SUFFOLK, Va., July 29, 2021 (GLOBE NEWSWIRE) -- TowneBank (the "Company") (NASDAQ: TOWN) today reported earnings for the quarter ended June 30, 2021 of $55.80 million, or $0.77 per diluted share, compared to $34.61 million, or $0.48 per diluted share, for the quarter ended June 30, 2020.
"Towne delivered another strong financial performance for the quarter with solid contributions across each of our business segments. Continued improvements in economic conditions led to an increase of nearly $50 million, or 16%, in total revenues. In fact, CNBC recently recognized Virginia and North Carolina as the #1 and #2 top states, respectively, in our country for doing business. As our economy continues to normalize, our Company is well-positioned to capitalize on the opportunities to drive future growth," said G. Robert Aston, Jr., Executive Chairman.
Highlights for Second Quarter 2021 Compared to Second Quarter 2020:
- Total revenues were $167.32 million, an increase of $4.67 million, or 2.87%.
- Pre-provision, pre-tax, net revenues (non-GAAP) were $59.73 million, a decrease of $9.29 million, or 13.46%.
- Loans held for investment were $9.42 billion, a decrease of $0.38 billion, or 3.86%, from June 30, 2020, and $0.31 billion, or 3.19%, from March 31, 2021. Excluding the decline in loans from the Paycheck Protection Program ("PPP"), loans held for investment increased $186.81 million, or 2.14%, compared to June 30, 2020, and $62.46 million, or 2.84%, on an annualized basis from the linked quarter. Total loans at June 30, 2021, June 30, 2020, and March 31, 2021 included $0.52 billion, $1.09 billion, and $0.90 billion, respectively, of PPP loans.
- Total deposits were $12.96 billion, an increase of $1.70 billion, or 15.09%, compared to prior year and $0.82 billion, or 27.26% on an annualized basis, from March 31, 2021.
- Noninterest bearing deposits increased by 24.06%, to $5.24 billion, representing 40.44% of total deposits. Compared to the linked quarter, noninterest bearing deposits increased 8.31%, or 33.34%, on an annualized basis.
- Annualized return on common shareholders' equity was 12.31% and annualized return on average tangible common shareholders' equity was 17.57% (non-GAAP).
- Net interest margin for the quarter was 2.92% and taxable equivalent net interest margin (non-GAAP) was 2.94%.
- Nonperforming assets were $15.22 million, or 0.10% of total assets, compared to $29.25 million, or 0.19%, at June 30, 2020, primarily due to the sale of several OREO properties.
- Effective tax rate of 20.03% in the quarter compared to 17.74% in second quarter 2020.
"We were pleased to deliver more than $62 million in core loan growth, excluding PPP, during the quarter. Strong credit performance and continued reductions in loan deferrals coupled with an improving economic forecast led to a modest release in loan loss reserves. Looking ahead, as liquidity continues to build we would expect continued pressure on our net interest margins, highlighting the importance of our fee-based business lines and diversified business model," stated J. Morgan Davis, President and Chief Executive Officer.
Quarterly Net Interest Income Compared to Second Quarter 2020:
- Net interest income was $101.14 million compared to $93.27 million at June 30, 2020.
- Tax-equivalent net interest margin (non-GAAP) was 2.94%, including purchase accounting accretion of 5 basis points and PPP interest and fees of 10 basis points, compared to 2.87%, including purchase accounting accretion of 8 basis points and a 16 basis point decline in interest and fees related to PPP, for second quarter 2020.
- On an average basis, loans held for investment, with a yield of 4.24%, represented 69.02% of earning assets at June 30, 2021 compared to a yield of 4.29% and 73.10% of earning assets in the second quarter of 2020. Excluding PPP loans, loan yields were 4.15% in second quarter 2021 compared to 4.42% in second quarter 2020.
- Interest and fee income on PPP loans was $10.02 million in second quarter 2021, compared to $11.63 million in the linked quarter, and $5.81 million in second quarter 2020.
- Total cost of deposits decreased to 0.23% from 0.58% at June 30, 2020.
- Average interest-earning assets totaled $13.92 billion at June 30, 2021 compared to $13.16 billion at June 30, 2020, an increase of 5.74%.
- Average interest-bearing liabilities totaled $8.07 billion, a decrease of $0.57 billion from prior year.
- Interest expense on the Federal Reserve Bank ("FRB") PPP lending facility was $0.12 million in second quarter 2021, compared to $0.16 million in the linked quarter, and $0.54 million in second quarter 2020. The Company repaid the entire balance of the facility during second quarter 2021.
Quarterly Provision for Credit Losses:
- The quarterly provision for credit losses for on-balance-sheet loans was a benefit of $8.09 million compared to a provision expense of $25.99 million one year ago and a benefit of $3.41 million in the linked quarter. The second quarter 2021 included a release in the allowance for credit losses of $7.95 million that was driven by a combination of net recoveries, reduction in loans deferred under the CARES Act, and improvements in the economic forecast, offset by modest core loan growth.
- Net loan recoveries were $0.14 million compared to net recoveries of $0.10 million one year prior and net charge-offs of $0.67 million in the linked quarter. The ratio of net loan charge-offs to average loans on an annualized basis was (0.01)% in second quarter 2021, 0.00% in 2020, and 0.03% in the linked quarter.
- The provision for credit losses on off-balance-sheet commitments was a benefit of $1.89 million compared to a provision expense of $1.08 million in the second quarter of 2020, and a benefit of $0.48 million in the linked quarter.
- The allowance for credit losses on loans represented 1.15% of total loans compared to 1.19% at March 31, 2021 and 0.92% at June 30, 2020. Excluding PPP loans, which are fully government guaranteed, the allowance for credit losses (non-GAAP) was 1.22%, compared to 1.31% at March 31, 2021 and 1.04% at June 30, 2020. The allowance for credit losses on loans was 9.67 times nonperforming loans compared to 9.09 times at March 31, 2021 and 5.34 times at June 30, 2020.
- Expected loss estimates are subject to change based on continuing review of models and assumptions, portfolio performance, changes in forecasted macroeconomic conditions and loan mix, which could result in material changes to the reserve in future periods.
Quarterly Noninterest Income Compared to Second Quarter 2020:
- Total noninterest income was $66.18 million compared to $69.38 million in 2020, a decrease of $3.21 million, or 4.62%. Residential mortgage banking income decreased $4.19 million, investment income increased $0.88 million, insurance commissions and other title fees increased $0.72 million, and real estate brokerage and property management income increased $0.20 million. Also included in noninterest income are net gains on investment securities of $0.25 million as compared to net gains of $2.93 million in the prior year.
- Residential mortgage banking recorded income of $25.52 million compared to $29.72 million in second quarter 2020. Loan volume in the current quarter was $1.45 billion, with purchase activity comprising 76.95% of that volume, compared to volume in second quarter 2020 of $1.47 billion, with purchase activity comprising 51.26%. Offsetting this 1.36% decline in volume between quarters, margins improved 47 basis points. The primary driver of the decline in income between quarters was the income statement impact of a net loss on derivative instruments of $7.88 million, including a loss on interest rate-locks of $4.76 million, compared to a net gain on derivative instruments of $6.43 million, including a gain on interest rate-locks of $3.51 million in second quarter 2020.
- In the quarterly comparison, margins on residential mortgages declined 37 basis points from the linked quarter after peaking in December 2020. Management expects margin compression to continue through the end of the year.
- Total Insurance segment revenue increased $1.03 million, or 4.93% to $21.90 million in second quarter 2021 compared to 2020. The Company acquired a property and casualty insurance agency in December 2020, which brought in $0.53 million in additional revenue in second quarter 2021. The new agency revenues, combined with organic growth, outpaced the impact of the reduction in revenues due to the sale of its travel insurance joint venture in third quarter 2020, which contributed revenue of $0.86 million in second quarter 2020.
- Property management fee revenue decreased 12.69%, or $1.03 million, to $7.09 million compared to second quarter 2020. The earnings streams between years has been impacted by the emergence of the COVID-19 pandemic, which put travel at a standstill in first quarter 2020 and resulted in heavier reservation activities in second quarter 2020. Due to record first quarter 2021 reservations, occupancy levels are currently at near-maximum and year-to-date reservation income is $9.38 million, or 71.08% ahead of 2020.
- The Company acquired Venture Resorts, the largest cabin rental company in the Smoky Mountains of Tennessee, in July 2021. Based on the timing of this acquisition, management does not expect the impact to earnings for the remainder of 2021 to be material.
Quarterly Noninterest Expense Compared to Second Quarter 2020:
- Total noninterest expense was $105.39 million compared to $91.03 million in 2020, an increase of $14.37 million, or 15.79%. The higher level of expenses were attributable to increases in salary and benefits expense of $4.44 million, and production or performance related items such as advertising and marketing expense of $1.27 million, software expense of $1.0 million, charitable contributions of $3.43 million, and data processing expense of $0.70 million.
- The quarterly increase in salaries and benefits was primarily driven by across-the-board cost of living increases in the second quarter of 2021.
- Noninterest expenses across most major categories have increased compared to 2020, due to the pandemic impact in the prior year, and have begun to normalize in 2021.
- Higher credit card fees on vacation property reservation activities drove the increase in data processing expense, while increased costs associated with our core banking platform resulted in higher software expenses.
Consolidated Balance Sheet Highlights:
- Total assets were $15.80 billion for the quarter ended June 30, 2021, an increase of $0.72 billion, or 4.80%, compared to $15.08 billion at March 31, 2021. Total assets increased $0.22 billion, or 1.44%, from $15.58 billion at June 30, 2020. The year-over-year increase was driven primarily by higher liquidity levels and loans held for investment tied to PPP lending activities.
- Loans held for investment decreased $0.38 billion, or 3.86%, compared to prior year and $0.31 billion, or 3.19%, compared the linked quarter. Excluding PPP loans of $0.52 billion in second quarter 2021, $1.09 billion in second quarter 2020, and $0.90 billion in the linked quarter, loans held for investment increased $186.81 million, or 2.14%, compared to prior year, and $62.46 million, or 0.71%, compared to March 31, 2021, or 2.84% on an annualized basis.
- Average loans held for investment, excluding PPP loans, were $8.85 billion in the second quarter of 2021, an increase of $19.19 million, or 0.22% compared to prior year. In the linked quarter comparison, average loans held for investment, excluding PPP loans, increased 0.79%, or $68.96 million, 3.15% on an annualized basis.
- Unamortized fee income related to PPP loans was $14.33 million at June 30, 2021.
- Mortgage loans held for sale decreased $55.92 million, or 9.16%, compared to the prior year and $28.46 million, or 4.88%, compared to the linked quarter.
