Press Release

TowneBank Reports Record Third Quarter Earnings

Company Release - 10/27/2016 8:30 AM ET

SUFFOLK, Va., Oct. 27, 2016 (GLOBE NEWSWIRE) -- Hampton Roads based TowneBank (the “Bank” or “Company”) (NASDAQ:TOWN) today reported financial results for the quarter and nine months ended September 30, 2016.  Earnings for the quarter ended September 30, 2016 increased 37.63% to a record $24.18 million compared to $17.57 million for the same quarter in 2015.  Fully diluted earnings per share were $0.39 compared to $0.34 for the third quarter of 2015.  Earnings in the third quarter of 2016 included after-tax acquisition-related expenses of $0.70 million as compared to $0.16 million in the third quarter of 2015.

Excluding after-tax acquisition-related expenses, core earnings for the quarter ended September 30, 2016 were $24.88 million (non-GAAP) compared to $17.72 million (non-GAAP) for the same quarter in 2015.  Fully diluted core earnings per share, excluding after-tax acquisition-related expenses, were $0.40 (non-GAAP measure) compared to $0.35 for the third quarter of 2015.

Earnings for the year-to-date period were $48.25 million as compared to the $49.92 million earned in the same period of 2015.  Fully diluted earnings per share were $0.87 compared to $0.98 for the nine months ended September 30, 2015.  Earnings in 2016 included after-tax acquisition-related expenses of $13.34 million as compared to $0.67 million in 2015.  Earnings per share were also affected by the issuance of 10.49 million new common shares in conjunction with the acquisition of Monarch Financial Holdings, Inc. (“Monarch”) on June 24, 2016.

Excluding after-tax acquisition-related expenses, core earnings for the year-to-date period were $61.60 million (non-GAAP) as compared to the $50.58 million (non-GAAP) earned in the same period of 2015.  Fully diluted earnings per share were $1.12 (non-GAAP) compared to $0.99 (non-GAAP) for the nine months ended September 30, 2015.

The Bank’s common dividend was $0.13 per share for the quarter with the common dividend totaling $8.11 million.  The current dividend represents an increase of 8.3% over the dividend paid during the same quarter of 2015 and a payout ratio of 33.3%.

“We are extremely pleased with our strong operating performance driven in part by our successful merger integration of Monarch Bank into our Towne family.  Reflective of our planned merger cost saves, our core return of average assets increased to 1.24%, producing a core return on average tangible equity of 13.23%.  On another note of significance, the June 30, 2016 release of Deposit Market Share by the FDIC for the Virginia Beach-Norfolk-Newport News, VA-NC Metropolitan Statistical Area(s) placed TowneBank in a market leading position with a 21.51% market share,” said G. Robert Aston, Jr., Chairman and Chief Executive Officer.

Third Quarter 2016 Performance Highlights

  • Total revenues were a record $109.43 million, an increase of $33.45 million, or 44.03%, from third quarter 2015
    • Taxable equivalent net interest margin was 3.57%, including accretion of 17 basis points, compared to 3.40%, including accretion of 6 basis points, for third quarter 2015
    • Residential mortgage banking income increased $13.17 million, or 159.38%
    • Insurance segment total revenue increased 11.88% from third quarter 2015, to $13.22 million
       
  • Core net income, excluding after-tax acquisition-related expenses, was $24.88 million, an increase of 40.36% from September 30, 2015
     
  • Loans held for investment increased $1.28 billion, or 29.42%, from September 30, 2015, which included $808.14 million of loans acquired in the Monarch merger
     
  • Average loans held for sale increased $349.14 million, or 264.07% from September 30, 2015
     
  • Total deposits were $6.15 billion, an increase of $1.36 billion, or 28.39%, from third quarter 2015, which included $1.06 billion of deposits acquired in the Monarch merger
    • Noninterest bearing deposits increased by 36.54%, to $1.97 billion and represent 32.12% of total deposits
    • Total cost of deposits decreased to 0.38% from 0.41% at September 30, 2015
       
  • Asset quality showed continued strength
    • Nonperforming assets declined to $34.22 million, or 0.44% of total assets compared to $47.99 million, or 0.78%, at September 30, 2015
    • Nonperforming loans were 0.20% of period end loans
    • Foreclosed property decreased 42.08% to $22.88 million
       
