SUFFOLK, Va., July 25, 2019 (GLOBE NEWSWIRE) -- TowneBank (the “Company”) (NASDAQ: TOWN) today reported earnings for the quarter ended June 30, 2019 of $34.64 million, or $0.48 per diluted share, compared to $34.80 million, or $0.48 per diluted share, for the quarter ended June 30, 2018.

“Our second quarter performance was highlighted by record top-line revenues coupled with strong deposit growth. We also continued to strategically invest in recruiting, technology, enhanced services, and infrastructure to support future growth," said G. Robert Aston, Jr., Executive Chairman.

Highlights for the Second Quarter of 2019 Compared to the Second Quarter of 2018:

Total revenues were $144.54 million, an increase of $7.48 million, or 5.46%.
Loans held for investment increased $351.77 million, or 4.52%, from June 30, 2018, and $21.36 million, or 0.26%, from March 31, 2019, or 1.06% on an annualized basis.
Total deposits were $9.27 billion, an increase of $1.28 billion, or 15.99%, compared to prior year and $0.54 billion, or 6.15% from March 31, 2019, or 24.67% on an annualized basis. In comparison to June 30, 2018, total deposits increased 11.70% in our Hampton Roads region, 28.14% in our Richmond region, and 23.39% in our North Carolina region.
Noninterest bearing deposits increased by 13.60%, to $2.95 billion, representing 31.83% of total deposits. Compared to the linked quarter, noninterest bearing deposits increased 4.86%, or 19.49% on an annualized basis.
Annualized return on common shareholders' equity of 8.89% and annualized return on average tangible common shareholders' equity of 14.05% (non-GAAP).
Net interest margin for the quarter was 3.49% and taxable equivalent net interest margin was 3.52% (non-GAAP).
Effective tax rate of 20.47% in the quarter compared to 19.89% in the second quarter of 2018.

“In addition to recruiting Jack Clayton as President of Business Strategies for North Carolina in the first quarter of 2019, we continued to build our production teams in Raleigh, Greensboro, and Charlotte adding Private Bankers and Treasury expertise. We announced that Charity Volman has been appointed President of TowneBank’s newly formed Corporate Banking Group. Joining her team are Karen Priest, Laura Morgan, and Brian Woodell, who served with her at her former bank. In addition, Shane Stevens, was recently appointed Director of Merchant and Treasury Services. Each of these individuals brings a wealth of experience and talent to our HomeTowne Banking platform,” stated J. Morgan Davis, President and Chief Executive Officer.

Quarterly Net Interest Income Compared to the Second Quarter of 2018:

Net interest income was $89.82 million compared to $86.82 million at June 30, 2018.
Taxable equivalent net interest margin (non-GAAP) was 3.52%, including accretion of 11 basis points, compared to 3.71%, including accretion of 23 basis points, for 2018.
Average loans held for investment, with an average yield of 5.08%, represented 78.27% of average earning assets at June 30, 2019 compared to an average yield of 4.97% and 79.99% of average earning assets in the second quarter of 2018.
Total cost of deposits increased to 0.99% from 0.60% at June 30, 2018.
Average interest-earning assets totaled $10.32 billion at June 30, 2019 compared to $9.44 billion at June 30, 2018, an increase of 9.26%.
Average interest-bearing liabilities totaled $6.95 billion, an increase of $0.55 billion from prior year.

Quarterly Provision for Loan Losses:

Recorded a provision for loan losses of $2.82 million compared to $3.06 million one year ago and $1.44 million in the linked quarter.
Net charge-offs were $1.60 million compared to $0.26 million one year prior. The ratio of net charge-offs to average loans on an annualized basis was 0.08% compared to 0.01% in the prior quarter and 0.01% in the second quarter of 2018. This increase was primarily attributable to the charge-off of one credit relationship.
The allowance for loan losses represented 0.67% of total loans compared to 0.66% at March 31, 2019 and 0.64% at June 30, 2018. Loan loss reserve as a percentage of total loans, excluding purchased loans, was 0.81% at June 30, 2019, and March 31, 2019, compared to 0.84% at June 30, 2018. The allowance for loan losses was 3.00 times nonperforming loans compared to 9.36 times at March 31, 2019 and 12.64 times at June 30, 2018.

Quarterly Noninterest Income Compared to the Second Quarter of 2018:

Total noninterest income was $54.72 million compared to $50.24 million in 2018, an increase of $4.48 million, or 8.92%. Residential mortgage banking income was relatively flat in the quarter, while insurance commissions and other title fees increased $2.13 million, real estate brokerage and property management income increased $1.93 million, and service charges on deposit accounts increased $0.22 million. Credit card merchant fees declined $0.78 million.
Credit card merchant fee income was roughly $0.90 million below normal seasonal levels in second quarter 2019 due to the impact of converting to a new processing platform that will allow us to provide additional services and capabilities.
Residential mortgage banking income was $18.57 million compared to $18.75 million in second quarter 2018. Loan volume in the current quarter was $821.13 million, with purchase activity comprising 84.97% of that volume. Loan volume in second quarter 2018 was $951.12 million, with purchase activity of 91.23%. Lower volumes led to the decline in revenue.
Total Insurance segment revenue increased 14.95% to $20.20 million in the second quarter due primarily to additional commission income from insurance agencies that were acquired in November 2018 and January 2019.
Property management fee revenue increased 45.89%, or $1.88 million, as compared to second quarter 2018 due to increases in reservation levels.

Quarterly Noninterest Expense Compared to the Second Quarter of 2018:

Total noninterest expense was $96.56 million compared to $89.22 million in 2018, an increase of $7.34 million, or 8.22%. This reflects increases of $3.94 million in salary and benefits expense, $1.29 million in professional fees, $0.86 million in occupancy expense, and $0.76 million in outside data processing expenses.
The increase in salary and benefits expense was attributable to the continued expansion of our functional support teams to enable us to enhance Company infrastructure and meet increased regulatory expectations related to exceeding $10 billion in assets, as well as keep pace with our growth and changing industry standards. Specific areas of focus include: information technology, risk and compliance, accounting, and internal audit.
In the wake of the May 2019 tragedy in Virginia Beach, Towne's contribution of $0.50 million to "VBStrong" was included in other expenses.
Noninterest expense included operational expenses of $1.60 million related to insurance agencies acquired subsequent to second quarter 2018.

Quarterly Income Taxes Compared to the Second Quarter of 2018:

Income tax expense was $8.92 million compared to $8.64 million one year prior. This represents an effective tax rate of 20.47% compared to 19.89% in the second quarter of 2018.