- Total deposits increased $1.70 billion, or 15.09%, compared to the prior year and $0.82 billion, or 6.80%, compared to the linked quarter.
- Total borrowings decreased $1.74 billion, or 74.65%, from prior year and $0.17 billion, or 22.02%, compared to the linked quarter.
Investment Securities:
- Total investment securities were $1.49 billion compared to $1.46 billion at March 31, 2021 and $1.36 billion at June 30, 2020. The weighted average duration of the portfolio at June 30, 2021 was 4.3 years. The carrying value of the AFS debt securities portfolio included $42.18 million, $59.89 million, and $28.12 million in net unrealized gains at June 30, 2021, June 30, 2020, and March 31, 2021, respectively.
Loans and Asset Quality:
- Total loans held for investment were $9.42 billion at June 30, 2021 compared to $9.73 billion at March 31, 2021 and $9.80 billion at June 30, 2020.
- Nonperforming assets were $15.22 million, or 0.10% of total assets, compared to $29.25 million, or 0.19%, at June 30, 2020.
- Nonperforming loans were 0.12% of period end loans compared to 0.17% at June 30, 2020.
- Foreclosed property decreased to $4.04 million from $12.32 million at June 30, 2020.
- At June 30, 2021, we had $61.02 million in loan modifications made in accordance with section 4013 of the CARES Act, a decline of $1.92 billion, or 96.92%, from a reported peak of $1.98 billion at April 30, 2020.
Deposits and Borrowings:
- Total deposits were $12.96 billion compared to $12.14 billion at March 31, 2021 and $11.26 billion at June 30, 2020.
- Total loans to deposits were 72.69% compared to 80.19% at March 31, 2021 and 87.01% at June 30, 2020.
- Non-interest bearing deposits were 40.44% of total deposits at June 30, 2021 compared to 39.87% at March 31, 2021 and 37.52% at June 30, 2020.
- Total borrowings were $0.59 billion compared to $0.76 billion at March 31, 2021 and $2.33 billion at June 30, 2020.
Capital:
- Common equity tier 1 capital ratio of 12.42%.
- Tier 1 leverage capital ratio of 9.44%.
- Tier 1 risk-based capital ratio of 12.57%.
- Total risk-based capital ratio of 15.76%.
- Book value per common share was $25.51 compared to $24.78 at March 31, 2021 and $23.50 at June 30, 2020.
- Tangible book value per common share (non-GAAP) was $18.70 compared to $17.94 at March 31, 2021 and $16.68 at June 30, 2020.
About TowneBank:Founded in 1999, TowneBank is a company built on relationships, offering a full range of banking and other financial services, with a mission of serving others and enriching lives. Dedicated to a culture of caring, Towne values all employees and members by embracing their diverse talents, perspectives, and experiences.
Today, TowneBank operates over 40 banking offices throughout Hampton Roads and Central Virginia, as well as Northeastern and Central North Carolina – serving as a local leader in promoting the social, cultural, and economic growth in each community. Towne offers a competitive array of business and personal banking solutions, delivered with only the highest ethical standards. Experienced local bankers providing a higher level of expertise and personal attention with local decision-making are key to the TowneBank strategy. TowneBank has grown its capabilities beyond banking to provide expertise through its controlled divisions and subsidiaries that include Towne Investment Group, Towne Wealth Management, Towne Insurance Agency, Towne Benefits, TowneBank Mortgage, TowneBank Commercial Mortgage, Berkshire Hathaway HomeServices Towne Realty, Towne 1031 Exchange, LLC, and Towne Vacations. With total assets of $15.80 billion as of June 30, 2021, TowneBank is one of the largest banks headquartered in Virginia.
Non-GAAP Financial Measures:This press release contains financial information determined by methods other than in accordance with GAAP. The Company's management uses these non-GAAP financial measures in its analysis of the Company's performance. These measures typically adjust GAAP performance measures to exclude the effects of the amortization of intangibles and include the tax benefit associated with revenue items that are tax-exempt, as well as adjust income available to common shareholders for certain significant activities or transactions that are infrequent in nature. Management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of the Company’s core businesses. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of GAAP to non-GAAP disclosures are included as tables at the end of this release.
Forward-Looking Statements:Certain statements contained in this release constitute forward-looking statements within the meaning of U.S. federal securities laws. These forward-looking statements speak only as of the date of this release, are based on current expectations, and involve a number of assumptions. These include statements regarding TowneBank’s future economic performance, financial condition, prospects, growth, strategies and expectations, and objectives of management, and are generally identified by the use of words such as “believe,” “expect,” “intend,” “anticipate,” “estimate,” or “project” or similar expressions. TowneBank intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is including this statement for purposes of these safe harbor provisions. You should not place undue reliance on forward-looking statements, which are subject to assumptions that are subject to change. TowneBank’s ability to predict results, or the actual effect of future plans or strategies, is inherently uncertain. These forward-looking statements are subject to a number of factors and uncertainties that could cause actual results to differ from those indicated or implied in the forward-looking statements and such differences may be material. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include the impact of the COVID-19 pandemic and the associated efforts to limit its spread; competitive pressures in the banking industry that may increase significantly; changes in the interest rate environment that may reduce margins and/or the volumes and values of loans made or held as well as the value of other financial assets held; changes in the creditworthiness of customers and the possible impairment of the collectability of loans; general economic conditions, either nationally or regionally, that may be less favorable than expected, resulting in, among other things, a deterioration in credit quality and/or a reduced demand for credit or other services; changes in the legislative or regulatory environment, including changes in accounting standards and tax laws, that may adversely affect TowneBank’s business; costs or difficulties related to the integration of the businesses TowneBank has acquired may be greater than expected; expected revenue growth or cost savings associated with pending or recently completed acquisitions may not be fully realized or realized within the expected time frame; cybersecurity threats or attacks, the implementation of new technologies, and the ability to develop and maintain reliable electronic systems; TowneBank’s competitors may have greater financial resources and develop products that enable them to compete more successfully; changes in business conditions; changes in the securities market; changes in the local economy with regard to TowneBank’s market areas; and other risk factors detailed from time to time in filings made by TowneBank with the Federal Deposit Insurance Corporation. TowneBank undertakes no obligation to update or clarify these forward-looking statements, whether as a result of new information, future events or otherwise.
Media contact:G. Robert Aston, Jr., Executive Chairman, 757-638-6780J. Morgan Davis, President and Chief Executive Officer, 757-673-1673
Investor contact:William B. Littreal, Chief Financial Officer, 757-638-6813
| TOWNEBANK | |||||||||||||||||||
| Selected Financial Highlights (unaudited) | |||||||||||||||||||
| (dollars in thousands, except per share data) | |||||||||||||||||||
| Three Months Ended | |||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||
| 2021 | 2021 | 2020 | 2020 | 2020 | |||||||||||||||
| Income and Performance Ratios: | |||||||||||||||||||
| Total Revenue | $ | 167,321 | $ | 182,509 | $ | 171,848 | $ | 192,135 | $ | 162,656 | |||||||||
| Net income | 58,002 | 72,631 | 53,891 | 50,715 | 37,222 | ||||||||||||||
