TowneBank Reports Record First Quarter Earnings


SUFFOLK, Va., April 28, 2016 (GLOBE NEWSWIRE) -- Hampton Roads based TowneBank (the “Bank”) (NASDAQ:TOWN) reported record earnings of $17.82 million for the quarter ended March 31, 2016, a 22.57% increase, or $3.28 million, over the $14.54 million reported for the comparative period in 2015.  Fully diluted earnings per share were $0.35 per share, an increase from $0.29 per share for the comparative period of 2015.

The Bank’s common dividend was $0.12 per share for the quarter with the common dividend totaling $6.20 million.  The current dividend represents an increase of 9.1% over the dividend paid during the same quarter of 2015.

“We delivered another quarter of outstanding performance and demonstrated our earning power by reporting a record quarter of earnings and revenue, as we continued to build on the momentum generated in 2015,” said G. Robert Aston, Jr., Chairman and Chief Executive Officer.  “We increased diluted earnings per share by 20.69% and revenue by 8.81%, from the first quarter of 2015 while producing a return on average assets of 1.14% and a return on average tangible equity of 11.56%."

"Our pending acquisition of Chesapeake, Virginia based Monarch Financial Holdings is proceeding as anticipated and we are looking forward to the opportunity to welcome our new members and provide them with the exquisite personal service that defines TowneBank," said Aston.

First Quarter 2016 Performance Highlights

  • Record total revenues of $78.75 million, a $6.38 million, or 8.81%, increase from first quarter 2015
    • Taxable equivalent net interest margin was 3.37%, including accretion of 0.06%, compared to 3.52%, including accretion of 0.08%, for first quarter 2015
    • Insurance segment total revenue increased 24.17% from first quarter 2015,to $16.08 million
       
  • Loans held for investment increased $456.57 million, or 11.15%, from March 31, 2015
     
  • Total deposits were $4.96 billion, an increase of $449.51 million, or 9.98%, from first quarter 2015
    • Noninterest bearing deposits increased by 14.92%, to $1.45 billion and represent 29.26% of total deposits
    • Total cost of deposits increased to 0.43% from 0.40% at March 31, 2015 reflective of an increase in higher cost time deposits
       
  • Asset quality showed continued strength
    • Nonperforming assets were $37.68 million, or 0.59% of total assets compared to $58.74 million, or 1.01%, at March 31, 2015
    • Nonperforming loans declined to 0.17% of period end loans
    • Foreclosed property decreased 42.47% to $29.74 million
       
  • The Bank remained well-capitalized
    • Common equity tier 1 capital ratio of 12.66%
    • Tier 1 leverage capital ratio of 10.70%
    • Tier 1 risk-based capital ratio of 12.73%
    • Total risk-based capital ratio of 13.46%
    • Tangible book value increased to $12.38

First Quarter 2016 Earnings Compared to First Quarter 2015

Net income for the first quarter was $17.82 million, or $0.35 per diluted share, versus $14.54 million, or $0.29 per diluted share, in first quarter 2015, reflecting strong growth in net interest income and growth in our Insurance segment leading to higher noninterest income.

Net Interest Income
Net interest income increased to $46.34 million, a $2.78 million, or 6.38%, increase from the first quarter of 2015.  The primary driver was the increase in average earning assets, which increased $524.82 million, or 9.92%, from first quarter 2015.  Tax-equivalent net interest margin was 3.37% in the current quarter as compared to 3.52% in first quarter 2015.  Accretion income added $0.65 million, or 6 basis points, to margin in the current quarter as compared to $0.78 million, or 8 basis points, in first quarter 2015.

Noninterest Income
Noninterest income, excluding gains or losses on investment securities, was $32.41 million for the first quarter of 2016, an increase of $3.65 million, or 12.68%, from the first quarter of 2015.  The majority of the increase from the comparative period in 2015 is attributable to insurance commissions, which increased $2.98 million, or 27.01%, primarily due to the acquisition of five insurance agencies in 2015.  Additionally, real estate brokerage and property management income increased $0.87 million, or 22.03%, from the first quarter of 2015 primarily due to the acquisition of a resort property management company in Oak Island, North Carolina in first quarter 2016 and increased revenue in our Hilton Head, South Carolina resort property management business ("Hilton Head").  This increase was partially offset by the sale of our Corolla, North Carolina-based property management business in 2015, which generated management fee revenue of $1.80 million in first quarter 2015.  Residential mortgage banking income decreased $1.33 million, or 15.69%, from first quarter 2015 due to a reduction in pricing and slightly lower production volumes.  Mortgage production was $313.14 million in the first quarter of 2016, which was $5.29 million less than first quarter 2015.

Noninterest Expense
Noninterest expense increased by $1.72 million, or 3.41%, from the comparative quarter of 2015.  Driving the increase were increased operating expenses of $1.05 million related to insurance agencies acquired in 2015 and operating expenses of $0.96 million related to the North Carolina resort property management acquisition.  Excluding the additional noninterest expense from the insurance agencies acquired in 2015 and the resort property management company acquired in 2016, core expenses decreased by $0.29 million in first quarter 2016.

First Quarter 2016 Earnings Compared to Fourth Quarter 2015

Net income for the first quarter was $17.82 million, or $0.35 per diluted share, versus $12.47 million, or $0.24 per diluted share, in fourth quarter 2015, reflecting seasonality and growth in our Insurance and Realty segments.  The seasonal increase in noninterest revenue was augmented by a decrease in noninterest expenses as personnel costs decreased from the previous quarter.

Performance Highlights

  • Total revenues were $78.75 million, a $7.34 million, or 10.28%, increase from fourth quarter 2015
    • Taxable equivalent net interest margin was 3.37%, including accretion of 0.06%, compared to 3.36%, including accretion of 0.09%, for fourth quarter 2015
    • Noninterest income increased $7.34 million due to seasonality and growth in our Insurance and Realty segments
       
  • Loans held for investment increased $32.87 million from December 31, 2015, with a strong loan pipeline heading into the second quarter
     
  • Noninterest bearing deposits increased by $56.40 million, or 4.05% during the quarter

  • Nonperforming assets decreased 12.55% during the quarter

Net Interest Income
On a linked quarter basis, net interest income increased slightly by $0.01 million, or 0.01%, in first quarter 2016 versus fourth quarter 2015, while tax-equivalent net interest margin was 3.37%, an increase of 1 basis point from the fourth quarter of 2015.  Accretion income added $0.65 million, or 6 basis points, to margin in the current quarter, as compared to $1.22 million, or 9 basis points, in the linked quarter.

