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Townebank Reports First Quarter Earnings

SUFFOLK, Va., April 27, 2017 (GLOBE NEWSWIRE) -- Hampton Roads based TowneBank (the “Bank” or “Company”) (NASDAQ:TOWN) today reported earnings of $21.97 million for the quarter ended March 31, 2017, as compared to the $17.82 million reported for the comparative period in 2016, representing a 23.28% increase. Fully diluted earnings per share were $0.35 per share, unchanged from the comparative period of 2016.

The Bank’s quarterly dividend was $0.13 per share resulting in total common dividends of $8.13 million. The current dividend represents an increase of 8.3% over the dividend paid during the same quarter of 2016.

“We are pleased to announce another quarter of strong earnings with solid loan and deposit growth,” said G. Robert Aston, Jr., Chairman and Chief Executive Officer. “We saw continued growth in our noninterest income streams and a reduction in noninterest expenses from fourth quarter 2016, while producing a return on average assets of 1.11% and a return on average tangible equity of 11.88%.”

First Quarter 2017 Performance Highlights

• Total revenues were $105.17 million, an increase of $26.42 million, or 33.54% from first quarter 2016

  • Taxable equivalent net interest margin was 3.45%, including accretion of 9 basis points, compared to 3.33%, including accretion of 6 basis points, for 2016
  • Insurance segment total revenue increased 4.78% to $16.85 million

• Loans held for investment increased $1.36 billion, or 29.89%, from March 31, 2016 with organic growth of $552.68 million, or 12.14%, excluding $808.14 million of loans acquired in the Monarch Financial Holdings, Inc. (“Monarch”) merger on June 24, 2016

• Total deposits were $6.19 billion, an increase of $1.24 billion, or 24.94%, from 2016. The increase included $1.06 billion deposits acquired in the Monarch merger

  • Noninterest bearing deposits increased by 41.59%, to $2.05 billion, representing 33.16% of total deposits
  • Total cost of deposits decreased to 0.40% from 0.43% at March 31, 2016

• Asset quality showed continued strength

  • Nonperforming assets declined to $35.81 million, or 0.44% of total assets compared to $37.68 million, or 0.59%, at March 31, 2016
  • Nonperforming loans were 0.20% of period end loans
  • Foreclosed property decreased to $21.47 million

• The Bank remained well-capitalized

  • Common equity tier 1 capital ratio of 11.94%
  • Tier 1 leverage capital ratio of 10.49%
  • Tier 1 risk-based capital ratio of 11.98%
  • Total risk-based capital ratio of 12.62%
  • Tangible book value increased to $12.59

First Quarter 2017 Earnings Compared to First Quarter 2016

Net income for the first quarter was $21.97 million, or $0.35 per diluted share, versus $17.82 million, or $0.35 per diluted share, in 2016, reflecting strong growth in net interest income as compared to the prior year period.

Net Interest Income
Net interest income increased to $60.28 million, a $13.95 million, or 30.10%, increase from first quarter 2016. The primary driver was the growth in average earning assets, which increased $1.51 billion, or 26.71%, while tax-equivalent net interest margin increased to 3.45% in the current quarter from 3.33% in first quarter 2016. Accretion income added $1.13 million, or 9 basis points, to margin in the current quarter as compared to $0.65 million, or 6 basis points, in the first quarter of 2016.

Noninterest Income
Noninterest income was $44.89 million for the first quarter of 2017, an increase of $12.47 million, or 38.47%, from the first quarter of 2016. Residential mortgage banking income increased $10.51 million, or 147.71%, from the first quarter of 2016 primarily due to higher production volumes resulting from the Monarch merger. Mortgage production was $706.06 million in first quarter 2017, which was $392.92 million higher than first quarter 2016 production of $313.14 million. Insurance commissions and other title fees increased $0.77 million, or 5.47%, primarily due to organic growth across the lines of business.

Noninterest Expense
Noninterest expense increased by $18.09 million, or 34.68%, from the comparative quarter of 2016. The primary driver was an increase of $10.02 million in salaries and benefits expense due to the addition of staff related to the Monarch acquisition and organic growth. Also contributing were increases in occupancy expenses of $1.67 million and furniture and equipment expenses of $0.99 million primarily related to mortgage facilities acquired in the Monarch acquisition.

First Quarter 2017 Earnings Compared to Fourth Quarter 2016
Net income for the first quarter was $21.97 million, or $0.35 per diluted share, versus $19.0 million, or $0.31 per diluted share, in fourth quarter 2016, reflecting the seasonality in our Insurance and Realty segments.

Performance Highlights

• Total revenues were $105.17 million compared to $101.67 million in the fourth quarter of 2016

  • Taxable equivalent net interest margin was 3.45%, including accretion of 9 basis points, compared to 3.52%, including accretion of 15 basis points, in the fourth quarter of 2016
  • Noninterest income, excluding gains on investment securities, increased $5.37 million due to seasonality in our Insurance and Realty segments

• Total loans held for investment increased $105.86 million, or 7.29% on an annualized basis, from December 31, 2016

Net Interest Income
On a linked quarter basis, net interest income decreased by $1.87 million or 3.01%, in first quarter 2017 versus fourth quarter 2016, while tax-equivalent net interest margin was 3.45% versus 3.52% for the fourth quarter of 2016. The decrease in net interest income was primarily due to seasonally lower loans held for sale average balances combined with a decrease in accretion income. Accretion income added $1.13 million, or 9 basis points, to margin in the current quarter, as compared to $2.34 million, or 15 basis points, in the linked quarter.

