SUFFOLK, Va., April 28, 2022 (GLOBE NEWSWIRE) -- TowneBank (the "Company" or "Towne") (NASDAQ: TOWN) today reported earnings for the quarter ended March 31, 2022 of $45.59 million, or $0.63 per diluted share, compared to $69.00 million, or $0.95 per diluted share, for the quarter ended March 31, 2021.
"TowneBank had a strong start to the year despite the expected revenue decline in our real estate segment as well as a reduction in revenue associated with the forgiveness of Paycheck Protection Program ("PPP") loans. With core annualized loan growth of over 20%, spread across all of our markets, combined with the continued deployment of excess liquidity, we expect the increase in short-term rates will result in improvements in net interest income and margin through the rest of 2022. Credit metrics remained excellent and we strengthened our balance sheet ahead of rising rates by completing a sub debt offering at attractive rates in early February," said G. Robert Aston, Jr., Executive Chairman.
Highlights for First Quarter 2022 Compared to First Quarter 2021:
- Total revenues were $165.41 million, a decrease of $17.10 million, or 9.37%, and pre-provision, pre-tax, net revenues (non-GAAP), were $55.37 million, a decrease of $26.21 million, or 32.13%. These declines were primarily driven by residential mortgage banking income, which declined $22.77 million in the quarter and a reduction in income on PPP loans of $9.53 million.
- Loans held for investment were $9.91 billion, an increase of $0.17 billion, or 1.79%, from March 31, 2021, and $0.40 billion, or 4.24%, from December 31, 2021. Excluding the decline in PPP loans, loans held for investment increased $989.07 million, or 11.19%, compared to March 31, 2021, and $476.79 million, or 20.68% on an annualized basis, from the linked quarter. Total loans at March 31, 2022, March 31, 2021, and December 31, 2021 included $0.08 billion, $0.90 billion, and $0.16 billion, respectively, of PPP loans.
- Total deposits were $13.77 billion, an increase of $1.63 billion, or 13.44% compared to prior year and $0.20 billion, or 5.92% on an annualized basis, from December 31, 2021.
- Noninterest bearing deposits increased by 14.29%, to $5.53 billion, representing 40.17% of total deposits. Compared to the linked quarter, noninterest bearing deposits decreased $14.33 million, primarily in escrow deposits.
- Annualized return on common shareholders' equity was 9.81% and annualized return on average tangible common shareholders' equity was 14.08% (non-GAAP).
- Net interest margin for the quarter was 2.67% and taxable equivalent net interest margin (non-GAAP) was 2.69%.
- Effective tax rate of 19.77% in the quarter compared to 19.37% in first quarter 2021, and 18.97% in the linked quarter.
"Our results benefited from healthy loan pipelines as we entered 2022. We opened a new full-service banking office in Charlotte, and we continue to invest in growing our fee-based businesses. We also believe our strong commitment to generating high levels of noninterest bearing deposits should provide a competitive advantage in a rising rate environment," stated J. Morgan Davis, Chief Executive Officer.
Quarterly Net Interest Income Compared to First Quarter 2021:
- Net interest income was $99.20 million compared to $99.99 million as of March 31, 2021.
- Tax-equivalent net interest margin (non-GAAP) was 2.69%, including purchase accounting accretion of 6 basis points and PPP interest and fees of 3 basis points, compared to 3.05%, including purchase accounting accretion of 4 basis points and 11 basis points of PPP interest and fees, for first quarter 2021.
- On an average basis, loans held for investment, with a yield of 4.01%, represented 64.26% of earning assets at March 31, 2022 compared to a yield of 4.28% and 72.33% of earning assets in the first quarter of 2021. Excluding PPP loans, loan yields were 3.97% in first quarter 2022 compared to 4.17% in first quarter 2021.
- Interest and fee income on PPP loans was $2.10 million in first quarter 2022, compared to $3.85 million in the linked quarter, and $11.63 million in first quarter 2021.
- Total cost of deposits decreased to 0.15% from 0.30% at March 31, 2021.
- In February 2022, the Company issued $250.00 million of fixed-to-floating rate subordinated notes. The subordinated notes accrue interest at a fixed rate of 3.13%, resulting in an increase in interest expense of $1.11 million in the quarter.
- Average interest-earning assets totaled $15.05 billion at March 31, 2022 compared to $13.36 billion at March 31, 2021, an increase of 12.65%.
- Average interest-bearing liabilities totaled $8.56 billion, an increase of $0.55 billion from prior year, driven primarily by growth in interest bearing deposits.
- We expect to continue positioning our earning asset portfolio to positively benefit interest margin in a rising rate environment.
Quarterly Provision for Credit Losses:
- The quarterly provision for credit losses for on-balance-sheet loans was a benefit of $2.10 million compared to benefits of $3.41 million one year ago and $1.18 million in the linked quarter.
- The first quarter 2022 included a release in the allowance for credit losses of $2.23 million that was driven by improved economic forecasts and the related release of certain reserves associated with industries heavily impacted by COVID-19, partially offset by an increase in reserves driven by core loan growth.
- Net loan charge-offs were $0.13 million compared to $0.67 million one year prior and net recoveries of $0.06 million in the linked quarter. The ratio of net loan charge-offs to average loans on an annualized basis was 0.01% in first quarter 2022, 0.03% in first quarter 2021, and 0.00% in the linked quarter.
- The allowance for credit losses on loans represented 1.05% of total loans at March 31, 2022, 1.12% at December 31, 2021, and 1.19% at March 31, 2021. Excluding PPP loans, which are fully government guaranteed, the allowance for credit losses (non-GAAP) was 1.06%, compared to 1.13% at December 31, 2021 and 1.31% at March 31, 2021. The allowance for credit losses on loans was 21.52 times nonperforming loans compared to 17.76 times at December 31, 2021 and 9.09 times at March 31, 2021.
Quarterly Noninterest Income Compared to First Quarter 2021:
- Total noninterest income was $66.21 million compared to $82.52 million in 2021, a decrease of $16.31 million, or 19.77%. Residential mortgage banking income decreased $22.77 million, while insurance commissions and property management income increased $2.75 million and $1.66 million, respectively.
- Residential mortgage banking recorded income of $14.64 million compared to $37.41 million in first quarter 2021. Margins declined 100 basis points between quarters and loan volume decreased to $0.82 billion in first quarter 2022 compared to $1.60 billion in 2021. Residential purchase activity comprised 77.93% of production volume in the first quarter of 2022 compared to 53.45% in the prior year quarter as the increase in rates continued to negatively impact refinance activity. Included in first quarter 2022 was a loss on interest rate-locks of $0.45 million, compared to a gain of $0.74 million in first quarter 2021.
- Margins on residential mortgages decreased 100 basis points from first quarter 2021 to 3.01% in the current quarter.
- Total Insurance segment revenue was $23.11 million in first quarter 2022, $3.03 million or 15.11%, higher than first quarter 2021. This increase was attributable to organic growth in property and casualty commissions plus bonus and contingency income.
- Property management fee revenue increased 10.75%, or $1.66 million, to $17.15 million compared to first quarter 2021. Reservation income is up in the quarter over quarter comparison due primarily to the July 2021 acquisition of a vacation rental company in Tennessee, which contributed $4.14 million in property management fees during the quarter. Management anticipates the loosening of COVID-related travel restrictions may result in a decline in reservation activity for the remainder of 2022, from the record levels of the past two years.
- In April 22, the Company implemented changes for personal accounts to eliminate fees for non-sufficient funds and other overdraft program fees. The change is not expected to have a material effect on future revenue.
Quarterly Noninterest Expense Compared to First Quarter 2021:
- Total noninterest expense was $109.38 million compared to $97.33 million in 2021, an increase of $12.05 million, or 12.38%. The higher level of expenses was attributable to increases in salaries and benefits of $5.53 million, advertising and marketing expense of $1.16 million, an earnout adjustment of $1.84 million for a prior year property management company acquisition, and $0.53 million in fixed asset disposals associated with the move of our financial services group headquarters.
- 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.
Consolidated Balance Sheet Highlights:
- Total assets were $16.67 billion for the quarter ended March 31, 2022, an increase of $1.59 billion, or 10.53%, from $15.08 billion at March 31, 2021. Total assets increased $0.31 billion, or 1.87%, from the linked quarter. The year-over-year increase was driven by increases in securities and loans held for investment.