| Net income available to common shareholders | 55,803 | 68,995 | 50,082 | 34,464 | 34,605 | ||||||||||||||
| Pre-provision, pre-tax, net revenues (non-GAAP) | 59,728 | 81,547 | 62,107 | 73,903 | 69,014 | ||||||||||||||
| Net income per common share - diluted | 0.77 | 0.95 | 0.69 | 0.48 | 0.48 | ||||||||||||||
| Book value per common share | 25.51 | 24.78 | 24.31 | 23.83 | 23.50 | ||||||||||||||
| Book value per common share - tangible (non-GAAP) | 18.70 | 17.94 | 17.46 | 17.06 | 16.68 | ||||||||||||||
| Return on average assets | 1.48 | % | 1.92 | % | 1.35 | % | 0.89 | % | 0.97 | % | |||||||||
| Return on average assets - tangible (non-GAAP) | 1.59 | % | 2.05 | % | 1.46 | % | 0.97 | % | 1.07 | % | |||||||||
| Return on average equity | 12.21 | % | 15.56 | % | 11.26 | % | 7.85 | % | 8.18 | % | |||||||||
| Return on average equity - tangible (non-GAAP) | 17.38 | % | 22.19 | % | 16.28 | % | 11.66 | % | 12.32 | % | |||||||||
| Return on average common equity | 12.31 | % | 15.70 | % | 11.36 | % | 7.91 | % | 8.24 | % | |||||||||
| Return on average common equity - tangible (non-GAAP) | 17.57 | % | 22.45 | % | 16.48 | % | 11.79 | % | 12.44 | % | |||||||||
| Noninterest income as a percentage of total revenue | 39.55 | % | 45.21 | % | 41.45 | % | 49.64 | % | 42.66 | % | |||||||||
| Regulatory Capital Ratios (1): | |||||||||||||||||||
| Common equity tier 1 | 12.42 | % | 12.15 | % | 11.87 | % | 11.75 | % | 11.54 | % | |||||||||
| Tier 1 | 12.57 | % | 12.30 | % | 12.04 | % | 11.91 | % | 11.67 | % | |||||||||
| Total | 15.76 | % | 15.59 | % | 15.42 | % | 15.35 | % | 14.91 | % | |||||||||
| Tier 1 leverage ratio | 9.44 | % | 9.54 | % | 8.99 | % | 8.89 | % | 9.05 | % | |||||||||
| Asset Quality: | |||||||||||||||||||
| Allowance for credit losses on loans to nonperforming loans | 9.67x | 9.09x | 10.74x | 7.31x | 5.34x | ||||||||||||||
| Allowance for credit losses on loans to period end loans | 1.15 | % | 1.19 | % | 1.25 | % | 1.22 | % | 0.92 | % | |||||||||
| Allowance for credit losses on loans to period end loans excluding PPP loans (non-GAAP) | 1.22 | % | 1.31 | % | 1.37 | % | 1.37 | % | 1.04 | % | |||||||||
| Nonperforming loans to period end loans | 0.12 | % | 0.13 | % | 0.12 | % | 0.17 | % | 0.17 | % | |||||||||
| Nonperforming assets to period end assets | 0.10 | % | 0.11 | % | 0.11 | % | 0.19 | % | 0.19 | % | |||||||||
| Net charge-offs (recoveries) to average loans (annualized) | (0.01 | )% | 0.03 | % | — | % | (0.01 | )% | — | % | |||||||||
| Net charge-offs (recoveries) | $ | (137 | ) | $ | 669 | $ | 109 | $ | (328 | ) | $ | (102 | ) | ||||||
| Nonperforming loans | $ | 11,178 | $ | 12,768 | $ | 11,188 | $ | 16,295 | $ | 16,935 | |||||||||
| Former bank premises | — | 750 | 750 | 750 | — | ||||||||||||||
| Foreclosed property | 4,041 | 3,748 | 4,276 | 11,695 | 12,315 | ||||||||||||||
| Total nonperforming assets | $ | 15,219 | $ | 17,266 | $ | 16,214 | $ | 28,740 | $ | 29,250 | |||||||||
| Loans past due 90 days and still accruing interest | $ | 1,584 | $ | 108 | $ | 528 | $ | 19 | $ | 464 | |||||||||
| Allowance for credit losses on loans | $ | 108,130 | $ | 116,077 | $ | 120,157 | $ | 119,058 | $ | 90,467 | |||||||||
| Mortgage Banking: | |||||||||||||||||||
| Loans originated, mortgage | $ | 1,050,663 | $ | 1,187,595 | $ | 1,257,963 | $ | 1,292,801 | $ | 1,116,782 | |||||||||
| Loans originated, joint venture | 403,864 | 417,177 | 429,848 | 498,100 | 357,815 | ||||||||||||||
| Total loans originated | $ | 1,454,527 | $ | 1,604,772 | $ | 1,687,811 | $ | 1,790,901 | $ | 1,474,597 | |||||||||
| Number of loans originated | 4,514 | 5,164 | 5,481 | 5,817 | 4,818 | ||||||||||||||
| Number of originators | 222 | 229 | 228 | 224 | 216 | ||||||||||||||
| Purchase % | 76.95 | % | 53.45 | % | 59.76 | % | 61.21 | % | 51.26 | % | |||||||||
| Loans sold | $ | 1,485,057 | $ | 1,601,480 | $ | 1,845,926 | $ | 1,833,590 | $ | 1,398,649 | |||||||||
| Rate lock asset | $ | 7,760 | $ | 12,522 | $ | 11,781 | $ | 10,480 | $ | 7,202 | |||||||||
| Gross realized gain on sales and fees as a % of loans originated | 3.64 | % | 4.01 | % | 4.02 | % | 3.65 | % | 3.17 | % | |||||||||
| Other Ratios: | |||||||||||||||||||
| Net interest margin | 2.92 | % | 3.04 | % | 2.97 | % | 2.70 | % | 2.85 | % | |||||||||
| Net interest margin-fully tax equivalent (non-GAAP) | 2.94 | % | 3.06 | % | 2.98 | % | 2.72 | % | 2.87 | % | |||||||||
| Average earning assets/total average assets | 91.89 | % | 91.47 | % | 91.59 | % | 92.09 | % | 91.33 | % | |||||||||
| Average loans/average deposits | 78.22 | % | 82.71 | % | 83.42 | % | 86.29 | % | 91.81 | % | |||||||||
| Average noninterest deposits/total average deposits | 40.21 | % | 38.39 | % | 39.61 | % | 37.76 | % | 36.52 | % | |||||||||
| Period end equity/period end total assets | 11.83 | % | 12.04 | % | 12.20 | % | 11.82 | % | 11.05 | % | |||||||||
| Efficiency ratio (non-GAAP) | 61.46 | % | 52.11 | % | 60.02 | % | 57.36 | % | 55.17 | % | |||||||||
| (1) Current reporting period regulatory capital ratios are preliminary | |||||||||||||||||||
| TOWNEBANK | |||||||||||||||||
| Selected Data (unaudited) | |||||||||||||||||
| (dollars in thousands) | |||||||||||||||||
| Investment Securities | % Change | ||||||||||||||||
| Q2 | Q2 | Q1 | Q2 21 vs. | Q2 21 vs. | |||||||||||||
| Available-for-sale securities, at fair value | 2021 | 2020 | 2021 | Q2 20 | Q1 21 | ||||||||||||
| U.S. agency securities | $ | 206,151 | $ | 118,176 | $ | 201,787 | 74.44 | % | 2.16 | % | |||||||
| U.S. Treasury notes | 1,013 | 1,010 | 1,019 | 0.30 | % | (0.59 | )% | ||||||||||
| Municipal securities | 334,633 | 313,322 | 334,751 | 6.80 | % | (0.04 | )% | ||||||||||
| Trust preferred and other corporate securities | 31,680 | 59,598 | 31,241 | (46.84 | )% | 1.41 | % | ||||||||||
| Mortgage-backed securities issued by GSE and GNMA | 881,078 | 774,658 | 849,418 | 13.74 | % | 3.73 | % | ||||||||||
| Allowance for credit losses | (134 | ) | (140 | ) | (210 | ) | (4.29 | )% | (36.19 | )% | |||||||
| Total | $ | 1,454,421 | $ | 1,266,624 | $ | 1,418,006 | 14.83 | % | 2.57 | % | |||||||
| Gross unrealized gains (losses) reflected in financial statements | |||||||||||||||||
| Total gross unrealized gains | $ | 65,152 | $ | 61,559 | $ | 38,751 | 5.84 | % | 68.13 | % | |||||||
| Total gross unrealized losses | (22,968 | ) | (1,674 | ) | (10,632 | ) | 1,272.04 | % | 116.03 | % | |||||||
| Net unrealized gains (losses) and other adjustments on AFS securities | $ | 42,184 | $ | 59,885 | $ | 28,119 | (29.56 | )% | 50.02 | % | |||||||
| Held-to-maturity securities, at amortized cost | |||||||||||||||||
| Trust preferred corporate securities | $ | 2,297 | $ | 2,345 | $ | 2,309 | (2.05 | )% | (0.52 | )% | |||||||
| Municipal securities | 5,053 | 28,854 | 5,032 | (82.49 | )% | 0.42 | % | ||||||||||
| Mortgage-backed securities issued by GSE and GNMA | 8,039 | 10,395 | 8,639 | (22.66 | )% | (6.95 | )% | ||||||||||
| Allowance for credit losses | (97 | ) | (121 | ) | (97 | ) | (19.83 | )% | — | ||||||||
| Total | $ | 15,292 | $ | 41,473 | $ | 15,883 | (63.13 | )% | (3.72 | )% | |||||||
| Gross unrealized gains (losses) not reflected in financial statements | |||||||||||||||||
| Total gross unrealized gains | $ | 1,708 | $ | 1,980 | $ | 1,598 | (13.74 | )% | 6.88 | % | |||||||
| Total gross unrealized losses | — | — | — | — | — | ||||||||||||
| Net unrealized gains (losses) in HTM securities | $ | 1,708 | $ | 1,980 | $ | 1,598 | (13.74 | )% | 6.88 | % | |||||||
| Loans Held For Investment (1) | % Change | ||||||||||||||||
| Q2 | Q2 | Q1 | Q2 21 vs. | Q2 21 vs. | |||||||||||||
| 2021 | 2020 | 2021 | Q2 20 | Q1 21 | |||||||||||||
| Real estate - construction and development | $ | 1,029,811 | $ | 1,178,832 | $ | 1,031,267 | (12.64 | )% | (0.14 | )% | |||||||
| Commercial real estate - owner occupied | 1,445,328 | 1,383,294 | 1,439,412 | 4.48 | % | 0.41 | % | ||||||||||
| Commercial real estate - non owner occupied | 2,597,405 | 2,332,447 | 2,477,315 | 11.36 | % | 4.85 | % | ||||||||||
| Real estate - multifamily | 343,764 | 277,947 | 360,125 | 23.68 | % | (4.54 | )% | ||||||||||
| Residential 1-4 family | 1,166,898 | 1,227,961 | 1,173,761 | (4.97 | )% | (0.58 | )% | ||||||||||
| HELOC | 390,726 | 442,569 | 400,314 | (11.71 | )% | (2.40 | )% | ||||||||||
| Commercial and industrial business (C&I) | 1,529,788 | 2,156,428 | 2,005,558 | (29.06 | )% | (23.72 | )% | ||||||||||
| Government | 479,664 | 346,734 | 398,579 | 38.34 | % | 20.34 | % | ||||||||||
