TowneBank Reports First Quarter 2020 Earnings

Nachrichtenquelle: globenewswire
27.04.2020, 14:30  |  122   |   |   

SUFFOLK, Va., April 27, 2020 (GLOBE NEWSWIRE) -- TowneBank (the “Company”) (NASDAQ: TOWN) today reported earnings for the quarter ended March 31, 2020 of $26.38 million, or $0.36 per diluted share, compared to $31.41 million, or $0.44 per diluted share, for the quarter ended March 31, 2019.

“Our Company began 2020 on strong footing with loan demand exceeding expectations.  However, traditional performance measures such as growth and profitability were temporarily superseded by challenges that are unprecedented in the history of this country.  Our slogan of “Serving Others and Enriching Lives” emerged center stage as we engaged our members, communities and colleagues to understand how we can help them navigate the current environment.  Through our participation in the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), we assisted our members with nearly 5,000 loans totaling $1 billion while also providing safe access to our banking offices and providing work at home solutions for a large number of Towne teammates.  Our strong liquidity and capital positions enabled us to help our members manage through these difficult times,” said G. Robert Aston, Jr., Executive Chairman.

Highlights for the First Quarter of 2020 Compared to the First Quarter of 2019:

  • Total revenues were $137.70 million, an increase of $3.84 million, or 2.87%.
  • Loans held for investment increased $678.83 million, or 8.38%, from March 31, 2019, and $364.91 million, or 4.33%, from December 31, 2019, or 17.43% on an annualized basis.
  • Total deposits were $9.31 billion, an increase of $0.58 billion, or 6.60%, compared to prior year and $0.04 billion, or 0.40%, from December 31, 2019, or 1.61% on an annualized basis.
  • Noninterest bearing deposits increased by 8.77%, to $3.06 billion, representing 32.88% of total deposits.  Compared to the linked quarter, noninterest bearing deposits increased 3.70%, or 14.89% on an annualized basis.
  • Annualized return on common shareholders' equity was 6.42% and annualized return on average tangible common shareholders' equity was 10.01% (non-GAAP).
  • Net interest margin for the quarter was 3.35% and taxable equivalent net interest margin was 3.37% (non-GAAP).
  • Effective tax rate of 19.00% in the quarter compared to 20.72% in the first quarter of 2019.

“Now more than ever it is important to know Your Banker; not your Bank.  Our style of Hometown Banking was redefined when social distancing and quarantines became daily buzz-words in our vocabulary, workplace and social activities.  Under challenging conditions our colleagues are providing uninterrupted services and offering solutions to help businesses and households.  We appreciate the trust and confidence of the communities we serve and our stakeholders,” stated J. Morgan Davis, President and Chief Executive Officer.

Quarterly Net Interest Income Compared to the First Quarter of 2019:

  • Net interest income was $89.50 million compared to $87.47 million at March 31, 2019.
  • Taxable equivalent net interest margin (non-GAAP) was 3.37%, including accretion of 13 basis points, compared to 3.57%, including accretion of 11 basis points, for 2019.
  • Average loans held for investment, with an average yield of 4.73%, represented 79.60% of average earning assets at March 31, 2020 compared to an average yield of 5.06% and 80.16% of average earning assets in the first quarter of 2019.
  • Total cost of deposits decreased to 0.83% from 0.93% at March 31, 2019.
  • Average interest-earning assets totaled $10.74 billion at March 31, 2020 compared to $10.02 billion at March 31, 2019, an increase of 7.22%.
  • Average interest-bearing liabilities totaled $7.16 billion, an increase of $0.34 billion from prior year.

Quarterly Provision for Credit Losses:

  • Effective January 1, 2020, we adopted the current expected credit loss (CECL) accounting standard, which requires an allowance for loans and unfunded commitments, as well as credit losses for debt securities.  The cumulative effect adjustment from the change in accounting policies resulted in an increase in our allowance of $3.01 million for loans and unfunded commitments and $0.23 million for debt securities, with a corresponding decrease in retained earnings (pre-tax).
  • Recorded a quarterly provision for credit losses for on-balance sheet loans of $5.76 million compared to $1.44 million one year ago and $3.60 million in the linked quarter.  This increase is primarily attributable to forecasted credit weaknesses due to deteriorating economic conditions driven by the current COVID-19 pandemic.  Expected loss estimates consider the impacts of decreased economic activity and higher unemployment and the mitigating benefits of government stimulus and industry wide loan modification efforts.
  • Net loan charge-offs were $0.56 million compared to $0.23 million one year prior.  The ratio of net loan charge-offs to average loans on an annualized basis was 0.03% compared to 0.04% in the linked quarter and 0.01% in the first quarter of 2019.
  • Recorded a provision for credit losses on off-balance sheet commitments of $1.10 million.
  • Recorded a provision for credit losses on debt securities of $0.16 million.
  • The on-balance sheet allowance for loan losses represented 0.73% of total loans compared to 0.69% at December 31, 2019 and 0.66% at March 31, 2019.  The allowance for on-balance sheet loan losses was 3.85 times nonperforming loans compared to 3.34 times at December 31, 2019 and 9.36 times at March 31, 2019.

Quarterly Noninterest Income Compared to the First Quarter of 2019:

  • Total noninterest income was $48.20 million compared to $46.38 million in 2019, an increase of $1.82 million, or 3.92%.  Insurance commissions and other title fees increased $1.31 million in the quarter, while residential mortgage banking income decreased $6.09 million, real estate brokerage and property management income decreased $2.33 million, and service charges on deposit accounts decreased $0.42 million.  Also included in noninterest income are net gains on investment securities of $5.00 million as compared to net losses of $0.78 million in the prior year.
  • Residential mortgage banking recorded income of $7.42 million compared to $13.51 million in first quarter 2019.  Loan volume in the current quarter was $923.20 million, with purchase activity comprising 61.31% of that volume.  Loan volume in first quarter 2019 was $513.53 million, with purchase activity of 86.08%. The notable increase in income from loan production between periods, was partially offset by net losses on derivative instruments of $10.89 million for the quarter.
  • Total Insurance segment revenue increased 9.42% to $20.24 million in the first quarter due to organic growth and additional income from a third quarter 2019 agency acquisition.
  • Property management fee revenue decreased 34.19%, or $2.64 million, as compared to first quarter 2019 due to decreases in reservation levels driven by current travel restrictions related to COVID-19.
  • Bank owned life insurance and other noninterest income increased $3.58 million, or 75.23%, as compared to first quarter 2019 due to proceeds from life insurance policies and investment commission income.