  • The Bank remained well-capitalized
    • Common equity tier 1 capital ratio of 11.74%
    • Tier 1 leverage capital ratio of 10.18%
    • Tier 1 risk-based capital ratio of 11.81%
    • Total risk-based capital ratio of 12.42%

Net Interest Income
Net interest income increased to $62.60 million, a $16.94 million, or 37.08%, increase from the third quarter of 2015.  The primary driver was the increase in average earning assets, which increased $1.65 billion, or 29.47%, from third quarter 2015.  Additionally, tax-equivalent net interest margin increased to 3.57% in the current quarter as compared to 3.40% in third quarter 2015.  Accretion income added $2.63 million, or 17 basis points, to margin in the current quarter as compared to $0.68 million, or 6 basis points, in the third quarter of 2015.

Noninterest Income
Noninterest income, excluding gains or losses on investments, was $46.82 million for the third quarter of 2016, an increase of $17.25 million, or 58.35%, from the third quarter of 2015.  Residential mortgage banking income increased $13.17 million, or 159.38%, from third quarter 2015 primarily due to higher production volumes resulting from the Monarch merger.  Mortgage production was $1.25 billion in the third quarter of 2016, which was $811.86 million greater than third quarter 2015.  Insurance commissions and other title fees increased $1.55 million, or 15.94%, primarily due to insurance agency acquisitions in 2015, combined with an increase in commercial lines and travel insurance commissions.  Additionally, real estate brokerage and property management income increased $1.30 million, or 24.27%, from the third quarter of 2015 due to the acquisition of a resort property management company in Oak Island, North Carolina ("Oak Island") in first quarter 2016.

Noninterest Expense
Noninterest expense increased by $21.03 million, or 42.13%, from the comparative quarter of 2015.  The primary driver was an increase of $11.59 million in salaries and benefits expense due to the addition of staff resulting from the Monarch acquisition, combined with the addition of staff resulting from the acquisitions in our Insurance and Realty segment businesses.  Also contributing were increases in occupancy expenses of $1.95 million and furniture and equipment expenses of $0.99 million primarily related to facilities acquired in the Monarch acquisition.

Third Quarter 2016 Earnings Compared to Second Quarter 2016

Core net income for the third quarter, excluding after-tax acquisition-related expenses of $0.70 million, was $24.88 million, or $0.40 per diluted share, versus $18.52 million, or $0.36 per diluted share, excluding after-tax acquisition-related expenses of $12.26 million, for second quarter 2016.

Performance Highlights

  • Record revenues of $109.43 million, a $25.17 million, or 29.88%, increase from second quarter 2016
    • Taxable equivalent net interest margin was 3.57%, including accretion of 17 basis points, compared to 3.36%, including accretion of 5 basis points, for second quarter 2016
    • Noninterest income increased $10.35 million primarily due to merger-related growth in our residential mortgage banking business
       
  • Loans held for investment increased $91.69 million, or 1.65%, from June 30, 2016
     
  • Noninterest bearing deposits increased by $23.58 million, or 1.21% during the quarter
     
  • Nonperforming assets decreased 5.69% during the quarter

Net Interest Income
On a linked quarter basis, net interest income increased by $14.82 million, or 31.02%, in third quarter 2016 versus second quarter 2016, while tax-equivalent net interest margin was 3.57%, an increase of 21 basis points from second quarter 2016.  Accretion income added $2.63 million, or 17 basis points, to margin in the current quarter, as compared to $0.61 million, or 5 basis points, in the linked quarter.

Noninterest Income
In comparison to the second quarter of 2016, noninterest income, excluding gains and losses on investment securities, increased $10.35 million, or 28.39%.  Residential mortgage banking income increased by $9.28 million, or 76.41%, from the second quarter of 2016 as the Monarch merger was the primary driver of an increase in mortgage production of $654.89 million.  Additionally, real estate brokerage and property management income increased due to seasonal improvements in our resort property management businesses.  Partially offsetting the increase from the linked quarter was a decline in insurance commissions due to a seasonal decrease in renewals.