| Indirect | 310,492 | 270,321 | 278,567 | 14.86 | % | 11.46 | % | ||||||||||
| Consumer loans and other | 129,702 | 185,356 | 169,685 | (30.03 | )% | (23.56 | )% | ||||||||||
| Total | $ | 9,423,578 | $ | 9,801,889 | $ | 9,734,583 | (3.86 | )% | (3.19 | )% | |||||||
| (1) Paycheck Protection Program loans totaling $0.52 billion, $1.09 billion, and $0.90 billion, primarily in C&I, are included in Q2 2021, Q2 2020, and Q1 2021, respectively. | |||||||||||||||||
| Deposits | % Change | ||||||||||||||||
| Q2 | Q2 | Q1 | Q2 21 vs. | Q2 21 vs. | |||||||||||||
| 2021 | 2020 | 2021 | Q2 20 | Q1 21 | |||||||||||||
| Noninterest-bearing demand | $ | 5,243,074 | $ | 4,226,208 | $ | 4,840,678 | 24.06 | % | 8.31 | % | |||||||
| Interest-bearing: | |||||||||||||||||
| Demand and money market accounts | 5,373,146 | 4,223,391 | 5,062,461 | 27.22 | % | 6.14 | % | ||||||||||
| Savings | 349,552 | 298,673 | 342,554 | 17.04 | % | 2.04 | % | ||||||||||
| Certificates of deposits | 1,998,828 | 2,516,666 | 1,893,951 | (20.58 | )% | 5.54 | % | ||||||||||
| Total | $ | 12,964,600 | $ | 11,264,938 | $ | 12,139,644 | 15.09 | % | 6.80 | % | |||||||
| TOWNEBANK | ||||||||||||||||||||||||||||||||
| Average Balances, Yields and Rate Paid (unaudited) | ||||||||||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||||||||
| Three Months Ended | Three Months Ended | Three Months Ended | ||||||||||||||||||||||||||||||
| June 30, 2021 | March 31, 2021 | June 30, 2020 | ||||||||||||||||||||||||||||||
| Interest | Average | Interest | Average | Interest | Average | |||||||||||||||||||||||||||
| Average | Income/ | Yield/ | Average | Income/ | Yield/ | Average | Income/ | Yield/ | ||||||||||||||||||||||||
| Balance | Expense | Rate | Balance | Expense | Rate | Balance | Expense | Rate | ||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||
| Loans (net of unearned income and deferred costs), excluding nonaccrual loans (1) | $ | 9,604,805 | $ | 101,490 | 4.24 | % | $ | 9,647,129 | $ | 101,960 | 4.29 | % | $ | 9,619,931 | $ | 102,656 | 4.29 | % | ||||||||||||||
| Taxable investment securities | 1,351,922 | 6,476 | 1.92 | % | 1,303,535 | 6,604 | 2.03 | % | 1,198,776 | 7,367 | 2.46 | % | ||||||||||||||||||||
| Tax-exempt investment securities | 128,094 | 434 | 1.36 | % | 139,859 | 542 | 1.55 | % | 147,489 | 836 | 2.27 | % | ||||||||||||||||||||
| Total securities | 1,480,016 | 6,910 | 1.87 | % | 1,443,394 | 7,146 | 1.98 | % | 1,346,265 | 8,203 | 2.44 | % | ||||||||||||||||||||
| Interest-bearing deposits | 2,327,310 | 619 | 0.11 | % | 1,715,110 | 416 | 0.10 | % | 1,729,140 | 433 | 0.10 | % | ||||||||||||||||||||
| Loans held for sale | 503,706 | 3,711 | 2.95 | % | 536,997 | 3,361 | 2.50 | % | 464,796 | 3,811 | 3.28 | % | ||||||||||||||||||||
| Total earning assets | 13,915,837 | 112,730 | 3.25 | % | 13,342,630 | 112,883 | 3.44 | % | 13,160,132 | 115,103 | 3.52 | % | ||||||||||||||||||||
| Less: allowance for credit losses | (116,025 | ) | (120,934 | ) | (69,451 | ) | ||||||||||||||||||||||||||
| Total nonearning assets | 1,344,076 | 1,370,720 | 1,318,787 | |||||||||||||||||||||||||||||
| Total assets | $ | 15,143,888 | $ | 14,592,416 | $ | 14,409,468 | ||||||||||||||||||||||||||
| Liabilities and Equity: | ||||||||||||||||||||||||||||||||
| Interest-bearing deposits | ||||||||||||||||||||||||||||||||
| Demand and money market | $ | 5,179,907 | $ | 2,004 | 0.16 | % | $ | 4,904,885 | $ | 2,075 | 0.17 | % | $ | 3,857,757 | $ | 2,491 | 0.26 | % | ||||||||||||||
| Savings | 346,177 | 528 | 0.61 | % | 332,006 | 522 | 0.64 | % | 290,201 | 554 | 0.77 | % | ||||||||||||||||||||
| Certificates of deposit | 1,816,283 | 4,612 | 1.02 | % | 1,959,225 | 5,951 | 1.23 | % | 2,503,648 | 12,027 | 1.93 | % | ||||||||||||||||||||
| Total interest-bearing deposits | 7,342,367 | 7,144 | 0.39 | % | 7,196,116 | 8,548 | 0.48 | % | 6,651,606 | 15,072 | 0.91 | % | ||||||||||||||||||||
| Borrowings | 476,122 | 565 | 0.47 | % | 562,451 | 822 | 0.58 | % | 1,741,832 | 3,238 | 0.74 | % | ||||||||||||||||||||
| Subordinated debt, net | 249,260 | 2,962 | 4.75 | % | 249,114 | 2,930 | 4.70 | % | 248,660 | 2,962 | 4.76 | % | ||||||||||||||||||||
| Total interest-bearing liabilities | 8,067,749 | 10,671 | 0.53 | % | 8,007,681 | 12,300 | 0.62 | % | 8,642,098 | 21,272 | 0.99 | % | ||||||||||||||||||||
| Demand deposits | 4,937,754 | 4,483,444 | 3,826,439 | |||||||||||||||||||||||||||||
| Other noninterest-bearing liabilities | 304,793 | 303,524 | 239,154 | |||||||||||||||||||||||||||||
| Total liabilities | 13,310,296 | 12,794,649 | 12,707,691 | |||||||||||||||||||||||||||||
| Shareholders’ equity | 1,833,592 | 1,797,767 | 1,701,777 | |||||||||||||||||||||||||||||
| Total liabilities and equity | $ | 15,143,888 | $ | 14,592,416 | $ | 14,409,468 | ||||||||||||||||||||||||||
| Net interest income (tax-equivalent basis) | $ | 102,059 | $ | 100,583 | $ | 93,831 | ||||||||||||||||||||||||||
| Reconciliation of Non-GAAP Financial Measures | ||||||||||||||||||||||||||||||||
| Tax-equivalent basis adjustment | (915 | ) | (593 | ) | (557 | ) | ||||||||||||||||||||||||||
| Net interest income (GAAP) | $ | 101,144 | $ | 99,990 | $ | 93,274 | ||||||||||||||||||||||||||
| Interest rate spread (2)(3) | 2.72 | % | 2.81 | % | 2.53 | % | ||||||||||||||||||||||||||
| Interest expense as a percent of average earning assets | 0.31 | % | 0.37 | % | 0.65 | % | ||||||||||||||||||||||||||
| Net interest margin (tax equivalent basis) (3)(4) | 2.94 | % | 3.06 | % | 2.87 | % | ||||||||||||||||||||||||||
| Total cost of deposits | 0.23 | % | 0.30 | % | 0.58 | % | ||||||||||||||||||||||||||
| (1) | June 30, 2021, June 30, 2020, and March 31, 2021 includes average PPP balances of $0.77 billion, $0.81 billion and $0.88 billion, and related interest and fee income of $10.02 million, $5.81 million, and $11.29 million, respectively. |
| (2) | Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities. Fully tax equivalent. |
| (3) | Net interest margin is net interest income expressed as a percentage of average earning assets. Fully tax equivalent. |
| (4) | Non-GAAP. |
| TOWNEBANK | |||||||||||||||||||||||||||||||||
| Average Balances, Yields and Rate Paid (unaudited) | |||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||
| Six Months Ended | Six Months Ended | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
| June 30, 2021 | June 30, 2020 | 2021 Compared with 2020 | |||||||||||||||||||||||||||||||
| Interest | Average | Interest | Average | ||||||||||||||||||||||||||||||
| Average | Income/ | Yield/ | Average | Income/ | Yield/ | Increase | Change Due to | ||||||||||||||||||||||||||
| Balance | Expense | Rate | Balance | Expense | Rate | (Decrease) | Rate | Volume | |||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||
| Loans (net of unearned income and deferred costs), excluding nonaccrual loans (1) | $ | 9,625,850 | $ | 203,451 | 4.26 | % | $ | 9,085,074 | $ | 203,221 | 4.50 | % | $ | 230 | $ | (11,198 | ) | $ | 11,427 | ||||||||||||||
| Taxable investment securities | 1,327,862 | 13,080 | 1.97 | % | 1,277,593 | 16,578 | 2.60 | % | (3,498 | ) | (4,128 | ) | 630 | ||||||||||||||||||||
| Tax-exempt investment securities | 133,944 | 976 | 1.46 | % | 137,846 | 1,698 | 2.46 | % | (722 | ) | (675 | ) | (47 | ) | |||||||||||||||||||
| Total securities | 1,461,806 | 14,056 | 1.92 | % | 1,415,439 | 18,276 | 2.58 | % | (4,220 | ) | (4,803 | ) | 583 | ||||||||||||||||||||
| Interest-bearing deposits | 2,022,901 | 1,035 | 0.10 | % | 472,589 | 1,535 | 0.65 | % | (500 | ) | (2,153 | ) | 1,653 | ||||||||||||||||||||
| Loans held for sale | 520,260 | 7,072 | 2.72 | % | 398,933 | 6,799 | 3.41 | % | 273 | (1,543 | ) | 1,816 | |||||||||||||||||||||
| Total earning assets | 13,630,817 | 225,614 | 3.34 | % | 11,372,035 | 229,831 | 4.06 | % | (4,217 | ) | (19,697 | ) | 15,479 | ||||||||||||||||||||
| Less: allowance for credit losses | (118,466 | ) | (62,390 | ) | |||||||||||||||||||||||||||||
| Total nonearning assets | 1,357,324 | 1,919,751 | |||||||||||||||||||||||||||||||
| Total assets | $ | 14,869,675 | $ | 13,229,396 | |||||||||||||||||||||||||||||
| Liabilities and Equity: | |||||||||||||||||||||||||||||||||
| Interest-bearing deposits | |||||||||||||||||||||||||||||||||
| Demand and money market | $ | 5,043,155 | $ | 4,080 | 0.16 | % | $ | 3,689,732 | $ | 7,809 | 0.43 | % | $ | (3,729 | ) | $ | (5,920 | ) | $ | 2,191 | |||||||||||||