Quarterly Noninterest Expense Compared to the First Quarter of 2019:

  • Total noninterest expense was $96.89 million compared to $92.12 million in 2019, an increase of $4.77 million, or 5.17%.  This reflects increases of $3.01 million in salary and benefits expense, $0.76 million in advertising and marketing, $0.75 million in software expense, $0.39 million in professional fees, $0.27 million in furniture and equipment expense, and a decline in occupancy expense of $0.75 million.
  • Market expansion and infrastructure enhancements, that occurred after first quarter 2019, have resulted in generally higher levels of salary and benefits expense, software expense, and professional fees.  Advertising and marketing increased due to focused advertising in our new North Carolina markets.  The decline in occupancy expense is attributable to one time expenses related to the adoption of the new leasing standard in first quarter 2019.

Quarterly Income Taxes Compared to the First Quarter of 2019:

  • Income tax expense was $6.19 million compared to $8.21 million one year prior.  This represents an effective tax rate of 19.00% compared to 20.72% in the first quarter of 2019.

Consolidated Balance Sheet Highlights:

  • Total assets were $12.62 billion for the quarter ended March 31, 2020, an increase of 5.66%, or 22.51% on an annualized basis, compared to $11.95 billion at December 31, 2019.  Total assets increased $1.06 billion, or 9.12%, from $11.57 billion at March 31, 2019.  The linked quarter increase was driven primarily by growth in cash and cash equivalents and loans held for investment.
  • Loans held for investment increased $0.36 billion, or 4.33%, or 17.43% on an annualized basis, compared to year end 2019.
  • Mortgage loans held for sale increased $33.91 million, or 8.09%, over December 31, 2019.
  • Total deposits increased $37.08 million, or 0.40%, or 1.61% on an annualized basis, over December 31, 2019.
  • Total borrowings increased $0.62 billion, or 80.17%, from December 31, 2019.  This increase was primarily attributable to the Company taking actions to shore up liquidity sources in response to the current economic environment.

Investment Securities:

  • Total investment securities were $1.35 billion compared to $1.52 billion at December 31, 2019 and $1.20 billion at March 31, 2019.  The weighted average duration of the portfolio at March 31, 2020 was 4.31 years.  The Company established credit loss reserves related to the HTM and AFS debt securities portfolios of $0.39 million during the quarter.  The carrying value of the AFS debt securities portfolio included $20.70 million in net unrealized gains compared to $19.73 million at December 31, 2019.  During the first quarter of 2020, we sold $211.70 million in AFS debt securities at a gain of $5.00 million, in order to take advantage of interest rate fluctuations in the market in response to concerns over COVID-19.

Loans and Asset Quality:

  • Total loans held for investment were $8.78 billion at March 31, 2020 compared to $8.42 billion at December 31, 2019 and $8.11 billion at March 31, 2019.
  • Nonperforming assets were $29.75 million, or 0.24% of total assets, compared to $24.99 million, or 0.22%, at March 31, 2019.
  • Nonperforming loans were 0.19% of period end loans.
  • Foreclosed property decreased to $13.05 million from $17.07 million at March 31, 2019.  The Company sold the remainder of its former bank premises during the first quarter of 2020 for a reduction of $2.22 million compared to March 31, 2019.
  • Expected loss estimates are subject to change based on continuing review of models and assumptions, portfolio performance, changes in forecasted macroeconomic conditions and loan mix which could result in material additions to the reserve in future periods.

Deposits and Borrowings:

  • Total deposits were $9.31 billion compared to $9.27 billion at December 31, 2019 and $8.73 billion at March 31, 2019.
  • Total loans to deposits were 94.37% compared to 90.81% at December 31, 2019 and 92.83% at March 31, 2019.
  • Non-interest bearing deposits were 32.88% of total deposits at March 31, 2020 compared to 31.83% at December 31, 2019 and 32.23% at March 31, 2019.
  • Total borrowings were $1.39 billion compared to $0.77 billion and $1.03 billion at December 31, 2019 and March 31, 2019, respectively.

Capital:

  • Common equity tier 1 capital ratio of 10.98%.
  • Tier 1 leverage capital ratio of 10.11%.
  • Tier 1 risk-based capital ratio of 11.10%.
  • Total risk-based capital ratio of 14.07%.
  • Book value was $22.77 compared to $22.58 at December 31, 2019 and $21.40 at March 31, 2019.
  • Tangible book value (non-GAAP) was $15.91 compared to $15.69 at December 31, 2019 and $14.46 at March 31, 2019.

About TowneBank:
As one of the top community banks in Virginia and North Carolina, TowneBank operates 42 banking offices serving Chesapeake, Chesterfield County, Glen Allen, Hampton, James City County, Mechanicsville, Newport News, Norfolk, Portsmouth, Richmond, Suffolk, Virginia Beach, Williamsburg, and York County in Virginia, along with Raleigh, Cary, Charlotte, Greensboro, Greenville, Moyock, Grandy, Camden County, Southern Shores, Corolla, Duck and Nags Head in North Carolina.  TowneBank also offers a full range of financial services through its controlled divisions and subsidiaries that include Towne Investment Group, Towne Wealth Management, Towne Insurance Agency, Towne Benefits, TowneBank Mortgage, TowneBank Commercial Mortgage, Berkshire Hathaway HomeServices Towne Realty, Towne 1031 Exchange, LLC, and Towne Vacations.  Local decision-making is a hallmark of its hometown banking strategy that is delivered through the leadership of each group’s President and Board of Directors.  With total assets of $12.62 billion as of March 31, 2020, TowneBank is one of the largest banks headquartered in Virginia.

Non-GAAP Financial Measures:
This press release contains financial information determined by methods other than in accordance with GAAP.  The Company's management uses these non-GAAP financial measures in its analysis of the Company's performance.  These measures typically adjust GAAP performance measures to exclude the effects of the amortization of intangibles and include the tax benefit associated with revenue items that are tax-exempt, as well as adjust income available to common shareholders for certain significant activities or transactions that are infrequent in nature.  Management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of the 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 which could have a material effect on the operations and future prospects of TowneBank include but are not limited to: the impacts of the ongoing coronavirus (COVID-19) pandemic, changes in interest rates, general economic and business conditions; legislative/regulatory changes; the monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System; the quality and composition of TowneBank’s loan and securities portfolios; demand for loan products; deposit flows; competition; demand for financial services in TowneBank’s market area; implementation of new technologies and the ability to develop and maintain secure and reliable electronic systems; changes in the securities markets; changes in accounting principles, policies and guidelines; and other risk factors detailed from time to time in filings made by TowneBank with the Federal Deposit Insurance Corporation.  TowneBank undertakes no obligation to update or clarify these forward-looking statements, whether as a result of new information, future events or otherwise.