Noninterest Income
In comparison to the fourth quarter of 2015, noninterest income, excluding gains or losses on investment securities, increased $7.34 million, or 29.25%.  The increase was driven by insurance commission income due to growth from prior year agency acquisitions, combined with higher contingent commission revenue, which is mostly received during the first quarter of each year.  Additionally, real estate brokerage and property management income increased due to a seasonal increase related to our resort property management business.  Residential mortgage banking income decreased by $0.14 million, or 1.89%, from the fourth quarter of 2015 as mortgage production saw a seasonally driven decrease of $40.38 million, which was partially offset by an increase in the value of rate lock commitments of $0.38 million recorded as of March 31, 2016, as compared to a decrease due to the value of rate lock commitments of $0.49 million recognized for the quarter ended December 31, 2015.

Noninterest Expense
Noninterest expense decreased by $0.58 million, or 1.10%, from the fourth quarter of 2015.  Driving the decrease were salary and benefits expenses, which decreased by $0.64 million due to lower personnel costs related to employee profit sharing and 401(k) matching expenses.


Noninterest Income      % Change
 Q1 Q1 Q4 Q1 16 vs. Q1 16 vs.
(dollars in thousands)2016 2015 2015 Q1 15 Q4 15
Residential mortgage banking income, net$7,118  $8,443  $7,255  (15.69)% (1.89)%
Real estate brokerage and property management, net4,827  3,955  2,438  22.05% 97.99%
Insurance commissions and other title fees and income, net14,033  11,049  8,997  27.01% 55.97%
Service charges on deposit accounts2,176  2,197  2,254  (0.96)% (3.46)%
Credit card merchant fees, net895  432  767  107.18% 16.69%
Other income3,366  2,691  3,368  25.08% (0.06)%
Subtotal before gain on investment securities32,415  28,767  25,079  12.68% 29.25%
Net gain on investment securities  49    (100.00)% %
Total noninterest income$32,415  $28,816  $25,079  12.49% 29.25%
 


Noninterest Expense      % Change
 Q1 Q1 Q4 Q1 16 vs. Q1 16 vs.
(dollars in thousands)2016 2015 2015 Q1 15 Q4 15
Salaries and benefits$30,187  $27,679  $30,826  9.06% (2.07)%
Occupancy expense5,017  4,930  5,156  1.76% (2.70)%
Furniture and equipment2,357  2,369  2,390  (0.51)% (1.38)%
Acquisition-related expenses414  415  285  (0.24)% 45.26%
Other expenses14,186  15,047  14,086  (5.72)% 0.71%
Total noninterest expense$52,161  $50,440  $52,743  3.41% (1.10)%
 

Segment Results

        $ Change
(in thousands) Q1 Q1 Q4 Q1 16 vs. Q1 16 vs.
Segment Net Income 2016 2015 2015 Q1 15 Q4 15
Banking $14,133  $11,108  $12,219  $3,025  $1,914 
Realty 1,033  1,647  6  (614) 1,027 
Insurance 2,653  1,783  241  870  2,412 
Total net income $17,819  $14,538  $12,466  $3,281  $5,353 
 

First Quarter 2016 Compared to First Quarter 2015

Banking
Net income for the three months ended March 31, 2016 for the Banking segment was $14.13 million, increasing $3.02 million, or 27.22%, from the comparative 2015 quarter.  The increase in earnings was driven by additional net interest income of $2.64 million caused by an increase in earning assets, as average loan balances increased $449.79 million.  Also contributing to the increase was a decrease in the loan loss provision driven by a reduction in historical loss ratios and an increase in noninterest income.  The increases in income were further augmented by lower noninterest expenses related to decreases in charitable contributions and foreclosed property expenses.

Realty
For the three months ended March 31, 2016, the Realty segment had net income of $1.03 million compared to $1.65 million the first quarter of 2015.  The current quarter results were driven by a decrease in residential mortgage banking income of $1.20 million, or 14.14%, due to a decline in margins combined with slightly lower production volumes.  The decrease was partially offset by an increase in property management fees of $0.73 million, or 27.00%, primarily due to increased revenue from Hilton Head and our purchase of a resort property management business based in Oak Island, North Carolina ("Oak Island") on January 14, 2016.

Insurance
The Insurance segment had net income of $2.65 million for the three months ended March 31, 2016, an increase of $0.87 million as compared to the first quarter of 2015.  Insurance agencies acquired in 2015 contributed additional revenue, net of commission expense, of $1.78 million in first quarter 2016.  Also contributing to increase was organic growth in commercial lines commissions and an increase in commissions from travel insurance. The acquired agencies resulted in additional noninterest expenses of $1.05 million of noninterest expenses, including acquisition-related expenses.

First Quarter 2016 Compared to Fourth Quarter 2015

Banking
The increase in earnings of $1.91 million, or 15.66% from the fourth quarter of 2015 was driven by a decrease in noninterest expenses of $1.40 million as personnel costs decreased along with acquisition-related expenses and advertising and marketing expenses.  Also contributing was a decrease in the loan loss provision of $1.11 million, primarily due to a reduction in historical loss ratios.  Additionally, revenue increased due to a combination of higher net interest income of $0.11 million and an increase in noninterest income of $0.13 million.

Realty
Net income in the Realty segment increased by $1.03 million from the linked quarter ended December 31, 2015.  The increase was primarily a result of a seasonal increase in resort property management fees of $2.63 million.  Partially offsetting the increase were additional operating expenses related to Oak Island operations.  Excluding Oak Island operations, expenses decreased from the linked quarter in the Realty segment.

Insurance
Net income increased $2.41 million from the fourth quarter of 2015.  The improvement from the linked quarter was driven by an increase in contingency and bonus revenue of $3.36 million.  Contingent commissions are seasonal in nature and are mostly received during the first half of each year.  Additionally, commissions from travel insurance increased by $0.83 million and a full quarter of operations from agencies acquired in the third and fourth quarters of 2015 resulted in additional revenue, net of commission expense, of $0.54 million.

Balance Sheet

At March 31, 2016, total Bank assets reached $6.37 billion, an increase of $0.54 billion, or 9.20%, over March 31, 2015.