- Loans held for investment increased $0.17 billion, or 1.79%, compared to prior year and $0.40 billion, or 4.24%, compared the linked quarter. Excluding PPP loans of $0.08 billion in first quarter 2022, $0.90 billion in first quarter 2021, and $0.16 billion in the linked quarter, loans held for investment increased $989.07 million, or 11.19%, compared to prior year, and $476.79 million, or 5.10%, compared to December 31, 2021, or 20.68% on an annualized basis. Loan growth was broad-based across almost all of our loan portfolio classifications and market areas.
- Average loans held for investment, excluding PPP loans, were $9.55 billion in the first quarter of 2022, an increase of $699.86 million, or 7.91%, compared to prior year. In the linked quarter comparison, average loans held for investment, excluding PPP loans, increased 4.15%, or $380.77 million, 16.84% on an annualized basis.
- Unamortized fee income related to PPP loans was $2.08 million at March 31, 2022.
- Mortgage loans held for sale decreased $348.29 million, or 59.75%, compared to the prior year and $123.68 million, or 34.52%, compared to the linked quarter.
- Total deposits increased $1.63 billion, or 13.44%, compared to the prior year and $0.20 billion, or 1.46%, compared to the linked quarter.
- Total borrowings decreased $0.13 billion, or 17.02%, from prior year due to the repayment of FHLB borrowings and the FRB PPP Lending Facility. Total borrowings increased $0.15 billion, or 30.33%, compared to the linked quarter due to a new subordinated debt offering in the quarter.
Investment Securities:
- Total investment securities were $2.30 billion compared to $1.98 billion at December 31, 2021 and $1.46 billion at March 31, 2021. The weighted average duration of the portfolio at March 31, 2022 was 3.9 years. The carrying value of the available for sale debt securities portfolio included $70.32 million in net unrealized losses at March 31, 2022, and $28.12 million and $17.54 million in net unrealized gains at March 31, 2021 and December 31, 2021, respectively. In first quarter 2022, the net change in carrying value for available-for-sale debt securities resulted in a $1.03 decrease in tangible book value.
Loans and Asset Quality:
- Total loans held for investment were $9.91 billion at March 31, 2022 compared to $9.51 billion at December 31, 2021 and $9.73 billion at March 31, 2021.
- Nonperforming assets were $5.39 million, or 0.03% of total assets, compared to $17.27 million, or 0.11%, at March 31, 2021.
- Nonperforming loans were 0.05% of period end loans compared to 0.13% at March 31, 2021.
- Foreclosed property decreased to $0.56 million from $3.75 million at March 31, 2021.
Deposits and Borrowings:
- Total deposits were $13.77 billion compared to $13.57 billion at December 31, 2021 and $12.14 billion at March 31, 2021.
- Total loans held for investment to deposits were 71.95% compared to 70.03% at December 31, 2021 and 80.19% at March 31, 2021.
- Non-interest bearing deposits were 40.17% of total deposits at March 31, 2022 compared to 40.86% at December 31, 2021 and 39.87% at March 31, 2021.
- Total borrowings were $0.63 billion compared to $0.48 billion at December 31, 2021 and $0.76 billion at March 31, 2021.
Capital:
- Common equity tier 1 capital ratio of 12.16%.
- Tier 1 leverage capital ratio of 9.16%.
- Tier 1 risk-based capital ratio of 12.31%.
- Total risk-based capital ratio of 17.34%.
- Book value per common share was $25.61 compared to $26.13 at December 31, 2021 and $24.78 at March 31, 2021.
- Tangible book value per common share (non-GAAP) was $18.67 compared to $19.15 at December 31, 2021 and $17.94 at March 31, 2021.
About TowneBank:Founded in 1999, TowneBank is a company built on relationships, offering a full range of banking and other financial services, with a focus 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 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 $16.67 billion as of March 31, 2022, 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, 2021 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, 757-638-6780J. 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 | ||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
| 2022 | 2021 | 2021 | 2021 | 2021 | ||||||||||||||||
| Income and Performance Ratios: | ||||||||||||||||||||
| Total Revenue | $ | 165,412 | $ | 160,424 | $ | 170,076 | $ | 167,321 | $ | 182,509 | ||||||||||
| Net income | 46,250 | 41,657 | 52,743 | 58,002 | 72,631 | |||||||||||||||
| Net income available to common shareholders | 45,586 | 40,183 | 50,400 | 55,803 | 68,995 | |||||||||||||||
| Pre-provision, pre-tax, net revenues(non-GAAP) | 55,369 | 48,483 | 63,647 | 59,728 | 81,578 | |||||||||||||||
| Net income per common share - diluted | 0.63 | 0.55 | 0.69 | 0.77 | 0.95 | |||||||||||||||
| Book value per common share | 25.61 | 26.13 | 25.91 | 25.51 | 24.78 | |||||||||||||||
| Book value per common share - tangible(non-GAAP) | 18.67 | 19.15 | 18.92 | 18.70 | 17.94 | |||||||||||||||
| Return on average assets | 1.13 | % | 0.99 | % | 1.27 | % | 1.48 | % | 1.92 | % | ||||||||||
| Return on average assets - tangible(non-GAAP) | 1.23 | % | 1.08 | % | 1.37 | % | 1.59 | % | 2.05 | % | ||||||||||
| Return on average equity | 9.73 | % | 8.38 | % | 10.59 | % | 12.21 | % | 15.56 | % | ||||||||||
| Return on average equity - tangible(non-GAAP) | 13.91 | % | 12.08 | % | 15.09 | % | 17.38 | % | 22.19 | % | ||||||||||
| Return on average common equity | 9.81 | % | 8.45 | % | 10.68 | % | 12.31 | % | 15.70 | % | ||||||||||
| Return on average common equity - tangible(non-GAAP) | 14.08 | % | 12.22 | % | 15.27 | % | 17.57 | % | 22.45 | % | ||||||||||
| Noninterest income as a percentage of total revenue | 40.03 | % | 37.17 | % | 40.94 | % | 39.55 | % | 45.21 | % | ||||||||||
| Regulatory Capital Ratios (1): | ||||||||||||||||||||
| Common equity tier 1 | 12.16 | % | 12.36 | % | 12.53 | % | 12.42 | % | 12.15 | % | ||||||||||
| Tier 1 | 12.31 | % | 12.51 | % | 12.69 | % | 12.57 | % | 12.30 | % | ||||||||||
| Total | 17.34 | % | 15.56 | % | 15.85 | % | 15.76 | % | 15.59 | % | ||||||||||
| Tier 1 leverage ratio | 9.16 | % | 9.11 | % | 9.18 | % | 9.44 | % | 9.54 | % | ||||||||||
| Asset Quality: | ||||||||||||||||||||
| Allowance for credit losses on loans to nonperforming loans | 21.52x | 17.76x | 12.68x | 9.67x | 9.09x | |||||||||||||||
