257,963 |
| $ |
| 1,292,801 |
| Loans originated, joint venture |
| 370,865 |
| 403,864 |
| 417,177 |
| 429,848 |
| 498,100 |
| Total loans originated |
| $ |
| 1,310,137 |
| $ |
| 1,454,527 |
| $ |
| 1,604,772 |
| $ |
| 1,687,811 |
| $ |
| 1,790,901 |
| Number of loans originated |
| 3,917 |
| 4,514 |
| 5,164 |
| 5,481 |
| 5,817 |
| Number of originators |
| 219 |
| 222 |
| 229 |
| 228 |
| 224 |
| Purchase % |
| 77.45 |
| % |
| 76.95 |
| % |
| 53.45 |
| % |
| 59.76 |
| % |
| 61.21 |
| % |
| Loans sold |
| $ |
| 1,394,166 |
| $ |
| 1,485,057 |
| $ |
| 1,601,480 |
| $ |
| 1,845,926 |
| $ |
| 1,833,590 |
| Rate lock asset |
| $ |
| 6,087 |
| $ |
| 7,760 |
| $ |
| 12,522 |
| $ |
| 11,781 |
| $ |
| 10,480 |
| Gross realized gain on sales and fees as a % of loans originated |
| 3.61 |
| % |
| 3.64 |
| % |
| 4.01 |
| % |
| 4.02 |
| % |
| 3.65 |
| % |
| Other Ratios: |
| Net interest margin |
| 2.76 |
| % |
| 2.92 |
| % |
| 3.04 |
| % |
| 2.97 |
| % |
| 2.70 |
| % |
| Net interest margin-fully tax equivalent (non-GAAP) |
| 2.78 |
| % |
| 2.94 |
| % |
| 3.06 |
| % |
| 2.98 |
| % |
| 2.72 |
| % |
| Average earning assets/total average assets |
| 91.89 |
| % |
| 91.89 |
| % |
| 91.46 |
| % |
| 91.59 |
| % |
| 92.09 |
| % |
| Average loans/average deposits |
| 71.69 |
| % |
| 78.22 |
| % |
| 82.71 |
| % |
| 83.42 |
| % |
| 86.29 |
| % |
| Average noninterest deposits/total average deposits |
| 40.40 |
| % |
| 40.21 |
| % |
| 38.39 |
| % |
| 39.61 |
| % |
| 37.76 |
| % |
| Period end equity/period end total assets |
| 12.02 |
| % |
| 11.83 |
| % |
| 12.04 |
| % |
| 12.20 |
| % |
| 11.82 |
| % |
| Efficiency ratio (non-GAAP) |
| 59.58 |
| % |
| 61.46 |
| % |
| 52.11 |
| % |
| 60.02 |
| % |
| 57.36 |
| % |
| (1) Current reporting period regulatory capital ratios are preliminary |
| TOWNEBANK |
| Selected Data (unaudited) |
| (dollars in thousands) |
| Investment Securities |
| % Change |
| Q3 |
| Q3 |
| Q2 |
| Q3 21 vs. |
| Q3 21 vs. |
| Available-for-sale securities, at fair value |
| 2021 |
| 2020 |
| 2021 |
| Q3 20 |
| Q2 21 |
| U.S. agency securities |
| $ |
| 207,949 |
| $ |
| 167,275 |
| $ |
| 206,151 |
| 24.32 |
| % |
| 0.87 |
| % |
| U.S. Treasury notes |
| 1,007 |
| 1,006 |
| 1,013 |
| 0.10 |
| % |
| (0.59 |
| ) |
| % |
| Municipal securities |
| 350,980 |
| 292,792 |
| 334,633 |
| 19.87 |
| % |
| 4.89 |
| % |
| Trust preferred and other corporate securities |
| 31,591 |
| 24,236 |
| 31,680 |
| 30.35 |
| % |
| (0.28 |
| ) |
| % |
| Mortgage-backed securities issued by GSE and GNMA |
| 969,017 |
| 825,378 |
| 881,078 |
| 17.40 |
| % |
| 9.98 |
| % |
| Allowance for credit losses |
| (142 |
| ) |
| (4 |
| ) |
| (134 |
| ) |
| 3,450.00 |
| % |
| 5.97 |
| % |
| Total |
| $ |
| 1,560,402 |
| $ |
| 1,310,683 |
| $ |
| 1,454,421 |
| 19.05 |
| % |
| 7.29 |
| % |
| Gross unrealized gains (losses) reflected in financial statements |
| Total gross unrealized gains |
| $ |
| 40,906 |
| $ |
| 62,206 |
| $ |
| 65,152 |
| (34.24 |
| ) |
| % |
| (37.21 |
| ) |
| % |
| Total gross unrealized losses |
| (8,845 |
| ) |
| (773 |
| ) |
| (22,968 |
| ) |
| 1,044.24 |
| % |
| (61.49 |
| ) |
| % |
| Net unrealized gains (losses) and other adjustments on AFS securities |
| $ |
| 32,061 |
| $ |
| 61,433 |
| $ |
| 42,184 |
| (47.81 |
| ) |
| % |
| (24.00 |
| ) |
| % |
| Held-to-maturity securities, at amortized cost |
| Trust preferred corporate securities |
| $ |
| 2,285 |
| $ |
| 2,333 |
| $ |
| 2,297 |
| (2.06 |
| ) |
| % |
| (0.52 |
| ) |
| % |
| Municipal securities |
| 5,074 |
| 4,992 |
| 5,053 |
| 1.64 |
| % |
| 0.42 |
| % |
| Mortgage-backed securities issued by GSE and GNMA |
| 7,539 |
| 9,806 |
| 8,039 |
| (23.12 |
| ) |
| % |
| (6.22 |
| ) |
| % |
| Allowance for credit losses |
| (94 |
| ) |
| (90 |
| ) |
| (97 |
| ) |
| 4.44 |
| % |
| (3.09 |
| ) |
| % |
| Total |
| $ |
| 14,804 |
| $ |
| 17,041 |
| $ |
| 15,292 |
| (13.13 |
| ) |
| % |
| (3.19 |
| ) |
| % |
| Gross unrealized gains (losses) not reflected in financial statements |
| Total gross unrealized gains |
| $ |
| 1,591 |
| $ |
| 1,971 |
| $ |
| 1,708 |
| (19.28 |
| ) |
| % |
| (6.85 |
| ) |
| % |
| Total gross unrealized losses |
| — |
| — |
| — |
| — |
| % |
| — |
| % |
| Net unrealized gains (losses) in HTM securities |
| $ |
| 1,591 |
| $ |
| 1,971 |
| $ |
| 1,708 |
| (19.28 |
| ) |
| % |
| (6.85 |
| ) |
| % |
| Loans Held For Investment (1) |
| % Change |
| Q3 |
| Q3 |
| Q2 |
| Q3 21 vs. |
| Q3 21 vs. |
| 2021 |
| 2020 |
| 2021 |
| Q3 20 |
| Q2 21 |
| Real estate - construction and development |
| $ |
| 1,005,592 |
| $ |
| 1,143,202 |
| $ |
| 1,029,811 |
| (12.04 |
| ) |
| % |
| (2.35 |
| ) |
| % |
| Commercial real estate - owner occupied |
| 1,463,000 |
| 1,378,443 |
| 1,445,328 |
| 6.13 |
| % |
| 1.22 |
| % |
| Commercial real estate - non owner occupied |
| 2,647,625 |
| 2,338,532 |
| 2,597,405 |
| 13.22 |
| % |
| 1.93 |
| % |
| Real estate - multifamily |
| 363,733 |
| 289,270 |
| 343,764 |
| 25.74 |
| % |
| 5.81 |
| % |
| Residential 1-4 family |
| 1,233,125 |
| 1,229,732 |
| 1,166,898 |
| 0.28 |
| % |
| 5.68 |
| % |
| HELOC |
| 389,974 |
| 430,803 |
| 390,726 |
| (9.48 |
| ) |
| % |
| (0.19 |
| ) |
| % |
| Commercial and industrial business (C&I) |
| 1,253,972 |
| 2,144,875 |
| 1,529,788 |
| (41.54 |
| ) |
| % |
| (18.03 |
| ) |
| % |
| Government |
| 471,037 |
| 354,926 |
| 479,664 |
| 32.71 |
| % |
| (1.80 |
| ) |
| % |
| Indirect |
| 348,864 |
| 270,371 |
| 310,492 |
| 29.03 |
| % |
| 12.36 |
| % |
| Consumer loans and other |
| 120,643 |
| 190,416 |
| 129,702 |
| (36.64 |
| ) |
| % |
| (6.98 |
| ) |
| % |
| Total |
| $ |
| 9,297,565 |
| $ |
| 9,770,570 |
| $ |
| 9,423,578 |