Loans

       % Change
 Q1 Q1 Q4 Q1 16 vs. Q1 16 vs.
(dollars in thousands)2016 2015 2015 Q1 15 Q4 15
Construction and land development$635,992  $519,390  $598,875  22.45% 6.20%
Commercial real estate - investment related properties998,082  954,826  1,004,393  4.53% (0.63)%
Commercial real estate - owner occupied764,230  770,880  780,000  (0.86)% (2.02)%
Multifamily real estate160,246  146,395  167,371  9.46% (4.26)%
1-4 family residential real estate988,432  915,205  973,331  8.00% 1.55%
Commercial and industrial business loans852,005  700,252  857,036  21.67% (0.59)%
Consumer loans and other153,273  88,747  138,387  72.71% 10.76%
Total$4,552,260  $4,095,695  $4,519,393  11.15% 0.73%
 

The Bank’s loan portfolio ended the period at $4.55 billion representing an increase of 11.15%, or $456.57 million, from the prior year and an increase of 0.73%, or $32.87 million, from December 31, 2015.

Deposits

       % Change
 Q1 Q1 Q4 Q1 16 vs. Q1 16 vs.
(dollars in thousands)2016 2015 2015 Q1 15 Q4 15
Noninterest-bearing demand$1,449,660  $1,261,482  $1,393,264  14.92% 4.05%
Interest-bearing:         
Demand and money market accounts1,769,414  1,643,534  1,824,226  7.66% (3.00)%
Savings302,373  303,936  300,408  (0.51)% 0.65%
Certificates of deposits1,433,679  1,296,666  1,396,129  10.57% 2.69%
Total$4,955,126  $4,505,618  $4,914,027  9.98% 0.84%
 

The Bank continued to experience solid deposit growth with total deposits increasing to $4.96 billion, up $449.51 million, or 9.98%, from March 31, 2015.  The Bank saw continued growth in noninterest bearing demand deposits, which ended the quarter at $1.45 billion, a 14.92% increase from March 31, 2015.  Noninterest deposits represented 29.26% of total deposits at March 31, 2016.

Capital Ratios

  Q1 Q1 Q4
  2016 2015 2015
Common Equity Tier 1 12.66% 13.09% 12.59%
Tier 1 12.73% 13.20% 12.70%
Total 13.46% 13.96% 13.44%
Tier 1 leverage ratio 10.70% 10.99% 10.67%
 

The Bank’s total equity at March 31, 2016 rose to $836.00 million, an increase of $44.42 million, or 5.61%, from March 31, 2015.  Total risk-based capital remained strong as total risk-based capital, Tier 1 capital, Tier 1 leverage ratios, and common equity Tier 1 capital ratios were 13.46%, 12.73%, 10.70%, 12.66%, respectively.  All ratios exceed the current regulatory standards for well capitalized status.

Asset Quality

          
(in thousands)3/31/2016 12/31/2015 9/30/2015 6/30/2015 3/31/2015
          
Nonperforming loans$7,944  $8,670  $8,477  $7,455  $7,045 
          
Foreclosed property29,740  34,420  39,509  46,154  51,698 
          
Total nonperforming assets$37,684  $43,090  $47,986  $53,609  $58,743 
          
Quarterly net loans charged off (recovered)$340  $(156) $69  $339  $333 
          
Year-to-date net loans charged off$340  $585  $741  $672  $333 
 


        Change
  Q1 Q1 Q4 Q1 16 vs. Q1 16 vs.
(dollars in thousands) 2016 2015 2015 Q1 15 Q4 15
Total loans 90 days past due and still accruing $  $3  $424  $(3) $(424)
Total loans 30-89 days past due $12,055  $19,537  $7,477  $(7,482) $4,578 
Allowance for loan losses $37,760  $35,907  $38,359  $1,853  $(599)
Total performing TDRs $24,955  $32,896  $29,114  $(7,941) $(4,159)
           
Nonperforming loans to period end loans 0.17% 0.17% 0.19% % (0.02)%
Nonperforming assets to period end assets 0.59% 1.01% 0.68% (0.42)% (0.09)%
Allowance for loan losses to period end loans 0.83% 0.88% 0.85% (0.05)% (0.02)%
Allowance for loan losses (originated) to originated period end loans 0.92% 1.00% 0.94% (0.08)% (0.02)%
Net charge-offs (recoveries) to average loans (annualized) 0.03% 0.03% (0.01)% % 0.04%
Ratio of allowance for loan losses to nonperforming loans 4.75x 5.10x 4.42x (0.35)x 0.33x
 

Continued strength in credit quality contributed to the Bank's financial results as net charge-offs were $0.34 million in the first quarter of 2016 compared to $0.33 million in the first quarter of 2015 and net recoveries of $0.16 million in the linked quarter.  As a result of the strength in credit quality and a reduction in historical loss ratios, a negative provision for loan losses of $0.26 million was recorded in first quarter 2016, a decrease of $0.58 million as compared to the same quarter of 2015.  Total nonperforming assets were $37.68 million, or 0.59% of Bank assets, at March 31, 2016, as compared to $58.74 million, or 1.01%, at March 31, 2015, and $43.09 million, or 0.68%, at December 31, 2015.  The allowance for loan losses was $37.76 million, increased from $35.91 million at March 31, 2015 and decreased from $38.36 million at December 31, 2015.

About TowneBank:
As one of the top community banks in Virginia and North Carolina, TowneBank operates 37 banking offices serving Chesapeake, Chesterfield County, Glen Allen, Hampton, James City County, Mechanicsville, Newport News, Norfolk, Portsmouth, Richmond, Suffolk, Virginia Beach, Williamsburg, and York County in Virginia, along with Moyock, Grandy, Camden County, Southern Shores, Corolla and Nags Head in North Carolina. Towne also offers a full range of financial services through its controlled divisions and subsidiaries that include Towne Investment Group, Towne Insurance Agency, TFA Benefits, TowneBank Mortgage, TowneBank Commercial Mortgage, Berkshire Hathaway HomeServices Towne Realty, Towne 1031 Exchange, LLC, and Beach Properties of Hilton Head. Local decision-making is a hallmark of its hometown banking strategy that is delivered through the leadership of each group’s President and Board of Directors.  With total assets of $6.37 billion as of March 31, 2016, 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 their 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.  Since the presentation of these GAAP performance measures and their impact differ between companies, 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:
Statements made in this release, other than those concerning historical financial information, may be considered forward-looking statements, which speak only as of the date of this release and are based on current expectations and involve a number of assumptions. These include statements as to the anticipated benefits of the merger with Monarch, including future financial and operating results, cost savings and enhanced revenues that may be realized from the merger as well as other statements of expectations regarding the merger and any other statements regarding future results or expectations. 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. TowneBank’s ability to predict results, or the actual effect of future plans or strategies, is inherently uncertain. Factors which could have a material effect on the operations and future prospects of TowneBank, and the resulting company after the merger with Monarch, include but are not limited to: the businesses of TowneBank and Monarch may not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; expected revenue synergies and cost savings from the merger or other pending or recently completed acquisitions may not be fully realized or realized within the expected timeframe; revenues following the merger may be lower than expected; customer and employee relationships and business operations may be disrupted by the merger; the ability to obtain required regulatory and stockholder approvals, and the ability to complete the merger on the expected timeframe may be more difficult, time-consuming or costly than expected; changes in interest rates, general economic and business conditions; legislative/regulatory changes; the monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve; the quality and composition of the loan and securities portfolios; demand for loan products; deposit flows; competition; demand for financial services in TowneBank’s  market areas; TowneBank’s implementation of new technologies and the ability to develop and maintain secure and reliable electronic systems; changes in the securities markets; and changes in accounting principles, policies and guidelines; and other risk factors detailed from time to time in filings made by TowneBank with the Federal Deposit Insurance Corporation (the “FDIC”). TowneBank undertakes no obligation to update or clarify these forward-looking statements, whether as a result of new information, future events or otherwise.