| Savings | 339,131 | 1,050 | 0.62 | % | 283,574 | 1,147 | 0.81 | % | (97 | ) | (296 | ) | 199 | ||||||||||||||||||||
| Certificates of deposit | 1,887,359 | 10,563 | 1.13 | % | 2,468,873 | 25,177 | 2.05 | % | (14,614 | ) | (9,590 | ) | (5,024 | ) | |||||||||||||||||||
| Total interest-bearing deposits | 7,269,645 | 15,693 | 0.44 | % | 6,442,179 | 34,133 | 1.07 | % | (18,440 | ) | (15,806 | ) | (2,634 | ) | |||||||||||||||||||
| Borrowings | 519,048 | 1,387 | 0.53 | % | 1,210,789 | 5,820 | 0.95 | % | (4,433 | ) | (1,931 | ) | (2,502 | ) | |||||||||||||||||||
| Subordinated debt, net | 249,188 | 5,892 | 4.73 | % | 248,585 | 5,923 | 4.77 | % | (31 | ) | (45 | ) | 14 | ||||||||||||||||||||
| Total interest-bearing liabilities | 8,037,881 | 22,972 | 0.58 | % | 7,901,553 | 45,876 | 1.17 | % | (22,904 | ) | (17,782 | ) | (5,122 | ) | |||||||||||||||||||
| Demand deposits | 4,711,854 | 3,394,275 | |||||||||||||||||||||||||||||||
| Other noninterest-bearing liabilities | 304,162 | 249,827 | |||||||||||||||||||||||||||||||
| Total liabilities | 13,053,897 | 11,545,655 | |||||||||||||||||||||||||||||||
| Shareholders’ equity | 1,815,778 | 1,683,741 | |||||||||||||||||||||||||||||||
| Total liabilities and equity | $ | 14,869,675 | $ | 13,229,396 | |||||||||||||||||||||||||||||
| Net interest income (tax-equivalent basis) | $ | 202,642 | $ | 183,955 | $ | 18,687 | $ | (1,915 | ) | $ | 20,601 | ||||||||||||||||||||||
| Reconciliation of Non-GAAP Financial Measures | |||||||||||||||||||||||||||||||||
| Tax-equivalent basis adjustment | (1,508 | ) | (1,185 | ) | (323 | ) | |||||||||||||||||||||||||||
| Net interest income (GAAP) | $ | 201,134 | $ | 182,770 | $ | 18,364 | |||||||||||||||||||||||||||
| Interest rate spread (2)(4) | 2.76 | % | 2.90 | % | |||||||||||||||||||||||||||||
| Interest expense as a percent of average earning assets | 0.34 | % | 0.81 | % | |||||||||||||||||||||||||||||
| Net interest margin (tax equivalent basis) (3)(4) | 3.00 | % | 3.25 | % | |||||||||||||||||||||||||||||
| Total cost of deposits | 0.26 | % | 0.70 | % | |||||||||||||||||||||||||||||
| (1) June 30, 2021 and June 30, 2020 includes average PPP balances of $0.79 billion and $0.40 billion and related interest income of $17.44 million and $5.81 million. | |||||||||||||||||||||||||||||||||
| (2) Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities. Fully tax equivalent. | |||||||||||||||||||||||||||||||||
| (3) Net interest margin is net interest income expressed as a percentage of average earning assets. Fully tax equivalent. | |||||||||||||||||||||||||||||||||
| (4) Non-GAAP. | |||||||||||||||||||||||||||||||||
| TOWNEBANK | |||||||
| Consolidated Balance Sheets | |||||||
| (dollars in thousands, except share data) | |||||||
| June 30, | December 31, | ||||||
| 2021 | 2020 | ||||||
| (unaudited) | (audited) | ||||||
| ASSETS | |||||||
| Cash and due from banks | $ | 117,797 | $ | 41,514 | |||
| Interest-bearing deposits at FRB - Richmond | 2,970,490 | 1,795,241 | |||||
| Interest-bearing deposits in financial institutions | 31,971 | 27,532 | |||||
| Total Cash and Cash Equivalents | 3,120,258 | 1,864,287 | |||||
| Securities available for sale, at fair value (amortized cost of $1,412,371 and $1,310,250, and allowance for credit losses of $134 and $348 at June 30, 2021 and December 31, 2020, respectively.) | 1,454,421 | 1,368,224 | |||||
| Securities held to maturity, at amortized cost (fair value $17,097 and $18,469 at June 30, 2021 and December 31, 2020, respectively.) | 15,389 | 16,512 | |||||
| Less: allowance for credit losses | (97 | ) | (97 | ) | |||
| Securities held to maturity, net of allowance for credit losses | 15,292 | 16,415 | |||||
| Other equity securities | 6,395 | 6,492 | |||||
| FHLB stock | 16,909 | 30,135 | |||||
| Total Securities | 1,493,017 | 1,421,266 | |||||
| Mortgage loans held for sale | 554,447 | 540,798 | |||||
| Loans, net of unearned income and deferred costs | 9,423,578 | 9,629,068 | |||||
| Less: allowance for credit losses | (108,130 | ) | (120,157 | ) | |||
| Net Loans | 9,315,448 | 9,508,911 | |||||
| Premises and equipment, net | 265,644 | 260,242 | |||||
| Goodwill | 452,328 | 452,328 | |||||
| Other intangible assets, net | 42,271 | 45,533 | |||||
| BOLI | 249,213 | 246,109 | |||||
| Other assets | 311,209 | 286,970 | |||||
| TOTAL ASSETS | $ | 15,803,835 | $ | 14,626,444 | |||
| LIABILITIES AND EQUITY | |||||||
| Deposits: | |||||||
| Noninterest-bearing demand | $ | 5,243,074 | $ | 4,374,566 | |||
| Interest-bearing: | |||||||
| Demand and money market accounts | 5,373,146 | 4,819,604 | |||||
| Savings | 349,552 | 330,091 | |||||
| Certificates of deposit | 1,998,828 | 2,048,905 | |||||
| Total Deposits | 12,964,600 | 11,573,166 | |||||
| Advances from the FHLB | 255,706 | 456,038 | |||||
| Subordinated debt, net | 249,353 | 249,055 | |||||
| FRB PPP lending facility | — | 182,852 | |||||
| Repurchase agreements and other borrowings | 85,042 | 67,786 | |||||
| Total Borrowings | 590,101 | 955,731 | |||||
| Other liabilities | 379,278 | 313,719 | |||||
| TOTAL LIABILITIES | 13,933,979 | 12,842,616 | |||||
| Preferred stock, authorized and unissued shares - 2,000,000 | — | — | |||||
| Common stock, $1.667 par: 150,000,000 shares authorized | |||||||
| 72,671,891 and 72,667,541 shares issued at | |||||||
| June 30, 2021 and December 31, 2020, respectively | 121,144 | 121,132 | |||||
| Capital surplus | 1,048,332 | 1,046,642 | |||||
| Retained earnings | 655,095 | 557,889 | |||||
| Common stock issued to deferred compensation trust, at cost | |||||||
| 905,484 and 873,486 shares at June 30, 2021 and December 31, 2020, respectively | (18,076 | ) | (16,969 | ) | |||
| Deferred compensation trust | 18,076 | 16,969 | |||||
| Accumulated other comprehensive income (loss) | 29,273 | 41,184 | |||||
| TOTAL SHAREHOLDERS’ EQUITY | 1,853,844 | 1,766,847 | |||||
| Noncontrolling interest | 16,012 | 16,981 | |||||
| TOTAL EQUITY | 1,869,856 | 1,783,828 | |||||
| TOTAL LIABILITIES AND EQUITY | $ | 15,803,835 | $ | 14,626,444 | |||
| TOWNEBANK | |||||||||||||||
| Consolidated Statements of Income (unaudited) | |||||||||||||||
| (dollars in thousands, except per share data) | |||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||
| June 30, | June 30, | ||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||
| INTEREST INCOME: | |||||||||||||||
| Loans, including fees | $ | 100,614 | $ | 102,139 | $ | 202,011 | $ | 202,201 | |||||||
| Investment securities | 6,871 | 8,163 | 13,988 | 18,112 | |||||||||||
| Interest-bearing deposits in financial institutions and federal funds sold | 619 | 433 | 1,035 | 1,535 | |||||||||||
| Mortgage loans held for sale | 3,711 | 3,811 | 7,072 | 6,799 | |||||||||||
| Total interest income | 111,815 | 114,546 | 224,106 | 228,647 | |||||||||||
| INTEREST EXPENSE: | |||||||||||||||
| Deposits | 7,144 | 15,072 | 15,693 | 34,134 | |||||||||||
| Advances from the FHLB | 274 | 2,595 | 771 | 5,088 | |||||||||||
| Subordinated debt, net | 2,962 | 2,962 | 5,892 | 5,923 | |||||||||||
| Repurchase agreements and other borrowings | 291 | 643 | 616 | 732 | |||||||||||
| Total interest expense | 10,671 | 21,272 | 22,972 | 45,877 | |||||||||||
| Net interest income | 101,144 | 93,274 | 201,134 | 182,770 | |||||||||||
| PROVISION FOR CREDIT LOSSES | (10,055 | ) | 26,945 | (14,082 | ) | 33,961 | |||||||||
| Net interest income after provision for credit losses | 111,199 | 66,329 | 215,216 | 148,809 | |||||||||||
| NONINTEREST INCOME: | |||||||||||||||
| Residential mortgage banking income, net | 25,524 | 29,715 | 62,937 | 37,131 | |||||||||||
| Insurance commissions and other title fees and income, net | 18,331 | 17,612 | 34,656 | 34,505 | |||||||||||
| Real estate brokerage and property management income, net | 10,984 | 10,781 | 28,918 | 17,719 | |||||||||||
| Service charges on deposit accounts | 2,391 | 1,888 | 4,580 | 4,328 | |||||||||||
| Credit card merchant fees, net | 1,667 | 1,109 | 2,969 | 2,287 | |||||||||||
| BOLI | 1,541 | 1,584 | 3,060 | 4,690 | |||||||||||
| Other income | 5,487 | 3,763 | 10,324 | 8,990 | |||||||||||
| Net gain/(loss) on investment securities | 252 | 2,930 | 1,252 | 7,932 | |||||||||||
| Total noninterest income | 66,177 | 69,382 | 148,696 | 117,582 | |||||||||||
| NONINTEREST EXPENSE: | |||||||||||||||
| Salaries and employee benefits | 61,365 | 56,926 | 119,801 | 112,793 | |||||||||||
