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TowneBank Reports Record First Quarter Earnings

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

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

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

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

First Quarter 2016 Performance Highlights

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

First Quarter 2016 Earnings Compared to First Quarter 2015

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

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

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

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

First Quarter 2016 Earnings Compared to Fourth Quarter 2015

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

Performance Highlights

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

  • Nonperforming assets decreased 12.55% during the quarter

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

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

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


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


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

Segment Results

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

First Quarter 2016 Compared to First Quarter 2015

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

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

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

First Quarter 2016 Compared to Fourth Quarter 2015

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

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

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

Balance Sheet

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

Loans

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

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

Deposits

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

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

Capital Ratios

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

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

Asset Quality

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


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

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

About TowneBank:
As one of the top community banks in Virginia and North Carolina, TowneBank operates 37 banking offices serving Chesapeake, Chesterfield County, Glen Allen, Hampton, James City County, Mechanicsville, Newport News, Norfolk, Portsmouth, Richmond, Suffolk, Virginia Beach, Williamsburg, and York County in Virginia, along with Moyock, Grandy, Camden County, Southern Shores, Corolla and Nags Head in North Carolina. Towne also offers a full range of financial services through its controlled divisions and subsidiaries that include Towne Investment Group, Towne Insurance Agency, TFA Benefits, TowneBank Mortgage, TowneBank Commercial Mortgage, Berkshire Hathaway HomeServices Towne Realty, Towne 1031 Exchange, LLC, and Beach Properties of Hilton Head. Local decision-making is a hallmark of its hometown banking strategy that is delivered through the leadership of each group’s President and Board of Directors. With total assets of $6.37 billion as of March 31, 2016, TowneBank is one of the largest banks headquartered in Virginia.

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

Forward-Looking Statements:
Statements made in this release, other than those concerning historical financial information, may be considered forward-looking statements, which speak only as of the date of this release and are based on current expectations and involve a number of assumptions. These include statements as to the anticipated benefits of the merger with Monarch, including future financial and operating results, cost savings and enhanced revenues that may be realized from the merger as well as other statements of expectations regarding the merger and any other statements regarding future results or expectations. TowneBank intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is including this statement for purposes of these safe harbor provisions. TowneBank’s ability to predict results, or the actual effect of future plans or strategies, is inherently uncertain. Factors which could have a material effect on the operations and future prospects of TowneBank, and the resulting company after the merger with Monarch, include but are not limited to: the businesses of TowneBank and Monarch may not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; expected revenue synergies and cost savings from the merger or other pending or recently completed acquisitions may not be fully realized or realized within the expected timeframe; revenues following the merger may be lower than expected; customer and employee relationships and business operations may be disrupted by the merger; the ability to obtain required regulatory and stockholder approvals, and the ability to complete the merger on the expected timeframe may be more difficult, time-consuming or costly than expected; changes in interest rates, general economic and business conditions; legislative/regulatory changes; the monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve; the quality and composition of the loan and securities portfolios; demand for loan products; deposit flows; competition; demand for financial services in TowneBank’s market areas; TowneBank’s implementation of new technologies and the ability to develop and maintain secure and reliable electronic systems; changes in the securities markets; and changes in accounting principles, policies and guidelines; and other risk factors detailed from time to time in filings made by TowneBank with the Federal Deposit Insurance Corporation (the “FDIC”). TowneBank undertakes no obligation to update or clarify these forward-looking statements, whether as a result of new information, future events or otherwise.

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

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

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

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


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


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


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


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


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


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


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


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


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


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


For more information contact: G. Robert Aston, Jr., Chairman and CEO, 757-638-6780 Clyde E. McFarland, Jr., Senior Executive Vice President and CFO, 757-638-6801 William B. Littreal, Chief Investment Relations Officer and COO, 757-638-6813

Source:TowneBank