Additional Information About the Merger and Where to Find It:
In connection with the proposed merger, TowneBank has filed with the FDIC a preliminary proxy statement/prospectus and Monarch has filed with the Securities and Exchange Commission (the “SEC”) a preliminary proxy statement.  TowneBank and Monarch will each deliver a definitive joint proxy statement/prospectus to their respective stockholders seeking approval of the merger and related matters.  In addition, each of TowneBank and Monarch may file other relevant documents concerning the proposed merger with the FDIC and SEC.

Investors and stockholders of both companies are urged to read the definitive joint proxy statement/prospectus when it becomes available and any other relevant documents to be filed with the FDIC and SEC in connection with the proposed merger because they will contain important information about TowneBank, Monarch and the proposed transaction.  Investors and stockholders may obtain free copies of certain of these documents through the website maintained by the SEC at http://www.sec.gov.  Free copies of the definitive joint proxy statement/prospectus, when available, also may be obtained by directing a request by telephone or mail to TowneBank, 6001 Harbour View Boulevard,  Suffolk, Virginia 23425, Attention: Investor Relations (telephone: (757) 638-6794), or Monarch Financial Holdings, Inc., 1435 Crossways Boulevard, Suite 301, Chesapeake, Virginia 23320, Attention: Investor Relations (telephone: (757) 389-5112), or by accessing TowneBank’s website at https://townebank.com under “Investor Relations” or Monarch’s website at https://www.monarchbank.com under “Investor Relations.”  The information on TowneBank’s and Monarch’s websites is not, and shall not be deemed to be, a part of this release or incorporated into other filings either company makes with the FDIC or SEC.

TowneBank and Monarch, and their respective directors and executive officers, may be deemed to be participants in the solicitation of proxies from the stockholders of TowneBank and/or Monarch in connection with the merger. Information about the directors and executive officers of TowneBank is set forth in the proxy statement for TowneBank’s 2016 annual meeting of stockholders filed with the FDIC on April 15, 2016.  Information about the directors and executive officers of Monarch is set forth in the proxy statement for Monarch’s 2015 annual meeting of stockholders filed with the SEC on April 2, 2015.  Additional information regarding the interests of these participants and other persons who may be deemed participants in the merger may be obtained by reading the definitive joint proxy statement/prospectus regarding the merger when it becomes available.

This release does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any offer, solicitation or sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.


Selected Financial Highlights (unaudited)
TOWNEBANK
(dollars in thousands, except per share data)
 
       Increase/  % Increase/
Three months ended March 31,2016 2015  (Decrease)  (Decrease)
        
Results of Operations:       
Net interest income$46,336  $43,556  $2,780  6.38%
Noninterest income (1)32,415  28,767  3,648  12.68%
Gain (loss) on investment securities  49  (49) (100.00)%
Total Revenue78,751  72,372  6,379  8.81%
Noninterest expenses52,161  50,440  1,721  3.41%
Provision for loan losses(259) 323  (582) (180.19)%
Income before income tax and noncontrolling interest26,849  21,609  5,240  24.25%
Provision for income tax expense8,188  6,385  1,803  28.24%
Net income18,661  15,224  3,437  22.58%
Net income attributable to noncontrolling interest(842) (686) (156) 22.74%
Net income attributable to TowneBank17,819  14,538  3,281  22.57%
Preferred stock dividends and accretion  13  (13) (100.00)%
Net income available to common shareholders17,819  14,525  3,294  22.68%
Net income per common share - basic0.35  0.29  0.06  20.69%
Net income per common share - diluted0.35  0.29  0.06  20.69%
Period End Data:       
Total assets$6,365,169  $5,828,703  $536,466  9.20%
Total assets - tangible6,178,224  5,649,097  529,127  9.37%
Earning assets (2)5,896,763  5,355,376  541,387  10.11%
Loans (net of unearned income)4,552,260  4,095,695  456,565  11.15%
Allowance for loan losses37,760  35,907  1,853  5.16%
Goodwill and other intangibles186,945  179,607  7,338  4.09%
Nonperforming assets37,684  58,743  (21,059) (35.85)%
Noninterest bearing deposits1,449,660  1,261,482  188,178  14.92%
Interest bearing deposits3,505,466  3,244,136  261,330  8.06%
Total deposits4,955,126  4,505,618  449,508  9.98%
Total equity836,003  791,580  44,423  5.61%
Total equity - tangible649,058  611,974  37,084  6.06%
Common equity826,875  783,157  43,718  5.58%
Common equity - tangible639,930  603,550  36,380  6.03%
Book value per common share16.00  15.22  0.78  5.12%
Book value per common share - tangible12.38  11.73  0.65  5.54%
Daily Average Balances:       
Total assets$6,313,238  $5,829,533  $483,705  8.30%
Total assets - tangible6,126,524  5,642,883  483,641  8.57%
Earning assets (2)5,815,383  5,290,562  524,821  9.92%
Loans (net of unearned income), excluding nonaccrual loans4,516,277  4,066,484  449,793  11.06%
Allowance for loan losses38,555  36,048  2,507  6.95%
Goodwill and other intangibles186,714  186,650  64  0.03%
Noninterest bearing deposits1,415,793  1,256,023  159,770  12.72%
Interest bearing deposits3,499,607  3,248,834  250,773  7.72%
Total deposits4,915,400  4,504,857  410,543  9.11%
Total equity830,178  781,833  48,345  6.18%
Total equity - tangible643,464  595,183  48,281  8.11%
Common equity821,268  767,980  53,288  6.94%
Common equity - tangible634,554  581,330  53,224  9.16%
Key Ratios:       
Return on average assets1.14% 1.01% 0.13% 12.87%
Return on average assets - tangible1.21% 1.08% 0.13% 12.04%
Return on average equity8.63% 7.54% 1.09% 14.46%
Return on average equity - tangible11.56% 10.27% 1.29% 12.56%
Return on average common equity8.73% 7.67% 1.06% 13.82%
Return on average common equity - tangible11.72% 10.51% 1.21% 11.51%
Net interest margin-fully tax equivalent (2)(3)3.37% 3.52% (0.15)% (4.26)%
Net interest margin (2)3.29% 3.43% (0.14)% (4.08)%
Average earning assets/total average assets92.11% 90.75% 1.36% 1.50%
Average loans/average deposits91.88% 90.27% 1.61% 1.78%
Average noninterest deposits/total average deposits28.80% 27.88% 0.92% 3.30%
Allowance for loan losses/period end loans0.83% 0.88% (0.05)% (5.68)%
Nonperforming assets to period end assets0.59% 1.01% (0.42)% (41.58)%
Period end equity/period end total assets13.13% 13.58% (0.45)% (3.31)%
Efficiency ratio (1)66.24% 69.74% (3.50)% (5.02)%
        