| (4.84 |
| ) |
| % |
| (1.34 |
| ) |
| % |
| (1) Paycheck Protection Program loans totaling $0.25 billion, $1.10 billion, and $0.52 billion, primarily in C&I, are included in Q3 21, Q3 20, and Q2 21, respectively. |
| Deposits |
| % Change |
| Q3 |
| Q3 |
| Q2 |
| Q3 21 vs. |
| Q3 21 vs. |
| 2021 |
| 2020 |
| 2021 |
| Q3 20 |
| Q2 21 |
| Noninterest-bearing demand |
| $ |
| 5,394,952 |
| $ |
| 4,464,178 |
| $ |
| 5,243,073 |
| 20.85 |
| % |
| 2.90 |
| % |
| Interest-bearing: |
| Demand and money market accounts |
| 5,681,181 |
| 4,642,482 |
| 5,373,146 |
| 22.37 |
| % |
| 5.73 |
| % |
| Savings |
| 366,165 |
| 312,444 |
| 349,552 |
| 17.19 |
| % |
| 4.75 |
| % |
| Certificates of deposits |
| 1,571,752 |
| 2,285,859 |
| 1,998,828 |
| (31.24 |
| ) |
| % |
| (21.37 |
| ) |
| % |
| Total |
| $ |
| 13,014,050 |
| $ |
| 11,704,963 |
| $ |
| 12,964,599 |
| 11.18 |
| % |
| 0.38 |
| % |
| TOWNEBANK |
| Average Balances, Yields and Rate Paid (unaudited) |
| (dollars in thousands) |
| Three Months Ended |
| Three Months Ended |
| Three Months Ended |
| September 30, 2021 |
| June 30, 2021 |
| September 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) |
| $ |
| 9,238,922 |
| $ |
| 98,732 |
| 4.24 |
| % |
| $ |
| 9,604,805 |
| $ |
| 101,490 |
| 4.24 |
| % |
| $ |
| 9,752,746 |
| $ |
| 103,401 |
| 4.22 |
| % |
| Taxable investment securities |
| 1,421,347 |
| 6,560 |
| 1.85 |
| % |
| 1,351,922 |
| 6,476 |
| 1.92 |
| % |
| 1,206,679 |
| 6,726 |
| 2.23 |
| % |
| Tax-exempt investment securities |
| 125,523 |
| 487 |
| 1.55 |
| % |
| 128,094 |
| 434 |
| 1.36 |
| % |
| 144,999 |
| 779 |
| 2.15 |
| % |
| Total securities |
| 1,546,870 |
| 7,047 |
| 1.82 |
| % |
| 1,480,016 |
| 6,910 |
| 1.87 |
| % |
| 1,351,678 |
| 7,505 |
| 2.22 |
| % |
| Interest-bearing deposits |
| 3,179,010 |
| 1,182 |
| 0.15 |
| % |
| 2,327,310 |
| 619 |
| 0.11 |
| % |
| 2,523,644 |
| 632 |
| 0.10 |
| % |
| Loans held for sale |
| 468,323 |
| 3,406 |
| 2.91 |
| % |
| 503,706 |
| 3,711 |
| 2.95 |
| % |
| 634,309 |
| 4,587 |
| 2.89 |
| % |
| Total earning assets |
| 14,433,125 |
| 110,367 |
| 3.03 |
| % |
| 13,915,837 |
| 112,730 |
| 3.25 |
| % |
| 14,262,377 |
| 116,125 |
| 3.24 |
| % |
| Less: allowance for credit losses |
| (108,478 |
| ) |
| (116,025 |
| ) |
| (95,594 |
| ) |
| Total nonearning assets |
| 1,382,351 |
| 1,344,076 |
| 1,320,369 |
| Total assets |
| $ |
| 15,706,998 |
| $ |
| 15,143,888 |
| $ |
| 15,487,152 |
| Liabilities and Equity: |
| Interest-bearing deposits |
| Demand and money market |
| $ |
| 5,486,788 |
| $ |
| 2,095 |
| 0.15 |
| % |
| $ |
| 5,179,907 |
| $ |
| 2,004 |
| 0.16 |
| % |
| $ |
| 4,311,920 |
| $ |
| 2,663 |
| 0.25 |
| % |
| Savings |
| 358,739 |
| 533 |
| 0.59 |
| % |
| 346,177 |
| 528 |
| 0.61 |
| % |
| 304,753 |
| 555 |
| 0.72 |
| % |
| Certificates of deposit |
| 1,842,948 |
| 3,400 |
| 0.73 |
| % |
| 1,816,283 |
| 4,612 |
| 1.02 |
| % |
| 2,417,772 |
| 9,747 |
| 1.60 |
| % |
| Total interest-bearing deposits |
| 7,688,475 |
| 6,028 |
| 0.31 |
| % |
| 7,342,367 |
| 7,144 |
| 0.39 |
| % |
| 7,034,445 |
| 12,965 |
| 0.73 |
| % |
| Borrowings |
| 300,505 |
| 412 |
| 0.54 |
| % |
| 476,122 |
| 565 |
| 0.47 |
| % |
| 1,931,120 |
| 2,841 |
| 0.58 |
| % |
| Subordinated debt, net |
| 249,405 |
| 2,962 |
| 4.75 |
| % |
| 249,260 |
| 2,962 |
| 4.75 |
| % |
| 248,807 |
| 2,962 |
| 4.76 |
| % |
| Total interest-bearing liabilities |
| 8,238,385 |
| 9,402 |
| 0.45 |
| % |
| 8,067,749 |
| 10,671 |
| 0.53 |
| % |
| 9,214,372 |
| 18,768 |
| 0.81 |
| % |
| Demand deposits |
| 5,212,271 |
| 4,937,754 |
| 4,268,443 |
| Other noninterest-bearing liabilities |
| 367,891 |
| 304,793 |
| 257,304 |
| Total liabilities |
| 13,818,547 |
| 13,310,296 |
| 13,740,119 |
| Shareholders’ equity |
| 1,888,451 |
| 1,833,592 |
| 1,747,033 |
| Total liabilities and equity |
| $ |
| 15,706,998 |
| $ |
| 15,143,888 |
| $ |
| 15,487,152 |
| Net interest income (tax-equivalent basis) |
| $ |
| 100,965 |
| $ |
| 102,059 |
| $ |
| 97,357 |
| Reconciliation of Non-GAAP Financial Measures |
| Tax-equivalent basis adjustment |
| (522 |
| ) |
| (915 |
| ) |
| (598 |
| ) |
| Net interest income (GAAP) |
| $ |
| 100,443 |
| $ |
| 101,144 |
| $ |
| 96,759 |
| Interest rate spread (2)(3) |
| 2.58 |
| % |
| 2.72 |
| % |
| 2.43 |
| % |
| Interest expense as a percent of average earning assets |
| 0.26 |
| % |
| 0.31 |
| % |
| 0.52 |
| % |
| Net interest margin (tax equivalent basis) (3)(4) |
| 2.78 |
| % |
| 2.94 |
| % |
| 2.72 |
| % |
| Total cost of deposits |
| 0.19 |
| % |
| 0.23 |
| % |
| 0.46 |
| % |
(1) September 30, 2021, September 30, 2020, and June 30, 2021 includes average PPP balances of $0.36 billion, $1.10 billion and $0.77 billion, and related interest and fee income of $7.77 million, $9.82 million, and $10.02 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) |
| Nine Months Ended |
| Nine Months Ended |
| Nine Months Ended September 30, |
| September 30, 2021 |
| September 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) |
| $ |
| 9,495,456 |
| $ |
| 302,182 |
| 4.25 |
| % |
| $ |
| 9,309,256 |
| $ |
| 306,622 |
| 4.40 |
| % |
| $ |
| (4,440 |
| ) |
| $ |
| (10,384 |
| ) |
| $ |
| 5,944 |
| Taxable investment securities |
| 1,359,366 |
| 19,640 |
| 1.93 |
| % |
| 1,253,783 |
| 23,304 |
| 2.48 |
| % |
| (3,664 |
| ) |
| (5,507 |
| ) |
| 1,843 |
| Tax-exempt investment securities |
| 131,106 |
| 1,462 |
| 1.49 |
| % |
| 140,248 |
| 2,476 |
| 2.35 |
| % |
| (1,014 |
| ) |
| (862 |
| ) |
| (152 |
| ) |
| Total securities |
| 1,490,472 |
| 21,102 |
| 1.89 |
| % |
| 1,394,031 |
| 25,780 |
| 2.47 |
| % |
| (4,678 |
| ) |
| (6,369 |
| ) |
| 1,691 |