| Allowance for credit losses on loans to period end loans | 1.05 | % | 1.12 | % | 1.15 | % | 1.15 | % | 1.19 | % | ||||||||||
| Allowance for credit losses on loans to period end loans excluding PPP loans(non-GAAP) | 1.06 | % | 1.13 | % | 1.18 | % | 1.22 | % | 1.31 | % | ||||||||||
| Nonperforming loans to period end loans | 0.05 | % | 0.06 | % | 0.09 | % | 0.12 | % | 0.13 | % | ||||||||||
| Nonperforming assets to period end assets | 0.03 | % | 0.06 | % | 0.09 | % | 0.10 | % | 0.11 | % | ||||||||||
| Net charge-offs (recoveries) to average loans (annualized) | 0.01 | % | — | % | (0.03) % | (0.01) % | 0.03 | % | ||||||||||||
| Net charge-offs (recoveries) | $ | 126 | $ | (60 | ) | $ | (644 | ) | $ | (137 | ) | $ | 669 | |||||||
| Nonperforming loans | $ | 4,825 | $ | 5,973 | $ | 8,451 | $ | 11,178 | $ | 12,768 | ||||||||||
| Former bank premises | — | — | — | — | 750 | |||||||||||||||
| Foreclosed property | 560 | 4,583 | 5,409 | 4,041 | 3,748 | |||||||||||||||
| Total nonperforming assets | $ | 5,385 | $ | 10,556 | $ | 13,860 | $ | 15,219 | $ | 17,266 | ||||||||||
| Loans past due 90 days and still accruing interest | $ | 40 | $ | 372 | $ | 143 | $ | 1,584 | $ | 108 | ||||||||||
| Allowance for credit losses on loans | $ | 103,833 | $ | 106,059 | $ | 107,177 | $ | 108,130 | $ | 116,077 | ||||||||||
| Mortgage Banking: | ||||||||||||||||||||
| Loans originated, mortgage | $ | 583,008 | $ | 851,021 | $ | 939,272 | $ | 1,050,663 | $ | 1,187,595 | ||||||||||
| Loans originated, joint venture | 236,980 | 303,362 | 370,865 | 403,864 | 417,177 | |||||||||||||||
| Total loans originated | $ | 819,988 | $ | 1,154,383 | $ | 1,310,137 | $ | 1,454,527 | $ | 1,604,772 | ||||||||||
| Number of loans originated | 2,237 | 3,408 | 3,917 | 4,514 | 5,164 | |||||||||||||||
| Number of originators | 207 | 213 | 219 | 222 | 229 | |||||||||||||||
| Purchase % | 77.93 | % | 79.36 | % | 77.45 | % | 76.95 | % | 53.45 | % | ||||||||||
| Loans sold | $ | 853,808 | $ | 1,150,996 | $ | 1,394,166 | $ | 1,485,057 | $ | 1,601,480 | ||||||||||
| Rate lock asset | $ | 3,009 | $ | 3,455 | $ | 6,087 | $ | 7,760 | $ | 12,522 | ||||||||||
| Gross realized gain on sales and fees as a % of loans originated | 3.01 | % | 3.42 | % | 3.61 | % | 3.64 | % | 4.01 | % | ||||||||||
| Other Ratios: | ||||||||||||||||||||
| Net interest margin | 2.67 | % | 2.70 | % | 2.76 | % | 2.91 | % | 3.04 | % | ||||||||||
| Net interest margin-fully tax equivalent(non-GAAP) | 2.69 | % | 2.72 | % | 2.77 | % | 2.94 | % | 3.05 | % | ||||||||||
| Average earning assets/total average assets | 92.24 | % | 92.13 | % | 91.95 | % | 91.97 | % | 91.52 | % | ||||||||||
| Average loans/average deposits | 71.61 | % | 70.68 | % | 71.69 | % | 78.22 | % | 82.71 | % | ||||||||||
| Average noninterest deposits/total average deposits | 40.49 | % | 41.42 | % | 40.40 | % | 40.21 | % | 38.39 | % | ||||||||||
| Period end equity/period end total assets | 11.28 | % | 11.71 | % | 12.02 | % | 11.83 | % | 12.04 | % | ||||||||||
| Efficiency ratio(non-GAAP) | 64.42 | % | 67.03 | % | 59.58 | % | 61.46 | % | 52.11 | % | ||||||||||
| (1) Current reporting period regulatory capital ratios are preliminary | ||||||||||||||||||||
| TOWNEBANK | |||||||||||||||||
| Selected Data (unaudited) | |||||||||||||||||
| (dollars in thousands) | |||||||||||||||||
| Time Period | % Change | ||||||||||||||||
| Investment Securities | Q1 | Q1 | Q4 | Q1 22 vs. | Q1 22 vs. | ||||||||||||
| Available-for-sale securities, at fair value | 2022 | 2021 | 2021 | Q1 21 | Q4 21 | ||||||||||||
| U.S. agency securities | $ | 338,490 | $ | 201,787 | $ | 310,587 | 67.75 | % | 8.98 | % | |||||||
| U.S. Treasury notes | 970 | 1,019 | 1,000 | (4.81) | % | (3.00) | % | ||||||||||
| Municipal securities | 400,200 | 334,751 | 385,673 | 19.55 | % | 3.77 | % | ||||||||||
| Trust preferred and other corporate securities | 85,792 | 31,241 | 53,950 | 174.61 | % | 59.02 | % | ||||||||||
| Mortgage-backed securities issued by GSE and GNMA | 1,022,169 | 849,418 | 1,055,183 | 20.34 | % | (3.13) | % | ||||||||||
| Allowance for credit losses | (1,081 | ) | (210 | ) | (210 | ) | 414.76 | % | 414.76 | % | |||||||
| Total | $ | 1,846,540 | $ | 1,418,006 | $ | 1,806,183 | 30.22 | % | 2.23 | % | |||||||
| Gross unrealized gains (losses) reflected in financial statements | |||||||||||||||||
| Total gross unrealized gains | $ | 3,443 | $ | 38,751 | $ | 32,054 | (91.12) | % | (89.26) | % | |||||||
| Total gross unrealized losses | (73,758 | ) | (10,632 | ) | (14,514 | ) | 593.74 | % | 408.19 | % | |||||||
| Net unrealized gains (losses) and other adj. on AFS securities | $ | (70,315 | ) | $ | 28,119 | $ | 17,540 | (350.06) | % | (500.88) | % | ||||||
| Held-to-maturity securities, at amortized cost | |||||||||||||||||
| U.S. agency securities | 83,004 | $ | — | $ | 73,360 | N/M | 13.15 | % | |||||||||
| U.S. Treasury notes | 336,193 | — | 66,326 | N/M | 406.88 | % | |||||||||||
| Municipal securities | 5,116 | 5,032 | 5,095 | 1.67 | % | 0.41 | % | ||||||||||
| Trust preferred corporate securities | 2,260 | 2,309 | 2,272 | (2.12) | % | (0.53) | % | ||||||||||
| Mortgage-backed securities issued by GSE and GNMA | 6,811 | 8,639 | 7,168 | (21.16) | % | (4.98) | % | ||||||||||
| Allowance for credit losses | (92 | ) | (97 | ) | (94 | ) | (5.15) | % | (2.13) | % | |||||||
| Total | $ | 433,292 | $ | 15,883 | $ | 154,127 | 2,628.02 | % | 181.13 | % | |||||||
| Gross unrealized gains (losses) not reflected in financial statements | |||||||||||||||||
| Total gross unrealized gains | $ | 714 | $ | 1,598 | $ | 1,561 | (55.32) | % | (54.26) | % | |||||||
| Total gross unrealized losses | (11,915 | ) | — | (106 | ) | — | % | — | % | ||||||||
| Net unrealized gains (losses) in HTM securities | $ | (11,201 | ) | $ | 1,598 | $ | 1,455 | (800.94) | % | (869.83) | % | ||||||
| Loans Held For Investment(1) | Q1 | Q1 | Q4 | Q1 22 vs. | Q1 22 vs. | ||||||||||||
| 2022 | 2021 | 2021 | Q1 21 | Q4 21 | |||||||||||||
| Real estate - construction and development | $ | 1,236,294 | $ | 1,031,267 | $ | 1,125,863 | 19.88 | % | 9.81 | % | |||||||
| Commercial real estate - owner occupied | 1,561,117 | 1,439,412 | 1,494,000 | 8.46 | % | 4.49 | % | ||||||||||
| Commercial real estate - non owner occupied | 2,697,929 | 2,477,315 | 2,620,334 | 8.91 | % | 2.96 | % | ||||||||||