Consolidated Balance Sheet June 30, 2019 Compared to June 30, 2018

Total assets were $11.94 billion for the quarter ended June 30, 2019 compared to $11.16 billion at December 31, 2018 and $10.83 billion at June 30, 2018. This increase was driven primarily by growth in cash and cash equivalents, available for sale securities, and loans held for investment. Year-over-year, other assets increased $41.40 million due to the adoption of the leasing standard.
Loans held for investment increased $0.11 billion, or 1.35%, or 2.73% on an annualized basis, compared to year end 2018, and $0.35 billion, or 4.52% compared to June 30, 2018.
Total liabilities were $10.34 billion at June 30, 2019, an increase of $0.71 billion, or 7.39%, compared to December 31, 2018 and $0.98 billion, or 10.49%, compared to June 30, 2018. Total deposits increased $0.90 billion over December 31, 2018 and $1.28 billion over June 30, 2018. Total borrowings declined $0.26 billion from December 31, 2018 and $0.34 billion from June 30, 2018.

Investment Securities:

Total investment securities were $1.35 billion compared to $1.20 billion at March 31, 2019 and $1.16 billion at June 30, 2018. The weighted average duration of the portfolio at June 30, 2019 was 3.1 years. The carrying value of the available-for-sale portfolio included $19.66 million of net unrealized gains compared to $2.22 million at March 31, 2019 and $20.60 million in net unrealized losses at June 30, 2018. The increase in net unrealized gains was primarily due to interest rate fluctuations. The carrying value of the held-to-maturity portfolio does not reflect $1.58 million in net unrealized gains compared to $1.04 million in net unrealized gains at March 31, 2019 and $0.64 million in net unrealized gains at June 30, 2018.

Loans and Asset Quality:

Total loans held for investment were $8.13 billion at June 30, 2019 compared to $8.11 billion at March 31, 2019 and $7.77 billion at June 30, 2018.
Nonperforming assets were $34.23 million, or 0.29% of total assets, compared to $26.31 million, or 0.24%, at June 30, 2018. This increase was primarily driven by a single commercial relationship of approximately $10 million.
Nonperforming loans were 0.22% of period end loans.
Foreclosed property decreased to $14.52 million from $20.13 million at June 30, 2018.

Deposits and Borrowings:

Total deposits were $9.27 billion compared to $8.73 billion at March 31, 2019 and $7.99 billion at June 30, 2018.
Total loans to deposits were 87.68% compared to 92.83% at March 31, 2019 and 97.29% at June 30, 2018.
Non-interest bearing deposits were 31.83% of total deposits at June 30, 2019 compared to 32.23% at March 31, 2019 and 32.50% at June 30, 2018.
Total borrowings were $0.84 billion compared to $1.03 billion and $1.17 billion at March 31, 2019 and June 30, 2018, respectively.

Capital:

Common equity tier 1 capital ratio of 11.58%.
Tier 1 leverage capital ratio of 9.86%.
Tier 1 risk-based capital ratio of 11.62%.
Total risk-based capital ratio of 14.85%.
Book value was $21.95 compared to $21.40 at March 31, 2019 and $20.22 at June 30, 2018.
Tangible book value (non-GAAP)was $15.05 compared to $14.46 at March 31, 2019 and $13.50 at June 30, 2018.

Outlook:
Management reforecasts on a quarterly basis and anticipates:

Annualized loan growth to be in the low-to-mid single digits for the remainder of 2019.
Our quarterly noninterest expense run rate will range between $93 - $94 million for the remainder of 2019.

About TowneBank:
As one of the top community banks in Virginia and North Carolina, TowneBank operates 41 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, Greenville, Moyock, Grandy, Camden County, Southern Shores, Corolla 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 $11.94 billion as of June 30, 2019, 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: 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, 757-638-681

TOWNEBANK
Selected Financial Highlights (unaudited)
(dollars in thousands, except per share data)

		Three Months Ended
		June 30,			March 31,			December 31,			September 30,			June 30,
		2019			2019			2018			2018			2018
Income and Performance Ratios:
	Total Revenue	$	144,537		$	133,854		$	131,417		$	137,914		$	137,058
	Net income	36,242			32,082			36,440			39,252			36,138
	Net income attributable to TowneBank	34,638			31,409			35,990			38,293			34,804
	Net income per common share - diluted	0.48			0.44			0.50			0.53			0.48
	Book value per common share	21.95			21.40			21.05			20.54			20.22
	Book value per common share - tangible ^(non-GAAP)	15.05			14.46			14.26			13.83			13.50
	Return on average assets	1.20		%	1.14		%	1.28		%	1.40		%	1.32		%
	Return on average assets - tangible ^(non-GAAP)	1.35		%	1.29		%	1.43		%	1.56		%	1.48		%
	Return on average equity	8.83		%	8.24		%	9.44		%	10.21		%	9.55		%
	Return on average equity - tangible ^(non-GAAP)	13.90		%	13.24		%	14.91		%	16.08		%	15.19		%
	Return on average common equity	8.89		%	8.30		%	9.53		%	10.30		%	9.62		%
	Return on average common equity - tangible ^(non-GAAP)	14.05		%	13.39		%	15.11		%	16.30		%	15.36		%
	Noninterest income as a percentage of total revenue	37.86		%	34.65		%	32.12		%	35.69		%	36.65		%

Regulatory Capital Ratios (1):
	Common equity tier 1	11.58		%	11.49		%	11.51		%	11.53		%	11.33		%
	Tier 1	11.62		%	11.52		%	11.54		%	11.57		%	11.36		%
	Total	14.85		%	14.79		%	14.83		%	14.90		%	14.71		%
	Tier 1 leverage ratio	9.86		%	9.92		%	9.87		%	9.98		%	10.00		%

Asset Quality:
	Allowance for loan losses to nonperforming loans		3.00	x		9.36	x		10.97	x		7.25	x		12.64	x
	Allowance for loan losses to period end loans	0.67		%	0.66		%	0.65		%	0.64		%	0.64		%
	Allowance for loan losses to period end loans excluding purchased loans	0.81		%	0.81		%	0.82		%	0.82		%	0.84		%
	Nonperforming loans to period end loans	0.22		%	0.07		%	0.06		%	0.09		%	0.05		%
	Nonperforming assets to period end assets	0.29		%	0.22		%	0.22		%	0.25		%	0.24		%
	Net charge-offs to average loans (annualized)	0.08		%	0.01		%	0.02		%	0.03		%	0.01		%

