TowneBank

10/23/2024 | Press release | Distributed by Public on 10/23/2024 14:37

TowneBank Reports Third Quarter 2024 Earnings

SUFFOLK, Va., Oct. 23, 2024 (GLOBE NEWSWIRE) -- TowneBank (the "Company" or "Towne") (NASDAQ: TOWN) today reported earnings for the quarter ended September 30, 2024 of $42.95 million, or $0.57 per diluted share, compared to $44.86 million, or $0.60 per diluted share, for the quarter ended September 30, 2023. Excluding certain items affecting comparability, core earnings (non-GAAP) were $43.39 million, or $0.58 per diluted share, in the current quarter compared to $44.88 million, or $0.60 per diluted share, for the quarter ended September 30, 2023.

"Our third quarter results continued to deliver increased net interest income and noninterest income contributions from our diverse business model which were in line with expectations. We remain committed to prudent balance sheet management strategies. We were also excited to announce our partnership with Village Bank which will meaningfully enhance our Richmond presence, which is core to our franchise future growth. Lastly, the recently released FDIC Deposit Market Share Report for 2024 continues to demonstrate the strength of our Main Street banking model and core deposit franchise, resulting in the #1 market share, or 30%, in our legacy Virginia Beach-Norfolk-Newport News, VA-NC MSA," said G. Robert Aston, Jr., Executive Chairman.

Highlights for Third Quarter 2024:

  • Total revenues were $174.52 million, an increase of $1.65 million, or 0.96%, compared to third quarter 2023. Noninterest income increased $2.43 million, driven by growth in residential mortgage banking income and insurance commissions. Partially offsetting the increase in noninterest income was a $0.78 million decline in net interest income.
  • Total deposits were $14.36 billion, an increase of $482.37 million, or 3.48%, compared to third quarter 2023. Total deposits increased 0.63%, or $90.58 million, in comparison to June 30, 2024, 2.52% on an annualized basis.
  • Noninterest-bearing deposits decreased 3.99%, to $4.27 billion, compared to third quarter 2023 and represented 29.71% of total deposits. Compared to the linked quarter, noninterest-bearing deposits decreased 0.84%.
  • Loans held for investment were $11.41 billion, an increase of $239.55 million, or 2.14%, compared to September 30, 2023, but a decrease of $39.23 million, or 0.34%, compared to June 30, 2024.
  • Annualized return on common shareholders' equity was 8.18% compared to 9.04% in third quarter 2023. Annualized return on average tangible common shareholders' equity (non-GAAP) was 11.54% compared to 13.11% in third quarter 2023.
  • Net interest margin was 2.90% for the quarter and tax-equivalent net interest margin (non-GAAP) was 2.93%, including purchase accounting accretion of 3 basis points, compared to the prior year quarter net interest margin of 2.95% and tax-equivalent net interest margin (non-GAAP) of 2.98%, including purchase accounting accretion of 5 basis points.
  • Compared to the linked quarter, net interest margin increased 4 bp and spread increased 6 bp.
  • The effective tax rate was 11.52% in the quarter compared to 17.34% in third quarter 2023 and 15.93% in the linked quarter. The lower effective tax rate in the current quarter was primarily due to the impact on state and federal taxes from the increase in credits and losses related to LIHTC investment properties placed in service during the period.

"Growth has certainly been challenging in the current environment but we believe our balance sheet is well positioned to support mid-single digit growth rates as we look ahead to next year. We plan to aggressively expand Towne Insurance and evaluate other opportunities to enhance our fee-based lines of business to further drive our differentiated business model," stated William I. Foster III, President and Chief Executive Officer.

Quarterly Net Interest Income:

  • Net interest income was $112.28 million compared to $113.06 million for the quarter ended September 30, 2023. The decrease was driven by increased deposit costs, which were mostly offset by higher yields on earning assets.
  • On an average basis, loans held for investment, with a yield of 5.46%, represented 74.16% of earning assets at September 30, 2024 compared to a yield of 5.13% and 73.45% of earning assets in the third quarter of 2023.
  • The cost of interest-bearing deposits was 3.28% for the quarter ended September 30, 2024, compared to 2.77% in second quarter 2023. Interest expense on deposits increased $17.96 million, or 27.98%, over the prior year quarter driven by the increase in rate and growth in interest-bearing deposits.
  • Our total cost of deposits increased to 2.29% from 1.84% for the quarter ended September 30, 2023 due to a combination of higher interest-bearing deposit balances coupled with higher rates. The Federal Reserve Open Market Committee lowered the overnight funds rate late in the third quarter. Management is expecting the decrease to have favorable impact on deposit costs in the fourth quarter of 2024.
  • Average interest-earning assets totaled $15.40 billion at September 30, 2024 compared to $15.21 billion at September 30, 2023, an increase of 1.26%. The Company anticipates approximately $604 million of cash flows from its securities portfolio to be available for reinvestment in the next twenty-four months.
  • Average interest-bearing liabilities totaled $10.25 billion, an increase of $493.95 million, or 5.06%, from prior year, driven by deposit growth. Borrowings have declined between periods. There were no short term FHLB borrowings in the third quarter of 2024, compared to an average of $248.91 million in the prior year quarter.

Quarterly Provision for Credit Losses:

  • The quarterly provision for credit losses was a benefit of $1.10 million compared to an expense of $1.01 million in the prior year quarter and a benefit of $177 thousand in the linked quarter.
  • The allowance for credit losses on loans decreased $2.36 million in third quarter 2024, compared to the linked quarter. The decrease in the allowance was driven by a modest decline in the loan portfolio, primarily in higher-risk real estate construction and development loans, combined with continued strength in credit quality, and improvements in macroeconomic forecast scenarios utilized in our model.
  • Net loan charge-offs were $0.68 million in the quarter compared to net recoveries of $1.07 million in the prior year quarter and $19 thousand in the linked quarter. Year-to-date 2024, net loan charge-offs were $1.18 million compared to net loan charge-offs of $2.81 million in first nine months of 2023.
  • The ratio of net charge-offs to average loans on an annualized basis was 0.02% in third quarter 2024, compared to (0.04)% in third quarter 2023 and 0.00% in the linked quarter.
  • The allowance for credit losses on loans represented 1.08% of total loans at September 30, 2024, compared to 1.12% at September 30, 2023, and 1.10% at June 30, 2024. The allowance for credit losses on loans was 18.70 times nonperforming loans compared to 17.60 times at September 30, 2023 and 19.08 times at June 30, 2024.

Quarterly Noninterest Income:

  • Total noninterest income was $62.24 million compared to $59.81 million in 2023, an increase of $2.43 million, or 4.06%.
  • Residential mortgage banking income was $11.79 million compared to $10.65 million in third quarter 2023. Loan volume increased to $598.18 million in third quarter 2024 from $520.41 million in third quarter 2023. Both, the number of loans originated and the per-loan average balance increased in third quarter 2024 compared to third quarter 2023. Refinance activities increased in the quarter after more than a year of low activity. Residential purchase activity was 91.49% of production volume in the third quarter of 2024 compared to 95.96% in third quarter 2023. Management expects mortgage production volumes to be positively impacted by any additional reductions in the Federal Reserve overnight rate.
  • While level with the linked quarter at 3.28%, gross margins on residential mortgage sales increased 11 basis points from 3.17% in third quarter 2023.
  • Total net insurance commissions increased $1.95 million, or 8.20%, to $25.73 million in third quarter 2024 compared to 2023. This increase was primarily attributable to increases in property and casualty commissions, which were driven by organic growth.
  • Property management fee revenue decreased 12.34%, or $1.58 million, to $11.22 million in third quarter 2024 compared to 2023. Reservation levels declined compared to the prior year.

Quarterly Noninterest Expense:

  • Total noninterest expense was $126.90 million compared to $117.70 million in 2023, an increase of $9.20 million, or 7.81%. This increase was primarily attributable to growth in salaries and employee benefits of $4.87 million, professional fees of $1.95 million, software of $0.66 million, data processing of $0.56 million, and advertising and marketing of $0.51 million.
  • Salaries and benefits expense increases were driven by an increase in banking personnel and production incentives.
  • Investment in technology related to banking services and information monitoring continued to drive both direct and indirect costs. Professional fees increased due to consulting and outside services. Software costs increased due to higher core system costs, while data processing increased due to higher processing costs and merchant fee increases.
  • Advertising and marketing increased, driven by business development.