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

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

 
TOWNEBANK
Selected Financial Highlights (unaudited)
(dollars in thousands, except per share data)
     
    Three Months Ended
    March 31,   December 31,   September 30,   June 30,   March 31,
  2020   2019   2019   2019   2019
Income and Performance Ratios:                  
  Total Revenue $ 137,696     $ 139,671     $ 145,879     $ 144,537     $ 133,854  
  Net income 27,605     35,948     39,400     36,242     32,082  
  Net income attributable to TowneBank 26,384     35,075     37,659     34,638     31,409  
  Net income per common share - diluted 0.36     0.49     0.52     0.48     0.44  
  Book value per common share 22.77     22.58     22.38     21.95     21.4  
  Book value per common share - tangible (non-GAAP) 15.91     15.69     15.44     15.05     14.46  
  Return on average assets 0.88 %   1.16 %   1.26 %   1.2 %   1.14 %
  Return on average assets - tangible (non-GAAP) 1 %   1.3 %   1.4 %   1.35 %   1.29 %
  Return on average equity 6.37 %   8.44 %   9.22 %   8.83 %   8.24 %
  Return on average equity - tangible (non-GAAP) 9.91 %   12.97 %   14.2 %   13.9 %   13.24 %
  Return on average common equity 6.42 %   8.51 %   9.29 %   8.89 %   8.3 %
  Return on average common equity - tangible (non-GAAP) 10.01 %   13.12 %   14.36 %   14.05 %   13.39 %
  Noninterest income as a percentage of total revenue 35 %   35.59 %   37.55 %   37.86 %   34.65 %
                     
Regulatory Capital Ratios (1):                  
  Common equity tier 1 10.98 %   11.46 %   11.52 %   11.58 %   11.49 %
  Tier 1 11.1 %   11.49 %   11.55 %   11.62 %   11.52 %
  Total 14.07 %   14.58 %   14.7 %   14.85 %   14.79 %
  Tier 1 leverage ratio 10.11 %   9.95 %   9.84 %   9.86 %   9.92 %
                     
Asset Quality:                  
  Allowance for credit losses on loans to nonperforming loans 3.85x   3.34x   3.95x   3.00x   9.36x
  Allowance for credit losses on loans to period end loans 0.73 %   0.69 %   0.68 %   0.67 %   0.66 %
  Nonperforming loans to period end loans 0.19 %   0.21 %   0.17 %   0.22 %   0.07 %
  Nonperforming assets to period end assets 0.24 %   0.27 %   0.26 %   0.29 %   0.22 %
  Net charge-offs to average loans (annualized) 0.03 %   0.04 %   0.03 %   0.08 %   0.01 %
                     
  Nonperforming loans $ 16,700     $ 17,437     $ 14,016     $ 18,202     $ 5,696  
  Former bank premises     1,521     1,510     1,510     2,223  
  Foreclosed property 13,053     13,839     15,517     14,517     17,071  
  Total nonperforming assets $ 29,753     $ 32,797     $ 31,043     $ 34,229     $ 24,990  
  Loans past due 90 days and still accruing interest $ 91     $ 309     $ 636     $ 415     $ 117  
                     
  Allowance for credit losses on loans $ 64,372     $ 58,234     $ 55,428     $ 54,527     $ 53,303  
                     
Mortgage Banking:                  
  Loans originated, mortgage $ 718,681     $ 628,279     $ 703,922     $ 574,638     $ 366,643  
  Loans originated, joint venture 204,522     231,879     259,742     246,491     146,884  
  Total loans originated $ 923,203     $ 860,158     $ 963,664     $ 821,129     $ 513,527  
  Number of loans originated 3,025     2,984     3,360     3,121     1,977  
  Number of originators 221     217     225     229     240  
  Purchase % 61.31 %   70.32 %   68.83 %   84.97 %   86.08 %
  Loans sold $ 809,834     $ 879,910     $ 925,058     $ 694,832     $ 473,068  
  Gross realized gain on sales and fees as a % of loans originated 1.8 %   3.38 %   3.45 %   3.43 %   3.58 %
                     
Other Ratios:                  
  Net interest margin 3.35 %   3.33 %   3.41 %   3.49 %   3.54 %
  Net interest margin-fully tax equivalent (non-GAAP) 3.37 %   3.35 %   3.43 %   3.52 %   3.57 %
  Average earning assets/total average assets 89.15 %   89.57 %   89.53 %   89.46 %   89.5 %
  Average loans/average deposits 92.99 %   88.41 %   87.63 %   91.6 %   95.83 %
  Average noninterest deposits/total average deposits 32.21 %   32.14 %   31.82 %   31.63 %   31.39 %
  Period end equity/period end total assets 13.19 %   13.84 %   13.63 %   13.45 %   13.53 %
  Efficiency ratio 73.02 %   66.11 %   66.66 %   66.8 %   68.43 %
                     
  (1) Current reporting period regulatory capital ratios are preliminary 


 
TOWNEBANK
Selected Data (unaudited)
(dollars in thousands)
 
Investment Securities             % Change
  Q1   Q1   Q4   Q1 20 vs.   Q1 20 vs.
Available-for-sale securities, at fair value 2020   2019   2019   Q1 19   Q4 19
U.S. agency securities $ 121,857     $ 260,152     $ 129,038     (53.16 )%   (5.57 )%
U.S. Treasury notes 1,014     2,229     1,000     (54.51 )%   1.40 %
Municipal securities 266,489     107,278     223,106     148.41 %   19.45 %
Trust preferred and other corporate securities 59,606     35,003     53,367     70.29 %   11.69 %
Mortgage-backed securities issued by GSE and GNMA 799,713     695,115     1,034,797     15.05 %   (22.72 )%
Allowance for credit losses (259 )   n/a   n/a   n/a   n/a
Total $ 1,248,420     $ 1,099,777     $ 1,441,308     13.52 %   (13.38 )%
                   