Noninterest Expense
Noninterest expense decreased by $0.97 million, or 1.34%, from the second quarter of 2016.  Driving the decrease was a decline in acquisition-related expenses of $17.47 million.  The decrease was mostly offset by increases in personnel and occupancy expenses due to the addition of staff and facilities resulting from the Monarch merger.

Noninterest Income      % Change
 Q3 Q3 Q2 Q3 16 vs. Q3 16 vs.
(dollars in thousands)2016 2015 2016 Q3 15 Q2 16
Residential mortgage banking income, net$21,430  $8,262  $12,148  159.38% 76.41%
Insurance commissions and other title fees and income, net11,258  9,710  11,627  15.94% (3.17)%
Real estate brokerage and property management, net6,647  5,349  6,116  24.27% 8.68%
Service charges on deposit accounts2,552  2,388  2,284  6.87% 11.73%
Credit card merchant fees, net1,365  823  1,113  65.86% 22.64%
Other income3,569  3,036  3,180  17.56% 12.23%
Subtotal before gain on investments46,821  29,568  36,468  58.35% 28.39%
Net gain on investment securities  736    (100.00)% N/M 
Total noninterest income$46,821  $30,304  $36,468  54.50% 28.39%



Noninterest Expense      % Change
 Q3 Q3 Q2 Q3 16 vs. Q3 16 vs.
(dollars in thousands)2016 2015 2016 Q3 15 Q2 16
Salaries and benefits$40,497  $28,910  $30,093  40.08% 34.57%
Occupancy expense6,656  4,703  5,157  41.53% 29.07%
Furniture and equipment3,199  2,211  2,381  44.69% 34.36%
Other expenses19,612  13,839  15,833  41.72% 23.87%
Core noninterest expense69,964  49,663  53,464  40.88% 30.86%
Acquisition-related expenses969  243  18,435  298.77% (94.74)%
Total noninterest expense$70,933  $49,906  $71,899  42.13% (1.34)%


Segment Results

The following table presents our segment results:

        $ Change
Segment Net Income Q3 Q3 Q2 Q3 16 vs. Q3 16 vs.
(in thousands) 2016 2015 2016 Q3 15 Q2 16
Banking $18,276  $14,148  $1,290  $4,128  $16,986 
Realty 4,815  2,345  3,765  2,470  1,050 
Insurance 1,085  1,073  1,204  12  (119)
Total net income $24,176  $17,566  $6,259  $6,610  $17,917 


Third Quarter 2016 Compared to Third Quarter 2015

Banking
Net income for the three months ended September 30, 2016 for the Banking segment was $18.28 million as compared to $14.15 million in the comparative 2015 quarter, as net interest income climbed by $14.17 million due to the increase in earning assets related to the Monarch merger.  Average loan balances saw an increase of $1.28 billion.  Partially offsetting the increase was an increase in noninterest expenses of $6.92 million and an increase in the loan loss provision.

Realty
For the three months ended September 30, 2016, the Realty segment had net income of $4.82 million compared to $2.35 million for the third quarter of 2015.  The current quarter results were driven by an increase in residential mortgage banking income of $13.16 million, or 154.15%, due to higher production volumes resulting from the Monarch merger.  Additionally, property management fees increased by $1.02 million, or 30.39%, primarily due to our purchase of Oak Island in January 2016.  The increase in revenue was partially offset by an increase in operational expenses related to the merger with Monarch.

Insurance
The Insurance segment had net income of $1.09 million for the three months ended September 30, 2016, an increase of $0.01 million as compared to the third quarter of 2015.  Insurance agencies acquired in 2015 contributed additional revenue, net of commission expense, of $0.97 million in third quarter 2016.  Contributing to the increase was an improvement in commercial lines commissions and commissions from travel insurance.  The acquired agencies resulted in additional noninterest expenses of $0.95 million, primarily related to personnel expenses.