Consolidated Balance Sheet Highlights:

  • Management is focused on strategic balance sheet management with a concentration on controlled loan growth and maintaining strong levels of liquidity.
  • Total assets were $17.19 billion for the quarter ended September 30, 2024, a $119.18 million increase compared to $17.07 billion at June 30, 2024. Total assets increased $507.66 million, or 3.04%, from $16.68 billion at September 30, 2023.
  • Loans held for investment declined $39.23 million, or 0.34%, compared to the linked quarter but increased $239.55 million, or 2.14%, compared to prior year. There were declines in several loan categories from the linked quarter, with the most significant decline in the real estate construction and development category. The Company continued to maintain strong credit discipline throughout the period.
  • Mortgage loans held for sale increased $76.27 million, or 40.56%, compared to prior year and $63.56 million, or 31.66%, compared to the linked quarter, driven by the increase in production.
  • Total deposits increased $482.37 million, or 3.48%, primarily in interest-bearing demand and time deposits, compared to prior year. In the linked quarter comparison, total deposits increased $90.58 million, or 2.52% on an annualized basis.
  • Noninterest-bearing deposits decreased $177.23 million, or 3.99%, compared to prior year and $36.15 million, or 0.84%, compared to the linked quarter, primarily in commercial and escrow accounts.
  • Total borrowings decreased $116.22 million, or 28.55%, compared to third quarter 2023 and $4.35 million, or 1.47%, compared to the linked quarter. Short-term FHLB advances were zero at each of September 30, 2024, and the linked quarter end, compared to $100 million at September 30, 2023.

Investment Securities:

  • Total investment securities were $2.60 billion compared to $2.49 billion at June 30, 2024 and $2.54 billion at September 30, 2023. The weighted average duration of the portfolio at September 30, 2024 was 3.1 years. The carrying value of the available-for-sale debt securities portfolio included net unrealized losses of $110.62 million at September 30, 2024, compared to $172.93 million at June 30, 2024 and $238.52 million at September 30, 2023, with the changes in fair value due to the change in interest rates.

Loans and Asset Quality:

  • Total loans held for investment were $11.41 billion at September 30, 2024, $11.45 billion June 30, 2024, and $11.17 billion at September 30, 2023.
  • Nonperforming assets were $7.47 million, or 0.04% of total assets, compared to $7.88 million, or 0.05%, at September 30, 2023, and $7.16 million, or 0.04%, in the linked quarter end.
  • Nonperforming loans were 0.06% of period end loans at September 30, 2024, September 30, 2023, and the linked quarter end.
  • Foreclosed property consisted of $884 thousand in repossessed autos at September 30, 2024, compared to $276 thousand in other real estate owned and $490 thousand in repossessed autos, for a total of $766 thousand in foreclosed property at September 30, 2023.

Deposits and Borrowings:

  • Total deposits were $14.36 billion compared to $14.27 billion at June 30, 2024 and $13.88 billion at September 30, 2023.
  • The ratio of period end loans held for investment to deposits was 79.46% compared to 80.24% at June 30, 2024 and 80.49% at September 30, 2023.
  • Noninterest-bearing deposits were 29.71% of total deposits at September 30, 2024 compared to 30.15% at June 30, 2024 and 32.02% at September 30, 2023. Noninterest-bearing deposits declined $177.23 million, or 3.99%, compared to September 30, 2023, and $36.15 million, or 0.84%, compared to the linked quarter.
  • Total borrowings were $290.82 million compared to $295.17 million at June 30, 2024 and $407.03 million at September 30, 2023.

Capital:

  • Common equity tier 1 capital ratio of 12.63%(1).
  • Tier 1 leverage capital ratio of 10.38%(1).
  • Tier 1 risk-based capital ratio of 12.75%(1).
  • Total risk-based capital ratio of 15.53% (1) .
  • Book value per common share was $28.59 compared to $27.62 at June 30, 2024 and $26.28 at September 30, 2023.
  • Tangible book value per common share (non-GAAP) was $21.65 compared to $20.65 at June 30, 2024 and $19.28 at September 30, 2023.

(1) Preliminary.

About TowneBank:
Founded in 1999, TowneBank is a company built on relationships, offering a full range of banking and other financial services, with a focus of serving others and enriching lives. Dedicated to a culture of caring, Towne values all employees and members by embracing their diverse talents, perspectives, and experiences.

Now celebrating 25 years, TowneBank operates 50 banking offices throughout Hampton Roads and Central Virginia, as well as Northeastern and Central North Carolina - serving as a local leader in promoting the social, cultural, and economic growth in each community. Towne offers a competitive array of business and personal banking solutions, delivered with only the highest ethical standards. Experienced local bankers providing a higher level of expertise and personal attention with local decision-making are key to the TowneBank strategy. TowneBank has grown its capabilities beyond banking to provide expertise through its affiliated companies that include Towne Wealth Management, Towne Insurance Agency, Towne Benefits, TowneBank Mortgage, TowneBank Commercial Mortgage, Berkshire Hathaway HomeServices RW Towne Realty, Towne 1031 Exchange, LLC, and Towne Vacations. With total assets of $17.19 billion as of September 30, 2024, TowneBank is one of the largest banks headquartered in Virginia.

Non-GAAP Financial Measures:
This press release contains certain financial measures determined by methods other than in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Such non-GAAP financial measures include the following: fully tax-equivalent net interest margin, core operating earnings, core net income, tangible book value per common share, total risk-based capital ratio, tier one leverage ratio, tier one capital ratio, and the tangible common equity to tangible assets ratio. Management uses these non-GAAP financial measures to assess the performance of TowneBank's core business and the strength of its capital position. Management believes that these non-GAAP financial measures provide meaningful additional information about TowneBank to assist investors in evaluating operating results, financial strength, and capitalization. The non-GAAP financial measures should be considered as additional views of the way our financial measures are affected by significant charges for credit costs and other factors. These non-GAAP financial measures should not be considered as a substitute for operating results determined in accordance with GAAP and may not be comparable to other similarly titled measures of other companies. The computations of the non-GAAP financial measures used in this presentation are referenced in a footnote or in the appendix to this presentation.

Forward-Looking Statements:
This press release contains certain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts, but instead represent only the beliefs, expectations, or opinions of TowneBank and its management regarding future events, many of which, by their nature, are inherently uncertain. Forward-looking statements may be identified by the use of such words as: "believe," "expect," "anticipate," "intend," "plan," "estimate," or words of similar meaning, or future or conditional terms, such as "will," "would," "should," "could," "may," "likely," "probably," or "possibly." These statements may address issues that involve significant risks, uncertainties, estimates, and assumptions made by management. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include among others, competitive pressures in the banking industry that may increase significantly; changes in the interest rate environment that may reduce margins and/or the volumes and values of loans made or held as well as the value of other financial assets held; an unforeseen outflow of cash or deposits or an inability to access the capital markets, which could jeopardize our overall liquidity or capitalization; changes in the creditworthiness of customers and the possible impairment of the collectability of loans; insufficiency of our allowance for credit losses due to market conditions, inflation, changing interest rates or other factors; adverse developments in the financial industry generally, such as the recent bank failures, responsive measures to mitigate and manage such developments, related supervisory and regulatory actions and costs, and related impacts on customer and client behavior; general economic conditions, either nationally or regionally, that may be less favorable than expected, resulting in, among other things, a deterioration in credit quality and/or a reduced demand for credit or other services; geopolitical instability, including wars, conflicts, civil unrest, and terrorist attacks and the potential impact, directly or indirectly, on our business; the effects of weather-related or natural disasters, which may negatively affect our operations and/or our loan portfolio and increase our cost of conducting business; public health events (such as the COVID-19 pandemic) and governmental and societal responses to them; changes in the legislative or regulatory environment, including changes in accounting standards and tax laws, that may adversely affect our business; our ability to close the transaction with Village Bank when expected or at all because required approvals and other conditions to closing are not received or satisfied on the proposed terms or on the anticipated schedule; our integration of Village Bank's business to the extent that it may take longer or be more difficult, time-consuming or costly to accomplish than expected; deposit attrition, operating costs, customer losses and business disruption following the Village Bank transaction, including adverse effects on relationships with employees and customers; costs or difficulties related to the integration of the businesses we have acquired may be greater than expected; expected growth opportunities or cost savings associated with pending or recently completed acquisitions may not be fully realized or realized within the expected time frame; cybersecurity threats or attacks, whether directed at us or at vendors or other third parties with which we interact, the implementation of new technologies, and the ability to develop and maintain reliable electronic systems; our competitors may have greater financial resources and develop products that enable them to compete more successfully; changes in business conditions; changes in the securities market; and changes in our local economy with regard to our market area. Any forward-looking statements made by us or on our behalf speak only as of the date they are made or as of the date indicated, and we do not undertake any obligation to update forward-looking statements as a result of new information, future events, or otherwise. For additional information on factors that could materially influence forward-looking statements included in this report, see the "Risk Factors" in TowneBank's Annual Report on Form 10-K for the year ended December 31, 2023, and related disclosures in other filings that have been, or will be, filed by TowneBank with the Federal Deposit Insurance Corporation.