| Occupancy expense | 7,559 | 7,227 | 15,630 | 14,728 | |||||||||||
| Furniture and equipment | 3,622 | 3,564 | 7,134 | 7,205 | |||||||||||
| Amortization - intangibles | 2,719 | 2,901 | 5,442 | 5,851 | |||||||||||
| Software expense | 4,494 | 3,492 | 8,688 | 6,984 | |||||||||||
| Data processing | 3,414 | 2,718 | 6,652 | 5,509 | |||||||||||
| Professional fees | 2,259 | 2,972 | 4,598 | 6,040 | |||||||||||
| Advertising and marketing | 3,257 | 1,986 | 6,225 | 5,570 | |||||||||||
| Other expenses | 16,705 | 9,239 | 28,549 | 23,233 | |||||||||||
| Total noninterest expense | 105,394 | 91,025 | 202,719 | 187,913 | |||||||||||
| Income before income tax expense and noncontrolling interest | 71,982 | 44,686 | 161,193 | 78,478 | |||||||||||
| Provision for income tax expense | 13,980 | 7,464 | 30,559 | 13,651 | |||||||||||
| Net income | $ | 58,002 | $ | 37,222 | $ | 130,634 | $ | 64,827 | |||||||
| Net income attributable to noncontrolling interest | (2,199 | ) | (2,617 | ) | (5,835 | ) | (3,838 | ) | |||||||
| Net income attributable to TowneBank | $ | 55,803 | $ | 34,605 | $ | 124,799 | $ | 60,989 | |||||||
| Per common share information | |||||||||||||||
| Basic earnings | $ | 0.77 | $ | 0.48 | $ | 1.72 | $ | 0.84 | |||||||
| Diluted earnings | $ | 0.77 | $ | 0.48 | $ | 1.72 | $ | 0.84 | |||||||
| Cash dividends declared | $ | 0.20 | $ | 0.18 | $ | 0.38 | $ | 0.36 | |||||||
| TOWNEBANK | |||||||||||||||||||
| Consolidated Balance Sheets - Five Quarter Trend | |||||||||||||||||||
| (dollars in thousands, except share data) | |||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||
| 2021 | 2021 | 2020 | 2020 | 2020 | |||||||||||||||
| (unaudited) | (unaudited) | (audited) | (unaudited) | (unaudited) | |||||||||||||||
| ASSETS | |||||||||||||||||||
| Cash and due from banks | $ | 117,797 | $ | 141,545 | $ | 41,514 | $ | 114,604 | $ | 115,724 | |||||||||
| Interest-bearing deposits at FRB - Richmond | 2,970,490 | 1,936,458 | 1,795,241 | 1,670,186 | 2,511,152 | ||||||||||||||
| Interest-bearing deposits in financial institutions | 31,971 | 30,031 | 27,532 | 24,890 | 24,374 | ||||||||||||||
| Total Cash and Cash Equivalents | 3,120,258 | 2,108,034 | 1,864,287 | 1,809,680 | 2,651,250 | ||||||||||||||
| Securities available for sale | 1,454,421 | 1,418,006 | 1,368,224 | 1,310,683 | 1,266,624 | ||||||||||||||
| Securities held to maturity | 15,389 | 15,980 | 16,512 | 17,131 | 41,595 | ||||||||||||||
| Less: allowance for credit losses | (97 | ) | (97 | ) | (97 | ) | (90 | ) | (121 | ) | |||||||||
| Securities held to maturity, net of allowance for credit losses | 15,292 | 15,883 | 16,415 | 17,041 | 41,474 | ||||||||||||||
| Other equity securities | 6,395 | 6,355 | 6,492 | 6,497 | 6,497 | ||||||||||||||
| FHLB stock | 16,909 | 16,909 | 30,135 | 41,829 | 49,277 | ||||||||||||||
| Total Securities | 1,493,017 | 1,457,153 | 1,421,266 | 1,376,050 | 1,363,872 | ||||||||||||||
| Mortgage loans held for sale | 554,447 | 582,905 | 540,798 | 669,020 | 610,369 | ||||||||||||||
| Loans, net of unearned income and deferred costs | 9,423,578 | 9,734,583 | 9,629,068 | 9,770,570 | 9,801,889 | ||||||||||||||
| Less: allowance for credit losses | (108,130 | ) | (116,077 | ) | (120,157 | ) | (119,058 | ) | (90,467 | ) | |||||||||
| Net Loans | 9,315,448 | 9,618,506 | 9,508,911 | 9,651,512 | 9,711,422 | ||||||||||||||
| Premises and equipment, net | 265,644 | 261,831 | 260,242 | 256,909 | 257,533 | ||||||||||||||
| Goodwill | 452,328 | 452,328 | 452,328 | 446,725 | 446,725 | ||||||||||||||
| Other intangible assets, net | 42,271 | 44,808 | 45,533 | 45,781 | 48,632 | ||||||||||||||
| BOLI | 249,213 | 247,655 | 246,109 | 244,103 | 242,493 | ||||||||||||||
| Other assets | 311,209 | 306,176 | 286,970 | 295,637 | 247,962 | ||||||||||||||
| TOTAL ASSETS | $ | 15,803,835 | $ | 15,079,396 | $ | 14,626,444 | $ | 14,795,417 | $ | 15,580,258 | |||||||||
| LIABILITIES AND EQUITY | |||||||||||||||||||
| Deposits: | |||||||||||||||||||
| Noninterest-bearing demand | $ | 5,243,074 | $ | 4,840,678 | $ | 4,374,566 | $ | 4,464,178 | $ | 4,226,208 | |||||||||
| Interest-bearing: | |||||||||||||||||||
| Demand and money market accounts | 5,373,146 | 5,062,461 | 4,819,604 | 4,642,482 | 4,223,391 | ||||||||||||||
| Savings | 349,552 | 342,554 | 330,091 | 312,444 | 298,673 | ||||||||||||||
| Certificates of deposit | 1,998,828 | 1,893,951 | 2,048,905 | 2,285,859 | 2,516,666 | ||||||||||||||
| Total Deposits | 12,964,600 | 12,139,644 | 11,573,166 | 11,704,963 | 11,264,938 | ||||||||||||||
| Advances from the FHLB | 255,706 | 255,872 | 456,038 | 731,202 | 906,365 | ||||||||||||||
| Subordinated debt, net | 249,353 | 249,204 | 249,055 | 248,906 | 248,756 | ||||||||||||||
| FRB PPP lending facility | — | 183,164 | 182,852 | — | 1,111,429 | ||||||||||||||
| Repurchase agreements and other borrowings | 85,042 | 68,509 | 67,786 | 58,061 | 60,913 | ||||||||||||||
| Total Borrowings | 590,101 | 756,749 | 955,731 | 1,038,169 | 2,327,463 | ||||||||||||||
| Other liabilities | 379,278 | 366,697 | 313,719 | 303,582 | 266,314 | ||||||||||||||
| TOTAL LIABILITIES | 13,933,979 | 13,263,090 | 12,842,616 | 13,046,714 | 13,858,715 | ||||||||||||||
| Preferred stock | |||||||||||||||||||
| Authorized shares - 2,000,000 | — | — | — | — | — | ||||||||||||||
| Common stock, $1.667 par value | 121,144 | 121,108 | 121,132 | 121,115 | 121,101 | ||||||||||||||
| Capital surplus | 1,048,332 | 1,047,312 | 1,046,642 | 1,045,170 | 1,043,774 | ||||||||||||||
| Retained earnings | 655,095 | 613,826 | 557,889 | 520,888 | 499,502 | ||||||||||||||
| Common stock issued to deferred compensation | |||||||||||||||||||
| trust, at cost | (18,076 | ) | (17,063 | ) | (16,969 | ) | (16,951 | ) | (16,776 | ) | |||||||||
| Deferred compensation trust | 18,076 | 17,063 | 16,969 | 16,951 | 16,776 | ||||||||||||||
| Accumulated other comprehensive income (loss) | 29,273 | 17,969 | 41,184 | 44,569 | 43,218 | ||||||||||||||
| TOTAL SHAREHOLDERS’ EQUITY | 1,853,844 | 1,800,215 | 1,766,847 | 1,731,742 | 1,707,595 | ||||||||||||||
| Noncontrolling interest | 16,012 | 16,091 | 16,981 | 16,961 | 13,948 | ||||||||||||||
| TOTAL EQUITY | 1,869,856 | 1,816,306 | 1,783,828 | 1,748,703 | 1,721,543 | ||||||||||||||
| TOTAL LIABILITIES AND EQUITY | $ | 15,803,835 | $ | 15,079,396 | $ | 14,626,444 | $ | 14,795,417 | $ | 15,580,258 | |||||||||
| TOWNEBANK | |||||||||||||||||||
| Consolidated Statements of Income - Five Quarter Trend (unaudited) | |||||||||||||||||||
| (dollars in thousands, except share data) | |||||||||||||||||||
| Three Months Ended | |||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||
| 2021 | 2021 | 2020 | 2020 | 2020 | |||||||||||||||
| INTEREST INCOME: | |||||||||||||||||||
| Loans, including fees | $ | 100,614 | $ | 101,396 | $ | 104,182 | $ | 102,869 | $ | 102,139 | |||||||||
| Investment securities | 6,871 | 7,117 | 7,499 | 7,440 | 8,163 | ||||||||||||||
| Interest-bearing deposits in financial institutions and federal funds sold | 619 | 416 | 435 | 632 | 433 | ||||||||||||||
| Mortgage loans held for sale | 3,711 | 3,361 | 3,867 | 4,587 | 3,811 | ||||||||||||||
| Total interest income | 111,815 | 112,290 | 115,983 | 115,528 | 114,546 | ||||||||||||||
| INTEREST EXPENSE: | |||||||||||||||||||
| Deposits | 7,144 | 8,548 | 10,762 | 12,966 | 15,072 | ||||||||||||||
| Advances from the FHLB | 274 | 497 | 1,404 | 1,901 | 2,595 | ||||||||||||||
| Subordinated debt | 2,962 | 2,930 | 2,962 | 2,962 | 2,962 | ||||||||||||||
| Repurchase agreements and other borrowings | 291 | 325 | 241 | 940 | 643 | ||||||||||||||
| Total interest expense | 10,671 | 12,300 | 15,369 | 18,769 | 21,272 | ||||||||||||||
| Net interest income | 101,144 | 99,990 | 100,614 | 96,759 | 93,274 | ||||||||||||||
| PROVISION FOR CREDIT LOSSES | (10,055 | ) | (4,027 | ) | 1,617 | 31,598 | 26,945 | ||||||||||||
| Net interest income after provision for credit losses | 111,199 | 104,017 | 98,997 | 65,161 | 66,329 | ||||||||||||||
| NONINTEREST INCOME: | |||||||||||||||||||
| Residential mortgage banking income, net | 25,524 | 37,412 | 37,504 | 37,531 | 29,715 | ||||||||||||||
| Insurance commissions and other title fees and income, net | 18,331 | 16,325 | 13,868 | 17,468 | 17,612 | ||||||||||||||
| Real estate brokerage and property management income, net | 10,984 | 17,934 | 9,229 | 11,301 | 10,781 | ||||||||||||||
| Service charges on deposit accounts | 2,391 | 2,190 | 1,707 | 1,986 | 1,888 | ||||||||||||||