Noninterest Income
In comparison to the fourth quarter of 2016, noninterest income increased $5.37 million, or 13.58%. The increase was driven by insurance commission income, which grew by $4.98 million, or 50.67%, due to organic growth and with higher contingent commission revenue, which is mostly received during the first quarter of each year. Additionally, real estate brokerage and property management income was higher due to a seasonal increase related to our resort property management business. Residential mortgage banking income decreased by $0.46 million, or 2.56%, from the fourth quarter of 2016 primarily due to a seasonal decrease in mortgage production of $299.93 million, from $1.01 billion in fourth quarter 2016 to $706.06 million in first quarter 2017.

Noninterest Expense
Noninterest expense decreased by $2.59 million, or 3.55%, from the fourth quarter of 2016. The primary driver was a decrease in salaries and benefits expenses of $2.86 million related to decreases in employee profit-sharing and incentive plan expenses.

Noninterest Income

% Change
Q1 Q1 Q4 Q1 17 vs. Q1 17 vs.
(dollars in thousands)2017 2016 2016 Q1 16 Q4 16
Residential mortgage banking income, net$17,632 $7,118 $18,096 147.71% (2.56)%
Insurance commissions and other title fees and income, net14,800 14,033 9,823 5.47% 50.67%
Real estate brokerage and property management, net4,993 4,827 2,925 3.44% 70.70%
Service charges on deposit accounts2,472 2,176 2,535 13.60% (2.49)%
Credit card merchant fees, net1,118 895 1,135 24.92% (1.50)%
Other income3,871 3,366 4,998 15.00% (22.55)%
Subtotal before gain on investment securities44,886 32,415 39,512 38.47% 13.60%
Net gain on investment securities 6 (100.00)%
Total noninterest income$44,886 $32,415 $39,518 38.47% 13.58%

Noninterest Expense

% Change
Q1 Q1 Q4 Q1 17 vs. Q1 17 vs.
(dollars in thousands)2017 2016 2016 Q1 16 Q4 16
Salaries and benefits$40,208 $30,187 $43,071 33.20% (6.65)%
Occupancy expense6,684 5,017 6,885 33.23% (2.92)%
Furniture and equipment3,343 2,357 3,378 41.83% (1.04)%
Acquisition-related expenses(5) 414 (707) (101.21)% (99.29)%
Other expenses20,018 14,186 20,207 41.11% (0.94)%
Total noninterest expense$70,248 $52,161 $72,834 34.68% (3.55)%

Segment Results

$ Change
(in thousands) Q1 Q1 Q4 Q1 17 vs. Q1 17 vs.
Segment Net Income (Loss) 2017 2016 2016 Q1 16 Q4 16
Banking $17,967 $14,133 $17,931 $3,834 $36
Realty 926 1,033 673 (107) 253
Insurance 3,075 2,653 392 422 2,683
Total net income $21,968 $17,819 $18,996 $4,149 $2,972

First Quarter 2017 Compared to First Quarter 2016

Banking
Net income for the three months ended March 31, 2017 for the Banking segment was $17.97 million, increasing $3.83 million, or 27.13% from comparative 2016, as net interest income climbed by $12.62 million primarily due to the increase in earning assets from the Monarch merger. Also contributing to the variance was an increase in noninterest income of $1.10 million, which included increases in service charges and credit card merchant fees. These factors were partially offset by increases in the provision for loan losses of $2.80 million and noninterest expenses of $6.17 million.

Realty
For the three months ended March 31, 2017, the Realty segment net income decreased to $0.93 million from $1.03 million from comparative quarter 2016. The decrease was driven by additional noninterest expenses of $11.89 million primarily due to an increase in mortgage operational expenses related to the merger with Monarch, including an increase in personnel costs of $7.00 million. The decrease was mostly offset by an increase in residential mortgage banking income of $10.47 million, or 143.16%, due to higher production volumes resulting from the Monarch merger. Additionally, net interest and other income increased by $1.44 million as higher production volume led to higher average mortgage loans held for sale.

Insurance
The Insurance segment had net income of $3.08 million for the three months ended March 31, 2017, an increase of $0.42 million compared to first quarter 2016. The increase in net income was driven by organic growth in property and casualty insurance, employee benefit insurance, and travel insurance commission income.

First Quarter 2017 Compared to Fourth Quarter 2016

Banking
Earnings increased slightly by $0.04 million, or 0.20% from the fourth quarter of 2016 as decreases in personnel costs of $3.43 million were partially offset by decreases in net interest income and bank-owned life insurance income. Additionally, loan growth in the quarter led to an increase of $0.74 million in the provision for loan losses.

Realty
Net income in the Realty segment increased by $0.25 million from the linked quarter ended December 31, 2016. The increase was primarily a result of a seasonal increase in resort property management fees of $2.37 million, partially offset by seasonal decreases in the Bank's mortgage and real estate brokerage businesses.