(1) Excludes gain (loss) on investment securities
(2) Includes bank-owned life insurance
(3) Presented on a tax-equivalent basis
 


Selected Financial Highlights (unaudited)
TOWNEBANK
(dollars in thousands, except per share data)
 
 March 31, December 31,   Increase/  % Increase/
Three Months Ended2016 2015  (Decrease)  (Decrease)
        
Results of Operations:       
Net interest income$46,336  $46,331  $5  0.01%
Noninterest income (1)32,415  25,079  7,336  29.25%
Gain (loss) on investment securities      %
Total Revenue78,751  71,410  7,341  10.28%
Noninterest expenses52,161  52,743  (582) (1.10)%
Provision for loan losses(259) 852  (1,111) (130.40)%
Income before income tax and noncontrolling interest26,849  17,815  9,034  50.71%
Provision for income tax expense8,188  4,846  3,342  68.96%
Net income18,661  12,969  5,692  43.89%
Net income attributable to noncontrolling interest(842) (503) (339) 67.40%
Net income attributable to TowneBank17,819  12,466  5,353  42.94%
Preferred stock dividends and accretion      %
Net income available to common shareholders17,819  12,466  5,353  42.94%
Net income per common share - basic0.35  0.24  0.11  45.83%
Net income per common share - diluted0.35  0.24  0.11  45.83%
Period End Data:       
Total assets$6,365,169  $6,296,574  $68,595  1.09%
Total assets - tangible6,178,224  6,115,579  62,645  1.02%
Earning assets (2)5,896,763  5,827,888  68,875  1.18%
Loans (net of unearned income)4,552,260  4,519,393  32,867  0.73%
Allowance for loan losses37,760  38,359  (599) (1.56)%
Goodwill and other intangibles186,945  180,995  5,950  3.29%
Nonperforming assets37,684  43,091  (5,407) (12.55)%
Noninterest bearing deposits1,449,660  1,393,264  56,396  4.05%
Interest bearing deposits3,505,466  3,520,763  (15,297) (0.43)%
Total deposits4,955,126  4,914,027  41,099  0.84%
Total equity836,003  820,194  15,809  1.93%
Total equity - tangible649,058  639,199  9,859  1.54%
Common equity826,875  810,921  15,954  1.97%
Common equity - tangible639,930  629,925  10,005  1.59%
Book value per common share16.00  15.71  0.29  1.85%
Book value per common share - tangible12.38  12.21  0.17  1.39%
Daily Average Balances:       
Total assets$6,313,238  $6,305,571  $7,667  0.12%
Total assets - tangible6,126,524  6,120,799  5,725  0.09%
Earning assets (2)5,815,383  5,800,907  14,476  0.25%
Loans (net of unearned income), excluding nonaccrual loans4,516,277  4,426,387  89,890  2.03%
Allowance for loan losses38,555  37,918  637  1.68%
Goodwill and other intangibles186,714  184,773  1,941  1.05%
Noninterest bearing deposits1,415,793  1,420,047  (4,254) (0.30)%
Interest bearing deposits3,499,607  3,458,597  41,010  1.19%
Total deposits4,915,400  4,878,644  36,756  0.75%
Total equity830,178  823,627  6,551  0.80%
Total equity - tangible643,464  638,855  4,609  0.72%
Common equity821,268  814,894  6,374  0.78%
Common equity - tangible634,554  630,121  4,433  0.70%
Key Ratios:       
Return on average assets1.14% 0.78% 0.36% 46.15%
Return on average assets - tangible1.21% 0.85% 0.36% 42.35%
Return on average equity8.63% 6.00% 2.63% 43.83%
Return on average equity - tangible11.56% 8.11% 3.45% 42.54%
Return on average common equity8.73% 6.07% 2.66% 43.82%
Return on average common equity - tangible11.72% 8.22% 3.50% 42.58%
Net interest margin-fully tax equivalent (2)(3)3.37% 3.36% 0.01% 0.30%
Net interest margin (2)3.29% 3.27% 0.02% 0.61%
Average earning assets/total average assets92.11% 92.00% 0.11% 0.12%
Average loans/average deposits91.88% 90.73% 1.15% 1.27%
Average noninterest deposits/total average deposits28.80% 29.11% (0.31)% (1.06)%
Allowance for loan losses/period end loans0.83% 0.85% (0.02)% (2.35)%
Nonperforming assets to period end assets0.59% 0.68% (0.09)% (13.24)%
Period end equity/period end total assets13.13% 13.03% 0.10% 0.77%
Efficiency ratio (1)66.24% 73.86% (7.62)% (10.32)%
        
(1) Excludes gain (loss) on investment securities
(2) Includes bank-owned life insurance
(3) Presented on a tax-equivalent basis
 


TOWNEBANK
Average Balances, Yields and Rate Paid (unaudited)
(dollars in thousands)
 