Media contact:
G. Robert Aston, Jr., Executive Chairman, 757-638-6780
William I. Foster III, President and Chief Executive Officer, 757-417-6482

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

TOWNEBANK
Selected Financial Highlights (unaudited)
(dollars in thousands, except per share data)
Three Months Ended
September 30, June 30, March 31, December 31, September 30,
2024 2024 2024 2023 2023
Income and Performance Ratios:
Total revenue $ 174,518 $ 174,970 $ 167,102 $ 155,546 $ 172,864
Net income 43,126 43,039 35,127 28,545 44,745
Net income available to common shareholders 42,949 42,856 34,687 28,804 44,862
Net income per common share - diluted 0.57 0.57 0.46 0.39 0.60
Book value per common share 28.59 27.62 27.33 27.24 26.28
Book value per common share - tangible (non-GAAP) 21.65 20.65 20.31 20.28 19.28
Return on average assets 1.00 % 1.01 % 0.83 % 0.68 % 1.06 %
Return on average assets - tangible (non-GAAP) 1.09 % 1.11 % 0.92 % 0.77 % 1.17 %
Return on average equity 8.12 % 8.43 % 6.84 % 5.75 % 8.96 %
Return on average equity - tangible (non-GAAP) 11.42 % 12.03 % 9.87 % 8.53 % 12.97 %
Return on average common equity 8.18 % 8.49 % 6.89 % 5.79 % 9.04 %
Return on average common equity - tangible (non-GAAP) 11.54 % 12.16 % 9.98 % 8.62 % 13.11 %
Noninterest income as a percentage of total revenue 35.66 % 37.68 % 38.23 % 30.74 % 34.60 %
Regulatory Capital Ratios (1):
Common equity tier 1 12.63 % 12.43 % 12.20 % 12.18 % 12.19 %
Tier 1 12.75 % 12.55 % 12.32 % 12.29 % 12.31 %
Total 15.53 % 15.34 % 15.10 % 15.06 % 15.09 %
Tier 1 leverage ratio 10.38 % 10.25 % 10.15 % 10.17 % 10.06 %
Asset Quality:
Allowance for credit losses on loans to nonperforming loans 18.70x 19.08x 18.01x 18.48x 17.60x
Allowance for credit losses on loans to period end loans 1.08 % 1.10 % 1.10 % 1.12 % 1.12 %
Nonperforming loans to period end loans 0.06 % 0.06 % 0.06 % 0.06 % 0.06 %
Nonperforming assets to period end assets 0.04 % 0.04 % 0.05 % 0.05 % 0.05 %
Net charge-offs (recoveries) to average loans (annualized) 0.02 % - % 0.02 % - % (0.04 )%
Net charge-offs (recoveries) $ 677 $ (19 ) $ 520 $ 68 $ (1,074 )
Nonperforming loans $ 6,588 $ 6,582 $ 6,987 $ 6,843 $ 7,110
Foreclosed property 884 581 780 908 766
Total nonperforming assets $ 7,472 $ 7,163 $ 7,767 $ 7,751 $ 7,876
Loans past due 90 days and still accruing interest $ 510 $ 368 $ 323 $ 735 $ 970
Allowance for credit losses on loans $ 123,191 $ 125,552 $ 125,835 $ 126,461 $ 125,159
Mortgage Banking:
Loans originated, mortgage $ 421,571 $ 430,398 $ 289,191 $ 302,616 $ 348,387
Loans originated, joint venture 176,612 196,583 135,197 126,332 172,021
Total loans originated $ 598,182 $ 626,981 $ 424,388 $ 428,948 $ 520,408
Number of loans originated 1,637 1,700 1,247 1,237 1,487
Number of originators 159 169 176 181 192
Purchase % 91.49 % 94.85 % 95.66 % 95.06 % 95.96 %
Loans sold $ 526,998 $ 605,134 $ 410,895 $ 468,014 $ 567,291
Rate lock asset $ 1,548 $ 1,930 $ 1,681 $ 895 $ 1,348
Gross realized gain on sales and fees as a % of loans originated 3.28 % 3.28 % 3.34 % 3.06 % 3.17 %
Other Ratios:
Net interest margin 2.90 % 2.86 % 2.72 % 2.83 % 2.95 %
Net interest margin-fully tax-equivalent (non-GAAP) 2.93 % 2.89 % 2.75 % 2.86 % 2.98 %
Average earning assets/total average assets 90.43 % 90.36 % 90.52 % 90.48 % 90.73 %
Average loans/average deposits 80.07 % 80.80 % 81.48 % 80.72 % 80.75 %
Average noninterest deposits/total average deposits 30.19 % 30.06 % 30.25 % 31.69 % 33.50 %
Period end equity/period end total assets 12.58 % 12.24 % 12.24 % 12.21 % 11.90 %
Efficiency ratio (non-GAAP) 70.93 % 68.98 % 73.25 % 76.17 % 66.21 %
(1) Current reporting period regulatory capital ratios are preliminary.
TOWNEBANK
Selected Data (unaudited)
(dollars in thousands)
Investment Securities % Change
Q3 Q3 Q2 Q3 24 vs. Q3 24 vs.
Available-for-sale securities, at fair value 2024 2023 2024 Q3 23 Q2 24
U.S. agency securities $ 291,814 $ 300,161 $ 281,934 (2.78 )% 3.50 %
U.S. Treasury notes 28,655 26,721 27,701 7.24 % 3.44 %
Municipal securities 455,722 484,587 442,474 (5.96 )% 2.99 %
Trust preferred and other corporate securities 91,525 74,024 88,228 23.64 % 3.74 %
Mortgage-backed securities issued by GSEs and GNMA 1,496,631 1,079,303 1,411,883 38.67 % 6.00 %
Allowance for credit losses (1,171 ) (1,343 ) (1,541 ) (12.81 )% (24.01 )%
Total $ 2,363,176 $ 1,963,453 $ 2,250,679 20.36 % 5.00 %
Gross unrealized gains (losses) reflected in financial statements
Total gross unrealized gains $ 6,703 $ 475 $ 1,983 1,311.16 % 238.02 %
Total gross unrealized losses (117,319 ) (238,993 ) (174,911 ) (50.91 )% (32.93 )%
Net unrealized gains (losses) and other adjustments on AFS securities $ (110,616 ) $ (238,518 ) $ (172,928 ) (53.62 )% (36.03 )%
Held-to-maturity securities, at amortized cost
U.S. agency securities $ 102,428 $ 101,659 $ 102,234 0.76 % 0.19 %
U.S. Treasury notes 96,942 433,015 97,171 (77.61 )% (0.24 )%
Municipal securities 5,342 5,249 5,318 1.77 % 0.45 %
Trust preferred corporate securities 2,133 2,185 2,147 (2.38 )% (0.65 )%
Mortgage-backed securities issued by GSEs 5,577 5,746 5,618 (2.94 )% (0.73 )%
Allowance for credit losses (77 ) (85 ) (79 ) (9.41 )% (2.53 )%
Total $ 212,345 $ 547,769 $ 212,409 (61.23 )% (0.03 )%
Total gross unrealized gains $ 323 $ 82 $ 175 293.90 % 84.57 %
Total gross unrealized losses (7,929 ) (23,505 ) (12,880 ) (66.27 )% (38.44 )%
Net unrealized gains (losses) in HTM securities $ (7,606 ) $ (23,423 ) $ (12,705 ) (67.53 )% (40.13 )%
Total unrealized gains (losses) on AFS and HTM securities $ (118,222 ) $ (261,941 ) $ (185,633 ) (54.87 )% (36.31 )%
% Change
Loans Held For Investment Q3 Q3 Q2 Q3 24 vs. Q3 24 vs.
2024 2023 2024 Q3 23 Q2 24
Real estate - construction and development $ 1,118,669 $ 1,325,976 $ 1,190,768 (15.63 )% (6.05 )%
Commercial real estate - owner occupied 1,655,345 1,686,888 1,673,582 (1.87 )% (1.09 )%
Commercial real estate - non owner occupied 3,179,699 3,025,985 3,155,958 5.08 % 0.75 %
Real estate - multifamily 750,906 542,611 682,537 38.39 % 10.02 %
Residential 1-4 family 1,891,216 1,818,843 1,887,420 3.98 % 0.20 %