| Real estate - multifamily | 339,220 | 360,125 | 332,659 | (5.80) | % | 1.97 | % | ||||||||||
| Residential 1-4 family | 1,392,052 | 1,173,761 | 1,305,915 | 18.60 | % | 6.60 | % | ||||||||||
| HELOC | 376,480 | 400,314 | 380,834 | (5.95) | % | (1.14) | % | ||||||||||
| Commercial and industrial business (C&I) | 1,212,973 | 2,005,558 | 1,206,911 | (39.52) | % | 0.50 | % | ||||||||||
| Government | 518,839 | 398,579 | 525,358 | 30.17 | % | (1.24) | % | ||||||||||
| Indirect | 485,620 | 278,567 | 394,802 | 74.33 | % | 23.00 | % | ||||||||||
| Consumer loans and other | 88,784 | 169,685 | 119,576 | (47.68) | % | (25.75) | % | ||||||||||
| Total | $ | 9,909,308 | $ | 9,734,583 | $ | 9,506,252 | 1.79 | % | 4.24 | % | |||||||
| (1) Paycheck Protection Program loans totaling $0.08 billion, $0.90 billion, and $0.16 billion, primarily in C&I, are included in Q1 22, Q1 21, and Q4 21, respectively. | |||||||||||||||||
| Deposits | Q1 | Q1 | Q4 | Q1 22 vs. | Q1 22 vs. | ||||||||||||
| 2022 | 2021 | 2021 | Q1 21 | Q4 21 | |||||||||||||
| Noninterest-bearing demand | $ | 5,532,337 | $ | 4,840,678 | $ | 5,546,665 | 14.29 | % | (0.26) | % | |||||||
| Interest-bearing: | |||||||||||||||||
| Demand and money market accounts | 6,432,005 | 5,062,461 | 6,139,714 | 27.05 | % | 4.76 | % | ||||||||||
| Savings | 393,119 | 342,554 | 371,356 | 14.76 | % | 5.86 | % | ||||||||||
| Certificates of deposits | 1,414,339 | 1,893,951 | 1,515,891 | (25.32) | % | (6.70) | % | ||||||||||
| Total | $ | 13,771,800 | $ | 12,139,644 | $ | 13,573,626 | 13.44 | % | 1.46 | % | |||||||
| TOWNEBANK | ||||||||||||||||||||||||||||||||
| Average Balances, Yields and Rate Paid (unaudited) | ||||||||||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||||||||
| Three Months Ended | Three Months Ended | Three Months Ended | ||||||||||||||||||||||||||||||
| March 31, 2022 | December 31, 2021 | March 31, 2021 | ||||||||||||||||||||||||||||||
| 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 incomeand deferred costs), (1)(2) | $ | 9,668,724 | $ | 95,596 | 4.01 | % | $ | 9,372,187 | $ | 95,696 | 4.05 | % | $ | 9,660,111 | $ | 101,960 | 4.28 | % | ||||||||||||||
| Taxable investment securities | 2,059,614 | 9,013 | 1.75 | % | 1,625,683 | 10,217 | 2.51 | % | 1,303,535 | 6,604 | 2.03 | % | ||||||||||||||||||||
| Tax-exempt investment securities | 110,698 | 680 | 2.46 | % | 157,855 | 292 | 0.74 | % | 139,859 | 542 | 1.55 | % | ||||||||||||||||||||
| Total securities | 2,170,312 | 9,693 | 1.79 | % | 1,783,538 | 10,509 | 2.36 | % | 1,443,394 | 7,146 | 1.98 | % | ||||||||||||||||||||
| Interest-bearing deposits | 2,929,929 | 1,347 | 0.19 | % | 3,274,392 | 1,215 | 0.15 | % | 1,715,110 | 416 | 0.10 | % | ||||||||||||||||||||
| Loans held for sale | 276,448 | 2,375 | 3.44 | % | 379,808 | 2,750 | 2.90 | % | 536,997 | 3,361 | 2.50 | % | ||||||||||||||||||||
| Total earning assets | 15,045,413 | 109,011 | 2.94 | % | 14,809,925 | 110,170 | 2.95 | % | 13,355,612 | 112,883 | 3.42 | % | ||||||||||||||||||||
| Less: allowance for credit losses | (106,172 | ) | (107,215 | ) | (120,934 | ) | ||||||||||||||||||||||||||
| Total nonearning assets | 1,372,757 | 1,372,799 | 1,357,738 | |||||||||||||||||||||||||||||
| Total assets | $ | 16,311,998 | $ | 16,075,509 | $ | 14,592,416 | ||||||||||||||||||||||||||
| Liabilities and Equity: | ||||||||||||||||||||||||||||||||
| Interest-bearing deposits | ||||||||||||||||||||||||||||||||
| Demand and money market | $ | 6,178,217 | $ | 2,262 | 0.15 | % | $ | 5,853,873 | $ | 2,148 | 0.15 | % | $ | 4,904,885 | $ | 2,075 | 0.17 | % | ||||||||||||||
| Savings | 382,839 | 511 | 0.54 | % | 371,901 | 534 | 0.57 | % | 332,006 | 522 | 0.64 | % | ||||||||||||||||||||
| Certificates of deposit | 1,472,942 | 2,121 | 0.58 | % | 1,541,483 | 2,707 | 0.70 | % | 1,959,225 | 5,951 | 1.23 | % | ||||||||||||||||||||
| Total interest-bearing deposits | 8,033,998 | 4,894 | 0.25 | % | 7,767,257 | 5,389 | 0.28 | % | 7,196,116 | 8,548 | 0.48 | % | ||||||||||||||||||||
| Borrowings | 135,775 | 137 | 0.40 | % | 245,622 | 360 | 0.58 | % | 562,451 | 822 | 0.58 | % | ||||||||||||||||||||
| Subordinated debt, net | 386,934 | 4,120 | 4.26 | % | 249,555 | 2,962 | 4.75 | % | 249,114 | 2,930 | 4.70 | % | ||||||||||||||||||||
| Total interest-bearing liabilities | 8,556,707 | 9,151 | 0.43 | % | 8,262,434 | 8,711 | 0.42 | % | 8,007,681 | 12,300 | 0.62 | % | ||||||||||||||||||||
| Demand deposits | 5,467,153 | 5,492,894 | 4,483,444 | |||||||||||||||||||||||||||||
| Other noninterest-bearing liabilities | 387,871 | 417,707 | 303,524 | |||||||||||||||||||||||||||||
| Total liabilities | 14,411,731 | 14,173,035 | 12,794,649 | |||||||||||||||||||||||||||||
| Shareholders’ equity | 1,900,267 | 1,902,474 | 1,797,767 | |||||||||||||||||||||||||||||
| Total liabilities and equity | $ | 16,311,998 | $ | 16,075,509 | $ | 14,592,416 | ||||||||||||||||||||||||||
| Net interest income (tax-equivalent basis) | $ | 99,860 | $ | 101,459 | $ | 100,583 | ||||||||||||||||||||||||||
| Reconciliation of Non-GAAP Financial Measures | ||||||||||||||||||||||||||||||||
| Tax-equivalent basis adjustment | (656 | ) | (667 | ) | (593 | ) | ||||||||||||||||||||||||||
| Net interest income (GAAP) | $ | 99,204 | $ | 100,792 | $ | 99,990 | ||||||||||||||||||||||||||
| Interest rate spread (3)(4) | 2.51 | % | 2.53 | % | 2.80 | % | ||||||||||||||||||||||||||
| Interest expense as a percent of average earning assets | 0.25 | % | 0.23 | % | 0.37 | % | ||||||||||||||||||||||||||
| Net interest margin (tax equivalent basis) (4)(5) | 2.69 | % | 2.72 | % | 3.05 | % | ||||||||||||||||||||||||||
| Total cost of deposits | 0.15 | % | 0.16 | % | 0.30 | % | ||||||||||||||||||||||||||
(1) Average loans balances for December 31, 2021 and March 31, 2021 and related yields have been restated to include, previously excluded, nonaccrual loans of $7.69 million and $12.98 million, respectively.(2) March 31, 2022, March 31, 2021, and December 31, 2021 includes average PPP balances of $0.12 billion, $0.81 billion and $0.20 billion, and related interest and fee income of $2.10 million, $11.63 million, and $3.85 million, respectively.(3) Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities. Fully tax equivalent.(4) Net interest margin is net interest income expressed as a percentage of average earning assets. Fully tax equivalent.(5) Non-GAAP.