	Nonperforming loans	$	18,202		$	5,696		$	4,749		$	6,926		$	3,919
	Former bank premises	1,510			2,223			2,253			2,253			2,253
	Foreclosed property	14,517			17,071			17,163			18,153			20,133
	Total nonperforming assets	$	34,229		$	24,990		$	24,165		$	27,332		$	26,305
	Loans past due 90 days and still accruing interest	$	415		$	117		$	394		$	153		$	22

	Allowance for loan losses	$	54,527		$	53,303		$	52,094		$	50,236		$	49,535

Mortgage Banking:
	Loans originated, mortgage	$	574,638		$	366,643		$	407,787		$	561,543		$	667,189
	Loans originated, joint venture	246,491			146,884			192,280			249,956			283,933
	Total loans originated	$	821,129		$	513,527		$	600,067		$	811,499		$	951,122
	Number of loans originated	3,121			1,977			2,304			3,068			3,687
	Number of originators	234			240			293			303			324
	Purchase %	84.97		%	86.08		%	88.64		%	89.72		%	91.23		%
	Loans sold	$	694,832		$	473,068		$	694,341		$	852,205		$	825,313
	Gross realized gain on sales and fees as a % of loans originated	3.43		%	3.58		%	3.37		%	3.36		%	3.30		%

Other Ratios:
	Net interest margin	3.49		%	3.54		%	3.53		%	3.62		%	3.69		%
	Net interest margin-fully tax equivalent ^(nonGAAP)	3.52		%	3.57		%	3.55		%	3.64		%	3.71		%
	Average earning assets/total average assets	89.46		%	89.50		%	89.91		%	89.69		%	89.61		%
	Average loans/average deposits	91.60		%	95.83		%	95.32		%	97.55		%	97.79		%
	Average noninterest deposits/total average deposits	31.63		%	31.39		%	31.90		%	32.61		%	32.28		%
	Period end equity/period end total assets	13.45		%	13.53		%	13.78		%	13.49		%	13.63		%
	Efficiency ratio	66.80		%	68.43		%	62.65		%	64.00		%	65.10		%

	(1) Current reporting period regulatory capital ratios are preliminary

TOWNEBANK
Selected Data (unaudited)
(dollars in thousands)


Investment Securities								% Change
	Q2		Q2		Q1			Q2 19 vs.			Q2 19 vs.
*Available-for-sale securities, at fair value*	2019		2018		2019			Q2 18			Q1 19
U.S. agency securities	$	261,960	$	426,118	$	260,152		(38.52		)%	0.69	%
U.S. Treasury notes	2,241		101,224		2,229			(97.79		)%	0.54	%
Municipal securities	167,466		55,465		107,278			201.93		%	56.10	%
Trust preferred and other corporate securities	43,799		30,718		35,003			42.58		%	25.13	%
Mortgage-backed securities issued by GSE	785,355		444,138		695,115			76.83		%	12.98	%
Total	$	1,260,821	$	1,057,663	$	1,099,777		19.21		%	14.64	%

*Held-to-maturity securities, at amortized cost*
Municipal securities	$	34,458	$	36,039	$	34,472		(4.39		)%	(0.04	)%
Trust preferred corporate securities	2,393		500		500			378.60		%	378.60	%
Mortgage-backed securities issued by GSE	13,723		17,415		14,715			(21.20		)%	(6.74	)%
Total	$	50,574	$	53,954	$	49,687		(6.26		)%	1.79	%


Loans Held For Investment								% Change
	Q2		Q2		Q1			Q2 19 vs.			Q2 19 vs.
	2019		2018		2019			Q2 18			Q1 19
Real estate-construction and development	$	1,107,762	$	989,910	$	1,111,360		11.91		%	(0.32	)%
Commercial real estate - investment related properties	1,985,990		1,935,013		1,951,292			2.63		%	1.78	%
Commercial real estate - owner occupied	1,288,478		1,227,072		1,279,039			5.00		%	0.74	%
Real estate-multifamily	267,528		288,043		255,649			(7.12		)%	4.65	%
Real estate-residential 1-4 family	1,639,547		1,596,264		1,637,579			2.71		%	0.12	%
Commercial and industrial business	1,523,607		1,440,625		1,547,623			5.76		%	(1.55	)%
Consumer and other loans	313,817		298,029		322,828			5.30		%	(2.79	)%
Total	$	8,126,729	$	7,774,956	$	8,105,370		4.52		%	0.26	%


Deposits								% Change
	Q2		Q2		Q1			Q2 19 vs.			Q2 19 vs.
	2019		2018		2019			Q2 18			Q1 19
Noninterest-bearing demand	$	2,950,615	$	2,597,320	$	2,813,857		13.60		%	4.86	%
Interest-bearing:
Demand and money market accounts	3,409,322		2,987,102		3,290,907			14.13		%	3.60	%
Savings	277,495		305,334		285,790			(9.12		)%	(2.90	)%
Certificates of deposits	2,631,386		2,101,455		2,341,134			25.22		%	12.40	%
Total	$	9,268,818	$	7,991,211	$	8,731,688		15.99		%	6.15	%


The following table sets forth an estimate of the expected effects of the aggregate acquisition accounting adjustments on pre-tax net interest income for the periods shown:
					Discount Accretion (Premium Amortization)
					For the three months ended
					September 30,			December 31,
					2019			2019
Assets:
Investment Securities					$	(67	)	$	(65	)
Loans					1,467			1,447

Liabilities:
Deposits					51			47

Total estimated effect on net interest income					$	1,349		$	1,335
Note: This information is intended for informational purposes only and is not necessarily indicative of future results. Actual results may differ due to factors such factors such as changes in estimated prepayment speeds or projected credit loss rates.