Gross unrealized gains (losses) reflected in financial statements            
Total gross unrealized gains $ 30,545     $ 6,736     $ 23,950     353.46 %   27.54 %
Total gross unrealized losses (9,848 )   (8,955 )   (4,215 )   9.97 %   133.64 %
Net unrealized gains (losses) and other adjustments on AFS securities $ 20,697     $ (2,219 )   $ 19,735          
                   
Held-to-maturity securities, at amortized cost                  
Municipal securities $ 28,852     $ 34,472     $ 29,167     (16.30 )%   (1.08 )%
Trust preferred corporate securities 2,357     500     2,369     371.40 %   (0.51 )%
Mortgage-backed securities issued by GSE and GNMA 11,222     14,715     12,152     (23.74 )%   (7.65 )%
Less: Allowance for credit losses (133 )   n/a   n/a   n/a   n/a
Total $ 42,298     $ 49,687     $ 43,688     (14.87 )%   (3.18 )%
                   
Gross unrealized gains (losses) not reflected in financial statements                
Total gross unrealized gains $ 964     $ 1,445     $ 1,520     (33.29 )%   (36.58 )%
Total gross unrealized losses     (410 )   (37 )   (100.00 )%   (100.00 )%
Net unrealized gains (losses) in HTM securities $ 964     $ 1,035     $ 1,483          
                   
Loans Held For Investment             % Change
  Q1   Q1   Q4   Q1 20 vs.   Q1 20 vs.
  2020   2019   2019   Q1 19   Q4 19
Real estate - construction and development $ 1,060,834     $ 1,111,360     $ 1,120,533     (4.55 )%   (5.33 )%
Commercial real estate - non owner occupied 2,305,971     1,951,292     2,183,232     18.18 %   5.62 %
Commercial real estate - owner occupied 1,398,216     1,279,039     1,329,144     9.32 %   5.20 %
Real estate - multifamily 283,514     255,649     243,041     10.90 %   16.65 %
Real estate - residential 1-4 family and HELOC 1,693,562     1,637,579     1,653,084     3.42 %   2.45 %
Commercial and industrial business 1,636,244     1,547,623     1,574,275     5.73 %   3.94 %
Consumer and other loans 405,854     322,828     315,979     25.72 %   28.44 %
Total $ 8,784,195     $ 8,105,370     $ 8,419,288     8.38 %   4.33 %
                   
Deposits             % Change
  Q1   Q1   Q4   Q1 20 vs.   Q1 20 vs.
  2020   2019   2019   Q1 19   Q4 19
Noninterest-bearing demand $ 3,060,515     $ 2,813,857     $ 2,951,225     8.77 %   3.70 %
Interest-bearing:                  
Demand and money market accounts 3,573,926     3,290,907     3,586,364     8.60 %   (0.35 )%
Savings 280,807     285,790     276,205     (1.74 )%   1.67 %
Certificates of deposits 2,392,744     2,341,134     2,457,123     2.20 %   (2.62 )%
Total $ 9,307,992     $ 8,731,688     $ 9,270,917     6.60 %   0.40 %


 
TOWNEBANK
Average Balances, Yields and Rate Paid (unaudited)
(dollars in thousands)
 
  Three Months Ended   Three Months Ended   Three Months Ended
  March 31, 2020   December 31, 2019   March 31, 2019
      Interest   Average       Interest   Average       Interest   Average
  Average   Income/   Yield/   Average   Income/   Yield/   Average   Income/   Yield/
  Balance   Expense   Rate   Balance   Expense   Rate   Balance   Expense   Rate
Assets:                                  
Loans (net of unearned income $ 8,550,216     $ 100,566     4.73 %   $ 8,283,388     $ 100,504     4.81 %   $ 8,030,994     $ 100,146     5.06 %
  and deferred costs), excluding
  nonaccrual loans
Taxable investment securities 1,356,411     9,211     2.72 %   1,331,175     9,179     2.76 %   1,036,645     7,529     2.91 %
Tax-exempt investment securities 128,204     861     2.69 %   118,298     908     3.07 %   79,310     765     3.86 %
Total securities 1,484,615     10,072     2.71 %   1,449,473     10,087     2.78 %   1,115,955     8,294     2.97 %
Interest-bearing deposits 373,984     1,102     1.19 %   519,737     2,067     1.58 %   693,365     3,998     2.34 %
Loans held for sale 333,070     2,988     3.59 %   469,725     4,413     3.76 %   178,475     2,003     4.49 %
Total earning assets 10,741,885     114,728     4.3 %   10,722,323     117,071     4.33 %   10,018,789     114,441     4.63 %
Less: allowance for credit losses (55,331 )           (56,766 )           (52,844 )        
Total nonearning assets 1,362,769             1,305,036             1,228,808          
Total assets $ 12,049,323             $ 11,970,593             $ 11,194,753          
Liabilities and Equity:                                  
Interest-bearing deposits                                  
Demand and money market $ 3,521,707     $ 5,319     0.61 %   $ 3,533,912     $ 6,421     0.72 %   $ 3,174,157     $ 6,240     0.8 %
Savings 276,947     593     0.86 %   278,910     638     0.91 %   285,499     1,027     1.46 %
Certificates of deposit 2,434,098     13,150     2.17 %   2,544,845     14,685     2.29 %   2,290,056     11,907     2.11 %
Total interest-bearing deposits 6,232,752     19,062     1.23 %   6,357,667     21,744     1.36 %   5,749,712     19,174     1.35 %
Borrowings 679,745     2,581     1.5 %   454,621     1,810     1.56 %   821,889     4,221     2.05 %
Subordinated debt, net 248,510     2,962     4.77 %   248,361     2,962     4.77 %   247,913     2,962     4.78 %
Total interest-bearing liabilities 7,161,007     24,605     1.38 %   7,060,649     26,516     1.49 %   6,819,514     26,357     1.57 %
Demand deposits 2,962,110             3,011,688             2,630,813          
Other noninterest-bearing liabilities 260,500             250,327             198,527          
Total liabilities 10,383,617             10,322,664             9,648,854          
Shareholders’ equity 1,665,706             1,647,929             1,545,899          
Total liabilities and equity $ 12,049,323             $ 11,970,593             $ 11,194,753          
Net interest income (tax-equivalent basis)     $ 90,123             $ 90,555             $ 88,084      
Reconcilement of Non-GAAP Financial Measures                                
Tax-equivalent basis adjustment     (627 )           (596 )           (611 )    
Net interest income (GAAP)     $ 89,496             $ 89,959             $ 87,473      
                                   
Interest rate spread (1)(3)         2.92 %           2.84 %           3.06 %
Interest expense as a percent of average earning assets       0.92 %           0.98 %           1.07 %
Net interest margin (tax equivalent basis) (2)(3)       3.37 %           3.35 %           3.57 %
Total cost of deposits         0.83 %           0.92 %           0.93 %


(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.
(3) Non-GAAP.