 Three Months Ended Three Months Ended Three Months Ended
 March 31, 2016 December 31, 2015 March 31, 2015
  InterestAverage  InterestAverage  InterestAverage
 AverageIncome/Yield/ AverageIncome/Yield/ AverageIncome/Yield/
 BalanceExpenseRate BalanceExpenseRate BalanceExpenseRate
Assets:           
Loans (net of unearned income and deferred costs), excluding nonaccrual loans$4,516,277 $50,781 4.52% $4,426,387 $50,850 4.56% $4,066,484 $47,890 4.78%
Taxable investment securities754,514 3,055 1.62% 782,998 2,987 1.53% 749,414 2,801 1.49%
Tax-exempt investment securities52,979 410 3.09% 54,974 428 3.11% 66,812 536 3.20%
Interest-bearing deposits265,256 330 0.50% 292,085 211 0.29% 202,852 125 0.25%
Loans held for sale76,503 693 3.62% 95,932 865 3.61% 64,512 565 3.50%
Bank-owned life insurance149,854 1,802 4.84% 148,531 2,311 6.17% 140,488 1,753 5.06%
Total earning assets5,815,383 57,071 3.95% 5,800,907 57,652 3.94% 5,290,562 53,670 4.11%
Less: allowance for loan losses(38,555)   (37,918)   (36,048)  
            
Total nonearning assets536,410    542,582    575,019   
            
Total assets$6,313,238    $6,305,571    $5,829,533   
            
Liabilities and Equity:           
Interest-bearing deposits           
Demand and money market$1,782,908 $1,328 0.30% $1,780,151 $1,265 0.28% $1,635,454 $1,111 0.28%
Savings300,070 700 0.94% 299,503 684 0.91% 305,016 683 0.91%
Certificates of deposit1,416,629 3,185 0.90% 1,378,943 3,170 0.91% 1,308,364 2,630 0.82%
Total interest-bearing deposits3,499,607 5,213 0.60% 3,458,597 5,119 0.59% 3,248,834 4,424 0.55%
Borrowings468,798 3,185 2.69% 471,929 3,360 2.79% 447,198 3,388 3.03%
Total interest-bearing liabilities3,968,405 8,398 0.85% 3,930,526 8,479 0.86% 3,696,032 7,812 0.86%
Demand deposits1,415,793    1,420,047    1,256,025   
Other noninterest-bearing liabilities98,862    131,371    95,643   
Total liabilities5,483,060    5,481,944    5,047,700   
            
Shareholders’ equity830,178    823,627    781,833   
            
Total liabilities and equity$6,313,238    $6,305,571    $5,829,533   
            
Net interest income (tax-equivalent basis) $48,673    $49,173    $45,858  
Reconcilement of Non-GAAP Financial Measures             
Bank-owned life insurance (1,802)   (2,311)   (1,753) 
Tax-equivalent basis adjustment (535)   (531)   (549) 
Net interest income (GAAP) $46,336    $46,331    $43,556  
            
Interest rate spread (1)  3.10%   3.09%   3.26%
Interest expense as a percent of average earning assets    0.58%   0.58%   0.60%
Net interest margin (tax equivalent basis) (2)    3.37%   3.36%   3.52%
Total cost of deposits  0.43%   0.42%   0.40%
            
(1) Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities.  Fully tax equivalent.
(2) Net interest margin is net interest income expressed as a percentage of average earning assets.  Fully tax equivalent.
 


TOWNEBANK
Consolidated Balance Sheets
(dollars in thousands, except share data)
 
 March 31, December 31,
 2016 2015 2015
 (unaudited) (audited)
ASSETS     
Cash and due from banks$195,161  $144,215  $250,836 
Interest-bearing deposits in financial institutions1,006  1,000  1,001 
Total Cash and Cash Equivalents196,167  145,215  251,837 
Securities available for sale, at fair value821,551  771,208  723,489 
Securities held to maturity, at amortized cost66,921  83,752  69,045 
Federal Home Loan Bank stock, at amortized cost23,903  22,366  23,691 
Total Securities912,375  877,326  816,225 
Mortgage loans held for sale97,491  102,850  102,346 
Loans, net of unearned income and deferred costs:     
Real estate - residential 1-4 family988,432  915,205  973,331 
Real estate - commercial1,762,312  1,725,706  1,784,393 
Real estate - construction and land development635,992  519,390  598,875 
Real estate - multifamily160,246  146,395  167,371 
Commercial and industrial business852,005  700,252  857,036 
Consumer and other loans153,273  88,747  138,387 
Loans, net of unearned income and deferred costs4,552,260  4,095,695  4,519,393 
Less:  Allowance for loan losses(37,760) (35,907) (38,359)
Net Loans4,514,500  4,059,788  4,481,034 
Premises and equipment, net178,154  166,164  173,695 
Goodwill157,659  156,516  154,842 
Other intangible assets, net29,286  23,090  26,153 
Bank-owned life insurance policies150,623  145,401  149,452 
Other assets128,914  152,353  140,990 
TOTAL ASSETS$6,365,169  $5,828,703  $6,296,574 
      
LIABILITIES AND EQUITY     
Liabilities     
Deposits:     
Noninterest-bearing demand$1,449,660  $1,261,482  $1,393,264 
Interest-bearing:     
Demand and money market accounts1,769,414  1,643,534  1,824,226 
Savings302,373  303,936  300,408 
Certificates of deposit1,433,679  1,296,666  1,396,129 
Total Deposits4,955,126  4,505,618  4,914,027 
Advances from the Federal Home Loan Bank428,940  397,884  429,080 
Repurchase agreements and other borrowings39,442  37,202  37,434 
Total Borrowings468,382  435,086  466,514 
Other liabilities105,658  96,419  95,839 
TOTAL LIABILITIES5,529,166  5,037,123  5,476,380 
Shareholders’ Equity     
Preferred stock:     
Authorized and unissued shares - 2,000,000     
Common stock, $1.667 par: 90,000,000 shares authorized 51,680,059; 51,466,606; and 51,605,521 shares issued at March 31, 2016 and 2015 and December 31, 2015, respectively86,151  85,795  86,026 
Capital surplus536,294  531,483  535,094 
Retained earnings204,413  163,519  192,795 
Common stock issued to deferred compensation trust, at cost 651,379; 637,935; and 648,350 shares at March 31, 2016 and 2015 and December 31, 2015, respectively(10,288) (9,816) (10,172)
Deferred compensation trust10,288  9,816  10,172 
Accumulated other comprehensive income (loss)17  2,359  (2,994)
TOTAL SHAREHOLDERS’ EQUITY826,875  783,156  810,921 
Noncontrolling interests9,128  8,424  9,273 
TOTAL EQUITY836,003  791,580  820,194 
TOTAL LIABILITIES AND EQUITY$6,365,169  $5,828,703  $6,296,574 
 


TOWNEBANK
Consolidated Statements of Income (unaudited)
(dollars in thousands, except per share data)
 