TOWNEBANK
Average Balances, Yields and Rate Paid (unaudited)
(dollars in thousands)

	Three Months Ended								Three Months Ended								Three Months Ended
	June 30, 2019								March 31, 2019								June 30, 2018
				Interest			Average					Interest			Average					Interest			Average
	Average			Income/			Yield/		Average			Income/			Yield/		Average			Income/			Yield/
	Balance			Expense			Rate		Balance			Expense			Rate		Balance			Expense			Rate
Assets:
Loans (net of unearned income and deferred costs), excluding nonaccrual loans	$	8,075,054		$	102,366		5.08	%	$	8,030,994		$	100,146		5.06	%	$	7,552,983		$	93,548		4.97	%
Taxable investment securities	1,170,215			8,346			2.85	%	1,036,645			7,529			2.91	%	987,693			5,787			2.34	%
Tax-exempt investment securities	90,942			756			3.33	%	79,310			765			3.86	%	82,839			719			3.47	%
Total securities	1,261,157			9,102			2.89	%	1,115,955			8,294			2.97	%	1,070,532			6,506			2.43	%
Interest-bearing deposits	698,649			4,016			2.31	%	693,365			3,998			2.34	%	499,349			2,159			1.73	%
Loans held for sale	281,775			3,007			4.27	%	178,475			2,003			4.49	%	319,214			3,557			4.46	%
Total earning assets	10,316,635			118,491			4.61	%	10,018,789			114,441			4.63	%	9,442,078			105,770			4.49	%
Less: allowance for loan losses	(53,386		)						(52,844		)						(47,745		)
Total nonearning assets	1,269,029								1,228,808								1,142,514
Total assets	$	11,532,278							$	11,194,753							$	10,536,847
Liabilities and Equity:
Interest-bearing deposits
Demand and money market	$	3,312,313		$	7,025		0.85	%	$	3,174,157		$	6,240		0.80	%	$	2,945,897		$	3,602		0.49	%
Savings	281,221			929			1.33	%	285,499			1,027			1.46	%	306,937			941			1.23	%
Certificates of deposit	2,433,479			13,830			2.28	%	2,290,056			11,907			2.11	%	1,977,973			7,077			1.43	%
Total interest-bearing deposits	6,027,013			21,784			1.45	%	5,749,712			19,174			1.35	%	5,230,807			11,620			0.89	%
Borrowings	678,799			3,318			1.93	%	821,889			4,221			2.05	%	927,216			3,827			1.65	%
Subordinated debt, net	248,064			2,962			4.78	%	247,913			2,962			4.78	%	249,966			2,986			4.78	%
Total interest-bearing liabilities	6,953,876			28,064			1.62	%	6,819,514			26,357			1.57	%	6,407,989			18,433			1.15	%
Demand deposits	2,788,596								2,630,813								2,493,211
Other noninterest-bearing liabilities	215,951								198,527								173,832
Total liabilities	9,958,423								9,648,854								9,075,032
Shareholders’ equity	1,573,855								1,545,899								1,461,815
Total liabilities and equity	$	11,532,278							$	11,194,753							$	10,536,847
Net interest income (tax-equivalent basis)				$	90,427							$	88,084							$	87,337
Reconcilement of Non-GAAP Financial Measures
Tax-equivalent basis adjustment				(608		)						(611		)						(514		)
Net interest income (GAAP)				$	89,819							$	87,473							$	86,823

Interest rate spread (1)(3)							2.99	%							3.06	%							3.34	%
Interest expense as a percent of average earning assets							1.09	%							1.07	%							0.78	%
Net interest margin (tax equivalent basis) (2)(3)							3.52	%							3.57	%							3.71	%
Total cost of deposits							0.99	%							0.93	%							0.60	%

(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
Average Balances, Yields and Rate Paid (unaudited)
(dollars in thousands)

	Six Months Ended								Six Months Ended								Six Months Ended June 30,
	June 30, 2019								June 30, 2018								2019 Compared with 2018
				Interest			Average					Interest			Average
	Average			Income/			Yield/		Average			Income/			Yield/		Increase			Change due to
	Balance			Expense			Rate		Balance			Expense			Rate		(Decrease)			Rate			Volume
Assets:
Loans (net of unearned income and deferred costs), excluding nonaccrual loans	$	8,053,146		$	202,512		5.07	%	$	7,255,533		$	175,458		4.88	%	$	27,054		$	7,201		$	19,853
Taxable investment securities	1,103,799			15,875			2.88	%	945,229			10,811			2.29	%	5,064			3,066			1,998
Tax-exempt investment securities	85,158			1,522			3.57	%	77,964			1,408			3.61	%	114			(14		)	128
Total securities	1,188,957			17,397			2.93	%	1,023,193			12,219			2.39	%	5,178			3,052			2,126
Interest-bearing deposits	695,999			8,013			2.32	%	564,041			4,522			1.62	%	3,491			2,272			1,219
Loans held for sale	230,411			5,010			4.35	%	279,380			5,936			4.25	%	(926		)	136			(1,062		)
Total earning assets	10,168,513			232,932			4.62	%	9,122,147			198,135			4.38	%	34,797			12,661			22,136
Less: allowance for loan losses	(53,117		)						(46,976		)
Total nonearning assets	1,249,052								1,119,336
Total assets	$	11,364,448							$	10,194,507
Liabilities and Equity:
Interest-bearing deposits
Demand and money market	$	3,243,616		$	13,264		0.82	%	$	2,860,596		$	6,571		0.46	%	$	6,693		$	5,713		$	980
Savings	283,348			1,956			1.39	%	307,734			1,817			1.19	%	139			290			(151		)
Certificates of deposit	2,362,165			25,738			2.20	%	1,922,737			12,718			1.33	%	13,020			9,623			3,397
Total interest-bearing deposits	5,889,129			40,958			1.40	%	5,091,067			21,106			0.84	%	19,852			15,626			4,226
Borrowings	749,948			7,540			2.00	%	874,385			6,705			1.53	%	835			1,882			(1,047		)
Subordinated debt, net	247,989			5,923			4.78	%	254,560			6,143			4.83	%	(220		)	(63		)	(157		)
Total interest-bearing liabilities	6,887,066			54,421			1.59	%	6,220,012			33,954			1.10	%	20,467			17,445			3,022
Demand deposits	2,710,141								2,398,693
Other noninterest-bearing liabilities	207,287								167,108
Total liabilities	9,804,494								8,785,813
Shareholders’ equity	1,559,954								1,408,694
Total liabilities and equity	$	11,364,448							$	10,194,507
Net interest income (tax-equivalent basis)				$	178,511							$	164,181				$	14,330		$	(4,784	)	$	19,114
Reconcilement of Non-GAAP Financial Measures
Tax-equivalent basis adjustment				(1,219		)						(1,013		)			(206		)
Net interest income (GAAP)				$	177,292							$	163,168				$	14,124

Interest rate spread (1)(3)							3.03	%							3.28	%
Interest expense as a percent of average earning assets							1.08	%							0.75	%
Net interest margin (tax equivalent basis) (2)(3)							3.54	%							3.63	%
Total cost of deposits							0.96	%							0.57	%

(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)