Third Quarter 2016 Compared to Second Quarter 2016

Banking
The increase in earnings from $1.29 million in the second quarter of 2016 was driven by an increase in net interest income of $12.03 million due to the growth in earning assets resulting from the Monarch merger, combined with a decrease in noninterest expenses of $11.31 million and a decrease in the loan loss provision of $0.41 million.  The decrease in noninterest expenses resulted from a decrease in acquisition-related expenses of $17.16 million, partially offset by an increase in personnel costs of $3.39 million.

Realty
Net income in the Realty segment increased by $1.05 million from the linked quarter ended June 30, 2016.  The increase resulted primarily from the merger-driven growth in residential mortgage banking income of $9.20 million.  Also contributing was a seasonal increase in our resort property management business.

Insurance
Net income decreased $0.12 million from the second quarter of 2016.  The variance from the linked quarter was a result of a drop in contingency and bonus revenue of $0.40 million, combined with a seasonal decrease in travel insurance commissions of $0.24 million.  Contingent commissions are seasonal in nature and are mostly received during the first quarter of each year.  The seasonal decrease in revenue was partially offset by a decline in operating expenses during the current quarter.

Balance Sheet

At September 30, 2016, total Bank assets reached $7.83 billion, an increase of $1.66 billion, or 26.83%, over September 30, 2015.

Loans

       % Change
 Q3 Q3 Q2 Q3 16 vs. Q3 16 vs.
(dollars in thousands)2016 2015 2016 Q3 15 Q2 16
Construction and land development$820,453  $554,753  $824,609  47.90% (0.50)%
Commercial real estate - investment
related properties
1,283,619  1,020,860  1,221,488  25.74% 5.09%
Commercial real estate - owner occupied905,870  775,290  896,620  16.84% 1.03%
Multifamily real estate206,623  138,954  171,501  48.70% 20.48%
1-4 family residential real estate1,208,001  965,559  1,183,818  25.11% 2.04%
Commercial and industrial business loans1,033,797  790,614  1,075,736  30.76% (3.90)%
Consumer loans and other193,279  121,009  186,177  59.72% 3.81%
Total$5,651,642  $4,367,039  $5,559,949  29.42% 1.65%


The Bank’s loan portfolio ended the period at $5.65 billion representing an increase of 29.42%, or $1.28 billion, from the prior year and an increase of 1.65%, or $91.69 million, from June 30, 2016.  In addition to organic growth, the increase in loans from the prior year is related to the acquisition of $808.14 million loans in the Monarch merger on June 24, 2016.

Deposits

       % Change
 Q3 Q3 Q2 Q3 16 vs. Q3 16 vs.
(dollars in thousands)2016 2015 2016 Q3 15 Q2 16
Noninterest-bearing demand$1,974,395  $1,445,978  $1,950,816  36.54% 1.21%
Interest-bearing:         
Demand and money market accounts2,207,962  1,676,623  2,174,154  31.69% 1.55%
Savings315,477  295,952  317,071  6.60% (0.50)%
Certificates of deposits1,649,113  1,369,325  1,744,238  20.43% (5.45)%
Total$6,146,947  $4,787,878  $6,186,279  28.39% (0.64)%


The Bank continued to experience solid deposit growth with total deposits increasing to $6.15 billion, up $1.36 billion, or 28.39%, from September 30, 2015.  Growth in total deposits includes $1.06 billion of deposits acquired in the Monarch merger.  The Bank saw continued growth in noninterest bearing demand deposits, which ended the quarter at $1.97 billion, a 36.54% increase from September 30, 2015.  Noninterest deposits represented 32.12% of total deposits at September 30, 2016.

Capital Ratios

  Q3 Q3 Q2
  2016 2015 2016
Common Equity Tier 1 11.74% 12.52% 11.82%
Tier 1 11.81% 12.62% 11.89%
Total 12.42% 13.35% 12.50%
Tier 1 leverage ratio 10.18% 10.93% 12.36%


The Bank’s total equity at September 30, 2016 rose to $1.08 billion, an increase of $262.81 million, or 32.20%, from September 30, 2015.  Total risk-based capital remained strong as common equity Tier 1, Tier 1 capital, total risk-based capital, and Tier 1 leverage capital ratios were 11.74%, 11.81%, 12.42%, and 10.18%, respectively.  All ratios exceed the current regulatory standards for well capitalized status.