| TOWNEBANK | |||||||
| Consolidated Balance Sheets | |||||||
| (dollars in thousands, except share data) | |||||||
| March 31, | December 31, | ||||||
| 2022 | 2021 | ||||||
| (unaudited) | (audited) | ||||||
| ASSETS | |||||||
| Cash and due from banks | $ | 74,991 | $ | 17,373 | |||
| Interest-bearing deposits at FRB - Richmond | 2,857,327 | 3,244,484 | |||||
| Interest-bearing deposits in financial institutions | 34,684 | 34,779 | |||||
| Total Cash and Cash Equivalents | 2,967,002 | 3,296,636 | |||||
| Securities available for sale, at fair value (amortized cost of $1,917,936 and $1,788,853, and allowance for credit losses of $1,081 and $210 at March 31, 2022 and December 31, 2021, respectively.) | 1,846,540 | 1,806,183 | |||||
| Securities held to maturity, at amortized cost (fair value $422,183 and $155,676 at March 31, 2022 and December 31, 2021, respectively.) | 433,384 | 154,221 | |||||
| Less: allowance for credit losses | (92 | ) | (94 | ) | |||
| Securities held to maturity, net of allowance for credit losses | 433,292 | 154,127 | |||||
| Other equity securities | 6,789 | 6,759 | |||||
| FHLB stock | 10,432 | 13,146 | |||||
| Total Securities | 2,297,053 | 1,980,215 | |||||
| Mortgage loans held for sale | 234,620 | 358,303 | |||||
| Loans, net of unearned income and deferred costs | 9,909,308 | 9,506,252 | |||||
| Less: allowance for credit losses | (103,833 | ) | (106,059 | ) | |||
| Net Loans | 9,805,475 | 9,400,193 | |||||
| Premises and equipment, net | 277,764 | 270,772 | |||||
| Goodwill | 457,162 | 457,187 | |||||
| Other intangible assets, net | 47,562 | 50,379 | |||||
| BOLI | 253,112 | 251,805 | |||||
| Other assets | 326,838 | 295,897 | |||||
| TOTAL ASSETS | $ | 16,666,588 | $ | 16,361,387 | |||
| LIABILITIES AND EQUITY | |||||||
| Deposits: | |||||||
| Noninterest-bearing demand | $ | 5,532,337 | $ | 5,546,665 | |||
| Interest-bearing: | |||||||
| Demand and money market accounts | 6,432,005 | 6,139,714 | |||||
| Savings | 393,119 | 371,356 | |||||
| Certificates of deposit | 1,414,339 | 1,515,891 | |||||
| Total Deposits | 13,771,800 | 13,573,626 | |||||
| Advances from the FHLB | 55,196 | 155,367 | |||||
| Subordinated debt, net | 496,757 | 249,652 | |||||
| FRB PPP lending facility | — | — | |||||
| Repurchase agreements and other borrowings | 75,988 | 76,797 | |||||
| Total Borrowings | 627,941 | 481,816 | |||||
| Other liabilities | 387,087 | 389,771 | |||||
| TOTAL LIABILITIES | 14,786,828 | 14,445,213 | |||||
| Preferred stock, authorized and unissued shares - 2,000,000 | — | — | |||||
| Common stock, $1.667 par: 150,000,000 shares authorized | |||||||
| 72,724,275 and 72,683,985 shares issued at | |||||||
| March 31, 2022 and December 31, 2021, respectively | 121,231 | 121,164 | |||||
| Capital surplus | 1,050,387 | 1,050,948 | |||||
| Retained earnings | 747,614 | 716,605 | |||||
| Common stock issued to deferred compensation trust, at cost | |||||||
| 910,304 and 911,458 shares at March 31, 2022 and December 31, 2021, respectively | (18,323 | ) | (18,257 | ) | |||
| Deferred compensation trust | 18,323 | 18,257 | |||||
| Accumulated other comprehensive income (loss) | (56,712 | ) | 10,597 | ||||
| TOTAL SHAREHOLDERS’ EQUITY | 1,862,520 | 1,899,314 | |||||
| Noncontrolling interest | 17,240 | 16,860 | |||||
| TOTAL EQUITY | 1,879,760 | 1,916,174 | |||||
| TOTAL LIABILITIES AND EQUITY | $ | 16,666,588 | $ | 16,361,387 | |||
| TOWNEBANK | |||||||
| Consolidated Statements of Income (unaudited) | |||||||
| (dollars in thousands, except per share data) | |||||||
| Three Months Ended | |||||||
| March 31, | |||||||
| 2022 | 2021 | ||||||
| INTEREST INCOME: | |||||||
| Loans, including fees | $ | 94,962 | $ | 101,396 | |||
| Investment securities | 9,671 | 7,117 | |||||
| Interest-bearing deposits in financial institutions and federal funds sold | 1,347 | 416 | |||||
| Mortgage loans held for sale | 2,375 | 3,361 | |||||
| Total interest income | 108,355 | 112,290 | |||||
| INTEREST EXPENSE: | |||||||
| Deposits | 4,894 | 8,548 | |||||
| Advances from the FHLB | 92 | 497 | |||||
| Subordinated debt, net | 4,120 | 2,930 | |||||
| Repurchase agreements and other borrowings | 45 | 325 | |||||
| Total interest expense | 9,151 | 12,300 | |||||
| Net interest income | 99,204 | 99,990 | |||||
| PROVISION FOR CREDIT LOSSES | (1,449 | ) | (4,027 | ) | |||
| Net interest income after provision for credit losses | 100,653 | 104,017 | |||||
| NONINTEREST INCOME: | |||||||
| Residential mortgage banking income, net | 14,638 | 37,412 | |||||
| Insurance commissions and other title fees and income, net | 19,074 | 16,325 | |||||
| Property management income, net | 17,147 | 15,483 | |||||
| Real estate commission income, net | 2,554 | 2,451 | |||||
| Service charges on deposit accounts | 2,574 | 2,190 | |||||
| Credit card merchant fees, net | 1,375 | 1,302 | |||||
| BOLI | 1,717 | 1,519 | |||||
| Other income | 7,129 | 4,837 | |||||
| Net gain/(loss) on investment securities | — | 1,000 | |||||
| Total noninterest income | 66,208 | 82,519 | |||||
| NONINTEREST EXPENSE: | |||||||
| Salaries and employee benefits | 63,963 | 58,435 | |||||
| Occupancy expense | 8,327 | 8,072 | |||||
| Furniture and equipment | 3,690 | 3,512 | |||||
| Amortization - intangibles | 2,817 | 2,723 | |||||
| Software expense | 4,492 | 4,194 | |||||
| Data processing | 3,594 | 3,239 | |||||
| Professional fees | 2,027 | 2,339 | |||||
| Advertising and marketing | 4,127 | 2,968 | |||||
| Other expenses | 16,342 | 11,844 | |||||
| Total noninterest expense | 109,379 | 97,326 | |||||
| Income before income tax expense and noncontrolling interest | 57,482 | 89,210 | |||||
| Provision for income tax expense | 11,232 | 16,579 | |||||
| Net income | $ | 46,250 | $ | 72,631 | |||
| Net income attributable to noncontrolling interest | (664 | ) | (3,636 | ) | |||
| Net income attributable to TowneBank | $ | 45,586 | $ | 68,995 | |||
| Per common share information | |||||||
| Basic earnings | $ | 0.63 | $ | 0.95 | |||
| Diluted earnings | $ | 0.63 | $ | 0.95 | |||
| Cash dividends declared | $ | 0.20 | $ | 0.18 | |||
| TOWNEBANK | |||||||||||||||||||
| Consolidated Balance Sheets - Five Quarter Trend | |||||||||||||||||||
| (dollars in thousands, except share data) | |||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
| 2022 | 2021 | 2021 | 2021 | 2021 | |||||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (audited) | (unaudited) | |||||||||||||||
| ASSETS | |||||||||||||||||||
| Cash and due from banks | $ | 74,991 | $ | 17,373 | $ | 75,370 | $ | 117,797 | $ | 141,545 | |||||||||
| Interest-bearing deposits at FRB - Richmond | 2,857,327 | 3,244,484 | 3,155,039 | 2,970,490 | 1,936,458 | ||||||||||||||