	June 30,			December 31,
	2019			2018
	(unaudited)			(audited)
ASSETS
Cash and due from banks	$	110,580		$	94,604
Interest-bearing deposits at Federal Reserve Bank	834,505			570,425
Interest-bearing deposits in financial institutions	21,527			21,667
Total Cash and Cash Equivalents	966,612			686,696
Securities available for sale, at fair value	1,260,821			1,095,339
Securities held to maturity, at amortized cost	50,574			50,598
Other equity securities	5,396			4,797
Federal Home Loan Bank stock	32,657			43,229
Total Securities	1,349,448			1,193,963
Mortgage loans held for sale	362,773			220,986
Loans, net of unearned income and deferred costs	8,126,729			8,018,233
Less: allowance for loan losses	(54,527		)	(52,094		)
Net Loans	8,072,202			7,966,139
Premises and equipment, net	230,177			211,796
Goodwill	442,881			433,658
Other intangible assets, net	58,391			58,752
Bank-owned life insurance policies	240,621			237,371
Other assets	219,375			153,669
TOTAL ASSETS	$	11,942,480		$	11,163,030

LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand	$	2,950,615		$	2,622,761
Interest-bearing:
Demand and money market accounts	3,409,322			3,223,215
Savings	277,495			286,684
Certificates of deposit	2,631,386			2,237,762
Total Deposits	9,268,818			8,370,422
Advances from the Federal Home Loan Bank	532,004			799,315
Subordinated debt, net	248,160			247,861
Repurchase agreements and other borrowings	56,355			47,156
Total Borrowings	836,519			1,094,332
Other liabilities	230,691			159,856
TOTAL LIABILITIES	10,336,028			9,624,610
Preferred stock
Authorized and unissued shares - 2,000,000	—			—
Common stock, $1.667 par: 90,000,000 shares authorized
72,608,253 and 72,465,923 shares issued at
June 30, 2019 and December 31, 2018, respectively	121,038			120,801
Capital surplus	1,036,982			1,034,676
Retained earnings	420,600			379,239
Common stock issued to deferred compensation trust, at cost
807,939 and 769,200 shares at
June 30, 2019 and December 31, 2018, respectively	(15,160		)	(13,955		)
Deferred compensation trust	15,160			13,955
Accumulated other comprehensive loss	15,143			(9,190		)
TOTAL SHAREHOLDERS’ EQUITY	1,593,763			1,525,526
Noncontrolling interest	12,689			12,894
TOTAL EQUITY	1,606,452			1,538,420
TOTAL LIABILITIES AND EQUITY	$	11,942,480		$	11,163,030

TOWNEBANK
Consolidated Statements of Income (unaudited)
(dollars in thousands, except per share data)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
INTEREST INCOME:
Loans, including fees	$	101,874		$	93,150		$	201,569		$	174,682
Investment securities	8,987			6,390			17,121			11,982
Interest-bearing deposits in financial institutions and federal funds sold	4,015			2,159			8,013			4,522
Mortgage loans held for sale	3,007			3,557			5,010			5,936
Total interest income	117,883			105,256			231,713			197,122
INTEREST EXPENSE:
Deposits	21,784			11,620			40,958			21,106
Advances from the Federal Home Loan Bank	3,201			3,764			7,354			6,602
Subordinated debt, net	2,962			2,986			5,924			6,143
Repurchase agreements and other borrowings	117			63			185			103
Total interest expense	28,064			18,433			54,421			33,954
Net interest income	89,819			86,823			177,292			163,168

PROVISION FOR LOAN LOSSES	2,824			3,056			4,262			5,009
Net interest income after provision for loan losses	86,995			83,767			173,030			158,159
NONINTEREST INCOME:
Residential mortgage banking income, net	18,565			18,745			32,073			36,348
Insurance commissions and other title fees and income, net	17,213			15,087			32,795			28,459
Real estate brokerage and property management income, net	8,843			6,910			18,111			17,340
Service charges on deposit accounts	3,185			2,969			6,046			5,852
Credit card merchant fees, net	660			1,443			1,843			2,611
Bank owned life insurance	1,635			1,633			3,233			3,165
Other income	4,617			3,448			7,774			6,389
Net gain/(loss) on investment securities	—			—			(776		)	3
Total noninterest income	54,718			50,235			101,099			100,167
NONINTEREST EXPENSE:
Salaries and employee benefits	54,263			50,324			107,123			101,108
Occupancy expense	7,662			6,802			15,913			13,279
Furniture and equipment	3,578			3,546			6,949			7,244
Amortization - intangibles	3,113			2,996			6,305			5,591
Software expense	2,788			2,648			5,533			4,988
Outside data processing	3,616			2,859			6,782			4,980
Professional fees	3,707			2,415			6,386			4,387
Advertising and marketing	3,182			3,124			6,011			5,774
Other expenses	14,647			14,507			27,677			34,173
Total noninterest expense	96,556			89,221			188,679			181,524
Income before income tax expense and noncontrolling interest	45,157			44,781			85,450			76,802
Provision for income tax expense	8,915			8,643			17,126			14,720
Net income	$	36,242		$	36,138		$	68,324		$	62,082
Net income attributable to noncontrolling interest	(1,604		)	(1,334		)	(2,277		)	(2,572		)
Net income attributable to TowneBank	$	34,638		$	34,804		$	66,047		$	59,510
Per common share information
Basic earnings	$	0.48		$	0.48		$	0.92		$	0.84
Diluted earnings	$	0.48		$	0.48		$	0.92		$	0.84
Cash dividends declared	$	0.18		$	0.16		$	0.34		$	0.30

TOWNEBANK
Consolidated Balance Sheets - Five Quarter Trend
(dollars in thousands, except share data)