 
TOWNEBANK
Consolidated Balance Sheets
(dollars in thousands, except share data)
   
     
  March 31,   December 31,
  2020   2019
  (unaudited)   (audited)
ASSETS      
Cash and due from banks $ 108,929     $ 97,593  
Interest-bearing deposits at FRB - Richmond 753,643     322,505  
Interest-bearing deposits in financial institutions 23,564     22,518  
Total Cash and Cash Equivalents 886,136     442,616  
Securities available for sale, at fair value (amortized cost $1,227,982, allowance for credit losses of $259) (1) 1,248,420     1,441,308  
Securities held to maturity, at amortized cost (fair value $43,395 )(1) 42,431     43,688  
Less: allowance for credit losses (133 )    
Securities held to maturity, net of allowance for credit losses 42,298     43,688  
Other equity securities 6,462     6,462  
FHLB stock 52,042     30,094  
Total Securities 1,349,222     1,521,552  
Mortgage loans held for sale 453,143     419,233  
Loans, net of unearned income and deferred costs 8,784,195     8,419,288  
Less: allowance for credit losses (64,372 )   (58,234 )
Net Loans 8,719,823     8,361,054  
Premises and equipment, net 236,735     231,806  
Goodwill 446,725     446,816  
Other intangible assets, net 51,448     54,399  
BOLI 240,924     243,062  
Other assets 239,670     227,125  
TOTAL ASSETS $ 12,623,826     $ 11,947,663  
       
LIABILITIES AND EQUITY      
Deposits:      
Noninterest-bearing demand $ 3,060,515     $ 2,951,225  
Interest-bearing:      
Demand and money market accounts 3,573,926     3,586,364  
Savings 280,807     276,205  
Certificates of deposit 2,392,744     2,457,123  
Total Deposits 9,307,992     9,270,917  
Advances from the FHLB 971,527     471,687  
Subordinated debt, net 248,607     248,458  
Repurchase agreements and other borrowings 171,762     52,391  
Total Borrowings 1,391,896     772,536  
Other liabilities 258,306     250,516  
TOTAL LIABILITIES 10,958,194     10,293,969  
Preferred stock      
Authorized and unissued shares - 2,000,000      
Common stock, $1.667 par: 150,000,000 shares authorized      
72,619,938 and 72,469,682 shares issued at      
March 31, 2020 and December 31, 2019, respectively 121,057     121,107  
Capital surplus 1,041,870     1,041,160  
Retained earnings 477,972     467,186  
Common stock issued to deferred compensation trust, at cost      
811,419 and 818,578 shares at      
March 31, 2020 and December 31, 2019, respectively (15,562 )   (15,555 )
Deferred compensation trust 15,562     15,555  
Accumulated other comprehensive income (loss) 12,301     11,302  
TOTAL SHAREHOLDERS’ EQUITY 1,653,200     1,640,755  
Noncontrolling interest 12,432     12,939  
TOTAL EQUITY 1,665,632     1,653,694  
TOTAL LIABILITIES AND EQUITY $ 12,623,826     $ 11,947,663  
(1) For 2020, disclosures are presented in compliance with ASC 326.


 
TOWNEBANK
Consolidated Statements of Income (unaudited)
(dollars in thousands, except per share data)
       
       
  Three Months Ended
  March 31,
  2020   2019
INTEREST INCOME:      
Loans, including fees $ 100,062     $ 99,695  
Investment securities 9,949     8,134  
Interest-bearing deposits in financial institutions and federal funds sold 1,102     3,998  
Mortgage loans held for sale 2,988     2,003  
Total interest income 114,101     113,830  
INTEREST EXPENSE:      
Deposits 19,062     19,174  
Advances from the FHLB 2,492     4,153  
Subordinated debt, net 2,962     2,962  
Repurchase agreements and other borrowings 89     68  
Total interest expense 24,605     26,357  
Net interest income 89,496     87,473  
       
PROVISION FOR CREDIT LOSSES 7,016     1,438  
Net interest income after provision for credit losses 82,480     86,035  
NONINTEREST INCOME:      
Residential mortgage banking income, net 7,416     13,508  
Insurance commissions and other title fees and income, net 16,893     15,582  
Real estate brokerage and property management income, net 6,938     9,268  
Service charges on deposit accounts 2,440     2,861  
Credit card merchant fees, net 1,179     1,183  
BOLI 3,105     1,598  
Other income 5,227     3,157  
Net gain/(loss) on investment securities 5,002     (776 )
Total noninterest income 48,200     46,381  
NONINTEREST EXPENSE:      
Salaries and employee benefits 55,867     52,860  
Occupancy expense 7,502     8,251  
Furniture and equipment 3,640     3,371  
Amortization - intangibles 2,950     3,192  
Software expense 3,492     2,745  
Data processing 2,791     3,166  
Professional fees 3,067     2,679  
Advertising and marketing 3,584     2,829  
Other expenses 13,995     13,030  
Total noninterest expense 96,888     92,123  
Income before income tax expense and noncontrolling interest 33,792     40,293  
Provision for income tax expense 6,187     8,211  
Net income $ 27,605     $ 32,082  
Net income attributable to noncontrolling interest (1,221 )   (673 )
Net income attributable to TowneBank $ 26,384     $ 31,409  
Per common share information      
Basic earnings $ 0.37     $ 0.44  
Diluted earnings $ 0.36     $ 0.44  
Cash dividends declared $ 0.18     $ 0.16  


 
TOWNEBANK
Consolidated Balance Sheets - Five Quarter Trend
(dollars in thousands, except share data)
 