| Interest-bearing deposits in financial institutions | 34,684 | 34,779 | 33,506 | 31,971 | 30,031 | ||||||||||||||
| Total Cash and Cash Equivalents | 2,967,002 | 3,296,636 | 3,263,915 | 3,120,258 | 2,108,034 | ||||||||||||||
| Securities available for sale | 1,846,540 | 1,806,183 | 1,560,402 | 1,454,421 | 1,418,006 | ||||||||||||||
| Securities held to maturity | 433,384 | 154,221 | 14,898 | 15,389 | 15,980 | ||||||||||||||
| Less: allowance for credit losses | (92 | ) | (94 | ) | (94 | ) | (97 | ) | (97 | ) | |||||||||
| Securities held to maturity, net of allowance for credit losses | 433,292 | 154,127 | 14,804 | 15,292 | 15,883 | ||||||||||||||
| Other equity securities | 6,789 | 6,759 | 6,621 | 6,395 | 6,355 | ||||||||||||||
| FHLB stock | 10,432 | 13,146 | 13,146 | 16,909 | 16,909 | ||||||||||||||
| Total Securities | 2,297,053 | 1,980,215 | 1,594,973 | 1,493,017 | 1,457,153 | ||||||||||||||
| Mortgage loans held for sale | 234,620 | 358,303 | 431,846 | 554,447 | 582,905 | ||||||||||||||
| Loans, net of unearned income and deferred costs | 9,909,308 | 9,506,252 | 9,297,565 | 9,423,578 | 9,734,583 | ||||||||||||||
| Less: allowance for credit losses | (103,833 | ) | (106,059 | ) | (107,177 | ) | (108,130 | ) | (116,077 | ) | |||||||||
| Net Loans | 9,805,475 | 9,400,193 | 9,190,388 | 9,315,448 | 9,618,506 | ||||||||||||||
| Premises and equipment, net | 277,764 | 270,772 | 270,810 | 265,644 | 261,831 | ||||||||||||||
| Goodwill | 457,162 | 457,187 | 457,187 | 452,328 | 452,328 | ||||||||||||||
| Other intangible assets, net | 47,562 | 50,379 | 50,839 | 42,271 | 44,808 | ||||||||||||||
| BOLI | 253,112 | 251,805 | 249,862 | 249,213 | 247,655 | ||||||||||||||
| Other assets | 326,838 | 295,897 | 301,552 | 311,209 | 306,176 | ||||||||||||||
| TOTAL ASSETS | $ | 16,666,588 | $ | 16,361,387 | $ | 15,811,372 | $ | 15,803,835 | $ | 15,079,396 | |||||||||
| LIABILITIES AND EQUITY | |||||||||||||||||||
| Deposits: | |||||||||||||||||||
| Noninterest-bearing demand | $ | 5,532,337 | $ | 5,546,665 | $ | 5,394,952 | $ | 5,243,074 | $ | 4,840,678 | |||||||||
| Interest-bearing: | |||||||||||||||||||
| Demand and money market accounts | 6,432,005 | 6,139,714 | 5,681,181 | 5,373,146 | 5,062,461 | ||||||||||||||
| Savings | 393,119 | 371,356 | 366,165 | 349,552 | 342,554 | ||||||||||||||
| Certificates of deposit | 1,414,339 | 1,515,891 | 1,571,752 | 1,998,828 | 1,893,951 | ||||||||||||||
| Total Deposits | 13,771,800 | 13,573,626 | 13,014,050 | 12,964,600 | 12,139,644 | ||||||||||||||
| Advances from the FHLB | 55,196 | 155,367 | 155,537 | 255,706 | 255,872 | ||||||||||||||
| Subordinated debt, net | 496,757 | 249,652 | 249,503 | 249,353 | 249,204 | ||||||||||||||
| FRB PPP lending facility | — | — | — | — | 183,164 | ||||||||||||||
| Repurchase agreements and other borrowings | 75,988 | 76,797 | 82,413 | 85,042 | 68,509 | ||||||||||||||
| Total Borrowings | 627,941 | 481,816 | 487,453 | 590,101 | 756,749 | ||||||||||||||
| Other liabilities | 387,087 | 389,771 | 409,435 | 379,278 | 366,697 | ||||||||||||||
| TOTAL LIABILITIES | 14,786,828 | 14,445,213 | 13,910,938 | 13,933,979 | 13,263,090 | ||||||||||||||
| Preferred stock | |||||||||||||||||||
| Authorized shares - 2,000,000 | — | — | — | — | — | ||||||||||||||
| Common stock, $1.667 par value | 121,231 | 121,164 | 121,163 | 121,144 | 121,108 | ||||||||||||||
| Capital surplus | 1,050,387 | 1,050,948 | 1,049,367 | 1,048,332 | 1,047,312 | ||||||||||||||
| Retained earnings | 747,614 | 716,605 | 690,960 | 655,095 | 613,826 | ||||||||||||||
| Common stock issued to deferred compensation | |||||||||||||||||||
| trust, at cost | (18,323 | ) | (18,257 | ) | (18,076 | ) | (18,076 | ) | (17,063 | ) | |||||||||
| Deferred compensation trust | 18,323 | 18,257 | 18,076 | 18,076 | 17,063 | ||||||||||||||
| Accumulated other comprehensive income (loss) | (56,712 | ) | 10,597 | 21,597 | 29,273 | 17,969 | |||||||||||||
| TOTAL SHAREHOLDERS’ EQUITY | 1,862,520 | 1,899,314 | 1,883,087 | 1,853,844 | 1,800,215 | ||||||||||||||
| Noncontrolling interest | 17,240 | 16,860 | 17,347 | 16,012 | 16,091 | ||||||||||||||
| TOTAL EQUITY | 1,879,760 | 1,916,174 | 1,900,434 | 1,869,856 | 1,816,306 | ||||||||||||||
| TOTAL LIABILITIES AND EQUITY | $ | 16,666,588 | $ | 16,361,387 | $ | 15,811,372 | $ | 15,803,835 | $ | 15,079,396 | |||||||||
| TOWNEBANK | ||||||||||||||||||||
| Consolidated Statements of Income - Five Quarter Trend (unaudited) | ||||||||||||||||||||
| (dollars in thousands, except share data) | ||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||
| 2022 | 2021 | 2021 | 2021 | 2021 | ||||||||||||||||
| INTEREST INCOME: | ||||||||||||||||||||
| Loans, including fees | $ | 94,962 | $ | 95,054 | $ | 98,258 | $ | 100,614 | $ | 101,396 | ||||||||||
| Investment securities | 9,671 | 10,484 | 7,000 | 6,871 | 7,117 | |||||||||||||||
| Interest-bearing deposits in financial institutions and federal funds sold | 1,347 | 1,215 | 1,182 | 619 | 416 | |||||||||||||||
| Mortgage loans held for sale | 2,375 | 2,750 | 3,405 | 3,711 | 3,361 | |||||||||||||||
| Total interest income | 108,355 | 109,503 | 109,845 | 111,815 | 112,290 | |||||||||||||||
| INTEREST EXPENSE: | ||||||||||||||||||||
| Deposits | 4,894 | 5,389 | 6,028 | 7,144 | 8,548 | |||||||||||||||
| Advances from the FHLB | 92 | 206 | 247 | 274 | 497 | |||||||||||||||
| Subordinated debt | 4,120 | 2,962 | 2,962 | 2,962 | 2,930 | |||||||||||||||
| Repurchase agreements and other borrowings | 45 | 154 | 165 | 291 | 325 | |||||||||||||||
| Total interest expense | 9,151 | 8,711 | 9,402 | 10,671 | 12,300 | |||||||||||||||
| Net interest income | 99,204 | 100,792 | 100,443 | 101,144 | 99,990 | |||||||||||||||
| PROVISION FOR CREDIT LOSSES | (1,449 | ) | (1,110 | ) | (1,582 | ) | (10,055 | ) | (4,027 | ) | ||||||||||
| Net interest income after provision for credit losses | 100,653 | 101,902 | 102,025 | 111,199 | 104,017 | |||||||||||||||
| NONINTEREST INCOME: | ||||||||||||||||||||
| Residential mortgage banking income, net | 14,638 | 20,945 | 25,422 | 25,524 | 37,412 | |||||||||||||||
| Insurance commissions and other title fees and income, net | 19,074 | 15,486 | 17,398 | 18,331 | 16,325 | |||||||||||||||
| Property management income, net | 17,147 | 9,099 | 10,502 | 7,091 | 15,483 | |||||||||||||||
| Real estate commission income, net | 2,554 | 3,165 | 3,781 | 3,893 | 2,451 | |||||||||||||||
| Service charges on deposit accounts | 2,574 | 2,479 | 2,524 | 2,391 | 2,190 | |||||||||||||||
| Credit card merchant fees, net | 1,375 | 1,412 | 1,660 | 1,667 | 1,302 | |||||||||||||||
| BOLI | 1,717 | 1,904 | 2,301 | 1,541 | 1,519 | |||||||||||||||
| Other income | 7,129 | 5,142 | 6,045 | 5,487 | 4,837 | |||||||||||||||