Asset Quality

(in thousands)9/30/2016 6/30/2016 3/31/2016 12/31/2015 9/30/2015
          
Nonperforming loans$11,337  $10,580  $7,944  $8,670  $8,477 
          
Foreclosed property22,884  25,707  29,740  34,420  39,509 
          
Total nonperforming assets$34,221  $36,287  $37,684  $43,090  $47,986 
          
Quarterly net loans charged off
(recovered)
$649  $241  $340  $(156) $69 
          
Year-to-date net loans charged off$1,230  $581  $340  $585  $741 



        Change
  Q3 Q3 Q2 Q3 16 vs. Q3 16 vs.
(dollars in thousands) 2016 2015 2016 Q3 15 Q2 16
Total loans 90 days past due and still accruing $  $31  $  $(31) $ 
Total loans 30-89 days past due $6,707  $5,864  $5,041  $843  $1,666 
Allowance for loan losses $40,655  $37,351  $39,618  $3,304  $1,037 
Total performing TDRs $28,345  $29,920  $28,184  $(1,575) $161 
           
Nonperforming loans to period end loans 0.20% 0.19% 0.19% 0.01% 0.01%
Nonperforming assets to period end assets 0.44% 0.78% 0.46% (0.34)% (0.02)%
Allowance for loan losses to period end loans 0.72% 0.86% 0.71% (0.14)% 0.01%
Allowance for loan losses (originated) to originated period end loans 0.91% 0.96% 0.90% (0.05)% 0.01%
Net charge-offs (recoveries) to average loans (annualized) 0.05% 0.01% 0.02% 0.04% 0.03%
Ratio of allowance for loan losses to nonperforming loans 3.59x 4.41x 3.74x (0.82)x (0.15)x


Continued strength in credit quality contributed to the Bank's financial results as net charge-offs remained low at $0.65 million in the third quarter of 2016 compared to $0.07 million in the third quarter of 2015 and $0.24 million in the linked quarter.  Total nonperforming assets were $34.22 million, or 0.44%, of Bank assets at September 30, 2016, as compared to $47.99 million, or 0.78%, at September 30, 2015, and $36.29 million, or 0.46%, at June 30, 2016.  The allowance for loan losses was $40.66 million, increased from $37.35 million at September 30, 2015 and $39.62 million at June 30, 2016.

About TowneBank:
As one of the top community banks in Virginia and North Carolina, TowneBank operates 38 banking offices serving Chesapeake, Chesterfield County, Glen Allen, Hampton, James City County, Mechanicsville, Newport News, Norfolk, Portsmouth, Richmond, Suffolk, Virginia Beach, Williamsburg, and York County in Virginia, along with Moyock, Grandy, Camden County, Southern Shores, Corolla and Nags Head in North Carolina. Towne also offers a full range of financial services through its controlled divisions and subsidiaries that include Towne Investment Group, Towne Insurance Agency, Towne Benefits, TowneBank Mortgage, TowneBank Commercial Mortgage, Berkshire Hathaway HomeServices Towne Realty, Towne 1031 Exchange, LLC, and Beach Properties of Hilton Head. Local decision-making is a hallmark of its hometown banking strategy that is delivered through the leadership of each group’s President and Board of Directors.  With total assets of $7.83 billion as of September 30, 2016, TowneBank is one of the largest banks headquartered in Virginia.

Non-GAAP Financial Measures:
This press release contains financial information determined by methods other than in accordance with GAAP.  The Company’s management uses these non-GAAP financial measures in their analysis of the Company’s performance.  These measures typically adjust GAAP performance measures to exclude the effects of the amortization of intangibles and include the tax benefit associated with revenue items that are tax-exempt, as well as adjust income available to common shareholders for certain significant activities or transactions that are infrequent in nature.  Since the presentation of these GAAP performance measures and their impact differ between companies, management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of the Company’s core businesses.  These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of GAAP to non-GAAP disclosures are included as tables at the end of this release.