HELOC 408,565 371,861 408,273 9.87 % 0.07 %
Commercial and industrial business (C&I) 1,256,511 1,237,524 1,297,538 1.53 % (3.16 )%
Government 521,681 523,456 517,954 (0.34 )% 0.72 %
Indirect 546,887 548,621 558,216 (0.32 )% (2.03 )%
Consumer loans and other 83,039 91,206 79,501 (8.95 )% 4.45 %
Total $ 11,412,518 $ 11,172,971 $ 11,451,747 2.14 % (0.34 )%
% Change
Deposits Q3 Q3 Q2 Q3 24 vs. Q3 24 vs.
2024 2023 2024 Q3 23 Q2 24
Noninterest-bearing demand $ 4,267,628 $ 4,444,861 $ 4,303,773 (3.99 )% (0.84 )%
Interest-bearing:
Demand and money market accounts 6,990,103 6,764,415 6,940,086 3.34 % 0.72 %
Savings 319,970 350,031 312,881 (8.59 )% 2.27 %
Certificates of deposits 2,785,469 2,321,498 2,715,848 19.99 % 2.56 %
Total 14,363,170 13,880,805 14,272,588 3.48 % 0.63 %
TOWNEBANK
Average Balances, Yields and Rate Paid (unaudited)
(dollars in thousands)
Three Months Ended Three Months Ended Three Months Ended
September 30, 2024 June 30, 2024 September 30, 2023
Interest Average Interest Average Interest Average
Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate (1) Balance Expense Rate (1) Balance Expense Rate (1)
Assets:
Loans (net of unearned income
and deferred costs) 		$ 11,419,428 $ 156,610 5.46 % $ 11,471,669 $ 155,374 5.45 % $ 11,169,924 $ 144,457 5.13 %
Taxable investment securities 2,376,102 20,940 3.53 % 2,368,476 21,671 3.66 % 2,373,731 18,645 3.14 %
Tax-exempt investment securities 168,768 1,686 4.00 % 156,503 1,521 3.89 % 206,639 1,993 3.86 %
Total securities 2,544,870 22,626 3.56 % 2,524,979 23,192 3.67 % 2,580,370 20,638 3.20 %
Interest-bearing deposits 1,226,445 15,249 4.95 % 1,182,816 14,512 4.93 % 1,230,582 15,031 4.85 %
Mortgage loans held for sale 208,513 3,247 6.23 % 165,392 2,945 7.12 % 227,426 3,928 6.91 %
Total earning assets 15,399,256 197,732 5.11 % 15,344,856 196,023 5.14 % 15,208,302 184,054 4.80 %
Less: allowance for loan losses (125,331 ) (126,792 ) (125,553 )
Total nonearning assets 1,754,216 1,764,418 1,680,110
Total assets $ 17,028,141 $ 16,982,482 $ 16,762,859
Liabilities and Equity:
Interest-bearing deposits
Demand and money market $ 6,917,622 $ 48,896 2.81 % $ 6,896,176 $ 48,161 2.81 % $ 6,605,853 $ 41,381 2.49 %
Savings 315,338 842 1.06 % 317,774 845 1.07 % 356,116 938 1.05 %
Certificates of deposit 2,723,437 32,390 4.73 % 2,715,615 33,017 4.89 % 2,236,102 21,852 3.88 %
Total interest-bearing deposits 9,956,397 82,128 3.28 % 9,929,565 82,023 3.32 % 9,198,071 64,171 2.77 %
Borrowings 33,867 (25 ) (0.29 )% 100,165 1,627 6.43 % 299,105 3,382 4.42 %
Subordinated debt, net 256,309 2,237 3.49 % 256,093 2,236 3.49 % 255,446 2,245 3.52 %
Total interest-bearing liabilities 10,246,573 84,340 3.27 % 10,285,823 85,886 3.36 % 9,752,622 69,798 2.84 %
Demand deposits 4,305,783 4,267,590 4,633,856
Other noninterest-bearing liabilities 370,736 383,447 389,912
Total liabilities 14,923,092 14,936,860 14,776,390
Shareholders' equity 2,105,049 2,045,622 1,986,469
Total liabilities and equity $ 17,028,141 $ 16,982,482 $ 16,762,859
Net interest income (tax-equivalent basis) (4) $ 113,392 $ 110,137 $ 114,256
Reconciliation of Non-GAAP Financial Measures
Tax-equivalent basis adjustment (1,110 ) (1,089 ) (1,198 )
Net interest income (GAAP) $ 112,282 $ 109,048 $ 113,058
Interest rate spread (2)(4) 1.84 % 1.78 % 1.96 %
Interest expense as a percent of average earning assets 2.18 % 2.25 % 1.82 %
Net interest margin (tax-equivalent basis) (3)(4) 2.93 % 2.89 % 2.98 %
Total cost of deposits 2.29 % 2.32 % 1.84 %
(1) Yields and interest income are presented on a tax-equivalent basis using the federal statutory tax rate of 21%.
(2) Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities. Fully tax-equivalent.
(3) Net interest margin is net interest income expressed as a percentage of average earning assets. Fully tax-equivalent.
(4) Non-GAAP.
TOWNEBANK
Average Balances, Yields and Rate Paid (unaudited)
(dollars in thousands)
Nine Months Ended Nine Months Ended
September 30, 2024 September 30, 2023
Interest Average Interest Average
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate (1) Balance Expense Rate (1)
Assets:
Loans (net of unearned income and deferred costs) $ 11,423,458 $ 463,794 5.42 % $ 11,159,329 $ 417,808 5.01 %
Taxable investment securities 2,395,007 61,327 3.41 % 2,420,634 52,656 2.90 %
Tax-exempt investment securities 162,294 4,756 3.91 % 201,535 5,883 3.89 %
Total securities 2,557,301 66,083 3.45 % 2,622,169 58,539 2.98 %
Interest-bearing deposits 1,192,319 43,995 4.93 % 1,179,952 40,168 4.55 %
Mortgage loans held for sale 163,755 7,908 6.44 % 168,822 8,079 6.38 %
Total earning assets 15,336,833 581,780 5.07 % 15,130,272 524,594 4.64 %
Less: allowance for loan losses (126,508 ) (120,420 )
Total nonearning assets 1,748,215 1,637,952
Total assets $ 16,958,540 $ 16,647,804
Liabilities and Equity:
Interest-bearing deposits
Demand and money market $ 6,880,752 $ 145,042 2.82 % $ 6,349,422 $ 96,742 2.04 %
Savings 320,696 2,569 1.07 % 376,282 2,676 0.95 %
Certificates of deposit 2,674,509 94,928 4.74 % 1,964,718 47,358 3.22 %
Total interest-bearing deposits 9,875,957 242,539 3.28 % 8,690,422 146,776 2.26 %
Borrowings 115,171 4,679 5.34 % 505,856 17,644 4.60 %
Subordinated debt, net 256,094 6,710 3.49 % 253,612 6,650 3.50 %
Total interest-bearing liabilities 10,247,222 253,928 3.31 % 9,449,890 171,070 2.42 %
Demand deposits 4,265,971 4,873,945
Other noninterest-bearing liabilities 381,547 353,459
Total liabilities 14,894,740 14,677,294
Shareholders' equity 2,063,800 1,970,510
Total liabilities and equity $ 16,958,540 $ 16,647,804
Net interest income (tax-equivalent basis)(4) $ 327,852 $ 353,524
Reconciliation of Non-GAAP Financial Measures
Tax-equivalent basis adjustment (3,304 ) (3,477 )
Net interest income (GAAP) $ 324,548 $ 350,047
Interest rate spread (2)(4) 1.76 % 2.22 %
Interest expense as a percent of average earning assets 2.21 % 1.51 %
Net interest margin (tax-equivalent basis) (3)(4) 2.86 % 3.12 %
Total cost of deposits 2.29 % 1.45 %
(1) Yields and interest income are presented on a tax-equivalent basis using the federal statutory rate of 21%.