Insurance
Net income increased $2.68 million from the fourth quarter of 2016 driven by an increase in contingency and bonus revenue of $3.47 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 $0.80 million and property and casualty commissions increased by $0.84 million due to organic growth and seasonal increases.

Balance Sheet

At March 31, 2017, total Bank assets reached $8.17 billion, an increase of $1.81 billion, or 28.43%, over March 31, 2016.

Loans

% Change
Q1 Q1 Q4 Q1 17 vs. Q1 17 vs.
(dollars in thousands)2017 2016 2016 Q1 16 Q4 16
Construction and land development$898,540 $635,992 $826,027 41.28% 8.78%
Commercial real estate - investment related properties1,362,184 998,082 1,322,466 36.48% 3.00%
Commercial real estate - owner occupied907,049 764,230 928,846 18.69% (2.35)%
Multifamily real estate236,782 160,246 222,791 47.76% 6.28%
1-4 family residential real estate1,215,278 988,432 1,215,823 22.95% (0.04)%
Commercial and industrial business loans1,086,273 852,005 1,089,539 27.50% (0.30)%
Consumer loans and other206,974 153,273 201,729 35.04% 2.60%
Total$5,913,080 $4,552,260 $5,807,221 29.89% 1.82%

The Bank’s loan portfolio ended the period at $5.91 billion representing an increase of 29.89%, or $1.36 billion, from the prior year, and an increase of $105.86 million, or 1.82%, from December 31, 2016. In addition to organic growth, the increase from the prior year is related to loans acquired in the Monarch merger on June 24, 2016.

Deposits

% Change
Q1 Q1 Q4 Q1 17 vs. Q1 17 vs.
(dollars in thousands)2017 2016 2016 Q1 16 Q4 16
Noninterest-bearing demand$2,052,598 $1,449,660 $1,947,312 41.59% 5.41%
Interest-bearing:
Demand and money market accounts2,270,025 1,769,414 2,263,894 28.29% 0.27%
Savings320,104 302,373 319,611 5.86% 0.15%
Certificates of deposits1,548,045 1,433,679 1,504,380 7.98% 2.90%
Total$6,190,772 $4,955,126 $6,035,197 24.94% 2.58%

The Bank continued to experience solid deposit growth with total deposits increasing to $6.19 billion, up $1.24 billion, or 24.94%, from March 31, 2016. The increase was primarily due to the deposits acquired in the Monarch merger. The Bank saw continued growth in noninterest-bearing demand deposits, which ended the quarter at $2.05 billion, a 41.59% increase from the prior year. Noninterest-bearing deposits represented 33.16% of total deposits at March 31, 2017.

Capital Ratios

Q1 Q1 Q4
2017 2016 2016
Common Equity Tier 1 11.94% 12.66% 11.75%
Tier 1 11.98% 12.73% 11.82%
Total 12.62% 13.46% 12.44%
Tier 1 Leverage Ratio 10.49% 10.70% 10.44%

The Bank’s total equity at March 31, 2017 rose to $1.10 billion, an increase of $265.24 million, or 31.73%, from March 31, 2016. 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 11.94%, 11.98%, 12.62%, 10.49%, respectively. All ratios exceed the current regulatory standards for well capitalized status.

Asset Quality

(in thousands)3/31/2017 12/31/2016 9/30/2016 6/30/2016 3/31/2016
Nonperforming loans$11,538 $13,099 $11,337 $10,580 $7,944
Former bank premises2,798 3,494
Foreclosed property21,473 21,011 22,884 25,707 29,740
Total nonperforming assets$35,809 $37,604 $34,221 $36,287 $37,684
Quarterly net loans charged off$1,347 $485 $649 $241 $340
Year-to-date net loans charged off$1,347 $1,715 $1,230 $581 $340


Change
Q1 Q1 Q4 Q1 17 vs. Q1 17 vs.
(dollars in thousands) 2017 2016 2016 Q1 16 Q4 16
Total loans 90 days past due and still accruing $35 $ $76 $35 $(41)
Total loans 30-89 days past due $11,424 $12,055 $10,459 $(631) $965
Allowance for loan losses $43,195 $37,760 $42,001 $5,435 $1,194
Total performing TDRs $26,659 $24,955 $31,351 $1,704 $(4,692)
Nonperforming loans to period end loans 0.20% 0.17% 0.23% 0.03 (0.03)
Nonperforming assets to period end assets 0.44% 0.59% 0.47% (0.15) (0.03)
Allowance for loan losses to period end loans 0.73% 0.83% 0.72% (0.10) 0.01
Allowance for loan losses (originated) to originated period end loans 0.86% 0.92% 0.87% (0.06) (0.01)
Net charge-offs to average loans (annualized) 0.09% 0.03% 0.03% 0.06 0.06
Ratio of allowance for loan losses to nonperforming loans 3.74x 4.75x 3.21x (1.01)x .53x

Continued strength in credit quality contributed to the Bank's financial results as net charge-offs totaled $1.35 million in the first quarter of 2017 compared to $0.34 million in the first quarter of 2016 and $0.49 million in the linked quarter. Total nonperforming assets were $35.81 million, or 0.44%, of Bank assets at March 31, 2017, as compared to $37.68 million, or 0.59%, at March 31, 2016, and $37.60 million, or 0.47%, at December 31, 2016. The allowance for loan losses was $43.20 million, increased from $37.76 million at March 31, 2016 and $42.00 million at December 31, 2016.