| Interest-bearing deposits |
| 2,426,468 |
| 2,218 |
| 0.12 |
| % |
| 615,466 |
| 2,168 |
| 0.47 |
| % |
| 50 |
| (2,552 |
| ) |
| 2,602 |
| Loans held for sale |
| 502,758 |
| 10,477 |
| 2.78 |
| % |
| 477,964 |
| 11,386 |
| 3.18 |
| % |
| (909 |
| ) |
| (1,478 |
| ) |
| 569 |
| Total earning assets |
| 13,915,154 |
| 335,979 |
| 3.23 |
| % |
| 11,796,717 |
| 345,956 |
| 3.92 |
| % |
| (9,977 |
| ) |
| (20,783 |
| ) |
| 10,806 |
| Less: allowance for credit losses |
| (115,100 |
| ) |
| (73,538 |
| ) |
| Total nonearning assets |
| 1,351,796 |
| 2,264,295 |
| Total assets |
| $ |
| 15,151,850 |
| $ |
| 13,987,474 |
| Liabilities and Equity: |
| Interest-bearing deposits |
| Demand and money market |
| $ |
| 5,192,658 |
| $ |
| 6,175 |
| 0.16 |
| % |
| $ |
| 3,898,642 |
| $ |
| 10,472 |
| 0.36 |
| % |
| $ |
| (4,297 |
| ) |
| $ |
| (7,044 |
| ) |
| $ |
| 2,747 |
| Savings |
| 345,739 |
| 1,583 |
| 0.61 |
| % |
| 290,684 |
| 1,702 |
| 0.78 |
| % |
| (119 |
| ) |
| (408 |
| ) |
| 289 |
| Certificates of deposit |
| 1,872,393 |
| 13,963 |
| 1.00 |
| % |
| 2,451,715 |
| 34,925 |
| 1.90 |
| % |
| (20,962 |
| ) |
| (14,008 |
| ) |
| (6,954 |
| ) |
| Total interest-bearing deposits |
| 7,410,790 |
| 21,721 |
| 0.39 |
| % |
| 6,641,041 |
| 47,099 |
| 0.95 |
| % |
| (25,378 |
| ) |
| (21,460 |
| ) |
| (3,918 |
| ) |
| Borrowings |
| 445,399 |
| 1,798 |
| 0.53 |
| % |
| 1,452,652 |
| 8,661 |
| 0.78 |
| % |
| (6,863 |
| ) |
| (2,169 |
| ) |
| (4,694 |
| ) |
| Subordinated debt, net |
| 249,261 |
| 8,854 |
| 4.74 |
| % |
| 248,660 |
| 8,885 |
| 4.76 |
| % |
| (31 |
| ) |
| (52 |
| ) |
| 21 |
| Total interest-bearing liabilities |
| 8,105,450 |
| 32,373 |
| 0.53 |
| % |
| 8,342,353 |
| 64,645 |
| 1.04 |
| % |
| (32,272 |
| ) |
| (23,681 |
| ) |
| (8,591 |
| ) |
| Demand deposits |
| 4,880,493 |
| 3,687,791 |
| Other noninterest-bearing liabilities |
| 325,639 |
| 252,337 |
| Total liabilities |
| 13,311,582 |
| 12,282,481 |
| Shareholders’ equity |
| 1,840,268 |
| 1,704,993 |
| Total liabilities and equity |
| $ |
| 15,151,850 |
| $ |
| 13,987,474 |
| Net interest income (tax-equivalent basis) |
| $ |
| 303,606 |
| $ |
| 281,311 |
| $ |
| 22,295 |
| $ |
| 2,898 |
| $ |
| 19,397 |
| Reconciliation of Non-GAAP Financial Measures |
| Tax-equivalent basis adjustment |
| (2,029 |
| ) |
| (1,781 |
| ) |
| (248 |
| ) |
| Net interest income (GAAP) |
| $ |
| 301,577 |
| $ |
| 279,530 |
| $ |
| 22,047 |
| Interest rate spread (2)(4) |
| 2.69 |
| % |
| 2.88 |
| % |
| Interest expense as a percent of average earning assets |
| 0.31 |
| % |
| 0.73 |
| % |
| Net interest margin (tax equivalent basis) (3)(4) |
| 2.92 |
| % |
| 3.19 |
| % |
| Total cost of deposits |
| 0.24 |
| % |
| 0.61 |
| % |
| (1) September 30, 2021 and September 30, 2020 includes average PPP balances of $0.48 billion and $0.64 billion and related interest income of $29.42 million and $15.65 million. |
| (2) Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities. Fully tax equivalent. |
| (3) Net interest margin is net interest income expressed as a percentage of average earning assets. Fully tax equivalent. |
| (4) Non-GAAP. |
| TOWNEBANK |
| Consolidated Balance Sheets |
| (dollars in thousands, except share data) |
| September 30, |
| December 31, |
| 2021 |
| 2020 |
| (unaudited) |
| (audited) |
| ASSETS |
| Cash and due from banks |
| $ |
| 75,370 |
| $ |
| 41,514 |
| Interest-bearing deposits at FRB - Richmond |
| 3,155,039 |
| 1,795,241 |
| Interest-bearing deposits in financial institutions |
| 33,506 |
| 27,532 |
| Total Cash and Cash Equivalents |
| 3,263,915 |
| 1,864,287 |
| Securities available for sale, at fair value (amortized cost of $1,528,483 and $1,310,250, and allowance for credit losses of $142 and $348 at September 30, 2021 and December 31, 2020, respectively.) |
| 1,560,402 |
| 1,368,224 |
| Securities held to maturity, at amortized cost (fair value $16,489 and $18,469 at September 30, 2021 and December 31, 2020, respectively.) |
| 14,898 |
| 16,512 |
| Less: allowance for credit losses |
| (94 |
| ) |
| (97 |
| ) |
| Securities held to maturity, net of allowance for credit losses |
| 14,804 |
| 16,415 |
| Other equity securities |
| 6,621 |
| 6,492 |
| FHLB stock |
| 13,146 |
| 30,135 |
| Total Securities |
| 1,594,973 |
| 1,421,266 |
| Mortgage loans held for sale |
| 431,846 |
| 540,798 |
| Loans, net of unearned income and deferred costs |
| 9,297,565 |
| 9,629,068 |
| Less: allowance for credit losses |
| (107,177 |
| ) |
| (120,157 |
| ) |
| Net Loans |
| 9,190,388 |
| 9,508,911 |
| Premises and equipment, net |
| 270,810 |
| 260,242 |
| Goodwill |
| 457,187 |
| 452,328 |
| Other intangible assets, net |
| 50,839 |
| 45,533 |
| BOLI |
| 249,862 |
| 246,109 |
| Other assets |
| 301,552 |
| 286,970 |
| TOTAL ASSETS |
| $ |
| 15,811,372 |
| $ |
| 14,626,444 |
| LIABILITIES AND EQUITY |
| Deposits: |
| Noninterest-bearing demand |
| $ |
| 5,394,952 |
| $ |
| 4,374,566 |
| Interest-bearing: |
| Demand and money market accounts |
| 5,681,181 |
| 4,819,604 |
| Savings |
| 366,165 |
| 330,091 |
| Certificates of deposit |
| 1,571,752 |
| 2,048,905 |
| Total Deposits |
| 13,014,050 |
| 11,573,166 |
| Advances from the FHLB |
| 155,537 |
| 456,038 |
| Subordinated debt, net |
| 249,503 |
| 249,055 |
| FRB PPP lending facility |
| — |
| 182,852 |
| Repurchase agreements and other borrowings |
| 82,413 |
| 67,786 |
| Total Borrowings |
| 487,453 |
| 955,731 |
| Other liabilities |
| 409,435 |
| 313,719 |
| TOTAL LIABILITIES |
| 13,910,938 |
| 12,842,616 |
| Preferred stock, authorized and unissued shares - 2,000,000 |
| — |
| — |
| Common stock, $1.667 par: 150,000,000 shares authorized |