(2) Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities. Fully tax-equivalent.
(3) Net interest margin is net interest income expressed as a percentage of average earning assets. Fully tax-equivalent.
(4) Non-GAAP.
TOWNEBANK
Consolidated Balance Sheets
(dollars in thousands, except share data)
September 30, December 31,
2024 2023
(unaudited) (audited)
ASSETS
Cash and due from banks $ 131,068 $ 85,584
Interest-bearing deposits at FRB 1,061,596 939,356
Interest-bearing deposits in financial institutions 103,400 103,417
Total Cash and Cash Equivalents 1,296,064 1,128,357
Securities available for sale, at fair value (amortized cost of $2,474,963 and $2,292,963, and allowance for credit losses of $1,171 and $1,498 at September 30, 2024 and December 31, 2023, respectively) 2,363,176 2,129,342
Securities held to maturity, at amortized cost (fair value $204,816 and $462,656 at September 30, 2024 and December 31, 2023, respectively) 212,422 477,592
Less: Allowance for credit losses (77 ) (84 )
Securities held to maturity, net of allowance for credit losses 212,345 477,508
Other equity securities 12,681 13,792
FHLB stock 12,134 21,372
Total Securities 2,600,336 2,642,014
Mortgage loans held for sale 264,320 149,987
Loans, net of unearned income and deferred costs 11,412,518 11,329,021
Less: allowance for credit losses (123,191 ) (126,461 )
Net Loans 11,289,327 11,202,560
Premises and equipment, net 365,764 337,598
Goodwill 457,619 456,335
Other intangible assets, net 63,265 64,634
BOLI 279,325 277,445
Other assets 572,000 576,109
TOTAL ASSETS $ 17,188,020 $ 16,835,039
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand $ 4,267,628 $ 4,342,701
Interest-bearing:
Demand and money market accounts 6,990,103 6,757,619
Savings 319,970 336,492
Certificates of deposit 2,785,469 2,456,394
Total Deposits 14,363,170 13,893,206
Advances from the FHLB 3,405 203,958
Subordinated debt, net 256,444 255,796
Repurchase agreements and other borrowings 30,970 32,826
Total Borrowings 290,819 492,580
Other liabilities 371,316 393,375
TOTAL LIABILITIES 15,025,305 14,779,161
Preferred stock, authorized and unissued shares - 2,000,000 - -
Common stock, $1.667 par value: 150,000,000 shares authorized;
75,068,662 and 74,893,462 shares issued at
September 30, 2024 and December 31, 2023, respectively 125,139 124,847
Capital surplus 1,117,279 1,112,761
Retained earnings 985,343 921,126
Common stock issued to deferred compensation trust, at cost:
1,056,823 and 1,004,717 shares at September 30, 2024 and December 31, 2023, respectively (22,224 ) (20,813 )
Deferred compensation trust 22,224 20,813
Accumulated other comprehensive income (loss) (81,482 ) (118,762 )
TOTAL SHAREHOLDERS' EQUITY 2,146,279 2,039,972
Noncontrolling interest 16,436 15,906
TOTAL EQUITY 2,162,715 2,055,878
TOTAL LIABILITIES AND EQUITY $ 17,188,020 $ 16,835,039
TOWNEBANK
Consolidated Statements of Income (unaudited)
(dollars in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2024 2023 2024 2023
INTEREST INCOME:
Loans, including fees $ 155,792 $ 143,605 $ 461,316 $ 415,351
Investment securities 22,334 20,292 65,257 57,519
Interest-bearing deposits in financial institutions and federal funds sold 15,249 15,031 43,995 40,168
Mortgage loans held for sale 3,247 3,928 7,908 8,079
Total interest income 196,622 182,856 578,476 521,117
INTEREST EXPENSE:
Deposits 82,128 64,171 242,539 146,776
Advances from the FHLB 29 3,438 3,408 16,838
Subordinated debt, net 2,237 2,245 6,710 6,650
Repurchase agreements and other borrowings (54 ) (56 ) 1,271 806
Total interest expense 84,340 69,798 253,928 171,070
Net interest income 112,282 113,058 324,548 350,047
PROVISION FOR CREDIT LOSSES (1,100 ) 1,007 (2,154 ) 16,232
Net interest income after provision for credit losses 113,382 112,051 326,702 333,815
NONINTEREST INCOME:
Residential mortgage banking income, net 11,786 10,648 35,685 31,380
Insurance commissions and related income, net 25,727 23,777 75,297 69,098
Property management income, net 11,221 12,800 42,306 40,433
Real estate brokerage income, net - (63 ) - 3,562
Service charges on deposit accounts 3,117 2,823 9,548 8,577
Credit card merchant fees, net 1,830 2,006 5,042 5,232
Investment commissions, net 2,835 2,363 7,759 6,581
BOLI 1,886 1,814 6,966 5,196
Gain on sale of equity investment 20 554 20 9,386
Other income 3,814 3,084 9,345 9,083
Net gain/(loss) on investment securities - - 74 -
Total noninterest income 62,236 59,806 192,042 188,528
NONINTEREST EXPENSE:
Salaries and employee benefits 72,123 67,258 214,849 204,124
Occupancy 9,351 9,027 28,490 27,579
Furniture and equipment 4,657 4,100 13,769 12,733
Amortization - intangibles 3,130 3,610 9,675 10,744
Software 6,790 6,130 19,947 17,922
Data processing 4,701 4,140 13,223 11,504
Professional fees 4,720 2,770 11,689 8,948
Advertising and marketing 4,162 3,653 12,268 12,012
Other expenses 17,266 17,014 52,565 61,762
Total noninterest expense 126,900 117,702 376,475 367,328
Income before income tax expense and noncontrolling interest 48,718 54,155 142,269 155,015
Provision for income tax expense 5,592 9,410 20,977 28,424
Net income $ 43,126 $ 44,745 $ 121,292 $ 126,591
Net income attributable to noncontrolling interest (177 ) 117 (800 ) (1,680 )
Net income attributable to TowneBank $ 42,949 $ 44,862 $ 120,492 $ 124,911
Per common share information
Basic earnings $ 0.57 $ 0.60 $ 1.61 $ 1.67
Diluted earnings $ 0.57 $ 0.60 $ 1.61 $ 1.67
Cash dividends declared $ 0.25 $ 0.25 $ 0.75 $ 0.73
TOWNEBANK
Consolidated Balance Sheets - Five Quarter Trend
(dollars in thousands, except share data)
September 30, June 30, March 31, December 31, September 30,
2024 2024 2024 2023 2023
(unaudited) (unaudited) (unaudited) (audited) (unaudited)
ASSETS
Cash and due from banks $ 131,068 $ 140,028 $ 75,802 $ 85,584 $ 83,949
Interest-bearing deposits at FRB 1,061,596 1,062,115 926,635 939,356 1,029,276
Interest-bearing deposits in financial institutions 103,400 99,303 98,673 103,417 102,527
Total Cash and Cash Equivalents 1,296,064 1,301,446 1,101,110 1,128,357 1,215,752
Securities available for sale 2,363,176 2,250,679 2,204,101 2,129,342 1,963,453