| Net gain/(loss) on investment securities | — | — | — | 252 | 1,000 | |||||||||||||||
| Total noninterest income | 66,208 | 59,632 | 69,633 | 66,177 | 82,519 | |||||||||||||||
| NONINTEREST EXPENSE: | ||||||||||||||||||||
| Salaries and employee benefits | 63,963 | 64,814 | 61,230 | 61,365 | 58,435 | |||||||||||||||
| Occupancy expense | 8,327 | 8,371 | 7,656 | 7,559 | 8,072 | |||||||||||||||
| Furniture and equipment | 3,690 | 3,528 | 3,513 | 3,622 | 3,512 | |||||||||||||||
| Amortization - intangibles | 2,817 | 2,935 | 2,750 | 2,719 | 2,723 | |||||||||||||||
| Software expense | 4,492 | 4,014 | 4,209 | 4,494 | 4,194 | |||||||||||||||
| Data processing | 3,594 | 3,524 | 3,603 | 3,414 | 3,239 | |||||||||||||||
| Professional fees | 2,027 | 2,723 | 2,227 | 2,259 | 2,339 | |||||||||||||||
| Advertising and marketing | 4,127 | 3,414 | 3,865 | 3,257 | 2,968 | |||||||||||||||
| Other expenses | 16,342 | 17,144 | 15,033 | 16,705 | 11,844 | |||||||||||||||
| Total noninterest expense | 109,379 | 110,467 | 104,086 | 105,394 | 97,326 | |||||||||||||||
| Income before income tax expense and noncontrolling interest | 57,482 | 51,067 | 67,572 | 71,982 | 89,210 | |||||||||||||||
| Provision for income tax expense | 11,232 | 9,410 | 14,829 | 13,980 | 16,579 | |||||||||||||||
| Net income | 46,250 | 41,657 | 52,743 | 58,002 | 72,631 | |||||||||||||||
| Net income attributable to noncontrolling interest | (664 | ) | (1,474 | ) | (2,343 | ) | (2,199 | ) | (3,636 | ) | ||||||||||
| Net income attributable to TowneBank | $ | 45,586 | $ | 40,183 | $ | 50,400 | $ | 55,803 | $ | 68,995 | ||||||||||
| Per common share information | ||||||||||||||||||||
| Basic earnings | $ | 0.63 | $ | 0.55 | $ | 0.70 | $ | 0.77 | $ | 0.95 | ||||||||||
| Diluted earnings | $ | 0.63 | $ | 0.55 | $ | 0.69 | $ | 0.77 | $ | 0.95 | ||||||||||
| Basic weighted average shares outstanding | 72,498,075 | 72,525,504 | 72,506,877 | 72,468,094 | 72,414,953 | |||||||||||||||
| Diluted weighted average shares outstanding | 72,562,122 | 72,624,610 | 72,591,281 | 72,560,234 | 72,517,008 | |||||||||||||||
| Cash dividends declared | $ | 0.20 | $ | 0.20 | $ | 0.20 | $ | 0.20 | $ | 0.18 | ||||||||||
| TOWNEBANK | ||||||||||||||||||
| Banking Segment Financial Information (unaudited) | ||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||
| Three Months Ended | Increase/(Decrease) | |||||||||||||||||
| March 31, | December 31, | 2022 over 2021 | ||||||||||||||||
| 2022 | 2021 | 2021 | Amount | Percent | ||||||||||||||
| Revenue | ||||||||||||||||||
| Net interest income | $ | 96,770 | $ | 97,604 | $ | 98,345 | $ | (834 | ) | (0.85) | % | |||||||
| Service charges on deposit | ||||||||||||||||||
| accounts | 2,574 | 2,190 | 2,479 | 384 | 17.53 | % | ||||||||||||
| Credit card merchant fees | 1,375 | 1,302 | 1,412 | 73 | 5.61 | % | ||||||||||||
| Other income | 6,710 | 4,970 | 4,876 | 1,740 | 35.01 | % | ||||||||||||
| Subtotal | 10,659 | 8,462 | 8,767 | 2,197 | 25.96 | % | ||||||||||||
| Net gain/(loss) on investment securities | — | 1,000 | — | (1,000 | ) | (100.00) | % | |||||||||||
| Total noninterest income | 10,659 | 9,462 | 8,767 | 1,197 | 12.65 | % | ||||||||||||
| Total revenue | 107,429 | 107,066 | 107,112 | 363 | 0.34 | % | ||||||||||||
| Provision for credit losses | (1,833 | ) | (3,401 | ) | (1,199 | ) | 1,568 | (46.10) | % | |||||||||
| Expenses | ||||||||||||||||||
| Salaries and employee benefits | 37,059 | 31,861 | 37,678 | 5,198 | 16.31 | % | ||||||||||||
| Occupancy expense | 5,659 | 5,546 | 5,541 | 113 | 2.04 | % | ||||||||||||
| Furniture and equipment | 2,709 | 2,668 | 2,570 | 41 | 1.54 | % | ||||||||||||
| Amortization of intangibles | 827 | 962 | 812 | (135 | ) | (14.03) | % | |||||||||||
| Other expenses | 18,228 | 14,050 | 19,484 | 4,178 | 29.74 | % | ||||||||||||
| Total expenses | 64,482 | 55,087 | 66,085 | 9,395 | 17.05 | % | ||||||||||||
| Income before income tax, corporate allocation and noncontrolling interest | 44,780 | 55,380 | 42,226 | (10,600 | ) | (19.14) | % | |||||||||||
| Corporate allocation | 1,292 | 1,292 | 1,260 | — | — | % | ||||||||||||
| Income before income tax provision and noncontrolling interest | 46,072 | 56,672 | 43,486 | (10,600 | ) | (18.70) | % | |||||||||||
| Provision for income tax expense | 8,519 | 9,701 | 7,123 | (1,182 | ) | (12.18) | % | |||||||||||
| Net income | 37,553 | 46,971 | 36,363 | (9,418 | ) | (20.05) | % | |||||||||||
| Noncontrolling interest | — | (5 | ) | (3 | ) | 5 | (100.00) | % | ||||||||||
| Net income attributable to TowneBank | $ | 37,553 | $ | 46,966 | $ | 36,360 | (9,413 | ) | (20.04) | % | ||||||||
| Efficiency ratio(non-GAAP) | 59.25 | % | 51.03 | % | 60.94 | % | ||||||||||||
| TOWNEBANK | ||||||||||||||||||||
| Realty Segment Financial Information (unaudited) | ||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Three Months Ended | Increase/(Decrease) | |||||||||||||||||||
| March 31, | December 31, | 2022 over 2021 | ||||||||||||||||||
| 2022 | 2021 | 2021 | Amount | Percent | ||||||||||||||||
| Revenue | ||||||||||||||||||||
| Residential mortgage brokerageincome, net | $ | 15,906 | $ | 37,877 | $ | 22,257 | $ | (21,971 | ) | (58.01) | % | |||||||||
| Real estate brokerage income, net | 2,554 | 2,451 | 3,165 | 103 | 4.20 | % | ||||||||||||||
| Title insurance and settlement fees | 504 | 525 | 610 | (21 | ) | (4.00) | % | |||||||||||||
| Property management fees, net | 17,147 | 15,483 | 9,099 | 1,664 | 10.75 | % | ||||||||||||||
| Income from unconsolidatedsubsidiary | 167 | 406 | 113 | (239 | ) | (58.87) | % | |||||||||||||
| Net interest and other income | 2,932 | 2,736 | 3,010 | 196 | 7.16 | % | ||||||||||||||
| Total revenue | 39,210 | 59,478 | 38,254 | (20,268 | ) | (34.08) | % | |||||||||||||
| Provision for credit losses | 384 | (626 | ) | 89 | 1,010 | (161.34) | % | |||||||||||||
| Expenses | ||||||||||||||||||||
| Salaries and employee benefits | 17,291 | 16,847 | 17,682 | 444 | 2.64 | % | ||||||||||||||
| Occupancy expense | 1,898 | 1,871 | 1,957 | 27 | 1.44 | % | ||||||||||||||
| Furniture and equipment | 761 | 649 | 727 | 112 | 17.26 | % | ||||||||||||||
| Amortization of intangible assets | 816 | 590 | 931 | 226 | 38.31 | % | ||||||||||||||
| Other expenses | 10,852 | 9,229 | 9,805 | 1,623 | 17.59 | % | ||||||||||||||
| Total expenses | 31,618 | 29,186 | 31,102 | 2,432 | 8.33 | % | ||||||||||||||
| Income before income tax, corporate allocation and noncontrolling interest | 7,208 | 30,918 | 7,063 | (23,710 | ) | (76.69) | % | |||||||||||||
| Corporate allocation | (1,000 | ) | (1,000 | ) | (1,000 | ) | — | — | % | |||||||||||