Forward-Looking Statements:
Statements made in this release, other than those concerning historical financial information, may be considered forward-looking statements, which speak only as of the date of this release and are based on current expectations and involve a number of assumptions.  TowneBank intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is including this statement for purposes of these safe harbor provisions.  TowneBank’s ability to predict results, or the actual effect of future plans or strategies, is inherently uncertain. Factors which could have a material effect on the operations and future prospects of TowneBank 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; the quality and composition of the loan and securities portfolios; demand for loan products; deposit flows; competition; demand for financial services in TowneBank’s  market areas; TowneBank’s implementation of new technologies and the ability to develop and maintain secure and reliable electronic systems; changes in the securities markets; and changes in accounting principles, policies and guidelines; and other risk factors detailed from time to time in filings made by TowneBank with the Federal Deposit Insurance Corporation.  TowneBank undertakes no obligation to update or clarify these forward-looking statements, whether as a result of new information, future events or otherwise.



TOWNEBANK
Selected Financial Highlights (unaudited)
(dollars in thousands, except per share data)
 
        Increase/  % Increase/
Three months ended September 30,2016 2015  (Decrease)  (Decrease)
         
Results of Operations:       
 Net interest income$62,605  $45,670  $16,935  37.08%
 Noninterest income (1)46,821  29,568  17,253  58.35%
 Gain on investment securities  736  (736) (100.00)%
 Total Revenue109,426  75,974  33,452  44.03%
 Acquisition-related expenses969  243  726  298.77%
 Noninterest expenses, excluding acquisition-related expenses69,964  49,663  20,301  40.88%
 Provision for loan losses1,686  130  1,556  N/M 
 Income before income tax and noncontrolling interest36,807  25,938  10,869  41.90%
 Provision for income tax expense10,974  7,444  3,530  47.42%
 Net income25,833  18,494  7,339  39.68%
 Net income attributable to noncontrolling interest(1,657) (928) (729) 78.56%
 Net income attributable to TowneBank24,176  17,566  6,610  37.63%
 Net income available to common shareholders24,176  17,566  6,610  37.63%
 Net income per common share - basic0.39  0.34  0.05  14.71%
 Net income per common share - diluted0.39  0.34  0.05  14.71%
Period End Data:       
 Total assets$7,830,142  $6,173,891  $1,656,251  26.83%
 Total assets - tangible7,525,817  5,998,373  1,527,444  25.46%
 Earning assets (2)7,197,077  5,508,341  1,688,736  30.66%
 Loans (net of unearned income)5,651,642  4,367,039  1,284,603  29.42%
 Allowance for loan losses40,655  37,351  3,304  8.85%
 Goodwill and other intangibles304,325  175,518  128,807  73.39%
 Nonperforming assets34,221  47,986  (13,765) (28.69)%
 Noninterest bearing deposits1,974,395  1,445,978  528,417  36.54%
 Interest bearing deposits4,172,552  3,341,900  830,652  24.86%
   Total deposits6,146,947  4,787,878  1,359,069  28.39%
 Total equity1,078,878  816,069  262,809  32.20%
 Total equity - tangible774,553  640,551  134,002  20.92%
 Common equity1,067,193  807,152  260,041  32.22%
 Common equity - tangible762,868  631,634  131,234  20.78%
 Book value per common share17.11  15.65  1.46  9.33%
 Book value per common share - tangible12.23  12.25  (0.02) (0.16)%
Daily Average Balances:       
 Total assets$7,991,213  $6,115,681  $1,875,532  30.67%
 Total assets - tangible7,689,122  5,940,258  1,748,864  29.44%
 Earning assets (2)7,255,956  5,604,472  1,651,484  29.47%
 Loans (net of unearned income), excluding nonaccrual loans5,583,711  4,300,751  1,282,960  29.83%
 Allowance for loan losses40,004  37,926  2,078  5.48%
 Goodwill and other intangibles302,091  175,423  126,668  72.21%
 Noninterest bearing deposits1,959,025  1,388,002  571,023  41.14%
 Interest bearing deposits4,219,316  3,346,874  872,442  26.07%
   Total deposits6,178,341  4,734,876  1,443,465  30.49%
 Total equity1,075,023  812,602  262,421  32.29%
 Total equity - tangible772,932  637,179  135,753  21.31%
 Common equity1,064,179  804,090  260,089  32.35%
 Common equity - tangible762,088  628,667  133,421  21.22%
Key Ratios:       
 Return on average assets1.20% 1.14% 0.06% 5.26%
 Return on average assets - tangible1.29% 1.21% 0.08% 6.61%
 Return on average equity8.95% 8.58% 0.37% 4.31%
 Return on average equity - tangible12.87% 11.25% 1.62% 14.40%
 Return on average common equity9.04% 8.67% 0.37% 4.27%
 Return on average common equity - tangible13.05% 11.41% 1.64% 14.37%
 Net interest margin-fully tax equivalent (2)(3)3.57% 3.40% 0.17% 5.00%
 Net interest margin (2)3.50% 3.32% 0.18% 5.42%
 Average earning assets/total average assets90.80% 91.64% (0.84)% (0.92)%
 Average loans/average deposits90.38% 90.83% (0.45)% (0.50)%
 Average noninterest deposits/total average deposits31.71% 29.31% 2.40% 8.19%
 Allowance for loan losses/period end loans0.72% 0.86% (0.14)% (16.28)%
 Nonperforming assets to period end assets0.44% 0.78% (0.34)% (43.59)%
 Period end equity/period end total assets13.78% 13.22% 0.56% 4.24%
 Efficiency ratio (1)64.82% 66.33% (1.51)% (2.28)%
         