| 72,683,529 and 72,667,541 shares issued at |
| September 30, 2021 and December 31, 2020, respectively |
| 121,163 |
| 121,132 |
| Capital surplus |
| 1,049,367 |
| 1,046,642 |
| Retained earnings |
| 690,960 |
| 557,889 |
| Common stock issued to deferred compensation trust, at cost |
| 905,484 and 873,486 shares at September 30, 2021 and December 31, 2020, respectively |
| (18,076 |
| ) |
| (16,969 |
| ) |
| Deferred compensation trust |
| 18,076 |
| 16,969 |
| Accumulated other comprehensive income (loss) |
| 21,597 |
| 41,184 |
| TOTAL SHAREHOLDERS’ EQUITY |
| 1,883,087 |
| 1,766,847 |
| Noncontrolling interest |
| 17,347 |
| 16,981 |
| TOTAL EQUITY |
| 1,900,434 |
| 1,783,828 |
| TOTAL LIABILITIES AND EQUITY |
| $ |
| 15,811,372 |
| $ |
| 14,626,444 |
| TOWNEBANK |
| Consolidated Statements of Income (unaudited) |
| (dollars in thousands, except per share data) |
| Three Months Ended |
| Nine Months Ended |
| September 30, |
| September 30, |
| 2021 |
| 2020 |
| 2021 |
| 2020 |
| INTEREST INCOME: |
| Loans, including fees |
| $ |
| 98,258 |
| $ |
| 102,869 |
| $ |
| 300,268 |
| $ |
| 305,070 |
| Investment securities |
| 7,000 |
| 7,440 |
| 20,987 |
| 25,553 |
| Interest-bearing deposits in financial institutions and federal funds sold |
| 1,182 |
| 632 |
| 2,218 |
| 2,168 |
| Mortgage loans held for sale |
| 3,405 |
| 4,587 |
| 10,477 |
| 11,385 |
| Total interest income |
| 109,845 |
| 115,528 |
| 333,950 |
| 344,176 |
| INTEREST EXPENSE: |
| Deposits |
| 6,028 |
| 12,966 |
| 21,721 |
| 47,099 |
| Advances from the FHLB |
| 247 |
| 1,901 |
| 1,017 |
| 6,990 |
| Subordinated debt, net |
| 2,962 |
| 2,962 |
| 8,854 |
| 8,885 |
| Repurchase agreements and other borrowings |
| 165 |
| 940 |
| 781 |
| 1,672 |
| Total interest expense |
| 9,402 |
| 18,769 |
| 32,373 |
| 64,646 |
| Net interest income |
| 100,443 |
| 96,759 |
| 301,577 |
| 279,530 |
| PROVISION FOR CREDIT LOSSES |
| (1,582 |
| ) |
| 31,598 |
| (15,665 |
| ) |
| 65,559 |
| Net interest income after provision for credit losses |
| 102,025 |
| 65,161 |
| 317,242 |
| 213,971 |
| NONINTEREST INCOME: |
| Residential mortgage banking income, net |
| 25,422 |
| 37,531 |
| 88,359 |
| 74,662 |
| Insurance commissions and other title fees and income, net |
| 17,398 |
| 17,468 |
| 52,055 |
| 51,973 |
| Real estate brokerage and property management income, net |
| 14,283 |
| 11,301 |
| 43,201 |
| 29,020 |
| Service charges on deposit accounts |
| 2,524 |
| 1,986 |
| 7,104 |
| 6,314 |
| Credit card merchant fees, net |
| 1,660 |
| 1,506 |
| 4,630 |
| 3,793 |
| BOLI |
| 2,301 |
| 1,605 |
| 5,361 |
| 6,295 |
| Other income |
| 6,045 |
| 22,278 |
| 16,367 |
| 31,268 |
| Net gain/(loss) on investment securities |
| — |
| 1,701 |
| 1,252 |
| 9,632 |
| Total noninterest income |
| 69,633 |
| 95,376 |
| 218,329 |
| 212,957 |
| NONINTEREST EXPENSE: |
| Salaries and employee benefits |
| 61,230 |
| 61,408 |
| 181,030 |
| 174,201 |
| Occupancy expense |
| 7,656 |
| 8,396 |
| 23,286 |
| 23,124 |
| Furniture and equipment |
| 3,513 |
| 3,247 |
| 10,647 |
| 10,451 |
| Amortization - intangibles |
| 2,750 |
| 2,851 |
| 8,192 |
| 8,702 |
| Software expense |
| 4,209 |
| 3,572 |
| 12,896 |
| 10,556 |
| Data processing |
| 3,603 |
| 3,113 |
| 10,255 |
| 8,622 |
| Professional fees |
| 2,227 |
| 2,637 |
| 6,826 |
| 8,677 |
| Advertising and marketing |
| 3,865 |
| 1,870 |
| 10,090 |
| 7,440 |
| Other expenses |
| 15,033 |
| 14,887 |
| 43,583 |
| 38,121 |
| Total noninterest expense |
| 104,086 |
| 101,981 |
| 306,805 |
| 289,894 |
| Income before income tax expense and noncontrolling interest |
| 67,572 |
| 58,556 |
| 228,766 |
| 137,034 |
| Provision for income tax expense |
| 14,829 |
| 7,841 |
| 45,388 |
| 21,492 |
| Net income |
| $ |
| 52,743 |
| $ |
| 50,715 |
| $ |
| 183,378 |
| $ |
| 115,542 |
| Net income attributable to noncontrolling interest |
| (2,343 |
| ) |
| (16,251 |
| ) |
| (8,177 |
| ) |
| (20,089 |
| ) |
| Net income attributable to TowneBank |
| $ |
| 50,400 |
| $ |
| 34,464 |
| $ |
| 175,201 |
| $ |
| 95,453 |
| Per common share information |
| Basic earnings |
| $ |
| 0.70 |
| $ |
| 0.48 |
| $ |
| 2.42 |
| $ |
| 1.32 |
| Diluted earnings |
| $ |
| 0.69 |
| $ |
| 0.48 |
| $ |
| 2.41 |
| $ |
| 1.32 |
| Cash dividends declared |
| $ |
| 0.20 |
| $ |
| 0.18 |
| $ |
| 0.38 |
| $ |
| 0.54 |
| TOWNEBANK |
| Consolidated Balance Sheets - Five Quarter Trend |
| (dollars in thousands, except share data) |
| September 30, |
| June 30, |
| March 31, |
| December 31, |
| September 30, |
| 2021 |
| 2021 |
| 2021 |
| 2020 |
| 2020 |
| (unaudited) |
| (unaudited) |
| (unaudited) |
| (audited) |
| (unaudited) |
| ASSETS |
| Cash and due from banks |
| $ |
| 75,370 |
| $ |
| 117,797 |
| $ |
| 141,545 |
| $ |
| 41,514 |
| $ |
| 114,604 |
| Interest-bearing deposits at FRB - Richmond |
| 3,155,039 |
| 2,970,490 |
| 1,936,458 |
| 1,795,241 |
| 1,670,186 |
| Interest-bearing deposits in financial institutions |
| 33,506 |
| 31,971 |
| 30,031 |
| 27,532 |
| 24,890 |
| Total Cash and Cash Equivalents |
| 3,263,915 |
| 3,120,258 |
| 2,108,034 |
| 1,864,287 |
| 1,809,680 |
| Securities available for sale |
| 1,560,402 |
| 1,454,421 |
| 1,418,006 |
| 1,368,224 |
| 1,310,683 |
| Securities held to maturity |
| 14,898 |
| 15,389 |
| 15,980 |
| 16,512 |
| 17,131 |
| Less: allowance for credit losses |
| (94 |
| ) |
| (97 |
| ) |
| (97 |
| ) |
| (97 |
| ) |
| (90 |
| ) |
| Securities held to maturity, net of allowance for credit losses |
| 14,804 |
| 15,292 |
| 15,883 |
| 16,415 |
| 17,041 |
| Other equity securities |
| 6,621 |
| 6,395 |
| 6,355 |
| 6,492 |
| 6,497 |
| FHLB stock |