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, 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 $8.17 billion as of March 31, 2017, 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 March 31,2017 2016 (Decrease) (Decrease)
Results of Operations:
Net interest income$60,281 $46,336 $13,945 30.10%
Noninterest income44,886 32,415 12,471 38.47%
Total Revenue105,167 78,751 26,416 33.54%
Acquisition-related expenses(5) 414 (419) (101.21)%
Noninterest expenses, excluding acquisition-related expenses70,253 51,747 18,506 35.76%
Provision for loan losses2,541 (259) 2,800 N/M
Income before income tax and noncontrolling interest32,378 26,849 5,529 20.59%
Provision for income tax expense9,386 8,188 1,198 14.63%
Net income22,992 18,661 4,331 23.21%
Net income attributable to noncontrolling interest(1,024) (842) (182) 21.62%
Net income attributable to TowneBank21,968 17,819 4,149 23.28%
Net income available to common shareholders21,968 17,819 4,149 23.28%
Net income per common share - basic0.35 0.35 %
Net income per common share - diluted0.35 0.35 %
Period End Data:
Total assets$8,174,786 $6,365,169 $1,809,617 28.43%
Total assets - tangible7,872,823 6,178,224 1,694,599 27.43%
Earning assets7,362,550 5,745,710 1,616,840 28.14%
Loans (net of unearned income)5,913,080 4,552,260 1,360,820 29.89%
Allowance for loan losses43,195 37,760 5,435 14.39%
Goodwill and other intangibles301,962 186,945 115,017 61.52%
Nonperforming assets35,809 37,684 (1,875) (4.98)%
Noninterest bearing deposits2,052,598 1,449,660 602,938 41.59%
Interest bearing deposits4,138,174 3,505,466 632,708 18.05%
Total deposits6,190,772 4,955,126 1,235,646 24.94%
Total equity1,101,245 836,003 265,242 31.73%
Total equity - tangible799,283 649,058 150,225 23.15%
Common equity1,089,760 826,875 262,885 31.79%
Common equity - tangible787,798 639,930 147,868 23.11%
Book value per common share17.42 16.00 1.42 8.88%
Book value per common share - tangible12.59 12.38 0.21 1.70%
Daily Average Balances:
Total assets$8,000,366 $6,313,238 $1,687,128 26.72%
Total assets - tangible7,698,310 6,126,524 1,571,786 25.66%
Earning assets7,177,697 5,664,461 1,513,236 26.71%
Loans (net of unearned income), excluding nonaccrual loans5,862,799 4,516,277 1,346,522 29.81%
Allowance for loan losses42,610 38,555 4,055 10.52%
Goodwill and other intangibles302,056 186,714 115,342 61.77%
Noninterest bearing deposits1,957,887 1,415,793 542,094 38.29%
Interest bearing deposits4,102,109 3,499,607 602,502 17.22%
Total deposits6,059,996 4,915,400 1,144,596 23.29%
Total equity1,093,490 830,178 263,312 31.72%
Total equity - tangible791,433 643,464 147,969 23.00%
Common equity1,082,324 821,268 261,056 31.79%
Common equity - tangible780,268 634,554 145,714 22.96%
Key Ratios:
Return on average assets1.11% 1.14% (0.03)% (2.63)%
Return on average assets - tangible1.22% 1.21% 0.01% 0.83%
Return on average equity8.15% 8.63% (0.48)% (5.56)%
Return on average equity - tangible11.88% 11.56% 0.32% 2.77%
Return on average common equity8.23% 8.73% (0.50)% (5.73)%
Return on average common equity - tangible12.05% 11.72% 0.33% 2.82%
Net interest margin-fully tax equivalent (1)3.45% 3.33% 0.12% 3.60%
Net interest margin3.41% 3.29% 0.12% 3.65%
Average earning assets/total average assets89.72% 89.72% % %
Average loans/average deposits96.75% 91.88% 4.87% 5.30%
Average noninterest deposits/total average deposits32.31% 28.80% 3.51% 12.19%
Allowance for loan losses/period end loans0.73% 0.83% (0.10)% (12.05)%
Nonperforming assets to period end assets0.44% 0.59% (0.15)% (25.42)%
Period end equity/period end total assets13.47% 13.13% 0.34% 2.59%
Efficiency ratio66.80% 66.24% 0.56% 0.85%
(1) Presented on a tax-equivalent basis