	June 30,			March 31,			December 31,			September 30,			June 30,
	2019			2019			2018			2018			2018
	(unaudited)			(unaudited)			(audited)			(unaudited)			(unaudited)
ASSETS
Cash and due from banks	$	110,580		$	104,091		$	94,604		$	106,485		$	98,339
Interest-bearing deposits at Federal Reserve Bank	834,505			775,208			570,425			582,099			341,715
Interest-bearing deposits in financial institutions	21,527			21,001			21,667			20,910			17,749
Total Cash and Cash Equivalents	966,612			900,300			686,696			709,494			457,803
Securities available for sale, at fair value	1,260,821			1,099,777			1,095,339			1,051,773			1,057,663
Securities held to maturity, at amortized cost	50,574			49,687			50,598			52,002			53,954
Other equity securities	5,396			5,022			4,797			5,519			5,206
Federal Home Loan Bank stock	32,657			41,464			43,229			46,393			46,393
Total Securities	1,349,448			1,195,950			1,193,963			1,155,687			1,163,216
Mortgage loans held for sale	362,773			247,021			220,986			333,354			396,185
Loans, net of unearned income and deferred costs	8,126,729			8,105,370			8,018,233			7,881,692			7,774,956
Less: allowance for loan losses	(54,527		)	(53,303		)	(52,094		)	(50,236		)	(49,535		)
Net Loans	8,072,202			8,052,067			7,966,139			7,831,456			7,725,421
Premises and equipment, net	230,177			227,458			211,796			210,724			207,997
Goodwill	442,881			442,881			433,658			427,117			425,625
Other intangible assets, net	58,391			61,333			58,752			58,165			60,669
Bank-owned life insurance policies	240,621			238,977			237,371			235,348			233,682
Other assets	219,375			202,276			153,669			159,887			161,055
TOTAL ASSETS	$	11,942,480		$	11,568,263		$	11,163,030		$	11,121,232		$	10,831,653
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand	$	2,950,615		$	2,813,857		$	2,622,761		$	2,671,558		$	2,597,320
Interest-bearing:
Demand and money market accounts	3,409,322			3,290,907			3,223,215			3,096,317			3,017,767
Savings	277,495			285,790			286,684			298,368			305,334
Certificates of deposit	2,631,386			2,341,134			2,237,762			2,233,188			2,070,790
Total Deposits	9,268,818			8,731,688			8,370,422			8,299,431			7,991,211
Advances from the Federal Home Loan Bank	532,004			739,160			799,315			873,469			873,622
Subordinated debt, net	248,160			248,010			247,861			247,712			247,563
Repurchase agreements and other borrowings	56,355			44,775			47,156			45,591			50,981
Total Borrowings	836,519			1,031,945			1,094,332			1,166,772			1,172,166
Other liabilities	230,691			238,974			159,856			155,205			191,490
TOTAL LIABILITIES	10,336,028			10,002,607			9,624,610			9,621,408			9,354,867
Preferred stock
Authorized shares - 2,000,000	—			—			—			—			—

Common stock, $1.667 par value	121,038			121,047			120,801			120,613			120,615
Capital surplus	1,036,982			1,035,563			1,034,676			1,032,863			1,031,965
Retained earnings	420,600			399,030			379,239			354,842			328,125
Common stock issued to deferred compensation
trust, at cost	(15,160		)	(14,067		)	(13,955		)	(13,780		)	(13,500		)
Deferred compensation trust	15,160			14,067			13,955			13,780			13,500
Accumulated other comprehensive loss	15,143			(1,792		)	(9,190		)	(22,348		)	(17,944		)
TOTAL SHAREHOLDERS’ EQUITY	1,593,763			1,553,848			1,525,526			1,485,970			1,462,761
Noncontrolling interest	12,689			11,808			12,894			13,854			14,025
TOTAL EQUITY	1,606,452			1,565,656			1,538,420			1,499,824			1,476,786
TOTAL LIABILITIES AND EQUITY	$	11,942,480		$	11,568,263		$	11,163,030		$	11,121,232		$	10,831,653

TOWNEBANK
Consolidated Statements of Income - Five Quarter Trend (unaudited)
(dollars in thousands, except share data)


	Three Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
	2019			2019			2018			2018			2018
INTEREST INCOME:
Loans, including fees	$	101,874		$	99,695		$	99,446		$	97,215		$	93,150
Investment securities	8,987			8,134			8,126			7,019			6,390
Interest-bearing deposits in financial institutions and federal funds sold	4,015			3,998			3,559			2,148			2,159
Mortgage loans held for sale	3,007			2,003			3,176			4,012			3,557
Total interest income	117,883			113,830			114,307			110,394			105,256
INTEREST EXPENSE:
Deposits	21,784			19,174			17,495			14,540			11,620
Advances from the Federal Home Loan Bank	3,201			4,153			4,585			4,153			3,764
Subordinated debt	2,962			2,962			2,961			2,962			2,986
Repurchase agreements and other borrowings	117			68			58			42			63
Total interest expense	28,064			26,357			25,099			21,697			18,433
Net interest income	89,819			87,473			89,208			88,697			86,823

PROVISION FOR LOAN LOSSES	2,824			1,438			2,292			1,241			3,056
Net interest income after provision for loan losses	86,995			86,035			86,916			87,456			83,767
NONINTEREST INCOME:
Residential mortgage banking income, net	18,565			13,508			12,951			15,804			18,745
Insurance commissions and other title fees and income, net	17,213			15,582			13,212			14,493			15,087
Real estate brokerage and property management income, net	8,843			9,268			5,982			8,542			6,910
Service charges on deposit accounts	3,185			2,861			2,928			3,028			2,969
Credit card merchant fees, net	660			1,183			1,298			1,563			1,443
Bank owned life insurance	1,635			1,598			2,014			1,657			1,633
Other income	4,617			3,157			3,824			4,130			3,448
Net gain/(loss) on investment securities	—			(776		)	—			—			—
Total noninterest income	54,718			46,381			42,209			49,217			50,235
NONINTEREST EXPENSE:
Salaries and employee benefits	54,263			52,860			50,233			50,497			50,324
Occupancy expense	7,662			8,251			7,352			7,013			6,802
Furniture and equipment	3,578			3,371			3,587			3,646			3,546
Amortization - intangibles	3,113			3,192			3,123			2,996			2,996
Software expense	2,788			2,745			2,694			2,940			2,648
Outside data processing	3,616			3,166			2,466			2,917			2,859
Professional fees	3,707			2,679			2,028			1,908			2,415
Advertising and marketing	3,182			2,829			2,546			2,874			3,124
Other expenses	14,647			13,030			8,308			13,471			14,507
Total noninterest expense	96,556			92,123			82,337			88,262			89,221
Income before income tax expense and noncontrolling interest	45,157			40,293			46,788			48,411			44,781
Provision for income tax expense	8,915			8,211			10,348			9,159			8,643
Net income	36,242			32,082			36,440			39,252			36,138
Net income attributable to noncontrolling interest	(1,604		)	(673		)	(450		)	(959		)	(1,334		)
Net income attributable to TowneBank	$	34,638		$	31,409		$	35,990		$	38,293		$	34,804
Per common share information
Basic earnings	$	0.48		$	0.44		$	0.50		$	0.53		$	0.48
Diluted earnings	$	0.48		$	0.44		$	0.50		$	0.53		$	0.48
Basic weighted average shares outstanding	72,044,817			71,992,330			71,905,956			71,875,085			71,787,980
Diluted weighted average shares outstanding	72,145,600			$	72,099,558		72,043,369			72,044,355			71,949,590
Cash dividends declared	$	0.18		$	0.16		$	0.16		$	0.16		$	0.16