                   
  March 31,   December 31,   September 30,   June 30,   March 31,
  2020   2019   2019   2019   2019
  (unaudited)   (audited)   (unaudited)   (unaudited)   (unaudited)
ASSETS                  
Cash and due from banks $ 108,929     $ 97,593     $ 124,439     $ 110,580     $ 104,091  
Interest-bearing deposits at FRB - Richmond 753,643     322,505     675,288     834,505     775,208  
Interest-bearing deposits in financial institutions 23,564     22,518     21,663     21,527     21,001  
Total Cash and Cash Equivalents 886,136     442,616     821,390     966,612     900,300  
Securities available for sale, at fair value (amortized cost $1,227,982, allowance for credit losses of $259) (1) 1,248,420     1,441,308     1,337,395     1,260,821     1,099,777  
Securities held to maturity, at amortized cost (fair value $43,395 )(1) 42,431     43,688     44,494     50,574     49,687  
Less: allowance for credit losses (133 )                
Securities held to maturity, net of allowance for credit losses 42,298     43,688     44,494     50,574     49,687  
Other equity securities 6,462     6,462     5,697     5,396     5,022  
FHLB stock 52,042     30,094     26,282     32,657     41,464  
Total Securities 1,349,222     1,521,552     1,413,868     1,349,448     1,195,950  
Mortgage loans held for sale 453,143     419,233     456,719     362,773     247,021  
Loans, net of unearned income and deferred costs 8,784,195     8,419,288     8,182,829     8,126,729     8,105,370  
Less: allowance for credit losses (64,372 )   (58,234 )   (55,428 )   (54,527 )   (53,303 )
Net Loans 8,719,823     8,361,054     8,127,401     8,072,202     8,052,067  
Premises and equipment, net 236,735     231,806     231,060     230,177     227,458  
Goodwill 446,725     446,816     446,423     442,881     442,881  
Other intangible assets, net 51,448     54,399     57,404     58,391     61,333  
BOLI 240,924     243,062     241,652     240,621     238,977  
Other assets 239,670     227,125     225,374     219,375     202,276  
TOTAL ASSETS $ 12,623,826     $ 11,947,663     $ 12,021,291     $ 11,942,480     $ 11,568,263  
LIABILITIES AND EQUITY                  
Deposits:                  
Noninterest-bearing demand $ 3,060,515     $ 2,951,225     $ 3,030,505     $ 2,950,615     $ 2,813,857  
Interest-bearing:                  
Demand and money market accounts 3,573,926     3,586,364     3,534,252     3,409,322     3,290,907  
Savings 280,807     276,205     280,552     277,495     285,790  
Certificates of deposit 2,392,744     2,457,123     2,592,705     2,631,386     2,341,134  
Total Deposits 9,307,992     9,270,917     9,438,014     9,268,818     8,731,688  
Advances from the FHLB 971,527     471,687     381,846     532,004     739,160  
Subordinated debt, net 248,607     248,458     248,309     248,160     248,010  
Repurchase agreements and other borrowings 171,762     52,391     42,971     56,355     44,775  
Total Borrowings 1,391,896     772,536     673,126     836,519     1,031,945  
Other liabilities 258,306     250,516     271,617     230,691     238,974  
TOTAL LIABILITIES 10,958,194     10,293,969     10,382,757     10,336,028     10,002,607  
Preferred stock                  
Authorized shares - 2,000,000                  
Common stock, $1.667 par value 121,057     121,107     121,080     121,038     121,047  
Capital surplus 1,041,870     1,041,160     1,039,156     1,036,982     1,035,563  
Retained earnings 477,972     467,186     445,186     420,600     399,030  
Common stock issued to deferred compensation                  
trust, at cost (15,562 )   (15,555 )   (15,317 )   (15,160 )   (14,067 )
Deferred compensation trust 15,562     15,555     15,317     15,160     14,067  
Accumulated other comprehensive income (loss) 12,301     11,302     19,958     15,143     (1,792 )
TOTAL SHAREHOLDERS’ EQUITY 1,653,200     1,640,755     1,625,380     1,593,763     1,553,848  
Noncontrolling interest 12,432     12,939     13,154     12,689     11,808  
TOTAL EQUITY 1,665,632     1,653,694     1,638,534     1,606,452     1,565,656  
TOTAL LIABILITIES AND EQUITY $ 12,623,826     $ 11,947,663     $ 12,021,291     $ 11,942,480     $ 11,568,263  
(1) For 2020, disclosures are presented in compliance with ASC 326.            



   
TOWNEBANK  
Consolidated Statements of Income - Five Quarter Trend (unaudited)  
(dollars in thousands, except share data)  
   
   
  Three Months Ended
  March 31,   December 31,   September 30,   June 30,   March 31,  
  2020   2019   2019   2019   2019  
INTEREST INCOME:                    
Loans, including fees $ 100,062     $ 100,059     $ 102,047     $ 101,874     $ 99,695    
Investment securities 9,949     9,936     9,889     8,987     8,134    
Interest-bearing deposits in financial institutions and federal funds sold 1,102     2,067     3,745     4,015     3,998    
Mortgage loans held for sale 2,988     4,413     3,956     3,007     2,003    
Total interest income 114,101     116,475     119,637     117,883     113,830    
INTEREST EXPENSE:                    
Deposits 19,062     21,744     23,552     21,784     19,174    
Advances from the FHLB 2,492     1,730     1,935     3,201     4,153    
Subordinated debt 2,962     2,962     2,962     2,962     2,962    
Repurchase agreements and other borrowings 89     80     85     117     68    
Total interest expense 24,605     26,516     28,534     28,064     26,357    
Net interest income 89,496     89,959     91,103     89,819     87,473    
                     
PROVISION FOR CREDIT LOSSES 7,016     3,601     1,508     2,824     1,438    
Net interest income after provision for credit losses 82,480     86,358     89,595     86,995     86,035    
NONINTEREST INCOME:                    
Residential mortgage banking income, net 7,416     15,884     18,855     18,565     13,508    
Insurance commissions and other title fees and income, net 16,893     15,001     16,681     17,213     15,582    
Real estate brokerage and property management income, net 6,938     6,737     9,444     8,843     9,268    
Service charges on deposit accounts 2,440     2,245     2,253     3,185     2,861    
Credit card merchant fees, net 1,179     1,389     1,514     660     1,183    
BOLI 3,105     3,865     2,117     1,635     1,598    
Other income 5,227     4,591     3,981     4,617     3,157    
Net gain/(loss) on investment securities 5,002         (69 )       (776 )  
Total noninterest income 48,200     49,712     54,776     54,718     46,381    
NONINTEREST EXPENSE:                    
Salaries and employee benefits 55,867     56,013     55,784     54,263     52,860    
Occupancy expense 7,502     7,516     7,953     7,662     8,251    
Furniture and equipment 3,640     3,598     3,805     3,578     3,371    
Amortization - intangibles 2,950     3,005     3,059     3,113     3,192    
Software expense 3,492     2,976     3,208     2,788     2,745    
Data processing 2,791     2,510     2,533     3,616     3,166    
Professional fees 3,067     2,990     3,566     3,707     2,679    
Advertising and marketing 3,584     2,839     3,429     3,182     2,829    
Other expenses 13,995     10,889     13,950     14,647     13,030    
Total noninterest expense 96,888     92,336     97,287     96,556     92,123    
Income before income tax expense and noncontrolling interest 33,792     43,734     47,084     45,157     40,293    
Provision for income tax expense 6,187     7,786     7,684     8,915     8,211    
Net income 27,605     35,948     39,400     36,242     32,082    
Net income attributable to noncontrolling interest (1,221 )   (873 )   (1,741 )   (1,604 )   (673 )  
Net income attributable to TowneBank $ 26,384     $ 35,075     $ 37,659     $ 34,638     $ 31,409    
Per common share information                    
Basic earnings $ 0.37     $ 0.49     $ 0.52     $ 0.48     $ 0.44    
Diluted earnings $ 0.36     $ 0.49     $ 0.52     $ 0.48     $ 0.44    
Basic weighted average shares outstanding 72,206,228     72,122,476     72,091,221     72,044,817     71,992,330    
Diluted weighted average shares outstanding 72,299,721     $ 72,302,414     72,222,934     72,145,600     72,099,558    
Cash dividends declared $ 0.18     $ 0.18     $ 0.18     $ 0.18     $ 0.16    