| Credit card merchant fees, net | 1,667 | 1,302 | 1,377 | 1,506 | 1,109 | ||||||||||||||
| BOLI | 1,541 | 1,519 | 1,990 | 1,605 | 1,584 | ||||||||||||||
| Other income | 5,487 | 4,837 | 5,559 | 22,278 | 3,763 | ||||||||||||||
| Net gain/(loss) on investment securities | 252 | 1,000 | — | 1,701 | 2,930 | ||||||||||||||
| Total noninterest income | 66,177 | 82,519 | 71,234 | 95,376 | 69,382 | ||||||||||||||
| NONINTEREST EXPENSE: | |||||||||||||||||||
| Salaries and employee benefits | 61,365 | 58,435 | 61,475 | 61,408 | 56,926 | ||||||||||||||
| Occupancy expense | 7,559 | 8,072 | 8,193 | 8,396 | 7,227 | ||||||||||||||
| Furniture and equipment | 3,622 | 3,512 | 3,462 | 3,247 | 3,564 | ||||||||||||||
| Amortization - intangibles | 2,719 | 2,723 | 2,797 | 2,851 | 2,901 | ||||||||||||||
| Software expense | 4,494 | 4,194 | 4,066 | 3,572 | 3,492 | ||||||||||||||
| Data processing | 3,414 | 3,239 | 2,363 | 3,113 | 2,718 | ||||||||||||||
| Professional fees | 2,259 | 2,339 | 2,591 | 2,637 | 2,972 | ||||||||||||||
| Advertising and marketing | 3,257 | 2,968 | 2,204 | 1,870 | 1,986 | ||||||||||||||
| Other expenses | 16,705 | 11,844 | 18,781 | 14,887 | 9,239 | ||||||||||||||
| Total noninterest expense | 105,394 | 97,326 | 105,932 | 101,981 | 91,025 | ||||||||||||||
| Income before income tax expense and noncontrolling interest | 71,982 | 89,210 | 64,299 | 58,556 | 44,686 | ||||||||||||||
| Provision for income tax expense | 13,980 | 16,579 | 10,408 | 7,841 | 7,464 | ||||||||||||||
| Net income | 58,002 | 72,631 | 53,891 | 50,715 | 37,222 | ||||||||||||||
| Net income attributable to noncontrolling interest | (2,199 | ) | (3,636 | ) | (3,809 | ) | (16,251 | ) | (2,617 | ) | |||||||||
| Net income attributable to TowneBank | $ | 55,803 | $ | 68,995 | $ | 50,082 | $ | 34,464 | $ | 34,605 | |||||||||
| Per common share information | |||||||||||||||||||
| Basic earnings | $ | 0.77 | $ | 0.95 | $ | 0.69 | $ | 0.48 | $ | 0.48 | |||||||||
| Diluted earnings | $ | 0.77 | $ | 0.95 | $ | 0.69 | $ | 0.48 | $ | 0.48 | |||||||||
| Basic weighted average shares outstanding | 72,468,094 | 72,414,953 | 72,357,177 | 72,339,413 | 72,280,555 | ||||||||||||||
| Diluted weighted average shares outstanding | 72,560,234 | 72,517,008 | 72,455,096 | 72,375,736 | 72,317,988 | ||||||||||||||
| Cash dividends declared | $ | 0.20 | $ | 0.18 | $ | 0.18 | $ | 0.18 | $ | 0.18 | |||||||||
| TOWNEBANK | ||||||||||||||||||||||||||
| Banking Segment Financial Information (unaudited) | ||||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | Increase/(Decrease) | ||||||||||||||||||||||||
| June 30, | March 31, | June 30, | 2021 over 2020 | |||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2021 | 2020 | Amount | Percent | ||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||||
| Net interest income | $ | 98,134 | $ | 89,665 | $ | 97,604 | $ | 195,739 | $ | 177,071 | $ | 18,668 | 10.54 | % | ||||||||||||
| Service charges on deposit | ||||||||||||||||||||||||||
| accounts | 2,391 | 1,888 | 2,190 | 4,580 | 4,328 | 252 | 5.82 | % | ||||||||||||||||||
| Credit card merchant fees | 1,667 | 1,109 | 1,302 | 2,969 | 2,287 | 682 | 29.82 | % | ||||||||||||||||||
| Other income | 5,404 | 3,888 | 4,970 | 10,375 | 10,950 | (575 | ) | (5.25 | )% | |||||||||||||||||
| Subtotal | 9,462 | 6,885 | 8,462 | 17,924 | 17,565 | 359 | 2.04 | % | ||||||||||||||||||
| Net gain/(loss) on investment securities | 252 | 2,930 | 1,000 | 1,252 | 7,932 | (6,680 | ) | (84.22 | )% | |||||||||||||||||
| Total noninterest income | 9,714 | 9,815 | 9,462 | 19,176 | 25,497 | (6,321 | ) | (24.79 | )% | |||||||||||||||||
| Total revenue | 107,848 | 99,480 | 107,066 | 214,915 | 202,568 | 12,347 | 6.10 | % | ||||||||||||||||||
| Provision for credit losses | (9,532 | ) | 26,059 | (3,401 | ) | (12,932 | ) | 33,100 | (46,032 | ) | (139.07 | )% | ||||||||||||||
| Expenses | ||||||||||||||||||||||||||
| Salaries and employee benefits | 35,776 | 35,209 | 31,861 | 67,637 | 68,434 | (797 | ) | (1.16 | )% | |||||||||||||||||
| Occupancy expense | 5,012 | 4,812 | 5,546 | 10,558 | 9,728 | 830 | 8.53 | % | ||||||||||||||||||
| Furniture and equipment | 2,816 | 2,715 | 2,668 | 5,484 | 5,375 | 109 | 2.03 | % | ||||||||||||||||||
| Amortization of intangibles | 912 | 1,114 | 962 | 1,875 | 2,278 | (403 | ) | (17.69 | )% | |||||||||||||||||
| Other expenses | 18,392 | 10,718 | 14,050 | 32,441 | 29,423 | 3,018 | 10.26 | % | ||||||||||||||||||
| Total expenses | 62,908 | 54,568 | 55,087 | 117,995 | 115,238 | 2,757 | 2.39 | % | ||||||||||||||||||
| Income before income tax, corporate allocation and noncontrolling interest | 54,472 | 18,853 | 55,380 | 109,852 | 54,230 | 55,622 | 102.57 | % | ||||||||||||||||||
| Corporate allocation | 1,249 | 627 | 1,292 | 2,540 | 1,297 | 1,243 | 95.84 | % | ||||||||||||||||||
| Income before income tax provision and noncontrolling interest | 55,721 | 19,480 | 56,672 | 112,392 | 55,527 | 56,865 | 102.41 | % | ||||||||||||||||||
| Provision for income tax expense | 10,535 | 2,167 | 9,701 | 20,236 | 8,830 | 11,406 | 129.17 | % | ||||||||||||||||||
| Net income | 45,186 | 17,313 | 46,971 | 92,156 | 46,697 | 45,459 | 97.35 | % | ||||||||||||||||||
| Noncontrolling interest | 1 | 5 | (5 | ) | (3 | ) | 4 | (7 | ) | (175.00 | )% | |||||||||||||||
| Net income attributable to TowneBank | $ | 45,187 | $ | 17,318 | $ | 46,966 | $ | 92,153 | $ | 46,701 | $ | 45,452 | 97.33 | % | ||||||||||||
| Efficiency ratio (non-GAAP) | 57.62 | % | 55.36 | % | 51.03 | % | 54.35 | % | 58.04 | % | (3.69 | )% | (6.36 | )% | ||||||||||||
| TOWNEBANK | ||||||||||||||||||||||||||
| Realty Segment Financial Information (unaudited) | ||||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | Increase/(Decrease) | ||||||||||||||||||||||||
| June 30, | March 31, | June 30, | 2021 over 2020 | |||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2021 | 2020 | Amount | Percent | ||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||||
| Residential mortgage brokerageincome, net | $ | 26,383 | $ | 30,468 | $ | 37,877 | $ | 64,260 | $ | 38,475 | $ | 25,785 | 67.02 | % | ||||||||||||
| Real estate brokerage income, net | 3,893 | 2,659 | 2,451 | 6,344 | 4,524 | 1,820 | 40.23 | % | ||||||||||||||||||
| Title insurance and settlement fees | 684 | 639 | 525 | 1,211 | 1,075 | 136 | 12.65 | % | ||||||||||||||||||
| Property management fees, net | 7,091 | 8,122 | 15,483 | 22,574 | 13,195 | 9,379 | 71.08 | % | ||||||||||||||||||
| Income from unconsolidatedsubsidiary | 289 | 301 | 406 | 695 | 487 | 208 | 42.71 | % | ||||||||||||||||||
| Net interest and other income | 3,336 | 3,765 | 2,736 | 6,069 | 6,161 | (92 | ) | (1.49 | )% | |||||||||||||||||
| Total revenue | 41,676 | 45,954 | 59,478 | 101,153 | 63,917 | 37,236 | 58.26 | % | ||||||||||||||||||
| Provision for credit losses | (523 | ) | 886 | (626 | ) | (1,150 | ) | 861 | (2,011 | ) | (233.57 | )% | ||||||||||||||
| Expenses | ||||||||||||||||||||||||||
| Salaries and employee benefits | 16,018 | 13,059 | 16,847 | 32,865 | 26,352 | 6,513 | 24.72 | % | ||||||||||||||||||
| Occupancy expense | 1,935 | 1,763 | 1,871 | 3,806 | 3,690 | 116 | 3.14 | % | ||||||||||||||||||
| Furniture and equipment | 592 | 626 | 649 | 1,242 | 1,388 | (146 | ) | (10.52 | )% | |||||||||||||||||
| Amortization of intangible assets | 590 | 658 | 590 | 1,180 | 1,315 | (135 | ) | (10.27 | )% | |||||||||||||||||
| Other expenses | 10,442 | 8,270 | 9,229 | 19,669 | 15,137 | 4,532 | 29.94 | % | ||||||||||||||||||
| Total expenses | 29,577 | 24,376 | 29,186 | 58,762 | 47,882 | 10,880 | 22.72 | % | ||||||||||||||||||
| Income before income tax, corporate allocation and noncontrolling interest | 12,622 | 20,692 | 30,918 | 43,541 | 15,174 | 28,367 | 186.94 | % | ||||||||||||||||||
| Corporate allocation | (1,000 | ) | (370 | ) | (1,000 | ) | (2,000 | ) | (763 | ) | (1,237 | ) | 162.12 | % | ||||||||||||
| Income before income tax provision and noncontrolling interest | 11,622 | 20,322 | 29,918 | 41,541 | 14,411 | 27,130 | 188.26 | % | ||||||||||||||||||
| Provision for income tax expense | 2,255 | 4,127 | 6,216 | 8,471 | 2,835 | 5,636 | 198.80 | % | ||||||||||||||||||
| Net income | 9,367 | 16,195 | 23,702 | 33,070 | 11,576 | 21,494 | 185.68 | % | ||||||||||||||||||
| Noncontrolling interest | (2,200 | ) | (2,415 | ) | (3,631 | ) | (5,832 | ) | (3,206 | ) | (2,626 | ) | 81.91 | % | ||||||||||||