Securities held to maturity 212,422 212,488 312,510 477,592 547,854
Less: allowance for credit losses (77 ) (79 ) (82 ) (84 ) (85 )
Securities held to maturity, net of allowance for credit losses 212,345 212,409 312,428 477,508 547,769
Other equity securities 12,681 13,566 13,661 13,792 14,062
FHLB stock 12,134 12,134 12,139 21,372 16,634
Total Securities 2,600,336 2,488,788 2,542,329 2,642,014 2,541,918
Mortgage loans held for sale 264,320 200,762 150,727 149,987 188,048
Loans, net of unearned income and deferred costs 11,412,518 11,451,747 11,452,343 11,329,021 11,172,971
Less: Allowance for credit losses (123,191 ) (125,552 ) (125,835 ) (126,461 ) (125,159 )
Net Loans 11,289,327 11,326,195 11,326,508 11,202,560 11,047,812
Premises and equipment, net 365,764 340,348 342,569 337,598 335,522
Goodwill 457,619 457,619 457,619 456,335 456,684
Other intangible assets, net 63,265 65,460 68,758 64,634 67,496
BOLI 279,325 277,434 279,293 277,445 275,240
Other assets 572,000 610,791 615,324 576,109 551,884
TOTAL ASSETS $ 17,188,020 $ 17,068,843 $ 16,884,237 $ 16,835,039 $ 16,680,356
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand $ 4,267,628 $ 4,303,773 $ 4,194,132 $ 4,342,701 $ 4,444,861
Interest-bearing:
Demand and money market accounts 6,990,103 6,940,086 6,916,701 6,757,619 6,764,415
Savings 319,970 312,881 326,179 336,492 350,031
Certificates of deposit 2,785,469 2,715,848 2,689,062 2,456,394 2,321,498
Total Deposits 14,363,170 14,272,588 14,126,074 13,893,206 13,880,805
Advances from the FHLB 3,405 3,591 3,775 203,958 104,139
Subordinated debt, net 256,444 256,227 256,011 255,796 255,580
Repurchase agreements and other borrowings 30,970 35,351 31,198 32,826 47,315
Total Borrowings 290,819 295,169 290,984 492,580 407,034
Other liabilities 371,316 411,770 401,307 393,375 408,305
TOTAL LIABILITIES 15,025,305 14,979,527 14,818,365 14,779,161 14,696,144
Preferred stock - - - - -
Common stock, $1.667 par value 125,139 125,090 125,009 124,847 124,837
Capital surplus 1,117,279 1,115,759 1,114,038 1,112,761 1,111,152
Retained earnings 985,343 961,162 937,065 921,126 911,042
Common stock issued to deferred compensation trust, at cost (22,224 ) (22,756 ) (20,915 ) (20,813 ) (20,740 )
Deferred compensation trust 22,224 22,756 20,915 20,813 20,740
Accumulated other comprehensive income (loss) (81,482 ) (129,224 ) (126,586 ) (118,762 ) (179,043 )
TOTAL SHAREHOLDERS' EQUITY 2,146,279 2,072,787 2,049,526 2,039,972 1,967,988
Noncontrolling interest 16,436 16,529 16,346 15,906 16,224
TOTAL EQUITY 2,162,715 2,089,316 2,065,872 2,055,878 1,984,212
TOTAL LIABILITIES AND EQUITY $ 17,188,020 $ 17,068,843 $ 16,884,237 $ 16,835,039 $ 16,680,356
TOWNEBANK
Consolidated Statements of Income - Five Quarter Trend (unaudited)
(dollars in thousands, except share data)
Three Months Ended
September 30, June 30, March 31, December 31, September 30,
2024 2024 2024 2023 2023
INTEREST INCOME:
Loans, including fees $ 155,792 $ 154,549 $ 150,974 $ 146,810 $ 143,605
Investment securities 22,334 22,928 19,996 20,464 20,292
Interest-bearing deposits in financial institutions and federal funds sold 15,249 14,512 14,234 13,967 15,031
Mortgage loans held for sale 3,247 2,945 1,716 2,886 3,928
Total interest income 196,622 194,934 186,920 184,127 182,856
INTEREST EXPENSE:
Deposits 82,128 82,023 78,388 73,200 64,171
Advances from the FHLB 29 942 2,438 917 3,438
Subordinated debt, net 2,237 2,236 2,236 2,236 2,245
Repurchase agreements and other borrowings (54 ) 685 640 41 (56 )
Total interest expense 84,340 85,886 83,702 76,394 69,798
Net interest income 112,282 109,048 103,218 107,733 113,058
PROVISION FOR CREDIT LOSSES (1,100 ) (177 ) (877 ) 2,446 1,007
Net interest income after provision for credit losses 113,382 109,225 104,095 105,287 112,051
NONINTEREST INCOME:
Residential mortgage banking income, net 11,786 13,422 10,477 8,035 10,648
Insurance commissions and related income, net 25,727 24,031 25,539 21,207 23,777
Property management income, net 11,221 14,312 16,773 7,358 12,800
Real estate brokerage income, net - - - (32 ) (63 )
Service charges on deposit accounts 3,117 3,353 3,079 3,056 2,823
Credit card merchant fees, net 1,830 1,662 1,551 1,476 2,006
Investment commissions, net 2,835 2,580 2,343 2,380 2,363
BOLI 1,886 3,238 1,842 2,206 1,814
Other income 3,834 3,324 2,206 2,127 3,638
Net gain/(loss) on investment securities - - 74 - -
Total noninterest income 62,236 65,922 63,884 47,813 59,806
NONINTEREST EXPENSE:
Salaries and employee benefits 72,123 71,349 71,377 66,035 67,258
Occupancy 9,351 9,717 9,422 9,308 9,027
Furniture and equipment 4,657 4,634 4,478 4,445 4,100
Amortization - intangibles 3,130 3,298 3,246 3,411 3,610
Software 6,790 7,056 6,100 6,743 6,130
Data processing 4,701 4,606 3,916 3,529 4,140
Professional fees 4,720 3,788 3,180 3,339 2,770
Advertising and marketing 4,162 3,524 4,582 3,377 3,653
Other expenses 17,266 16,012 19,290 21,708 17,014
Total noninterest expense 126,900 123,984 125,591 121,895 117,702
Income before income tax expense and noncontrolling interest 48,718 51,163 42,388 31,205 54,155
Provision for income tax expense 5,592 8,124 7,261 2,660 9,410
Net income 43,126 43,039 35,127 28,545 44,745
Net income attributable to noncontrolling interest (177 ) (183 ) (440 ) 259 117
Net income attributable to TowneBank $ 42,949 $ 42,856 $ 34,687 $ 28,804 $ 44,862
Per common share information
Basic earnings $ 0.57 $ 0.57 $ 0.46 $ 0.39 $ 0.60
Diluted earnings $ 0.57 $ 0.57 $ 0.46 $ 0.39 $ 0.60
Basic weighted average shares outstanding 74,940,827 74,925,877 74,816,420 74,773,335 74,750,294
Diluted weighted average shares outstanding 75,141,661 75,037,955 74,979,501 74,793,557 74,765,515
Cash dividends declared $ 0.25 $ 0.25 $ 0.25 $ 0.25 $ 0.25
TOWNEBANK
Banking Segment Financial Information (unaudited)
(dollars in thousands)
Three Months Ended Nine Months Ended Increase/(Decrease)
September 30, June 30, September 30, YTD 2024 over 2023
2024 2023 2024 2024 2023 Amount Percent
Revenue
Net interest income $ 111,569 $ 112,189 $ 108,029 $ 322,280 $ 349,165 $ (26,885 ) (7.70 )%