| 13,146 |
| 16,909 |
| 16,909 |
| 30,135 |
| 41,829 |
| Total Securities |
| 1,594,973 |
| 1,493,017 |
| 1,457,153 |
| 1,421,266 |
| 1,376,050 |
| Mortgage loans held for sale |
| 431,846 |
| 554,447 |
| 582,905 |
| 540,798 |
| 669,020 |
| Loans, net of unearned income and deferred costs |
| 9,297,565 |
| 9,423,578 |
| 9,734,583 |
| 9,629,068 |
| 9,770,570 |
| Less: allowance for credit losses |
| (107,177 |
| ) |
| (108,130 |
| ) |
| (116,077 |
| ) |
| (120,157 |
| ) |
| (119,058 |
| ) |
| Net Loans |
| 9,190,388 |
| 9,315,448 |
| 9,618,506 |
| 9,508,911 |
| 9,651,512 |
| Premises and equipment, net |
| 270,810 |
| 265,644 |
| 261,831 |
| 260,242 |
| 256,909 |
| Goodwill |
| 457,187 |
| 452,328 |
| 452,328 |
| 452,328 |
| 446,725 |
| Other intangible assets, net |
| 50,839 |
| 42,271 |
| 44,808 |
| 45,533 |
| 45,781 |
| BOLI |
| 249,862 |
| 249,213 |
| 247,655 |
| 246,109 |
| 244,103 |
| Other assets |
| 301,552 |
| 311,209 |
| 306,176 |
| 286,970 |
| 295,637 |
| TOTAL ASSETS |
| $ |
| 15,811,372 |
| $ |
| 15,803,835 |
| $ |
| 15,079,396 |
| $ |
| 14,626,444 |
| $ |
| 14,795,417 |
| LIABILITIES AND EQUITY |
| Deposits: |
| Noninterest-bearing demand |
| $ |
| 5,394,952 |
| $ |
| 5,243,074 |
| $ |
| 4,840,678 |
| $ |
| 4,374,566 |
| $ |
| 4,464,178 |
| Interest-bearing: |
| Demand and money market accounts |
| 5,681,181 |
| 5,373,146 |
| 5,062,461 |
| 4,819,604 |
| 4,642,482 |
| Savings |
| 366,165 |
| 349,552 |
| 342,554 |
| 330,091 |
| 312,444 |
| Certificates of deposit |
| 1,571,752 |
| 1,998,828 |
| 1,893,951 |
| 2,048,905 |
| 2,285,859 |
| Total Deposits |
| 13,014,050 |
| 12,964,600 |
| 12,139,644 |
| 11,573,166 |
| 11,704,963 |
| Advances from the FHLB |
| 155,537 |
| 255,706 |
| 255,872 |
| 456,038 |
| 731,202 |
| Subordinated debt, net |
| 249,503 |
| 249,353 |
| 249,204 |
| 249,055 |
| 248,906 |
| FRB PPP lending facility |
| — |
| — |
| 183,164 |
| 182,852 |
| — |
| Repurchase agreements and other borrowings |
| 82,413 |
| 85,042 |
| 68,509 |
| 67,786 |
| 58,061 |
| Total Borrowings |
| 487,453 |
| 590,101 |
| 756,749 |
| 955,731 |
| 1,038,169 |
| Other liabilities |
| 409,435 |
| 379,278 |
| 366,697 |
| 313,719 |
| 303,582 |
| TOTAL LIABILITIES |
| 13,910,938 |
| 13,933,979 |
| 13,263,090 |
| 12,842,616 |
| 13,046,714 |
| Preferred stock |
| Authorized shares - 2,000,000 |
| — |
| — |
| — |
| — |
| — |
| Common stock, $1.667 par value |
| 121,163 |
| 121,144 |
| 121,108 |
| 121,132 |
| 121,115 |
| Capital surplus |
| 1,049,367 |
| 1,048,332 |
| 1,047,312 |
| 1,046,642 |
| 1,045,170 |
| Retained earnings |
| 690,960 |
| 655,095 |
| 613,826 |
| 557,889 |
| 520,888 |
| Common stock issued to deferred compensation |
| trust, at cost |
| (18,076 |
| ) |
| (18,076 |
| ) |
| (17,063 |
| ) |
| (16,969 |
| ) |
| (16,951 |
| ) |
| Deferred compensation trust |
| 18,076 |
| 18,076 |
| 17,063 |
| 16,969 |
| 16,951 |
| Accumulated other comprehensive income (loss) |
| 21,597 |
| 29,273 |
| 17,969 |
| 41,184 |
| 44,569 |
| TOTAL SHAREHOLDERS’ EQUITY |
| 1,883,087 |
| 1,853,844 |
| 1,800,215 |
| 1,766,847 |
| 1,731,742 |
| Noncontrolling interest |
| 17,347 |
| 16,012 |
| 16,091 |
| 16,981 |
| 16,961 |
| TOTAL EQUITY |
| 1,900,434 |
| 1,869,856 |
| 1,816,306 |
| 1,783,828 |
| 1,748,703 |
| TOTAL LIABILITIES AND EQUITY |
| $ |
| 15,811,372 |
| $ |
| 15,803,835 |
| $ |
| 15,079,396 |
| $ |
| 14,626,444 |
| $ |
| 14,795,417 |
| TOWNEBANK |
| Consolidated Statements of Income - Five Quarter Trend (unaudited) |
| (dollars in thousands, except share data) |
| Three Months Ended |
| September 30, |
| June 30, |
| March 31, |
| December 31, |
| September 30, |
| 2021 |
| 2021 |
| 2021 |
| 2020 |
| 2020 |
| INTEREST INCOME: |
| Loans, including fees |
| $ |
| 98,258 |
| $ |
| 100,614 |
| $ |
| 101,396 |
| $ |
| 104,182 |
| $ |
| 102,869 |
| Investment securities |
| 7,000 |
| 6,871 |
| 7,117 |
| 7,499 |
| 7,440 |
| Interest-bearing deposits in financial institutions and federal funds sold |
| 1,182 |
| 619 |
| 416 |
| 435 |
| 632 |
| Mortgage loans held for sale |
| 3,405 |
| 3,711 |
| 3,361 |
| 3,867 |
| 4,587 |
| Total interest income |
| 109,845 |
| 111,815 |
| 112,290 |
| 115,983 |
| 115,528 |
| INTEREST EXPENSE: |
| Deposits |
| 6,028 |
| 7,144 |
| 8,548 |
| 10,762 |
| 12,966 |
| Advances from the FHLB |
| 247 |
| 274 |
| 497 |
| 1,404 |
| 1,901 |
| Subordinated debt |
| 2,962 |
| 2,962 |
| 2,930 |
| 2,962 |
| 2,962 |
| Repurchase agreements and other borrowings |
| 165 |
| 291 |
| 325 |
| 241 |
| 940 |
| Total interest expense |
| 9,402 |
| 10,671 |
| 12,300 |
| 15,369 |
| 18,769 |
| Net interest income |
| 100,443 |
| 101,144 |
| 99,990 |
| 100,614 |
| 96,759 |
| PROVISION FOR CREDIT LOSSES |
| (1,582 |
| ) |
| (10,055 |
| ) |
| (4,027 |
| ) |
| 1,617 |
| 31,598 |
| Net interest income after provision for credit losses |
| 102,025 |
| 111,199 |
| 104,017 |
| 98,997 |
| 65,161 |
| NONINTEREST INCOME: |
| Residential mortgage banking income, net |
| 25,422 |
| 25,524 |
| 37,412 |
| 37,504 |
| 37,531 |
| Insurance commissions and other title fees and income, net |
| 17,398 |
| 18,331 |
| 16,325 |
| 13,868 |
| 17,468 |
| Real estate brokerage and property management income, net |
| 14,283 |
| 10,984 |
| 17,934 |
| 9,229 |
| 11,301 |
| Service charges on deposit accounts |
| 2,524 |
| 2,391 |
| 2,190 |
| 1,707 |
| 1,986 |
| Credit card merchant fees, net |
| 1,660 |
| 1,667 |
| 1,302 |
| 1,377 |
| 1,506 |
| BOLI |
| 2,301 |
| 1,541 |
| 1,519 |
| 1,990 |
| 1,605 |
| Other income |
| 6,045 |
| 5,487 |
| 4,837 |
| 5,559 |
| 22,278 |
| Net gain/(loss) on investment securities |
| — |
| 252 |
| 1,000 |
| — |
| 1,701 |
| Total noninterest income |