TOWNEBANK
Banking Segment Financial Information
(dollars in thousands)


	Three Months Ended									Six Months Ended						Increase/(Decrease)
	June 30,						March 31,			June 30,						2019 over 2018
	2019			2018			2019			2019			2018			Amount			Percent
Revenue
Net interest income	$	88,442		$	83,686		$	86,400		$	174,842		$	157,729		$	17,113		10.85	%
Service charges on deposit
accounts	3,185			2,969			2,861			6,046			5,852			194			3.32	%
Credit card merchant fees	660			1,443			1,183			1,843			2,611			(768		)	(29.41	)%
Other income	5,273			4,062			3,927			9,200			8,017			1,183			14.76	%
Subtotal	9,118			8,474			7,971			17,089			16,480			609			3.70	%
Gain/(loss) on investment securities	—			—			(776		)	(776		)	3			(779		)	N/M
Total noninterest income	9,118			8,474			7,195			16,313			16,483			(170		)	(1.03	)%
Total revenue	97,560			92,160			93,595			191,155			174,212			16,943			9.73	%

Provision for loan losses	2,824			3,056			1,438			4,262			5,009			(747		)	(14.91	)%

Expenses
Salaries and employee benefits	32,353			27,840			31,087			63,440			58,042			5,398			9.30	%
Occupancy expense	5,007			4,274			5,244			10,251			8,291			1,960			23.64	%
Furniture and equipment	2,517			2,491			2,367			4,884			5,022			(138		)	(2.75	)%
Amortization of intangibles	1,315			1,530			1,366			2,681			2,751			(70		)	(2.54	)%
Other expenses	18,938			15,364			16,181			35,119			36,111			(992		)	(2.75	)%
Total expenses	60,130			51,499			56,245			116,375			110,217			6,158			5.59	%
Income before income tax, corporate allocation and noncontrolling interest	34,606			37,605			35,912			70,518			58,986			11,532			19.55	%
Corporate allocation	546			476			452			998			932			66			7.08	%
Income before income tax provision and noncontrolling interest	35,152			38,081			36,364			71,516			59,918			11,598			19.36	%
Provision for income tax expense	6,650			7,142			7,192			13,842			11,023			2,819			25.57	%
Net income	28,502			30,939			29,172			57,674			48,895			8,779			17.95	%
Noncontrolling interest	1			(6		)	2			3			(8		)	11			N/M
Net income attributable to TowneBank	$	28,503		$	30,933		$	29,174		$	57,677		$	48,887		$	8,790		17.98	%

Efficiency ratio	61.63		%	55.88		%	59.60		%	60.63		%	63.27		%	(2.64		)%	(4.17	)%

TOWNEBANK
Realty Segment Financial Information
(dollars in thousands)


	Three Months Ended									Six Months Ended						Increase/(Decrease)
	June 30,						March 31,			June 30,						2019 over 2018
	2019			2018			2019			2019			2018			Amount			Percent
Revenue
Residential mortgage brokerage income, net	$	18,898		$	19,344		$	13,756		$	32,654		$	37,005		$	(4,351	)	(11.76	)%
Real estate brokerage income, net	2,873			2,818			1,561			4,434			4,517			(83		)	(1.84	)%
Title insurance and settlement fees	594			579			368			962			895			67			7.49	%
Property management fees, net	5,970			4,092			7,708			13,678			12,823			855			6.67	%
Income from unconsolidated subsidiary	162			100			94			256			194			62			31.96	%
Net interest and other income	1,677			3,342			1,372			3,049			5,887			(2,838		)	(48.21	)%
Total revenue	30,174			30,275			24,859			55,033			61,321			(6,288		)	(10.25	)%

Expenses
Salaries and employee benefits	13,309			15,403			12,895			26,204			29,280			(3,076		)	(10.51	)%
Occupancy expense	2,028			1,964			2,345			4,373			3,858			515			13.35	%
Furniture and equipment	803			835			768			1,571			1,816			(245		)	(13.49	)%
Amortization of intangible assets	695			672			725			1,420			1,343			77			5.73	%
Other expenses	7,234			8,158			6,241			13,475			14,452			(977		)	(6.76	)%
Total expenses	24,069			27,032			22,974			47,043			50,749			(3,706		)	(7.30	)%

Income before income tax, corporate allocation and noncontrolling interest	6,105			3,243			1,885			7,990			10,572			(2,582		)	(24.42	)%
Corporate allocation	(328		)	(293		)	(263		)	(591		)	(582		)	(9		)	1.55	%
Income before income tax provision and noncontrolling interest	5,777			2,950			1,622			7,399			9,990			(2,591		)	(25.94	)%
Provision for income tax expense	1,287			633			551			1,838			2,192			(354		)	(16.15	)%
Net income	4,490			2,317			1,071			5,561			7,798			(2,237		)	(28.69	)%
Noncontrolling interest	(1,248		)	(891		)	(252		)	(1,500		)	(1,512		)	12			(0.79	)%
Net income attributable to TowneBank	$	3,242		$	1,426		$	819		$	4,061		$	6,286		$	(2,225	)	(35.40	)%

Efficiency ratio	79.77		%	89.29		%	92.42		%	85.48		%	82.76		%	2.72		%	3.29	%

TOWNEBANK
Insurance Segment Financial Information
(dollars in thousands)



	Three Months Ended									Six Months Ended						Increase/(Decrease)
	June 30,						March 31,			June 30,						2019 over 2018
	2019			2018			2019			2019			2018			Amount			Percent
Commission and fee income
Property and casualty	$	13,067		$	11,059		$	11,873		$	24,940		$	20,416		$	4,524		22.16	%
Employee benefits	3,833			3,454			3,506			7,339			6,650			689			10.36	%
Travel insurance	1,169			1,389			1,289			2,458			3,157			(699		)	(22.14	)%
Specialized benefit services	163			171			170			333			340			(7		)	(2.06	)%
Total commissions and fees	18,232			16,073			16,838			35,070			30,563			4,507			14.75	%

Contingency and bonus revenue	1,893			1,433			1,585			3,479			2,566			913			35.58	%
Other income	79			71			75			154			141			13			9.22	%
Total revenue	20,204			17,577			18,498			38,703			33,270			5,433			16.33	%

Employee commission expense	3,401			2,953			3,098			6,500			5,468			1,032			18.87	%
Revenue, net of commission expense	16,803			14,624			15,400			32,203			27,802			4,401			15.83	%