TOWNEBANK
Selected Financial Highlights (unaudited)
(dollars in thousands, except per share data)
March 31, December 31, Increase/ % Increase/
Three Months Ended2017 2016 (Decrease) (Decrease)
Results of Operations:
Net interest income$60,281 $62,151 $(1,870) (3.01)%
Noninterest income44,886 39,518 5,368 13.58%
Total Revenue105,167 101,669 3,498 3.44%
Acquisition-related expenses(5) (707) 702 (99.29)%
Noninterest expenses, excluding acquisition-related expenses70,253 73,541 (3,288) (4.47)%
Provision for loan losses2,541 1,831 710 38.78%
Income before income tax and noncontrolling interest32,378 27,004 5,374 19.90%
Provision for income tax expense9,386 7,160 2,226 31.09%
Net income22,992 19,844 3,148 15.86%
Net income attributable to noncontrolling interest(1,024) (848) (176) 20.75%
Net income attributable to TowneBank21,968 18,996 2,972 15.65%
Net income available to common shareholders21,968 18,996 2,972 15.65%
Net income per common share - basic0.35 0.31 0.04 12.90%
Net income per common share - diluted0.35 0.31 0.04 12.90%
Period End Data:
Total assets$8,174,786 $7,973,915 $200,871 2.52%
Total assets - tangible7,872,823 7,671,149 201,674 2.63%
Earning assets7,362,550 7,157,391 205,159 2.87%
Loans (net of unearned income)5,913,080 5,807,221 105,859 1.82%
Allowance for loan losses43,195 42,001 1,194 2.84%
Goodwill and other intangibles301,962 302,766 (804) (0.27)%
Nonperforming assets35,809 37,605 (1,796) (4.78)%
Noninterest bearing deposits2,052,598 1,947,312 105,286 5.41%
Interest bearing deposits4,138,174 4,087,885 50,289 1.23%
Total deposits6,190,772 6,035,197 155,575 2.58%
Total equity1,101,245 1,086,558 14,687 1.35%
Total equity - tangible799,283 783,792 15,491 1.98%
Common equity1,089,760 1,075,102 14,658 1.36%
Common equity - tangible787,798 772,337 15,461 2.00%
Book value per common share17.42 17.20 0.22 1.28%
Book value per common share - tangible12.59 12.36 0.23 1.86%
Daily Average Balances:
Total assets$8,000,366 $7,965,438 $34,928 0.44%
Total assets - tangible7,698,310 7,661,845 36,465 0.48%
Earning assets7,177,697 7,125,742 51,955 0.73%
Loans (net of unearned income), excluding nonaccrual loans5,862,799 5,705,832 156,967 2.75%
Allowance for loan losses42,610 41,188 1,422 3.45%
Goodwill and other intangibles302,056 303,593 (1,537) (0.51)%
Noninterest bearing deposits1,957,887 1,961,902 (4,015) (0.20)%
Interest bearing deposits4,102,109 4,137,806 (35,697) (0.86)%
Total deposits6,059,996 6,099,708 (39,712) (0.65)%
Total equity1,093,490 1,087,382 6,108 0.56%
Total equity - tangible791,433 783,789 7,644 0.98%
Common equity1,082,324 1,076,277 6,047 0.56%
Common equity - tangible780,268 772,683 7,585 0.98%
Key Ratios:
Return on average assets1.11% 0.95% 0.16% 16.84%
Return on average assets - tangible1.22% 1.05% 0.17% 16.19%
Return on average equity8.15% 6.95% 1.20% 17.27%
Return on average equity - tangible11.88% 10.27% 1.61% 15.68%
Return on average common equity8.23% 7.02% 1.21% 17.24%
Return on average common equity - tangible12.05% 10.42% 1.63% 15.64%
Net interest margin-fully tax equivalent (1)3.45% 3.52% (0.07)% (1.99)%
Net interest margin3.41% 3.47% (0.06)% (1.73)%
Average earning assets/total average assets89.72% 89.46% 0.26% 0.29%
Average loans/average deposits96.75% 93.54% 3.21% 3.43%
Average noninterest deposits/total average deposits32.31% 32.16% 0.15% 0.47%
Allowance for loan losses/period end loans0.73% 0.72% 0.01% 1.39%
Nonperforming assets to period end assets0.44% 0.47% (0.03)% (6.38)%
Period end equity/period end total assets13.47% 13.63% (0.16)% (1.17)%
Efficiency ratio66.80% 71.64% (4.84)% (6.76)%
(1) 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, 2017 December 31, 2016 March 31, 2016
InterestAverage InterestAverage InterestAverage
AverageIncome/Yield/ AverageIncome/Yield/ AverageIncome/Yield/
BalanceExpenseRate BalanceExpenseRate BalanceExpenseRate
Assets:
Loans (net of unearned income
and deferred costs), excluding
nonaccrual loans
$5,862,799 $64,979 4.49% $5,705,832 $66,061 4.61% $4,516,277 $50,781 4.52%
Taxable investment securities627,338 2,843 1.81% 666,936 2,762 1.66% 754,514 3,055 1.62%
Tax-exempt investment securities50,485 375 2.97% 52,199 390 2.99% 52,979 410 3.09%
Interest-bearing deposits450,076 887 0.80% 352,418 487 0.55% 265,256 330 0.50%
Loans held for sale186,999 1,727 3.69% 348,357 3,028 3.48% 75,435 693 3.67%
Total earning assets7,177,697 70,811 4.00% 7,125,742 72,728 4.06% 5,664,461 55,269 3.92%
Less: allowance for loan losses(42,610) (41,188) (38,555)
Total nonearning assets865,279 880,884 687,332
Total assets$8,000,366 $7,965,438 $6,313,238
Liabilities and Equity:
Interest-bearing deposits
Demand and money market$2,272,911 $1,865 0.33% $2,230,198 $1,742 0.31% $1,782,908 $1,328 0.30%
Savings320,319 757 0.96% 316,211 728 0.92% 300,070 700 0.94%
Certificates of deposit1,508,879 3,381 0.91% 1,591,397 3,458 0.86% 1,416,629 3,185 0.90%
Total interest-bearing deposits4,102,109 6,003 0.59% 4,137,806 5,928 0.57% 3,499,607 5,213 0.60%
Borrowings723,506 3,803 2.10% 628,272 3,739 2.33% 468,798 3,185 2.69%
Total interest-bearing liabilities4,825,615 9,806 0.82% 4,766,078 9,667 0.81% 3,968,405 8,398 0.85%
Demand deposits1,957,887 1,961,902 1,415,793
Other noninterest-bearing liabilities123,374 150,076 98,862
Total liabilities6,906,876 6,878,056 5,483,060
Shareholders’ equity1,093,490 1,087,382 830,178
Total liabilities and equity$8,000,366 $7,965,438 $6,313,238
Net interest income (tax-equivalent basis) $61,005 $63,061 $46,870
Reconcilement of Non-GAAP Financial Measures
Tax-equivalent basis adjustment (724) (910) (535)
Net interest income (GAAP) $60,281 $62,151 $46,335
Interest rate spread (1) 3.18% 3.25% 3.07%
Interest expense as a percent of average earning assets 0.55% 0.54% 0.60%
Net interest margin (tax equivalent basis) (2) 3.45% 3.52% 3.33%
Total cost of deposits 0.40% 0.39% 0.43%