 Three Months Ended
 March 31,
 2016 2015
INTEREST INCOME:   
Loans, including fees$50,247  $47,341 
Investment securities3,464  3,337 
Interest-bearing deposits in financial institutions and federal funds sold330  125 
Mortgage loans held for sale693  565 
Total Interest Income54,734  51,368 
    
INTEREST EXPENSE:   
Deposits5,213  4,424 
Advances from the Federal Home Loan Bank3,163  3,374 
Repurchase agreements and other borrowings22  14 
Total Interest Expense8,398  7,812 
    
Net Interest Income46,336  43,556 
    
PROVISION FOR LOAN LOSSES(259) 323 
    
Net Interest Income after Provision for Loan Losses46,595  43,233 
    
NONINTEREST INCOME:   
Residential mortgage banking income, net7,118  8,443 
Real estate brokerage and property management income, net4,827  3,955 
Insurance commissions and other title fees and income, net14,033  11,049 
Service charges on deposit accounts2,176  2,197 
Credit card merchant fees, net895  432 
Other income3,366  2,691 
Net gain on investment securities  49 
Total Noninterest Income32,415  28,816 
    
NONINTEREST EXPENSE:   
Salaries and employee benefits30,187  27,679 
Occupancy expense5,017  4,930 
Furniture and equipment2,357  2,369 
Other expenses14,600  15,462 
Total Noninterest Expense52,161  50,440 
    
Income before income tax expense and noncontrolling interest26,849  21,609 
    
Provision for income tax expense8,188  6,385 
    
Net income18,661  15,224 
    
Net income attributable to noncontrolling interest(842) (686)
    
Net income attributable to TowneBank$17,819  $14,538 
    
Preferred stock dividends  13 
    
Net income available to common shareholders$17,819  $14,525 
    
Per common share information   
Basic earnings$0.35  $0.29 
Diluted earnings$0.35  $0.29 
Cash dividends declared$0.12  $0.11 
 


TOWNEBANK
Consolidated Statements of Comprehensive Income (unaudited)
(dollars in thousands)
 
 Three Months Ended
 March 31,
 2016 2015
Net income$18,661  $15,224 
    
Other comprehensive income   
    
Unrealized gains on securities   
Unrealized holding gains arising during the period4,480  2,914 
Deferred tax expense(1,568) (1,020)
Realized gains reclassified into earnings  (49)
Deferred tax benefit  17 
Net unrealized gains2,912  1,862 
    
Pension and postretirement benefit plans   
Actuarial gains109   
Deferred tax expense(38)  
Amortization of prior service costs38   
Deferred tax expense(13)  
Amortization of net actuarial loss5  60 
Deferred tax expense(2) (21)
Change in defined benefit retirement plan, net of tax99  39 
    
Other comprehensive income, net of tax3,011  1,901 
    
Comprehensive income$21,672  $17,125 
 


TOWNEBANK
Consolidated Balance Sheets - Five Quarter Trend
(dollars in thousands, except share data)
 
          
 March 31, December 31, September 30, June 30, March 31,
 2016 2015 2015 2015 2015
 (unaudited) (audited) (unaudited) (unaudited) (unaudited)
ASSETS         
Cash and due from banks$195,161  $250,836  $284,625  $184,099  $144,215 
Interest-bearing deposits in financial institutions1,006  1,001  1,000  1,011  1,000 
Total Cash and Cash Equivalents196,167  251,837  285,625  185,110  145,215 
Securities available for sale, at fair value821,551  723,489  542,634  759,425  771,208 
Securities held to maturity, at amortized cost66,921  69,045  75,154  80,195  83,752 
Federal Home Loan Bank stock, at amortized cost23,903  23,691  24,058  24,058  22,366 
Total Securities912,375  816,225  641,846  863,678  877,326 
Mortgage loans held for sale97,491  102,346  99,330  165,994  102,850 
Loans, net of unearned income and deferred costs:4,552,260  4,519,393  4,367,039  4,228,127  4,095,695 
Less: allowance for loan losses(37,760) (38,359) (37,351) (37,290) (35,907)
Net Loans4,514,500  4,481,034  4,329,688  4,190,837  4,059,788 
Premises and equipment, net178,154  173,695  172,940  172,492  166,164 
Goodwill157,659  154,842  152,438  153,191  156,516 
Other intangible assets, net29,286  26,153  23,080  22,016  23,090 
Bank-owned life insurance policies150,623  149,452  147,949  146,729  145,401 
Other assets128,914  140,990  320,995  155,134  152,353 
TOTAL ASSETS$6,365,169  $6,296,574  $6,173,891  $6,055,181  $5,828,703 
LIABILITIES AND EQUITY         
Deposits:         
Noninterest-bearing demand$1,449,660  $1,393,264  $1,445,978  $1,363,551  $1,261,482 
Interest-bearing:         
Demand and money market accounts1,769,414  1,824,226  1,676,623  1,680,038  1,643,534 
Savings302,373  300,408  295,952  300,203  303,936 
Certificates of deposit1,433,679  1,396,129  1,369,325  1,342,860  1,296,666 
Total Deposits4,955,126  4,914,027  4,787,878  4,686,652  4,505,618 
Advances from the Federal Home Loan Bank428,940  429,080  437,282  437,584  397,884 
Repurchase agreements and other borrowings39,442  37,434  33,784  35,737  37,202 
Total Borrowings468,382  466,514  471,066  473,321  435,086 
Other liabilities105,658  95,839  98,878  92,317  96,419 
TOTAL LIABILITIES5,529,166  5,476,380  5,357,822  5,252,290  5,037,123 
Preferred stock         
Authorized and unissued shares - 2,000,000         
          
Common stock, $1.667 par value86,151  86,026  85,985  85,936  85,795 
Capital surplus536,294  535,094  533,609  532,646  531,483 
Retained earnings204,413  192,795  186,522  175,145  163,519 
Common stock issued to deferred compensation trust, at cost(10,288) (10,172) (10,151) (10,110) (9,816)
Deferred compensation trust10,288  10,172  10,151  10,110  9,816 
Accumulated other comprehensive income (loss)17  (2,994) 1,036  291  2,359 
TOTAL SHAREHOLDERS’ EQUITY826,875  810,921  807,152  794,018  783,156 
Noncontrolling interest9,128  9,273  8,917  8,873  8,424 
TOTAL EQUITY836,003  820,194  816,069  802,891  791,580 
TOTAL LIABILITIES AND EQUITY$6,365,169  $6,296,574  $6,173,891  $6,055,181  $5,828,703 
 