Service charges on deposit accounts 3,117 2,823 3,352 9,548 8,577 971 11.32 %
Credit card merchant fees 1,830 2,006 1,662 5,042 5,232 (190 ) (3.63 )%
Investment commissions, net 2,835 2,363 2,580 7,759 6,581 1,178 17.90 %
Other income 4,828 4,224 4,840 13,096 12,012 1,084 9.02 %
Subtotal 12,610 11,416 12,434 35,445 32,402 3,043 9.39 %
Net gain/(loss) on investment securities - - - 74 - 74 N/M
Total noninterest income 12,610 11,416 12,434 35,519 32,402 3,117 9.62 %
Total revenue 124,179 123,605 120,463 357,799 381,567 (23,768 ) (6.23 )%
Provision for credit losses (1,043 ) 1,206 (170 ) (2,189 ) 16,442 (18,631 ) (113.31 )%
Expenses
Salaries and employee benefits 47,148 42,727 46,640 140,261 128,161 12,100 9.44 %
Occupancy 6,963 6,637 7,194 21,217 19,717 1,500 7.61 %
Furniture and equipment 3,878 3,273 3,810 11,336 10,150 1,186 11.68 %
Amortization of intangible assets 1,072 1,296 1,117 3,352 3,918 (566 ) (14.45 )%
Other expenses 26,674 22,595 23,587 77,215 80,215 (3,000 ) (3.74 )%
Total expenses 85,735 76,528 82,348 253,381 242,161 11,220 4.63 %
Income before income tax, corporate allocation and noncontrolling interest 39,487 45,871 38,285 106,607 122,964 (16,357 ) (13.30 )%
Corporate allocation 1,223 1,291 1,232 3,524 3,763 (239 ) (6.35 )%
Income before income tax provision and noncontrolling interest 40,710 47,162 39,517 110,131 126,727 (16,596 ) (13.10 )%
Provision for income tax expense 3,495 7,440 5,130 12,731 21,204 (8,473 ) (39.96 )%
Net income 37,215 39,722 34,387 97,400 105,523 (8,123 ) (7.70 )%
Noncontrolling interest (29 ) - (58 ) 34 - 34 N/M
Net income attributable to TowneBank $ 37,186 $ 39,722 $ 34,329 $ 97,434 $ 105,523 $ (8,089 ) (7.67 )%
Efficiency ratio (non-GAAP) 68.18 % 60.86 % 67.43 % 69.89 % 62.44 % 7.45 % 11.93 %
TOWNEBANK
Realty Segment Financial Information (unaudited)
(dollars in thousands)
Three Months Ended Nine Months Ended Increase/(Decrease)
September 30, June 30, September 30, YTD 2024 over 2023
2024 2023 2024 2024 2023 Amount Percent
Revenue
Residential mortgage brokerage income, net $ 12,211 $ 10,955 $ 13,996 $ 37,006 $ 32,964 $ 4,042 12.26 %
Real estate brokerage income, net - (63 ) - - 3,562 (3,562 ) (100.00 )%
Title insurance and settlement fees - - - - 443 (443 ) (100.00 )%
Property management fees, net 11,221 12,800 14,312 42,306 40,433 1,873 4.63 %
Income (loss) from unconsolidated subsidiary 51 (63 ) 67 148 (884 ) 1,032 116.74 %
Gain on equity investment - - - - 8,833 (8,833 ) (100.00 )%
Net interest and other income 906 1,163 1,317 3,007 1,984 1,023 51.56 %
Total revenue 24,389 24,792 29,692 82,467 87,335 (4,868 ) (5.57 )%
Provision for credit losses (57 ) (199 ) (7 ) 35 (210 ) 245 116.67 %
Expenses
Salaries and employee benefits 12,355 12,881 12,370 36,913 41,670 (4,757 ) (11.42 )%
Occupancy 1,638 1,669 1,811 5,019 5,559 (540 ) (9.71 )%
Furniture and equipment 604 600 596 1,794 1,933 (139 ) (7.19 )%
Amortization of intangible assets 637 742 781 2,094 2,166 (72 ) (3.32 )%
Other expenses 8,839 9,544 9,136 26,174 27,319 (1,145 ) (4.19 )%
Total expenses 24,073 25,436 24,694 71,994 78,647 (6,653 ) (8.46 )%
Income before income tax, corporate allocation and noncontrolling interest 373 (445 ) 5,005 10,438 8,898 1,540 17.31 %
Corporate allocation (484 ) (600 ) (490 ) (1,322 ) (1,800 ) 478 (26.56 )%
Income before income tax provision and noncontrolling interest (111 ) (1,045 ) 4,515 9,116 7,098 2,018 28.43 %
Provision for income tax expense 18 (99 ) 1,163 2,336 1,769 567 32.05 %
Net income (129 ) (946 ) 3,352 6,780 5,329 1,451 27.23 %
Noncontrolling interest (148 ) 117 (125 ) (834 ) (1,680 ) 846 (50.36 )%
Net income attributable to TowneBank $ (277 ) $ (829 ) $ 3,227 $ 5,946 $ 3,649 $ 2,297 62.95 %
Efficiency ratio excluding gain on equity investment (non-GAAP) 96.09 % 99.61 % 80.54 % 84.76 % 97.43 % (12.67 )% (13.00 )%
TOWNEBANK
Insurance Segment Financial Information (unaudited)
(dollars in thousands)
Three Months Ended Nine Months Ended Increase/(Decrease)
September 30, June 30, September 30, YTD 2024 over 2023
2024 2023 2024 2024 2023 Amount Percent
Commission and fee income
Property and casualty $ 23,157 $ 22,103 $ 22,225 $ 66,104 $ 60,259 $ 5,845 9.70 %
Employee benefits 4,483 4,245 4,404 13,712 13,393 319 2.38 %
Specialized benefit services - 133 - 10 445 (435 ) (97.75 )%
Total commissions and fees 27,640 26,481 26,629 79,826 74,097 5,729 7.73 %
Contingency and bonus revenue 2,731 2,335 2,951 10,185 9,343 842 9.01 %
Other income 25 557 6 41 573 (532 ) (92.84 )%
Total revenue 30,396 29,373 29,586 90,052 84,013 6,039 7.19 %
Employee commission expense 4,446 4,906 4,771 13,728 14,340 (612 ) (4.27 )%
Revenue, net of commission expense 25,950 24,467 24,815 76,324 69,673 6,651 9.55 %
Salaries and employee benefits 12,620 11,650 12,339 37,675 34,293 3,382 9.86 %
Occupancy 750 721 712 2,254 2,303 (49 ) (2.13 )%
Furniture and equipment 175 227 228 639 650 (11 ) (1.69 )%
Amortization of intangible assets 1,421 1,572 1,400 4,229 4,660 (431 ) (9.25 )%
Other expenses 2,126 1,568 2,263 6,303 4,614 1,689 36.61 %
Total operating expenses 17,092 15,738 16,942 51,100 46,520 4,580 9.85 %
Income before income tax, corporate allocation and noncontrolling interest 8,858 8,729 7,873 25,224 23,153 2,071 8.94 %
Corporate allocation (739 ) (691 ) (742 ) (2,202 ) (1,963 ) (239 ) 12.18 %
Income before income tax provision and noncontrolling interest 8,119 8,038 7,131 23,022 21,190 1,832 8.65 %
Provision for income tax expense 2,079 2,069 1,831 5,910 5,451 459 8.42 %
Net income 6,040 5,969 5,300 17,112 15,739 1,373 8.72 %
Noncontrolling interest - - - - - - - %
Net income attributable to TowneBank $ 6,040 $ 5,969 $ 5,300 $ 17,112 $ 15,739 $ 1,373 8.72 %
Provision for income taxes 2,079 2,069 1,831 5,910 5,451 459 8.42 %
Depreciation, amortization and interest expense 1,550 1,726 1,529 4,632 5,115 (483 ) (9.44 )%
EBITDA (non-GAAP) $ 9,669 $ 9,764 $ 8,660 $ 27,654 $ 26,305 $ 1,349 5.13 %
Efficiency ratio (non-GAAP) 60.44 % 59.21 % 62.63 % 61.43 % 60.55 % 0.88 % 1.45 %
TOWNEBANK
Reconciliation of Non-GAAP Financial Measures
(dollars in thousands)
Three Months Ended Nine Months Ended