(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,
2017 2016 2016
(unaudited) (unaudited) (audited)
ASSETS
Cash and due from banks$420,192 $195,161 $130,967
Interest-bearing deposits in financial institutions5,335 1,006 5,581
Total Cash and Cash Equivalents425,527 196,167 136,548
Securities available for sale, at fair value720,667 821,551 812,974
Securities held to maturity, at amortized cost65,117 66,921 66,490
Federal Home Loan Bank stock, at amortized cost36,402 23,903 35,937
Total Securities822,186 912,375 915,401
Mortgage loans held for sale214,047 97,491 314,117
Loans, net of unearned income and deferred costs:
Real estate-residential 1-4 family1,215,278 988,432 1,215,823
Real estate-commercial2,269,233 1,762,312 2,251,312
Real estate-construction and development898,540 635,992 826,027
Real estate-multi-family236,782 160,246 222,791
Commercial1,086,273 852,005 1,089,539
Consumer and other loans206,974 153,273 201,729
Loans, net of unearned income and deferred costs5,913,080 4,552,260 5,807,221
Less: allowance for loan losses(43,195) (37,760) (42,001)
Net Loans5,869,885 4,514,500 5,765,220
Premises and equipment, net198,664 178,154 198,568
Goodwill264,910 157,659 264,910
Other intangible assets, net37,052 29,286 37,856
Bank-owned life insurance policies190,917 150,623 189,499
Other assets151,598 128,914 151,796
TOTAL ASSETS$8,174,786 $6,365,169 $7,973,915
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand$2,052,598 $1,449,660 $1,947,312
Interest-bearing:
Demand and money market accounts2,270,025 1,769,414 2,263,894
Savings320,104 302,373 319,611
Certificates of deposit1,548,045 1,433,679 1,504,380
Total Deposits6,190,772 4,955,126 6,035,197
Advances from the Federal Home Loan Bank687,366 428,940 687,511
Repurchase agreements and other borrowings35,318 40,235 32,540
Total Borrowings722,684 469,175 720,051
Other liabilities160,085 104,865 132,109
TOTAL LIABILITIES7,073,541 5,529,166 6,887,357
Preferred stock
Authorized and unissued shares - 2,000,000
Common stock, $1.667 par value
Authorized shares - 90,000,000
62,571,739; 51,680,059; and 62,492,168 shares issued at
March 31, 2017 and 2016 and December 31, 2016, respectively104,307 86,151 104,174
Capital surplus746,289 536,294 745,411
Retained earnings243,337 204,413 229,503
Common stock issued to deferred compensation trust, at cost
693,654; 651,379; and 692,431 shares at
March 31, 2017 and 2016 and December 31, 2016, respectively(11,294) (10,288) (11,168)
Deferred compensation trust11,294 10,288 11,168
Accumulated other comprehensive income (loss)(4,173) 17 (3,986)
TOTAL SHAREHOLDERS’ EQUITY1,089,760 826,875 1,075,102
Noncontrolling interest11,485 9,128 11,456
TOTAL EQUITY1,101,245 836,003 1,086,558
TOTAL LIABILITIES AND EQUITY$8,174,786 $6,365,169 $7,973,915