TOWNEBANK
Consolidated Statements of Income - Five Quarter Trend (unaudited)
(dollars in thousands, except per share data)
 
 
 Three Months Ended
 March 31, December 31, September 30, June 30, March 31,
 2016 2015 2015 2015 2015
INTEREST INCOME:         
Loans, including fees$50,247  $50,319  $48,906  $48,170  $47,341 
Investment securities3,464  3,415  3,728  3,321  3,337 
Interest-bearing deposits in financial institutions and federal funds sold330  212  107  56  125 
Mortgage loans held for sale693  865  1,246  1,161  565 
Total Interest Income54,734  54,811  53,987  52,708  51,368 
INTEREST EXPENSE:         
Deposits5,213  5,119  4,881  4,442  4,424 
Advances from the Federal Home Loan Bank3,163  3,326  3,422  3,365  3,374 
Repurchase agreements and other borrowings22  35  14  17  14 
Total Interest Expense8,398  8,480  8,317  7,824  7,812 
Net Interest Income46,336  46,331  45,670  44,884  43,556 
          
PROVISION FOR LOAN LOSSES(259) 852  130  1,723  323 
Net Interest Income after Provision for Loan Losses46,595  45,479  45,540  43,161  43,233 
NONINTEREST INCOME:         
Residential mortgage banking income, net7,118  7,255  8,262  10,251  8,443 
Real estate brokerage and property management income, net4,827  2,438  5,349  4,584  3,955 
Insurance commissions and other title fees and income, net14,033  8,997  9,710  9,885  11,049 
Service charges on deposit accounts2,176  2,254  2,388  2,326  2,197 
Credit card merchant fees, net895  767  823  566  432 
Other income3,366  3,368  3,036  5,354  2,691 
Net gain on investment securities    736  119  49 
Total Noninterest Income32,415  25,079  30,304  33,085  28,816 
NONINTEREST EXPENSE:         
Salaries and employee benefits30,187  30,826  28,910  26,544  27,679 
Occupancy expense5,017  5,156  4,703  4,856  4,930 
Furniture and equipment2,357  2,390  2,211  2,369  2,369 
Other expenses14,600  14,371  14,082  15,298  15,462 
Total Noninterest Expense52,161  52,743  49,906  49,067  50,440 
Income before income tax expense and noncontrolling interest26,849  17,815  25,938  27,179  21,609 
Provision for income tax expense8,188  4,846  7,444  8,201  6,385 
Net income18,661  12,969  18,494  18,978  15,224 
Net income attributable to noncontrolling interest(842) (503) (928) (1,166) (686)
Net income attributable to TowneBank$17,819  $12,466  $17,566  $17,812  $14,538 
Preferred stock dividends        13 
Net income available to common shareholders$17,819  $12,466  $17,566  $17,812  $14,525 
Per common share information         
Basic earnings$0.35  $0.24  $0.34  $0.35  $0.29 
Diluted earnings$0.35  $0.24  $0.34  $0.35  $0.29 
Basic weighted average shares outstanding51,290,010  51,267,447  51,153,205  51,089,051  50,652,963 
Diluted weighted average shares outstanding51,392,857  51,440,440  51,263,382  51,151,512  50,724,588 
Cash dividends declared$0.12  $0.12  $0.12  $0.12  $0.11 
 


TOWNEBANK
Insurance Segment Financial Information
(dollars in thousands)
 
          
   Increase/(Decrease)
 Three Months Ended March 31, 2016 March 31, 2016
 March 31, December 31, March 31, 2015 December 31, 2015
 2016 2015 2015 Amount Percent Amount Percent
Commission and fee income             
Property and casualty$8,263  $6,446  $7,371  $1,817  28.19% $892  12.10%
Employee benefits2,721  2,670  2,588  51  1.91% 133  5.14%
Travel insurance1,456  1,131  630  325  28.74% 826  131.11%
Specialized benefit services153  133  144  20  15.04% 9  6.25%
Total commissions and fees12,593  10,380  10,733  2,213  21.32% 1,860  17.33%
              
Contingency and bonus revenue3,411  2,523  53  888  35.20% 3,358  N/M
Other income77  48  58  29  60.42% 19  32.76%
Total revenue$16,081  $12,951  $10,844  $3,130  24.17% $5,237  48.29%
              
Employee commission expense2,168  2,022  2,008  146  7.22% 160  7.97%
Revenue, net of commission expense$13,913  $10,929  $8,836  $2,984  27.30% $5,077  57.46%
              
Salaries and employee benefits5,968  4,794  5,863  1,174  24.49% 105  1.79%
Occupancy expense529  456  537  73  16.01% (8) (1.49)%
Furniture and equipment224  242  235  (18) (7.44)% (11) (4.68)%
Amortization of intangible assets685  526  676  159  30.23% 9  1.33%
Other expenses1,390  1,242  892  148  11.92% 498  55.83%
Total operating expenses8,796  7,260  8,203  1,536  21.16% 593  7.23%
Income before income tax provision and noncontrolling interest$5,117  $3,669  $633  $1,448  39.47% $4,484  708.37%
Plus: Acquisition related expenses76  180  (334) (104) (57.78)% 410  (122.75)%
Plus: Amortization of intangible assets685  526  676  159  30.23% 9  1.33%
Operating earnings before income taxes (non-GAAP)$5,878  $4,375  $975  $1,503  34.35% $4,903  502.87%
 


TOWNEBANK
March 31, 2016
Reconcilement of Non-GAAP Financial Measures:
(dollars in thousands)
 
       
  Three Months Ended
  March 31, March 31, December 31,
  2016 2015 2015
       
Return on average assets (GAAP basis) 1.14% 1.01% 0.78%
Impact of excluding average goodwill and other intangibles and amortization 0.07% 0.07% 0.07%
Return on average tangible assets (Non-GAAP) 1.21% 1.08% 0.85%
       
Return on average equity (GAAP basis) 8.63% 7.54% 6.00%
Impact of excluding average goodwill and other intangibles and amortization 2.93% 2.73% 2.11%
Return on average tangible equity (Non-GAAP) 11.56% 10.27% 8.11%
       
Return on average common equity (GAAP basis) 8.73% 7.67% 6.07%
Impact of excluding average goodwill and other intangibles and amortization 2.99% 2.84% 2.15%
Return on average tangible common equity (Non-GAAP) 11.72% 10.51% 8.22%
       
Book value (GAAP basis) $16.00  15.22  $15.71 
Impact of excluding average goodwill and other intangibles and amortization (3.62) (3.49) (3.50)
Tangible book value $12.38  $11.73  $12.21 



            

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