 
TOWNEBANK
Banking Segment Financial Information (unaudited)
(dollars in thousands)
 
           
  Three Months Ended   Increase/(Decrease)
  March 31,   December 31,   2020 over 2019
  2020   2019   2019   Amount   Percent
Revenue                  
Net interest income $ 87,406     $ 86,400     $ 87,637     $ 1,006     1.16 %
Service charges on deposit                  
  accounts 2,440     2,861     2,245     (421 )   (14.72 )%
Credit card merchant fees 1,179     1,183     1,389     (4 )   (0.34 )%
Other income 7,061     3,927     5,271     3,134     79.81 %
Subtotal 10,680     7,971     8,905     2,709     33.99 %
Net gain/(loss) on investment securities 5,002     (776 )       5,778     (744.59 )%
Total noninterest income 15,682     7,195     8,905     8,487     117.96 %
Total revenue 103,088     93,595     96,542     9,493     10.14 %
                   
Provision for credit losses 7,041     1,438     3,601     5,603     389.64 %
                   
Expenses                  
Salaries and employee benefits 33,225     31,087     34,183     2,138     6.88 %
Occupancy expense 4,916     5,244     4,959     (328 )   (6.25 )%
Furniture and equipment 2,660     2,367     2,577     293     12.38 %
Amortization of intangibles 1,164     1,366     1,214     (202 )   (14.79 )%
Other expenses 18,705     16,181     14,078     2,524     15.6 %
Total expenses 60,670     56,245     57,011     4,425     7.87 %
Income before income tax, corporate allocation and noncontrolling interest 35,377     35,912     35,930     (535 )   (1.49 )%
Corporate allocation 670     452     627     218     48.23 %
Income before income tax provision and noncontrolling interest 36,047     36,364     36,557     (317 )   (0.87 )%
Provision for income tax expense 6,663     7,192     6,368     (529 )   (7.36 )%
Net income 29,384     29,172     30,189     212     0.73 %
Noncontrolling interest (1 )   2     (1 )   (3 )   (150.00 )%
Net income attributable to TowneBank $ 29,383     $ 29,174     $ 30,188     $ 209     0.72 %
                   
Efficiency ratio 61.85 %   59.6 %   59.05 %   2.25 %   3.78 %


 
TOWNEBANK
Realty Segment Financial Information (unaudited)
(dollars in thousands)
 
     
  Three Months Ended   Increase/(Decrease)
  March 31,   December 31,   2020 over 2019
  2020   2019   2019   Amount   Percent
Revenue                  
Residential mortgage brokerage $ 8,007     $ 13,756     $ 16,617     $ (5,749 )   (41.79 )%
income, net
Real estate brokerage income, net 1,865     1,561     2,550     304     19.47 %
Title insurance and settlement fees 436     368     531     68     18.48 %
Property management fees, net 5,073     7,708     4,187     (2,635 )   (34.19 )%
Income from unconsolidated 186     94     75     92     97.87 %
subsidiary
Net interest and other income 2,421     1,372     2,787     1,049     76.46 %
Total revenue 17,988     24,859     26,747     (6,871 )   (27.64 )%
                   
Expenses                  
Salaries and employee benefits 13,293     12,895     12,941     398     3.09 %
Occupancy expense 1,927     2,345     1,857     (418 )   (17.83 )%
Furniture and equipment 762     768     773     (6 )   (0.78 )%
Amortization of intangible assets 657     725     655     (68 )   (9.38 )%
Other expenses 6,867     6,241     7,030     626     10.03 %
Total expenses 23,506     22,974     23,256     532     2.32 %
                   
(Loss) income before income tax, corporate allocation and noncontrolling interest (5,518 )   1,885     3,491     (7,403 )   (392.73 )%
Corporate allocation (393 )   (263 )   (362 )   (130 )   49.43 %
(Loss) income before income tax provision and noncontrolling interest (5,911 )   1,622     3,129     (7,533 )   (464.43 )%
Provision for income tax (benefit) expense (1,292 )   551     416     (1,843 )   (334.48 )%
Net (loss) income (4,619 )   1,071     2,713     (5,690 )   (531.28 )%
Noncontrolling interest (791 )   (252 )   (715 )   (539 )   213.89 %
Net (loss) income attributable to TowneBank $ (5,410 )   $ 819     $ 1,998     $ (6,229 )   (760.56 )%
                   
Efficiency ratio 130.68 %   92.42 %   86.95 %   38.26 %   41.4 %



 
TOWNEBANK
Insurance Segment Financial Information (unaudited)
(dollars in thousands)
 
           
  Three Months Ended   Increase/(Decrease)
  March 31,   December 31,   2020 over 2019
  2020   2019   2019   Amount   Percent
Commission and fee income                  
Property and casualty $ 12,786     $ 11,873     $ 11,957     $ 913     7.69 %
Employee benefits 3,918     3,506     3,758     412     11.75 %
Travel insurance 1,266     1,289     794     (23 )   (1.78 )%
Specialized benefit services 168     170     173     (2 )   (1.18 )%
Total commissions and fees 18,138     16,838     16,682     1,300     7.72 %
                   