TOWNEBANK
Consolidated Statements of Income
(dollars in thousands, except per share data)
Three Months Ended
March 31,
2017 2016
(unaudited) (unaudited)
INTEREST INCOME:
Loans, including fees$64,255 $50,247
Investment securities3,218 3,464
Interest-bearing deposits in financial institutions and
federal funds sold
887 330
Mortgage loans held for sale1,727 693
Total interest income70,087 54,734
INTEREST EXPENSE:
Deposits6,003 5,213
Advances from the Federal Home Loan Bank3,772 3,163
Repurchase agreements and other borrowings, net of capitalized interest31 22
Total interest expense9,806 8,398
Net interest income60,281 46,336
PROVISION FOR LOAN LOSSES2,541 (259)
Net interest income after provision for loan losses57,740 46,595
NONINTEREST INCOME:
Residential mortgage banking income, net17,632 7,118
Insurance commissions and other title fees and income, net14,800 14,033
Real estate brokerage and property management income, net4,993 4,827
Service charges on deposit accounts2,472 2,176
Credit card merchant fees, net1,118 895
Other income3,871 3,366
Total noninterest income44,886 32,415
NONINTEREST EXPENSE:
Salaries and employee benefits40,208 30,187
Occupancy6,684 5,017
Furniture and equipment3,343 2,357
Other expenses20,013 14,600
Total noninterest expense70,248 52,161
Income before income tax expense & noncontrolling interest32,378 26,849
Provision for income tax expense9,386 8,188
Net income$22,992 $18,661
Net income attributable to noncontrolling interest(1,024) (842)
Net income attributable to TowneBank$21,968 $17,819
Net income available to common shareholders$21,968 $17,819
Per common share information
Basic earnings$0.35 $0.35
Diluted earnings$0.35 $0.35
Cash dividends declared$0.13 $0.12


TOWNEBANK
Consolidated Statements of Comprehensive Income
(dollars in thousands)
Three Months Ended
March 31,
2017 2016
(unaudited) (unaudited)
Net income$22,992 $18,661
Other comprehensive income (loss)
Unrealized gains on securities
Unrealized holding gains arising during the period162 4,480
Deferred tax expense(57) (1,568)
Net unrealized gains105 2,912
Pension and postretirement benefit plans
Actuarial gain (loss)(538) 109
Deferred tax benefit (expense)188 (38)
Amortization of prior service costs51 38
Deferred tax expense(18) (13)
Amortization of actuarial loss39 4
Deferred tax expense(14) (1)
Change in retirement plans, net of tax(292) 99
Other comprehensive income (loss), net of tax(187) 3,011
Comprehensive income$22,805 $21,672


TOWNEBANK
Consolidated Balance Sheets - Five Quarter Trend
(dollars in thousands, except share data)
March 31, December 31, September 30, June 30, March 31,
2017 2016 2016 2016 2016
(unaudited) (audited) (unaudited) (unaudited) (unaudited)
ASSETS
Cash and due from banks$420,192 $130,967 $147,887 $188,183 $195,161
Interest-bearing deposits in financial institutions5,335 5,581 6,891 33,777 1,006
Federal funds sold 14
Total Cash and Cash Equivalents425,527 136,548 154,778 221,974 196,167
Securities available for sale, at fair value720,667 812,974 704,418 812,375 821,551
Securities held to maturity, at amortized cost65,117 66,490 70,304 65,728 66,921
Federal Home Loan Bank stock, at amortized cost36,402 35,937 24,888 28,008 23,903
Total Securities822,186 915,401 799,610 906,111 912,375
Mortgage loans held for sale214,047 314,117 439,608 474,978 97,491
Loans, net of unearned income and deferred costs:5,913,080 5,807,221 5,651,642 5,559,949 4,552,260
Less: allowance for loan losses(43,195) (42,001) (40,655) (39,618) (37,760)
Net Loans5,869,885 5,765,220 5,610,987 5,520,331 4,514,500
Premises and equipment, net198,664 198,568 202,955 202,333 178,154
Goodwill264,910 264,910 264,578 257,485 157,659
Other intangible assets, net37,052 37,856 39,747 41,515 29,286
Bank-owned life insurance policies190,917 189,499 163,385 164,933 150,623
Other assets151,598 151,796 154,494 151,081 128,914
TOTAL ASSETS$8,174,786 $7,973,915 $7,830,142 $7,940,741 $6,365,169
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand$2,052,598 $1,947,312 $1,974,395 $1,950,816 $1,449,660
Interest-bearing:
Demand and money market accounts2,270,025 2,263,894 2,207,962 2,174,154 1,769,414
Savings320,104 319,611 315,477 317,071 302,373
Certificates of deposit1,548,045 1,504,380 1,649,113 1,744,238 1,433,679
Total Deposits6,190,772 6,035,197 6,146,947 6,186,279 4,955,126
Advances from the Federal Home Loan Bank687,366 687,511 427,655 500,798 428,940
Repurchase agreements and other borrowings35,318 32,540 31,927 44,008 40,235
Total Borrowings722,684 720,051 459,582 544,806 469,175
Other liabilities160,085 132,109 144,735 148,108 104,865
TOTAL LIABILITIES7,073,541 6,887,357 6,751,264 6,879,193 5,529,166
Preferred stock
Authorized shares - 2,000,000
Common stock, $1.667 par value104,307 104,174 104,000 103,963 86,151
Capital surplus746,289 745,411 743,223 742,228 536,294
Retained earnings243,337 229,503 218,631 202,565 204,413
Common stock issued to deferred compensation trust, at cost(11,294) (11,168) (10,969) (10,785) (10,288)
Deferred compensation trust11,294 11,168 10,969 10,785 10,288
Accumulated other comprehensive income (loss)(4,173) (3,986) 1,339 1,604 17
TOTAL SHAREHOLDERS’ EQUITY1,089,760 1,075,102 1,067,193 1,050,360 826,875
Noncontrolling interest11,485 11,456 11,685 11,188 9,128
TOTAL EQUITY1,101,245 1,086,558 1,078,878 1,061,548 836,003
TOTAL LIABILITIES AND EQUITY$8,174,786 $7,973,915 $7,830,142 $7,940,741 $6,365,169