September 30, September 30, June 30, September 30, September 30,
2024 2023 2024 2024 2023
Return on average assets (GAAP) 1.00 % 1.06 % 1.01 % 0.95 % 1.00 %
Impact of excluding average goodwill and other intangibles and amortization 0.09 % 0.11 % 0.10 % 0.09 % 0.11 %
Return on average tangible assets (non-GAAP) 1.09 % 1.17 % 1.11 % 1.04 % 1.11 %
Return on average equity (GAAP) 8.12 % 8.96 % 8.43 % 7.80 % 8.48 %
Impact of excluding average goodwill and other intangibles and amortization 3.30 % 4.01 % 3.60 % 3.31 % 3.87 %
Return on average tangible equity (non-GAAP) 11.42 % 12.97 % 12.03 % 11.11 % 12.35 %
Return on average common equity (GAAP) 8.18 % 9.04 % 8.49 % 7.86 % 8.54 %
Impact of excluding average goodwill and other intangibles and amortization 3.36 % 4.07 % 3.67 % 3.37 % 3.95 %
Return on average tangible common equity
(non-GAAP) 		11.54 % 13.11 % 12.16 % 11.23 % 12.49 %
Book value (GAAP) $ 28.59 $ 26.28 $ 27.62 $ 28.59 $ 26.28
Impact of excluding average goodwill and other intangibles and amortization (6.94 ) (7.00 ) (6.97 ) (6.94 ) (7.00 )
Tangible book value (non-GAAP) $ 21.65 $ 19.28 $ 20.65 $ 21.65 $ 19.28
Efficiency ratio (GAAP) 72.71 % 68.09 % 70.86 % 72.88 % 68.20 %
Impact of exclusions (1.78 )% (1.88 )% (1.88 )% (1.86 )% (0.82 )%
Efficiency ratio (non-GAAP) 70.93 % 66.21 % 68.98 % 71.02 % 67.38 %
Average assets (GAAP) $ 17,028,141 $ 16,762,859 $ 16,982,482 $ 16,958,540 $ 16,647,804
Less: average goodwill and intangible assets 522,219 526,445 525,122 523,335 526,375
Average tangible assets (non-GAAP) $ 16,505,922 $ 16,236,414 $ 16,457,360 $ 16,435,205 $ 16,121,429
Average equity (GAAP) $ 2,105,049 $ 1,986,469 $ 2,045,622 $ 2,063,800 $ 1,970,510
Less: average goodwill and intangible assets 522,219 526,445 525,122 523,335 526,375
Average tangible equity (non-GAAP) $ 1,582,830 $ 1,460,024 $ 1,520,500 $ 1,540,465 $ 1,444,135
Average common equity (GAAP) $ 2,088,674 $ 1,969,898 $ 2,029,150 $ 2,047,482 $ 1,954,850
Less: average goodwill and intangible assets 522,219 526,445 525,122 523,335 526,375
Average tangible common equity (non-GAAP) $ 1,566,455 $ 1,443,453 $ 1,504,028 $ 1,524,147 $ 1,428,475
Net income (GAAP) $ 42,949 $ 44,862 $ 42,856 $ 120,492 $ 124,911
Amortization of intangibles, net of tax 2,473 2,852 2,605 7,643 8,488
Tangible net income (non-GAAP) $ 45,422 $ 47,714 $ 45,461 $ 128,135 $ 133,399
Total revenue (GAAP) $ 174,518 $ 172,864 $ 174,970 $ 516,590 $ 538,575
Net (gain)/loss on investment securities - - - (74 ) -
Other nonrecurring (income) loss (20 ) (554 ) - (20 ) (9,386 )
Total Revenue for efficiency calculation (non-GAAP) $ 174,498 $ 172,310 $ 174,970 $ 516,496 $ 529,189
Noninterest expense (GAAP) $ 126,900 $ 117,702 $ 123,984 $ 376,475 $ 367,328
Less: amortization of intangibles 3,130 3,610 3,298 9,675 10,744
Noninterest expense net of amortization (non-GAAP) $ 123,770 $ 114,092 $ 120,686 $ 366,800 $ 356,584
TOWNEBANK
Reconciliation of Non-GAAP Financial Measures
(dollars in thousands, except per share data)
Reconciliation of GAAP Earnings to Operating Earnings Excluding Certain Items Affecting Comparability Three Months Ended
September 30, June 30, March 31, December 31, September 30,
2024 2024 2023 2023 2023
Net income (GAAP) $ 42,949 $ 42,856 $ 34,687 $ 28,804 $ 44,862
Adjustments
Plus: Acquisition-related expenses, net of tax 460 18 564 56 458
Plus: FDIC special assessment, net of tax - (310 ) 1,021 4,083 -
Less: Gain on sale of equity investments, net of noncontrolling interest (16 ) - - (1,846 ) (438 )
Core operating earnings, excluding certain items affecting comparability (non-GAAP) $ 43,393 $ 42,564 $ 36,272 $ 31,097 $ 44,882
Weighted average diluted shares 75,141,661 75,037,955 74,979,501 74,793,557 74,765,515
Diluted EPS (GAAP) $ 0.57 $ 0.57 $ 0.46 $ 0.39 $ 0.60
Diluted EPS, excluding certain items affecting comparability (non-GAAP) $ 0.58 $ 0.57 $ 0.48 $ 0.42 $ 0.60
Average assets $ 17,028,141 $ 16,982,482 $ 16,864,235 $ 16,683,041 $ 16,762,859
Average tangible equity $ 1,582,830 $ 1,520,500 1,517,600 $ 1,465,216 $ 1,460,024
Average common tangible equity $ 1,566,455 $ 1,504,028 $ 1,501,494 $ 1,449,052 $ 1,443,453
Return on average assets, excluding certain items affecting comparability (non-GAAP) 1.01 % 1.01 % 0.87 % 0.74 % 1.06 %
Return on average tangible equity, excluding certain items affecting comparability (non-GAAP) 11.53 % 11.95 % 10.29 % 9.15 % 12.97 %
Return on average common tangible equity, excluding certain items affecting comparability (non-GAAP) 11.65 % 12.08 % 10.40 % 9.25 % 13.13 %
Efficiency ratio, excluding certain items affecting comparability (non-GAAP) 72.45 % 70.85 % 74.84 % 78.33 % 67.76 %
TOWNEBANK
Reconciliation of Non-GAAP Financial Measures
(dollars in thousands, except per share data)
Reconciliation of GAAP Earnings to Operating Earnings Excluding Certain Items Affecting Comparability Nine Months Ended
September 30, September 30,
2024 2023
Net income (GAAP) $ 120,492 $ 124,911
Adjustments
Plus: Acquisition-related expenses, net of tax 1,040 7,718
Plus: FDIC special assessment, net of tax 711 -
Plus: Initial provision for acquired loans, net of tax - 3,166
Less: Gain on sale of equity investments, net of noncontrolling interest and tax (16 ) (5,951 )
Core operating earnings, excluding certain items affecting comparability (non-GAAP) $ 122,227 $ 129,844
Weighted average diluted shares 75,043,848 74,618,743
Diluted EPS (GAAP) $ 1.61 $ 1.67
Diluted EPS, excluding certain items affecting comparability (non-GAAP) $ 1.63 $ 1.74
Average assets $ 16,958,540 $ 16,647,804
Average tangible equity $ 1,540,465 $ 1,444,135
Average tangible common equity $ 1,524,147 $ 1,428,475
Return on average assets, excluding certain items affecting comparability (non-GAAP) 0.96 % 1.04 %
Return on average tangible equity, excluding certain items affecting comparability (non-GAAP) 11.26 % 12.81 %
Return on average common tangible equity, excluding certain items affecting comparability (non-GAAP) 11.38 % 12.95 %
Efficiency ratio, excluding certain items affecting comparability (non-GAAP) 72.68 % 67.61 %


Source: TowneBank