Contingency and bonus revenue 2,022     1,585     1,396     437     27.57 %
Other income 81     75     1,805     6     8 %
Total revenue 20,241     18,498     19,883     1,743     9.42 %
                   
Employee commission expense 3,596     3,098     3,501     498     16.07 %
Revenue, net of commission expense 16,645     15,400     16,382     1,245     8.08 %
                   
Salaries and employee benefits 9,349     8,878     8,889     471     5.31 %
Occupancy expense 659     662     700     (3 )   (0.45 )%
Furniture and equipment 218     236     248     (18 )   (7.63 )%
Amortization of intangible assets 1,129     1,101     1,136     28     2.54 %
Other expenses 1,357     2,027     1,096     (670 )   (33.05 )%
Total operating expenses 12,712     12,904     12,069     (192 )   (1.49 )%
Income before income tax, corporate allocation and noncontrolling interest 3,933     2,496     4,313     1,437     57.57 %
Corporate allocation (277 )   (189 )   (265 )   (88 )   46.56 %
Income before income tax provision and noncontrolling interest 3,656     2,307     4,048     1,349     58.47 %
Provision for income tax expense 816     468     1,002     348     74.36 %
Net income 2,840     1,839     3,046     1,001     54.43 %
Noncontrolling interest (429 )   (423 )   (157 )   (6 )   1.42 %
Net income attributable to TowneBank $ 2,411     $ 1,416     $ 2,889     $ 995     70.27 %
                   
Provision for income taxes 816     468     1,002     348     74.36 %
Depreciation, amortization and interest expense 1,300     1,333     1,309     (33 )   (2.48 )%
EBITDA (non-GAAP) $ 4,527     $ 3,217     $ 5,200     $ 1,310     40.72 %
                   
Efficiency ratio 76.37 %   83.79 %   73.67 %   (7.42 )%   (8.86 )%



 
TOWNEBANK
Reconcilement of Non-GAAP Financial Measures
(dollars in thousands)
 
           
  Three Months Ended
  March 31,   March 31,   December 31,
  2020   2019   2019
           
Return on average assets (GAAP) 0.88 %   1.14 %   1.16 %
Impact of excluding average goodwill and other 0.12 %   0.15 %   0.14 %
intangibles and amortization
Return on average tangible assets (non-GAAP) 1 %   1.29 %   1.3 %
           
Return on average equity (GAAP) 6.37 %   8.24 %   8.44 %
Impact of excluding average goodwill and other 3.54 %   5 %   4.53 %
intangibles and amortization
Return on average tangible equity (non-GAAP) 9.91 %   13.24 %   12.97 %
           
Return on average common equity (GAAP) 6.42 %   8.3 %   8.51 %
Impact of excluding average goodwill and other 3.59 %   5.09 %   4.61 %
intangibles and amortization
Return on average tangible common equity 10.01 %   13.39 %   13.12 %
(non-GAAP)
           
Book value (GAAP) $ 22.77     $ 21.4     $ 22.58  
Impact of excluding average goodwill and other (6.86 )   (6.94 )   (6.89 )
intangibles and amortization
Tangible book value (non-GAAP) $ 15.91     $ 14.46     $ 15.69  
           
Average assets (GAAP) $ 12,049,323     $ 11,194,753     $ 11,970,593  
Less: average goodwill 446,838     442,869     446,428  
Less: average intangible assets 53,285     63,400     56,339  
Average tangible assets (non-GAAP) $ 11,549,200     $ 10,688,484     $ 11,467,826  
           
Average equity (GAAP) $ 1,665,706     $ 1,545,899     $ 1,647,929  
Less: average goodwill 446,838     442,869     446,428  
Less: average intangible assets 53,285     63,400     56,339  
Average tangible equity (non-GAAP) $ 1,165,583     $ 1,039,630     $ 1,145,162  
           
Average common equity (GAAP) $ 1,653,676     $ 1,534,131     $ 1,635,394  
Less: average goodwill 446,838     442,869     446,428  
Less: average intangible assets 53,285     63,400     56,339  
Average tangible common equity (non-GAAP) $ 1,153,553     $ 1,027,862     $ 1,132,627  
           
Net Income (GAAP) $ 26,384     $ 31,409     35,075  
Amortization of Intangibles, net of tax 2,331     2,521     2,374  
Tangible Net Income (non-GAAP) $ 28,715     $ 33,930     $ 37,449  


 
TOWNEBANK
Reconcilement of Non-GAAP Financial Measures
(dollars in thousands, except per share data)
                     
                     
Reconcilement of GAAP Earnings to Operating Earnings Excluding Certain Items Affecting Comparability   Three Months Ended
    March 31,   December 31,   September 30,   June 30,   March 31,
    2020   2019   2019   2019   2019
Net income (GAAP)   $ 26,384     $ 35,075     $ 37,659     $ 34,638     $ 31,409  
                     
Acquisition-related expenses   (150 )   19     207     20     411  
Income tax expense (benefit) - other items   21     (3 )   (20 )   (3 )   (52 )
Total charges, net of taxes   (129 )   16     187     17     359  
Operating earnings, excluding certain items affecting   $ 26,255     $ 35,091     $ 37,846     $ 34,655     $ 31,768  
comparability (non-GAAP)
Weighted average diluted shares   72,299,721     72,311,979     72,222,934     72,145,600     72,099,558  
Diluted EPS (GAAP)   $ 0.36     $ 0.49     $ 0.52     $ 0.48     $ 0.44  
Diluted EPS, excluding certain items affecting   $ 0.36     $ 0.49     $ 0.52     $ 0.48     $ 0.44  
comparability (non-GAAP)
Average assets   $ 12,049,323     $ 11,970,593     $ 11,845,282     $ 11,532,278     $ 11,194,753  
Average tangible equity   $ 1,165,583     $ 1,145,162     1,119,824     $ 1,070,635     $ 1,039,630  
Return on average assets, excluding certain items   0.88 %   1.16 %   1.27 %   1.21 %   1.15 %
affecting comparability (non-GAAP)
Return on average tangible equity, excluding certain items affecting comparability (non-GAAP)   9.86 %   12.98 %   14.26 %   13.9 %   13.38 %
Return on average common tangible equity, excluding certain items affecting comparability (non-GAAP)   9.97 %   13.12 %   14.42 %   14.06 %   13.53 %
Efficiency ratio, excluding certain items affecting   73.13 %   66.1 %   66.52 %   66.79 %   68.12 %
comparability (non-GAAP)
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