| Income before income tax provision and noncontrolling interest | 6,208 | 29,918 | 6,063 | (23,710 | ) | (79.25) | % | |||||||||||||
| Provision for income tax expense | 1,374 | 6,216 | 1,894 | (4,842 | ) | (77.90) | % | |||||||||||||
| Net income | 4,834 | 23,702 | 4,169 | (18,868 | ) | (79.61) | % | |||||||||||||
| Noncontrolling interest | (664 | ) | (3,631 | ) | (1,471 | ) | 2,967 | (81.71) | % | |||||||||||
| Net income attributable to TowneBank | $ | 4,170 | $ | 20,071 | $ | 2,698 | (15,901 | ) | (79.22) | % | ||||||||||
| Efficiency ratio(non-GAAP) | 78.56 | % | 48.08 | % | 78.87 | % | ||||||||||||||
| TOWNEBANK | ||||||||||||||||||
| Insurance Segment Financial Information (unaudited) | ||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||
| Three Months Ended | Increase/(Decrease) | |||||||||||||||||
| March 31, | December 31, | 2022 over 2021 | ||||||||||||||||
| 2022 | 2021 | 2021 | Amount | Percent | ||||||||||||||
| Commission and fee income | ||||||||||||||||||
| Property and casualty | $ | 15,337 | $ | 14,188 | $ | 13,135 | $ | 1,149 | 8.10 | % | ||||||||
| Employee benefits | 4,161 | 3,884 | 3,682 | 277 | 7.13 | % | ||||||||||||
| Specialized benefit services | 170 | 167 | 172 | 3 | 1.80 | % | ||||||||||||
| Total commissions and fees | 19,668 | 18,239 | 16,989 | 1,429 | 7.83 | % | ||||||||||||
| Contingency and bonus revenue | 3,404 | 1,759 | 2,231 | 1,645 | 93.52 | % | ||||||||||||
| Other income | 33 | 74 | 40 | (41 | ) | (55.41) | % | |||||||||||
| Total revenue | 23,105 | 20,072 | 19,260 | 3,033 | 15.11 | % | ||||||||||||
| Employee commission expense | 4,332 | 4,107 | 4,202 | 225 | 5.48 | % | ||||||||||||
| Revenue, net of commission expense | 18,773 | 15,965 | 15,058 | 2,808 | 17.59 | % | ||||||||||||
| Salaries and employee benefits | 9,613 | 9,727 | 9,454 | (114 | ) | (1.17) | % | |||||||||||
| Occupancy expense | 770 | 655 | 873 | 115 | 17.56 | % | ||||||||||||
| Furniture and equipment | 220 | 195 | 231 | 25 | 12.82 | % | ||||||||||||
| Amortization of intangible assets | 1,174 | 1,171 | 1,192 | 3 | 0.26 | % | ||||||||||||
| Other expenses | 1,502 | 1,305 | 1,530 | 197 | 15.10 | % | ||||||||||||
| Total operating expenses | 13,279 | 13,053 | 13,280 | 226 | 1.73 | % | ||||||||||||
| Income before income tax, corporate allocation and noncontrolling interest | 5,494 | 2,912 | 1,778 | 2,582 | 88.67 | % | ||||||||||||
| Corporate allocation | (292 | ) | (292 | ) | (260 | ) | — | — | % | |||||||||
| Income before income tax provision and noncontrolling interest | 5,202 | 2,620 | 1,518 | 2,582 | 98.55 | % | ||||||||||||
| Provision for income tax expense | 1,339 | 662 | 393 | 677 | 102.27 | % | ||||||||||||
| Net income | 3,863 | 1,958 | 1,125 | 1,905 | 97.29 | % | ||||||||||||
| Noncontrolling interest | — | — | — | — | N/M | |||||||||||||
| Net income attributable to TowneBank | $ | 3,863 | $ | 1,958 | $ | 1,125 | 1,905 | 97.29 | % | |||||||||
| Provision for income taxes | 1,339 | 662 | 393 | 677 | 102.27 | % | ||||||||||||
| Depreciation, amortization and interest expense | 1,319 | 1,308 | 1,342 | 11 | 0.84 | % | ||||||||||||
| EBITDA(non-GAAP) | $ | 6,521 | $ | 3,928 | $ | 2,860 | 2,593 | 66.01 | % | |||||||||
| Efficiency ratio(non-GAAP) | 64.48 | % | 74.43 | % | 80.28 | % | ||||||||||||
| TOWNEBANK | |||||||||||
| Reconciliation of Non-GAAP Financial Measures | |||||||||||
| (dollars in thousands) | |||||||||||
| Three Months Ended | |||||||||||
| March 31, | March 31, | December 31, | |||||||||
| 2022 | 2021 | 2021 | |||||||||
| Return on average assets (GAAP) | 1.13 | % | 1.92 | % | 0.99 | % | |||||
| Impact of excluding average goodwill and otherintangibles and amortization | 0.10 | % | 0.13 | % | 0.09 | % | |||||
| Return on average tangible assets (non-GAAP) | 1.23 | % | 2.05 | % | 1.08 | % | |||||
| Return on average equity (GAAP) | 9.73 | % | 15.56 | % | 8.38 | % | |||||
| Impact of excluding average goodwill and otherintangibles and amortization | 4.18 | % | 6.63 | % | 3.70 | % | |||||
| Return on average tangible equity (non-GAAP) | 13.91 | % | 22.19 | % | 12.08 | % | |||||
| Return on average common equity (GAAP) | 9.81 | % | 15.70 | % | 8.45 | % | |||||
| Impact of excluding average goodwill and otherintangibles and amortization | 4.27 | % | 6.75 | % | 3.77 | % | |||||
| Return on average tangible common equity(non-GAAP) | 14.08 | % | 22.45 | % | 12.22 | % | |||||
| Book value (GAAP) | $ | 25.61 | $ | 24.78 | $ | 26.13 | |||||
| Impact of excluding average goodwill and otherintangibles and amortization | (6.94 | ) | (6.84 | ) | (6.98 | ) | |||||
| Tangible book value (non-GAAP) | $ | 18.67 | $ | 17.94 | $ | 19.15 | |||||
| Efficiency ratio (GAAP) | 66.13 | % | 53.33 | % | 68.86 | % | |||||
| Impact of exclusions | (1.71) | % | (1.22) | % | (1.83) | % | |||||
| Efficiency ratio (non-GAAP) | 64.42 | % | 52.11 | % | 67.03 | % | |||||
| Average assets (GAAP) | $ | 16,311,998 | $ | 14,592,416 | $ | 16,075,509 | |||||
| Less: average goodwill and intangible assets | 506,496 | 497,446 | 506,867 | ||||||||
| Average tangible assets (non-GAAP) | $ | 15,805,502 | $ | 14,094,970 | $ | 15,568,642 | |||||
| Average equity (GAAP) | $ | 1,900,267 | $ | 1,797,767 | $ | 1,902,474 | |||||
| Less: average goodwill and intangible assets | 506,496 | 497,446 | 506,867 | ||||||||
| Average tangible equity (non-GAAP) | $ | 1,393,771 | $ | 1,300,321 | $ | 1,395,607 | |||||
| Average common equity (GAAP) | $ | 1,884,101 | $ | 1,782,795 | $ | 1,886,279 | |||||
| Less: average goodwill and intangible assets | 506,496 | 497,446 | 506,867 | ||||||||
| Average tangible common equity (non-GAAP) | $ | 1,377,605 | $ | 1,285,349 | $ | 1,379,412 | |||||
| Net Income (GAAP) | $ | 45,586 | $ | 68,995 | $ | 40,183 | |||||
| Amortization of Intangibles, net of tax | 2,225 | 2,151 | 2,318 | ||||||||
| Tangible net income (non-GAAP) | $ | 47,811 | $ | 71,146 | $ | 42,501 | |||||
| Net Income (GAAP) | $ | 45,586 | $ | 68,995 | $ | 40,183 | |||||
| Provision for credit losses | (1,449 | ) | (4,027 | ) | (1,110 | ) | |||||
| Provision for income tax | 11,232 | 16,579 | 9,410 | ||||||||
| Pre-provision, pre-tax net revenues (non-GAAP) | $ | 55,369 | $ | 81,547 | $ | 48,483 | |||||
| Total Revenue (GAAP) | $ | 165,412 | $ | 182,509 | $ | 160,424 | |||||
| Net (gain)/loss on investment securities | — | (1,000 | ) | — | |||||||
| Other nonrecurring (income) loss | — | 30 | — | ||||||||
| Total Revenue for efficiency calculation (non-GAAP) | $ | 165,412 | $ | 181,539 | $ | 160,424 | |||||
| Noninterest expense (GAAP) | $ | 109,379 | $ | 97,326 | $ | 110,467 | |||||
| Less: Amortization of intangibles | 2,817 | 2,723 | 2,935 | ||||||||
| Noninterest expense net of amortization (non-GAAP) | $ | 106,562 | $ | 94,603 | $ | 107,532 | |||||