Salaries and employee benefits	8,601			7,081			8,878			17,479			13,786			3,693			26.79	%
Occupancy expense	627			564			662			1,289			1,130			159			14.07	%
Furniture and equipment	258			220			236			494			406			88			21.67	%
Amortization of intangible assets	1,103			794			1,101			2,204			1,497			707			47.23	%
Other expenses	1,768			2,032			2,027			3,795			3,739			56			1.50	%
Total operating expenses	12,357			10,691			12,904			25,261			20,558			4,703			22.88	%
Income before income tax, corporate allocation and noncontrolling interest	4,446			3,933			2,496			6,942			7,244			(302		)	(4.17	)%
Corporate allocation	(218		)	(183		)	(189		)	(407		)	(350		)	(57		)	16.29	%
Income before income tax provision and noncontrolling interest	4,228			3,750			2,307			6,535			6,894			(359		)	(5.21	)%
Provision for income tax expense	978			868			468			1,446			1,505			(59		)	(3.92	)%
Net income	3,250			2,882			1,839			5,089			5,389			(300		)	(5.57	)%
Noncontrolling interest	(357		)	(437		)	(423		)	(780		)	(1,052		)	272			(25.86	)%
Net income attributable to TowneBank	$	2,893		$	2,445		$	1,416		$	4,309		$	4,337		$	(28	)	(0.65	)%

Provision for income taxes	978			868			468			1,446			1,505			(59		)	(3.92	)%
Depreciation, amortization and interest expense	1,309			1,007			1,333			2,642			1,913			729			38.11	%
EBITDA (non-GAAP)	$	5,180		$	4,320		$	3,217		$	8,397		$	7,755		$	642		8.28	%

Efficiency ratio	73.54		%	73.11		%	83.79		%	78.44		%	73.94		%	4.50		%	6.09	%

TOWNEBANK
Reconcilement of Non-GAAP Financial Measures


	Three Months Ended									Six Months Ended
	June 30,			June 30,			March 31,			June 30,			June 30,
	2019			2018			2019			2019			2018

Return on average assets (GAAP)	1.20		%	1.32		%	1.14		%	1.17		%	1.18		%
Impact of excluding average goodwill and other intangibles and amortization	0.15		%	0.16		%	0.15		%	0.15		%	0.14		%
Return on average tangible assets (non-GAAP)	1.35		%	1.48		%	1.29		%	1.32		%	1.32		%

Return on average equity (GAAP)	8.83		%	9.55		%	8.24		%	8.54		%	8.52		%
Impact of excluding average goodwill and other intangibles and amortization	5.07		%	5.64		%	5.00		%	5.03		%	4.95		%
Return on average tangible equity (non-GAAP)	13.90		%	15.19		%	13.24		%	13.57		%	13.47		%

Return on average common equity (GAAP)	8.89		%	9.62		%	8.30		%	8.60		%	8.59		%
Impact of excluding average goodwill and other intangibles and amortization	5.16		%	5.74		%	5.09		%	5.13		%	5.03		%
Return on average tangible common equity (non-GAAP)	14.05		%	15.36		%	13.39		%	13.73		%	13.62		%

Book value (GAAP)	$	21.95		$	20.22		$	21.40		$	21.95		$	20.22
Impact of excluding average goodwill and other intangibles and amortization	(6.90		)	(6.72		)	(6.94		)	(6.90		)	(6.72		)
Tangible book value (non-GAAP)	$	15.05		$	13.50		$	14.46		$	15.05		$	13.50

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
	June 30,			March 31,			December 31,			September 30,			June 30,
	2019			2019			2018			2018			2018
Net income (GAAP)	$	34,638		$	31,409		$	35,990		$	38,293		$	34,804

Acquisition-related expenses	20			411			(1,518		)	424			797
Income tax expense -tax reform legislation	—			—			696			—			—
Income tax expense (benefit) - other items	(3		)	(52		)	355			(44		)	(93		)
Income tax expense (benefit)	(3		)	(52		)	1,051			(44		)	(93		)
Total charges, net of taxes	17			359			(467		)	380			704
Operating earnings, excluding certain items affecting comparability (non-GAAP)	$	34,655		$	31,768		$	35,523		$	38,673		$	35,508
Weighted average diluted shares	72,145,600			72,099,558			72,043,369			72,044,355			71,949,590
Diluted EPS (GAAP)	$	0.48		$	0.44		$	0.50		$	0.53		$	0.48
Diluted EPS, excluding certain items affecting comparability (non-GAAP)	$	0.48		$	0.44		$	0.49		$	0.54		$	0.49
Average assets	$	11,532,278		$	11,194,753		$	11,149,960		$	10,844,570		$	10,536,847
Average tangible equity	$	1,070,634		$	1,039,630		1,022,982			$	1,003,151		$	981,607
Return on average assets, excluding certain items affecting comparability (non-GAAP)	1.21		%	1.15		%	1.26		%	1.41		%	1.35		%
Return on average tangible equity, excluding certain items affecting comparability (non-GAAP)	13.90		%	13.38		%	14.73		%	16.23		%	15.48		%
Return on average common tangible equity, excluding certain items affecting comparability (non-GAAP)	14.06		%	13.53		%	14.93		%	16.45		%	15.66		%
Efficiency ratio, excluding certain items affecting comparability (non-GAAP)	66.79		%	68.12		%	63.81		%	63.69		%	64.52		%

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	Six months ended
	June 30,			June 30,
	2019			2018
Net income (GAAP)	$	66,047		$	59,510

Acquisition-related expenses	431			9,523
Total charges	431			9,523
Income tax expense (benefit) - other items	(55		)	(1,732		)
Income tax expense (benefit)	(55		)	(1,732		)
Total charges, net of taxes	376			7,791
Operating earnings, excluding certain items affecting comparability (non-GAAP)	$	66,423		$	67,301
Weighted average diluted shares	72,122,467			70,551,537
Diluted EPS (GAAP)	$	0.92		$	0.84
Diluted EPS, excluding certain items affecting comparability (non-GAAP)	$	0.92		$	0.95
Average assets	$	11,364,448		$	10,194,507
Average tangible equity	$	1,055,218		$	957,021
Return on average assets, excluding certain items affecting comparability (non-GAAP)	1.18		%	1.33		%
Return on average tangible equity, excluding certain items affecting comparability (non-GAAP)	13.65		%	15.11		%
Return on average common tangible equity, excluding certain items affecting comparability (non-GAAP)	13.80		%	15.29		%
Efficiency ratio, excluding certain items affecting comparability (non-GAAP)	67.43		%	65.32		%

TowneBank Reports Second Quarter 2019 Earnings

More articles issued by

More articles related to:

Earnings Releases and Operating Results