| 69,633 |
| 66,177 |
| 82,519 |
| 71,234 |
| 95,376 |
| NONINTEREST EXPENSE: |
| Salaries and employee benefits |
| 61,230 |
| 61,365 |
| 58,435 |
| 61,475 |
| 61,408 |
| Occupancy expense |
| 7,656 |
| 7,559 |
| 8,072 |
| 8,193 |
| 8,396 |
| Furniture and equipment |
| 3,513 |
| 3,622 |
| 3,512 |
| 3,462 |
| 3,247 |
| Amortization - intangibles |
| 2,750 |
| 2,719 |
| 2,723 |
| 2,797 |
| 2,851 |
| Software expense |
| 4,209 |
| 4,494 |
| 4,194 |
| 4,066 |
| 3,572 |
| Data processing |
| 3,603 |
| 3,414 |
| 3,239 |
| 2,363 |
| 3,113 |
| Professional fees |
| 2,227 |
| 2,259 |
| 2,339 |
| 2,591 |
| 2,637 |
| Advertising and marketing |
| 3,865 |
| 3,257 |
| 2,968 |
| 2,204 |
| 1,870 |
| Other expenses |
| 15,033 |
| 16,705 |
| 11,844 |
| 18,781 |
| 14,887 |
| Total noninterest expense |
| 104,086 |
| 105,394 |
| 97,326 |
| 105,932 |
| 101,981 |
| Income before income tax expense and noncontrolling interest |
| 67,572 |
| 71,982 |
| 89,210 |
| 64,299 |
| 58,556 |
| Provision for income tax expense |
| 14,829 |
| 13,980 |
| 16,579 |
| 10,408 |
| 7,841 |
| Net income |
| 52,743 |
| 58,002 |
| 72,631 |
| 53,891 |
| 50,715 |
| Net income attributable to noncontrolling interest |
| (2,343 |
| ) |
| (2,199 |
| ) |
| (3,636 |
| ) |
| (3,809 |
| ) |
| (16,251 |
| ) |
| Net income attributable to TowneBank |
| $ |
| 50,400 |
| $ |
| 55,803 |
| $ |
| 68,995 |
| $ |
| 50,082 |
| $ |
| 34,464 |
| Per common share information |
| Basic earnings |
| $ |
| 0.70 |
| $ |
| 0.77 |
| $ |
| 0.95 |
| $ |
| 0.69 |
| $ |
| 0.48 |
| Diluted earnings |
| $ |
| 0.69 |
| $ |
| 0.77 |
| $ |
| 0.95 |
| $ |
| 0.69 |
| $ |
| 0.48 |
| Basic weighted average shares outstanding |
| 72,506,877 |
| 72,468,094 |
| 72,414,953 |
| 72,357,177 |
| 72,339,413 |
| Diluted weighted average shares outstanding |
| 72,591,281 |
| 72,560,234 |
| 72,517,008 |
| 72,455,096 |
| 72,375,736 |
| Cash dividends declared |
| $ |
| 0.20 |
| $ |
| 0.20 |
| $ |
| 0.18 |
| $ |
| 0.18 |
| $ |
| 0.18 |
| TOWNEBANK |
| Banking Segment Financial Information (unaudited) |
| (dollars in thousands) |
| Three Months Ended |
| Nine Months Ended |
| Increase/(Decrease) |
| September 30, |
| June 30, |
| September 30, |
| 2021 over 2020 |
| 2021 |
| 2020 |
| 2021 |
| 2021 |
| 2020 |
| Amount |
| Percent |
| Revenue |
| Net interest income |
| $ |
| 97,668 |
| $ |
| 92,869 |
| $ |
| 98,134 |
| $ |
| 293,407 |
| $ |
| 269,941 |
| $ |
| 23,466 |
| 8.69 |
| % |
| Service charges on deposit accounts |
| 2,524 |
| 1,986 |
| 2,391 |
| 7,104 |
| 6,315 |
| 789 |
| 12.49 |
| % |
| Credit card merchant fees |
| 1,660 |
| 1,506 |
| 1,667 |
| 4,630 |
| 3,793 |
| 837 |
| 22.07 |
| % |
| Other income |
| 6,334 |
| 4,876 |
| 5,404 |
| 16,706 |
| 15,826 |
| 880 |
| 5.56 |
| % |
| Subtotal |
| 10,518 |
| 8,368 |
| 9,462 |
| 28,440 |
| 25,934 |
| 2,506 |
| 9.66 |
| % |
| Net gain/(loss) on investment securities |
| — |
| 1,701 |
| 252 |
| 1,252 |
| 9,632 |
| (8,380 |
| ) |
| (87.00 |
| ) |
| % |
| Total noninterest income |
| 10,518 |
| 10,069 |
| 9,714 |
| 29,692 |
| 35,566 |
| (5,874 |
| ) |
| (16.52 |
| ) |
| % |
| Total revenue |
| 108,186 |
| 102,938 |
| 107,848 |
| 323,099 |
| 305,507 |
| 17,592 |
| 5.76 |
| % |
| Provision for credit losses |
| (1,728 |
| ) |
| 31,070 |
| (9,532 |
| ) |
| (14,661 |
| ) |
| 64,170 |
| (78,831 |
| ) |
| (122.85 |
| ) |
| % |
| Expenses |
| Salaries and employee benefits |
| 34,791 |
| 36,535 |
| 35,776 |
| 102,427 |
| 104,970 |
| (2,543 |
| ) |
| (2.42 |
| ) |
| % |
| Occupancy expense |
| 5,098 |
| 5,829 |
| 5,012 |
| 15,657 |
| 15,557 |
| 100 |
| 0.64 |
| % |
| Furniture and equipment |
| 2,602 |
| 2,424 |
| 2,816 |
| 8,086 |
| 7,800 |
| 286 |
| 3.67 |
| % |
| Amortization of intangibles |
| 862 |
| 1,063 |
| 912 |
| 2,737 |
| 3,341 |
| (604 |
| ) |
| (18.08 |
| ) |
| % |
| Other expenses |
| 16,580 |
| 15,793 |
| 18,392 |
| 49,020 |
| 45,214 |
| 3,806 |
| 8.42 |
| % |
| Total expenses |
| 59,933 |
| 61,644 |
| 62,908 |
| 177,927 |
| 176,882 |
| 1,045 |
| 0.59 |
| % |
| Income before income tax, corporate allocation and noncontrolling interest |
| 49,981 |
| 10,224 |
| 54,472 |
| 159,833 |
| 64,455 |
| 95,378 |
| 147.98 |
| % |
| Corporate allocation |
| 1,241 |
| 595 |
| 1,249 |
| 3,782 |
| 1,891 |
| 1,891 |
| 100.00 |
| % |
| Income before income tax provision and noncontrolling interest |
| 51,222 |
| 10,819 |
| 55,721 |
| 163,615 |
| 66,346 |
| 97,269 |
| 146.61 |
| % |
| Provision for income tax expense |
| 10,225 |
| 474 |
| 10,535 |
| 30,461 |
| 9,304 |
| 21,157 |
| 227.40 |
| % |
| Net income |
| 40,997 |
| 10,345 |
| 45,186 |
| 133,154 |
| 57,042 |
| 76,112 |
| 133.43 |
| % |
| Noncontrolling interest |
| 2 |
| (2 |
| ) |
| 1 |
| (1 |
| ) |
| 2 |
| (3 |
| ) |
| (150.00 |
| ) |
| % |
| Net income attributable to TowneBank |
| $ |
| 40,999 |
| $ |
| 10,343 |
| $ |
| 45,187 |
| $ |
| 133,153 |
| $ |
| 57,044 |
| $ |
| 76,109 |
| 133.42 |
| % |
| Efficiency ratio (non-GAAP) |
| 54.60 |
| % |
| 59.84 |
| % |
| 57.62 |
| % |
| 54.43 |
| % |
| 58.65 |
| % |
| (4.22 |
| ) |
| % |
| (7.20 |
| ) |
| % |
| TOWNEBANK |
| Realty Segment Financial Information (unaudited) |
| (dollars in thousands) |
| Three Months Ended |
| Nine Months Ended |
| Increase/(Decrease) |
| September 30, |
| June 30, |
| September 30, |
| 2021 over 2020 |
| 2021 |
| 2020 |
| 2021 |
| 2021 |
| 2020 |
| Amount |
| Percent |
| Revenue |
| Residential mortgage brokerage income, net |
| $ |
| 26,637 |
| $ |
| 38,074 |
| $ |
| 26,383 |
| $ |
| 90,898 |
| $ |
| 76,549 |
| $ |
| 14,349 |
| 18.74 |
| % |
| Real estate brokerage income, net |
| 3,781 |
| 3,688 |
| 3,893 |
| 10,125 |
| 8,212 |
| 1,913 |