(1) Excludes gain on investment securities       
(2) Includes bank-owned life insurance       
(3) Presented on a tax-equivalent basis       



TOWNEBANK
Selected Financial Highlights (unaudited)
(dollars in thousands, except per share data)
         
       Increase/ % Increase/
Nine Months Ended September 30,2016 2015 (Decrease) (Decrease)
         
Results of Operations:       
 Net interest income$156,724  $134,111  $22,613  16.86%
 Noninterest income (1)115,704  89,368  26,336  29.47%
 Gain on investment securities  904  (904) (100.00)%
 Gain on investment properties  1,933  (1,933) (100.00)%
 Total Revenue272,428  226,316  46,112  20.38%
 Acquisition-related expenses19,817  1,027  18,790  N/M 
 Noninterest expenses, excluding acquisition-related expenses175,175  148,387  26,788  18.05%
 Provision for loan losses3,526  2,176  1,350  62.04%
 Income before income tax and noncontrolling interest73,910  74,726  (816) (1.09)%
 Provision for income tax expense21,538  22,030  (492) (2.23)%
 Net income52,372  52,696  (324) (0.61)%
 Net income attributable to noncontrolling interest(4,118) (2,780) (1,338) 48.13%
 Net income attributable to TowneBank48,254  49,916  (1,662) (3.33)%
 Preferred stock dividends  13  (13) (100.00)%
 Net income available to common shareholders48,254  49,903  (1,649) (3.30)%
 Net income per common share - basic0.88  0.98  (0.10) (10.20)%
 Net income per common share - diluted0.87  0.98  (0.11) (11.22)%
Period End Data:       
 Total assets$7,830,142  $6,173,891  $1,656,251  26.83%
 Total assets - tangible7,525,817  5,998,373  1,527,444  25.46%
 Earning assets (2)7,197,077  5,508,341  1,688,736  30.66%
 Loans (net of unearned income)5,651,642  4,367,039  1,284,603  29.42%
 Allowance for loan losses40,655  37,351  3,304  8.85%
 Goodwill and other intangibles304,325  175,518  128,807  73.39%
 Nonperforming assets34,221  47,986  (13,765) (28.69)%
 Noninterest bearing deposits1,974,395  1,445,978  528,417  36.54%
 Interest bearing deposits4,172,552  3,341,900  830,652  24.86%
   Total deposits6,146,947  4,787,878  1,359,069  28.39%
 Total equity1,078,878  816,069  262,809  32.20%
 Total equity - tangible774,553  640,551  134,002  20.92%
 Common equity1,067,193  807,152  260,041  32.22%
 Common equity - tangible762,868  631,634  131,234  20.78%
 Book value per common share17.11  15.65  1.46  9.33%
 Book value per common share - tangible12.23  12.25  (0.02) (0.16)%
Daily Average Balances:       
 Total assets