| Net income attributable to TowneBank | $ | 7,167 | $ | 13,780 | $ | 20,071 | $ | 27,238 | $ | 8,370 | $ | 18,868 | 225.42 | % | ||||||||||||
| Efficiency ratio (non-GAAP) | 69.55 | % | 51.61 | % | 48.08 | % | 56.93 | % | 72.86 | % | (15.93 | )% | (21.86 | )% | ||||||||||||
| TOWNEBANK | ||||||||||||||||||||||||||
| Insurance Segment Financial Information (unaudited) | ||||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | Increase/(Decrease) | ||||||||||||||||||||||||
| June 30, | March 31, | June 30, | 2021 over 2020 | |||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2021 | 2020 | Amount | Percent | ||||||||||||||||||||
| Commission and fee income | ||||||||||||||||||||||||||
| Property and casualty | $ | 14,941 | $ | 13,926 | $ | 14,189 | $ | 29,129 | $ | 26,712 | $ | 2,417 | 9.05 | % | ||||||||||||
| Employee benefits | 3,430 | 3,791 | 3,884 | 7,315 | 7,709 | (394 | ) | (5.11 | )% | |||||||||||||||||
| Travel insurance | — | 861 | — | — | 2,127 | (2,127 | ) | (100.00 | )% | |||||||||||||||||
| Specialized benefit services | 163 | 157 | 167 | 329 | 325 | 4 | 1.23 | % | ||||||||||||||||||
| Total commissions and fees | 18,534 | 18,735 | 18,240 | 36,773 | 36,873 | (100 | ) | (0.27 | )% | |||||||||||||||||
| Contingency and bonus revenue | 3,323 | 2,009 | 1,759 | 5,082 | 4,031 | 1,051 | 26.07 | % | ||||||||||||||||||
| Other income | 43 | 127 | 73 | 117 | 208 | (91 | ) | (43.75 | )% | |||||||||||||||||
| Total revenue | 21,900 | 20,871 | 20,072 | 41,972 | 41,112 | 860 | 2.09 | % | ||||||||||||||||||
| Employee commission expense | 4,103 | 3,649 | 4,107 | 8,210 | 7,245 | 965 | 13.32 | % | ||||||||||||||||||
| Revenue, net of commission expense | 17,797 | 17,222 | 15,965 | 33,762 | 33,867 | (105 | ) | (0.31 | )% | |||||||||||||||||
| Salaries and employee benefits | 9,571 | 8,658 | 9,727 | 19,299 | 18,007 | 1,292 | 7.17 | % | ||||||||||||||||||
| Occupancy expense | 612 | 652 | 655 | 1,266 | 1,311 | (45 | ) | (3.43 | )% | |||||||||||||||||
| Furniture and equipment | 214 | 223 | 195 | 408 | 441 | (33 | ) | (7.48 | )% | |||||||||||||||||
| Amortization of intangible assets | 1,217 | 1,129 | 1,171 | 2,387 | 2,258 | 129 | 5.71 | % | ||||||||||||||||||
| Other expenses | 1,295 | 1,419 | 1,305 | 2,602 | 2,776 | (174 | ) | (6.27 | )% | |||||||||||||||||
| Total operating expenses | 12,909 | 12,081 | 13,053 | 25,962 | 24,793 | 1,169 | 4.72 | % | ||||||||||||||||||
| Income before income tax, corporate allocation and noncontrolling interest | 4,888 | 5,141 | 2,912 | 7,800 | 9,074 | (1,274 | ) | (14.04 | )% | |||||||||||||||||
| Corporate allocation | (249 | ) | (257 | ) | (292 | ) | (540 | ) | (534 | ) | (6 | ) | 1.12 | % | ||||||||||||
| Income before income tax provision and noncontrolling interest | 4,639 | 4,884 | 2,620 | 7,260 | 8,540 | (1,280 | ) | (14.99 | )% | |||||||||||||||||
| Provision for income tax expense | 1,190 | 1,170 | 662 | 1,852 | 1,986 | (134 | ) | (6.75 | )% | |||||||||||||||||
| Net income | 3,449 | 3,714 | 1,958 | 5,408 | 6,554 | (1,146 | ) | (17.49 | )% | |||||||||||||||||
| Noncontrolling interest | — | (207 | ) | — | — | (636 | ) | 636 | (100.00 | )% | ||||||||||||||||
| Net income attributable to TowneBank | $ | 3,449 | $ | 3,507 | $ | 1,958 | $ | 5,408 | $ | 5,918 | (510 | ) | (8.62 | )% | ||||||||||||
| Provision for income taxes | 1,190 | 1,170 | 662 | 1,852 | 1,986 | (134 | ) | (6.75 | )% | |||||||||||||||||
| Depreciation, amortization and interest expense | 1,361 | 1,291 | 1,308 | 2,669 | 2,591 | 78 | 3.01 | % | ||||||||||||||||||
| EBITDA (non-GAAP) | $ | 6,000 | $ | 5,968 | $ | 3,928 | $ | 9,929 | $ | 10,495 | $ | (566 | ) | (5.39 | )% | |||||||||||
| Efficiency ratio (non-GAAP) | 65.70 | % | 63.59 | % | 74.43 | % | 69.83 | % | 66.54 | % | 3.29 | % | 4.94 | % | ||||||||||||
| TOWNEBANK | |||||||||||||||||||
| Reconciliation of Non-GAAP Financial Measures | |||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||
| June 30, | June 30, | March 31, | June 30, | June 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2021 | 2020 | |||||||||||||||
| Return on average assets (GAAP) | 1.48 | % | 0.97 | % | 1.92 | % | 1.69 | % | 0.93 | % | |||||||||
| Impact of excluding average goodwill and otherintangibles and amortization | 0.11 | % | 0.10 | % | 0.13 | % | 0.12 | % | 0.11 | % | |||||||||
| Return on average tangible assets (non-GAAP) | 1.59 | % | 1.07 | % | 2.05 | % | 1.81 | % | 1.04 | % | |||||||||
| Return on average equity (GAAP) | 12.21 | % | 8.18 | % | 15.56 | % | 13.86 | % | 7.28 | % | |||||||||
| Impact of excluding average goodwill and otherintangibles and amortization | 5.17 | % | 4.14 | % | 6.63 | % | 5.88 | % | 3.85 | % | |||||||||
| Return on average tangible equity (non-GAAP) | 17.38 | % | 12.32 | % | 22.19 | % | 19.74 | % | 11.13 | % | |||||||||
| Return on average common equity (GAAP) | 12.31 | % | 8.24 | % | 15.70 | % | 13.98 | % | 7.34 | % | |||||||||
| Impact of excluding average goodwill and otherintangibles and amortization | 5.26 | % | 4.20 | % | 6.75 | % | 5.98 | % | 3.91 | % | |||||||||
| Return on average tangible common equity(non-GAAP) | 17.57 | % | 12.44 | % | 22.45 | % | 19.96 | % | 11.25 | % | |||||||||
| Book value (GAAP) | $ | 25.51 | $ | 23.50 | $ | 24.78 | $ | 25.51 | $ | 23.50 | |||||||||
| Impact of excluding average goodwill and otherintangibles and amortization | (6.81 | ) | (6.82 | ) | (6.84 | ) | (6.81 | ) | (6.82 | ) | |||||||||
| Tangible book value (non-GAAP) | $ | 18.70 | $ | 16.68 | $ | 17.94 | $ | 18.70 | $ | 16.68 | |||||||||
| Efficiency ratio (GAAP) | 62.99 | % | 55.96 | % | 53.33 | % | 57.95 | % | 62.56 | % | |||||||||
| Impact of exclusions | (1.53 | )% | (0.79 | )% | (1.22 | )% | (1.36 | )% | (0.30 | )% | |||||||||
| Efficiency ratio (non-GAAP) | 61.46 | % | 55.17 | % | 52.11 | % | 56.59 | % | 62.26 | % | |||||||||
| Average assets (GAAP) | $ | 15,143,888 | $ | 14,409,468 | $ | 14,592,416 | $ | 14,869,675 | $ | 13,229,396 | |||||||||
| Less: average goodwill and intangible assets | 496,059 | 497,077 | 497,446 | 496,748 | 498,600 | ||||||||||||||
| Average tangible assets (non-GAAP) | $ | 14,647,829 | $ | 13,912,391 | $ | 14,094,970 | $ | 14,372,927 | $ | 12,730,796 | |||||||||
| Average equity (GAAP) | $ | 1,833,592 | $ | 1,701,777 | $ | 1,797,767 | $ | 1,815,778 | $ | 1,683,742 | |||||||||
| Less: average goodwill and intangible assets | 496,059 | 497,077 | 497,446 | 496,748 | 498,600 | ||||||||||||||
| Average tangible equity (non-GAAP) | $ | 1,337,533 | $ | 1,204,700 | $ | 1,300,321 | $ | 1,319,030 | $ | 1,185,142 | |||||||||
| Average common equity (GAAP) | $ | 1,818,664 | $ | 1,689,603 | $ | 1,782,795 | $ | 1,800,829 | $ | 1,671,640 | |||||||||
| Less: average goodwill and intangible assets | 496,059 | 497,077 | 497,446 | 496,748 | 498,600 | ||||||||||||||
| Average tangible common equity (non-GAAP) | $ | 1,322,605 | $ | 1,192,526 | $ | 1,285,349 | $ | 1,304,081 | $ | 1,173,040 | |||||||||
| Net Income (GAAP) | $ | 55,803 | $ | 34,605 | 68,995 | 124,799 | 60,989 | ||||||||||||
| Amortization of Intangibles, net of tax | 2,148 | 2,292 | 2,151 | 4,299 | 4,622 | ||||||||||||||
| Tangible net income (non-GAAP) | $ | 57,951 | $ | 36,897 | $ | 71,146 | $ | 129,098 | $ | 65,611 | |||||||||
| Net Income (GAAP) | $ | 55,803 | $ | 34,605 | $ | 68,995 | $ | 124,799 | $ | 60,989 | |||||||||
| Provision for credit losses | (10,055 | ) | 26,945 | (4,027 | ) | (14,082 | ) | 33,961 | |||||||||||
| Provision for income tax | 13,980 | 7,464 | 16,579 | 30,559 | 13,651 | ||||||||||||||
| Pre-provision, pre-tax net revenues (non-GAAP) | $ | 59,728 | $ | 69,014 | $ | 81,547 | $ | 141,276 | $ | 108,601 | |||||||||
| Total Revenue (GAAP) | $ | 167,321 | $ | 162,656 | $ | 182,509 | $ | 349,830 | $ | 300,352 | |||||||||
| Net (gain)/loss on investment securities | (252 | ) | (2,930 | ) | (1,000 | ) | (1,252 | ) | (7,932 | ) | |||||||||
| Other nonrecurring (income) loss | — | — | 30 | 30 | — | ||||||||||||||
| Total Revenue for efficiency calculation (non-GAAP) | $ | 167,069 | $ | 159,726 | $ | 181,539 | $ | 348,608 | $ | 292,420 | |||||||||
| Noninterest expense (GAAP) | $ | 105,394 | $ | 91,025 | $ | 97,326 | $ | 202,719 | $ | 187,913 | |||||||||
| Less: Amortization of intangibles | 2,719 | 2,901 | 2,723 | 5,442 | 5,851 | ||||||||||||||
| Noninterest expense net of amortization (non-GAAP) | $ | 102,675 | $ | 88,124 | $ | 94,603 | $ | 197,277 | $ | 182,062 | |||||||||