| 23.30 |
| % |
| Title insurance and settlement fees |
| 706 |
| 654 |
| 684 |
| 1,917 |
| 1,728 |
| 189 |
| 10.94 |
| % |
| Property management fees, net |
| 10,502 |
| 7,613 |
| 7,091 |
| 33,076 |
| 20,808 |
| 12,268 |
| 58.96 |
| % |
| Income from unconsolidated subsidiary |
| 269 |
| 451 |
| 289 |
| 964 |
| 938 |
| 26 |
| 2.77 |
| % |
| Net interest and other income |
| 3,154 |
| 4,101 |
| 3,336 |
| 9,223 |
| 10,262 |
| (1,039 |
| ) |
| (10.12 |
| ) |
| % |
| Total revenue |
| 45,049 |
| 54,581 |
| 41,676 |
| 146,203 |
| 118,497 |
| 27,706 |
| 23.38 |
| % |
| Provision for credit losses |
| 146 |
| 528 |
| (523 |
| ) |
| (1,004 |
| ) |
| 1,389 |
| (2,393 |
| ) |
| (172.28 |
| ) |
| % |
| Expenses |
| Salaries and employee benefits |
| 17,375 |
| 15,744 |
| 16,018 |
| 50,240 |
| 42,095 |
| 8,145 |
| 19.35 |
| % |
| Occupancy expense |
| 1,926 |
| 1,906 |
| 1,935 |
| 5,732 |
| 5,595 |
| 137 |
| 2.45 |
| % |
| Furniture and equipment |
| 693 |
| 620 |
| 592 |
| 1,934 |
| 2,007 |
| (73 |
| ) |
| (3.64 |
| ) |
| % |
| Amortization of intangible assets |
| 702 |
| 658 |
| 590 |
| 1,882 |
| 1,973 |
| (91 |
| ) |
| (4.61 |
| ) |
| % |
| Other expenses |
| 11,103 |
| 9,226 |
| 10,442 |
| 30,774 |
| 24,366 |
| 6,408 |
| 26.30 |
| % |
| Total expenses |
| 31,799 |
| 28,154 |
| 29,577 |
| 90,562 |
| 76,036 |
| 14,526 |
| 19.10 |
| % |
| Income before income tax, corporate allocation and noncontrolling interest |
| 13,104 |
| 25,899 |
| 12,622 |
| 56,645 |
| 41,072 |
| 15,573 |
| 37.92 |
| % |
| Corporate allocation |
| (1,000 |
| ) |
| (356 |
| ) |
| (1,000 |
| ) |
| (3,000 |
| ) |
| (1,119 |
| ) |
| (1,881 |
| ) |
| 168.10 |
| % |
| Income before income tax provision and noncontrolling interest |
| 12,104 |
| 25,543 |
| 11,622 |
| 53,645 |
| 39,953 |
| 13,692 |
| 34.27 |
| % |
| Provision for income tax expense |
| 3,546 |
| 4,780 |
| 2,255 |
| 12,017 |
| 7,614 |
| 4,403 |
| 57.83 |
| % |
| Net income |
| 8,558 |
| 20,763 |
| 9,367 |
| 41,628 |
| 32,339 |
| 9,289 |
| 28.72 |
| % |
| Noncontrolling interest |
| (2,345 |
| ) |
| (4,790 |
| ) |
| (2,200 |
| ) |
| (8,176 |
| ) |
| (7,996 |
| ) |
| (180 |
| ) |
| 2.25 |
| % |
| Net income attributable to TowneBank |
| $ |
| 6,213 |
| $ |
| 15,973 |
| $ |
| 7,167 |
| $ |
| 33,452 |
| $ |
| 24,343 |
| $ |
| 9,109 |
| 37.42 |
| % |
| Efficiency ratio (non-GAAP) |
| 69.03 |
| % |
| 50.38 |
| % |
| 69.55 |
| % |
| 60.66 |
| % |
| 62.50 |
| % |
| (1.84 |
| ) |
| % |
| (2.94 |
| ) |
| % |
| TOWNEBANK |
| Insurance Segment Financial Information (unaudited) |
| (dollars in thousands) |
| Three Months Ended |
| Nine Months Ended |
| Increase/(Decrease) |
| September 30, |
| June 30, |
| September 30, |
| 2021 over 2020 |
| 2021 |
| 2020 |
| 2021 |
| 2021 |
| 2020 |
| Amount |
| Percent |
| Commission and fee income |
| Property and casualty |
| $ |
| 15,338 |
| $ |
| 14,072 |
| $ |
| 14,941 |
| $ |
| 44,467 |
| $ |
| 40,784 |
| $ |
| 3,683 |
| 9.03 |
| % |
| Employee benefits |
| 3,820 |
| 3,825 |
| 3,430 |
| 11,135 |
| 11,534 |
| (399 |
| ) |
| (3.46 |
| ) |
| % |
| Travel insurance |
| — |
| 1,399 |
| — |
| — |
| 3,526 |
| (3,526 |
| ) |
| (100.00 |
| ) |
| % |
| Specialized benefit services |
| 164 |
| 165 |
| 163 |
| 494 |
| 489 |
| 5 |
| 1.02 |
| % |
| Total commissions and fees |
| 19,322 |
| 19,461 |
| 18,534 |
| 56,096 |
| 56,333 |
| (237 |
| ) |
| (0.42 |
| ) |
| % |
| Contingency and bonus revenue |
| 1,664 |
| 1,112 |
| 3,323 |
| 6,746 |
| 5,144 |
| 1,602 |
| 31.14 |
| % |
| Other income |
| 40 |
| 17,697 |
| 43 |
| 157 |
| 17,906 |
| (17,749 |
| ) |
| (99.12 |
| ) |
| % |
| Total revenue |
| 21,026 |
| 38,270 |
| 21,900 |
| 62,999 |
| 79,383 |
| (16,384 |
| ) |
| (20.64 |
| ) |
| % |
| Employee commission expense |
| 4,185 |
| 3,654 |
| 4,103 |
| 12,395 |
| 10,900 |
| 1,495 |
| 13.72 |
| % |
| Revenue, net of commission expense |
| 16,841 |
| 34,616 |
| 17,797 |
| 50,604 |
| 68,483 |
| (17,879 |
| ) |
| (26.11 |
| ) |
| % |
| Salaries and employee benefits |
| 9,064 |
| 9,129 |
| 9,571 |
| 28,363 |
| 27,136 |
| 1,227 |
| 4.52 |
| % |
| Occupancy expense |
| 632 |
| 661 |
| 612 |
| 1,897 |
| 1,972 |
| (75 |
| ) |
| (3.80 |
| ) |
| % |
| Furniture and equipment |
| 218 |
| 203 |
| 214 |
| 626 |
| 644 |
| (18 |
| ) |
| (2.80 |
| ) |
| % |
| Amortization of intangible assets |
| 1,186 |
| 1,130 |
| 1,217 |
| 3,573 |
| 3,388 |
| 185 |
| 5.46 |
| % |
| Other expenses |
| 1,254 |
| 1,060 |
| 1,295 |
| 3,857 |
| 3,836 |
| 21 |
| 0.55 |
| % |
| Total operating expenses |
| 12,354 |
| 12,183 |
| 12,909 |
| 38,316 |
| 36,976 |
| 1,340 |
| 3.62 |
| % |
| Income before income tax, corporate allocation and noncontrolling interest |
| 4,487 |
| 22,433 |
| 4,888 |
| 12,288 |
| 31,507 |
| (19,219 |
| ) |
| (61.00 |
| ) |
| % |
| Corporate allocation |
| (241 |
| ) |
| (239 |
| ) |
| (249 |
| ) |
| (782 |
| ) |
| (772 |
| ) |
| (10 |
| ) |
| 1.30 |
| % |
| Income before income tax provision and noncontrolling interest |
| 4,246 |
| 22,194 |
| 4,639 |
| 11,506 |
| 30,735 |
| (19,229 |
| ) |
| (62.56 |
| ) |
| % |
| Provision for income tax expense |
| 1,058 |
| 2,587 |
| 1,190 |
| 2,910 |
| 4,574 |
| (1,664 |
| ) |
| (36.38 |
| ) |
| % |
| Net income |
| 3,188 |
| 19,607 |
| 3,449 |
| 8,596 |
| 26,161 |
| (17,565 |
| ) |
| (67.14 |
| ) |
| % |
| Noncontrolling interest |
| — |
| (11,459 |
| ) |
| — |
| — |
| (12,095 |
| ) |
| 12,095 |
| (100.00 |
| ) |
| % |
| Net income attributable to TowneBank |
| $ |
| 3,188 |
| $ |
| 8,148 |
| $ |
| 3,449 |
| $ |
| 8,596 |
| $ |
| 14,066 |
| (5,470 |
| ) |
| (38.89 |
| ) |
| % |
| Provision for income taxes |
| 1,058 |
| 2,587 |
| 1,190 |
| 2,910 |
| 4,574 |
| (1,664 |
| ) |
| (36.38 |
| ) |
| % |
| Depreciation, amortization and interest expense |
| 1,330 |
| 1,285 |
| 1,361 |
| 3,999 |
| 3,875 |
| 124 |
| 3.20 |
| % |
| EBITDA (non-GAAP) |
| $ |
| 5,576 |
| $ |
| 12,020 |
| $ |
| 6,000 |
| $ |
| 15,505 |
| $ |
| 22,515 |
| $ |
| (7,010 |
| ) |
| (31.13 |
| ) |
| % |
| Efficiency ratio (non-GAAP) |
| 66.31 |
| % |
| 31.93 |
| % |
| 65.70 |
| % |
| 68.66 |
| % |
| 49.05 |
| % |
| 19.61 |
| % |
| 39.98 |
| % |
| *Included in other income is the gross gain on the sale of Red Sky |
| $ |
| 17,626 |
| $ |
| 17,626 |
| Efficiency ratio excluding gain |
| 31.95 |
| % |
| 49.06 |
| % |
| TOWNEBANK |
| Reconciliation of Non-GAAP Financial Measures |
| (dollars in thousands) |
| Three Months Ended |
| Nine Months Ended |
| September 30, |
| September 30, |
| June 30, |
| September 30, |
| September 30, |
| 2021 |
| 2020 |
| 2021 |
| 2021 |
| 2020 |
| Return on average assets (GAAP) |
| 1.27 |
| % |
| 0.89 |
| % |
| 1.48 |
| % |
| 1.55 |
| % |
| 0.91 |
| % |
| Impact of excluding average goodwill and other intangibles and amortization |
| 0.10 |
| % |
| 0.08 |
| % |
| 0.11 |
| % |
| 0.11 |
| % |
| 0.10 |
| % |
| Return on average tangible assets (non-GAAP) |
| 1.37 |
| % |
| 0.97 |
| % |
| 1.59 |
| % |
| 1.66 |
| % |
| 1.01 |
| % |
| Return on average equity (GAAP) |
| 10.59 |
| % |
| 7.85 |
| % |
| 12.21 |
| % |
| 12.73 |
| % |
| 7.48 |
| % |
| Impact of excluding average goodwill and other intangibles and amortization |
| 4.50 |
| % |
| 3.81 |
| % |
| 5.17 |
| % |
| 5.39 |
| % |
| 3.84 |
| % |
| Return on average tangible equity (non-GAAP) |
| 15.09 |
| % |
| 11.66 |
| % |
| 17.38 |
| % |
| 18.12 |
| % |
| 11.32 |
| % |
| Return on average common equity (GAAP) |
| 10.68 |
| % |
| 7.91 |
| % |
| 12.31 |
| % |
| 12.84 |
| % |
| 7.53 |
| % |
| Impact of excluding average goodwill and other intangibles and amortization |
| 4.59 |
| % |
| 3.88 |
| % |
| 5.26 |
| % |
| 5.49 |
| % |
| 3.91 |
| % |
| Return on average tangible common equity (non-GAAP) |
| 15.27 |
| % |
| 11.79 |
| % |
| 17.57 |
| % |
| 18.33 |
| % |
| 11.44 |
| % |
| Book value (GAAP) |
| $ |
| 25.91 |
| $ |
| 23.83 |
| $ |
| 25.51 |
| $ |
| 25.91 |
| $ |
| 23.83 |
| Impact of excluding average goodwill and other intangibles and amortization |
| (6.99 |
| ) |
| (6.77 |
| ) |
| (6.81 |
| ) |
| (6.99 |
| ) |
| (6.77 |
| ) |
| Tangible book value (non-GAAP) |
| $ |
| 18.92 |
| $ |
| 17.06 |
| $ |
| 18.70 |
| $ |
| 18.92 |
| $ |
| 17.06 |
| Efficiency ratio (GAAP) |
| 61.20 |
| % |
| 53.08 |
| % |
| 62.99 |
| % |
| 59.01 |
| % |
| 58.86 |
| % |
| Impact of exclusions |
| (1.62 |
| ) |
| % |
| 4.28 |
| % |
| (1.53 |
| ) |
| % |
| (1.44 |
| ) |
| % |
| 1.58 |
| % |
| Efficiency ratio (non-GAAP) |
| 59.58 |
| % |
| 57.36 |
| % |
| 61.46 |
| % |
| 57.57 |
| % |
| 60.44 |
| % |
| Average assets (GAAP) |
| $ |
| 15,706,998 |
| $ |
| 15,487,152 |
| $ |
| 15,143,888 |
| $ |
| 15,151,850 |
| $ |
| 13,987,474 |
| Less: average goodwill and intangible assets |
| 506,231 |
| 494,238 |
| 496,059 |
| 499,944 |
| 497,135 |
| Average tangible assets (non-GAAP) |
| $ |
| 15,200,767 |
| $ |
| 14,992,914 |
| $ |
| 14,647,829 |
| $ |
| 14,651,906 |
| $ |
| 13,490,339 |
| Average equity (GAAP) |
| $ |
| 1,888,451 |
| $ |
| 1,747,033 |
| $ |
| 1,833,592 |
| $ |
| 1,840,268 |
| $ |
| 1,704,993 |
| Less: average goodwill and intangible assets |
| 506,231 |
| 494,238 |
| 496,059 |
| 499,944 |
| 497,135 |
| Average tangible equity (non-GAAP) |
| $ |
| 1,382,220 |
| $ |
| 1,252,795 |
| $ |
| 1,337,533 |
| $ |
| 1,340,324 |
| $ |
| 1,207,858 |
| Average common equity (GAAP) |
| $ |
| 1,871,820 |
| $ |
| 1,732,881 |
| $ |
| 1,818,664 |
| $ |
| 1,824,753 |
| $ |
| 1,692,202 |
| Less: average goodwill and intangible assets |
| 506,231 |
| 494,238 |
| 496,059 |
| 499,944 |
| 497,135 |
| Average tangible common equity (non-GAAP) |
| $ |
| 1,365,589 |
| $ |
| 1,238,643 |
| $ |
| 1,322,605 |
| $ |
| 1,324,809 |
| $ |
| 1,195,067 |
| Net Income (GAAP) |
| $ |
| 50,400 |
| $ |
| 34,464 |
| $ |
| 55,803 |
| $ |
| 175,201 |
| $ |
| 95,453 |
| Amortization of Intangibles, net of tax |
| 2,172 |
| 2,252 |
| 2,148 |
| 6,472 |
| 6,875 |
| Tangible net income (non-GAAP) |
| $ |
| 52,572 |
| $ |
| 36,716 |
| $ |
| 57,951 |
| $ |
| 181,673 |
| $ |
| 102,328 |
| Net Income (GAAP) |
| $ |
| 50,400 |
| $ |
| 34,464 |
| $ |
| 55,803 |
| $ |
| 175,201 |
| $ |
| 95,453 |
| Provision for credit losses |
| (1,582 |
| ) |
| 31,599 |
| (10,055 |
| ) |
| (15,665 |
| ) |
| 65,559 |
| Provision for income tax |
| 14,829 |
| 7,841 |
| 13,980 |
| 45,388 |
| 21,492 |
| Other nonrecurring (income) loss |
| — |
| (17,626 |
| ) |
| — |
| 30 |
| (17,626 |
| ) |
| Pre-provision, pre-tax net revenues (non-GAAP) |
| $ |
| 63,647 |
| $ |
| 56,278 |
| $ |
| 59,728 |
| $ |
| 204,955 |
| $ |
| 164,879 |
| Total Revenue (GAAP) |
| $ |
| 170,076 |
| $ |
| 192,136 |
| $ |
| 167,321 |
| $ |
| 519,906 |
| $ |
| 492,487 |
| Net (gain)/loss on investment securities |
| — |
| (1,701 |
| ) |
| (252 |
| ) |
| (1,252 |
| ) |
| (9,633 |
| ) |
| Other nonrecurring (income) loss |
| — |
| (17,626 |
| ) |
| — |
| 30 |
| (17,626 |
| ) |
| Total Revenue for efficiency calculation (non-GAAP) |
| $ |
| 170,076 |
| $ |
| 172,809 |
| $ |
| 167,069 |
| $ |
| 518,684 |
| $ |
| 465,228 |
| Noninterest expense (GAAP) |
| $ |
| 104,086 |
| $ |
| 101,981 |
| $ |
| 105,394 |
| $ |
| 306,805 |
| $ |
| 289,894 |
| Less: Amortization of intangibles |
| 2,750 |
| 2,851 |
| 2,719 |
| 8,192 |
| 8,702 |
| Noninterest expense net of amortization (non-GAAP) |
| $ |
| 101,336 |
| $ |
| 99,130 |
| $ |
| 102,675 |
| $ |
| 298,613 |
| $ |
| 281,192 |