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,
2017 2016 2016 2016 2016
INTEREST INCOME:
Loans, including fees$64,255 $65,151 $64,623 $51,444 $50,247
Investment securities3,218 3,152 3,099 3,139 3,464
Interest-bearing deposits in financial institutions and
federal funds sold
887 487 (36) 364 330
Mortgage loans held for sale1,727 3,028 4,137 1,294 693
Total Interest Income70,087 71,818 71,823 56,241 54,734
INTEREST EXPENSE:
Deposits6,003 5,928 5,909 5,267 5,213
Advances from the Federal Home Loan Bank3,772 3,546 3,276 3,158 3,163
Repurchase agreements and other borrowings31 193 33 32 22
Total Interest Expense9,806 9,667 9,218 8,457 8,398
Net Interest Income60,281 62,151 62,605 47,784 46,336
PROVISION FOR LOAN LOSSES2,541 1,831 1,686 2,099 (259)
Net Interest Income after Provision for Loan Losses57,740 60,320 60,919 45,685 46,595
NONINTEREST INCOME:
Residential mortgage banking income, net17,632 18,096 21,430 12,148 7,118
Insurance commissions and other title fees and income, net14,800 9,823 11,258 11,627 14,033
Real estate brokerage and property management income, net4,993 2,925 6,647 6,116 4,827
Service charges on deposit accounts2,472 2,535 2,552 2,284 2,176
Credit card merchant fees, net1,118 1,135 1,365 1,113 895
Other income3,871 4,998 3,569 3,180 3,366
Net gain on investment securities 6
Total Noninterest Income44,886 39,518 46,821 36,468 32,415
NONINTEREST EXPENSE:
Salaries and employee benefits40,208 43,071 40,497 30,093 30,187
Occupancy expense6,684 6,885 6,656 5,157 5,017
Furniture and equipment3,343 3,378 3,199 2,381 2,357
Other expenses20,013 19,500 20,581 34,268 14,600
Total Noninterest Expense70,248 72,834 70,933 71,899 52,161
Income before income tax expense and noncontrolling interest32,378 27,004 36,807 10,254 26,849
Provision for income tax expense9,386 7,160 10,974 2,375 8,188
Net income22,992 19,844 25,833 7,879 18,661
Net income attributable to noncontrolling interest(1,024) (848) (1,657) (1,620) (842)
Net income attributable to TowneBank$21,968 $18,996 $24,176 $6,259 $17,819
Net income available to common shareholders$21,968 $18,996 $24,176 $6,259 $17,819
Per common share information
Basic earnings$0.35 $0.31 $0.39 $0.12 $0.35
Diluted earnings$0.35 $0.31 $0.39 $0.12 $0.35
Basic weighted average shares outstanding62,075,983 61,963,948 61,908,316 51,994,473 51,290,010
Diluted weighted average shares outstanding62,262,789 62,175,705 62,067,832 52,116,772 51,392,857
Cash dividends declared$0.13 $0.13 $0.13 $0.13 $0.12


TOWNEBANK
Banking Segment Financial Information
(dollars in thousands)
Increase/(Decrease)
Three Months Ended March 31, 2017 March 31, 2017
March 31, December 31, March 31, 2016 December 31, 2016
2017 2016 2016 Amount Percent Amount Percent
Revenue
Net interest income$58,444 $45,823 $59,482 $12,621 27.54% $(1,038) (1.75)%
Service charges on deposit accounts2,472 2,176 2,535 296 13.60% (63) (2.49)%
Credit card merchant fees1,118 895 1,135 223 24.92% (17) (1.50)%
Other income3,106 2,530 4,125 576 22.77% (1,019) (24.70)%
Net gain on investment securities 6 (6) (100.00)%
Total noninterest income6,696 5,601 7,801 1,095 19.55% (1,105) (14.16)%
Total revenue65,140 51,424 67,283 13,716 26.67% (2,143) (3.19)%
Provision for loan losses2,541 (259) 1,801 2,800 N/M 740 41.09%
Expenses
Salaries and employee benefits20,341 17,513 23,770 2,828 16.15% (3,429) (14.43)%
Occupancy expense4,128 3,475 4,349 653 18.79% (221) (5.08)%
Furniture and equipment2,274 1,865 2,374 409 21.93% (100) (4.21)%
Advertising and marketing1,041 874 749 167 19.11% 292 38.99%
Charitable contributions1,313 967 1,011 346 35.78% 302 29.87%
Outside processing1,154 930 1,387 224 24.09% (233) (16.80)%
Foreclosed property expenses118 112 607 6 5.36% (489) (80.56)%
FDIC and other insurance987 1,050 848 (63) (6.00)% 139 16.39%
Professional fees1,280 1,049 1,181 231 22.02% 99 8.38%
Telephone and postage904 744 997 160 21.51% (93) (9.33)%
Other expenses4,809 3,602 4,242 1,207 33.51% 567 13.37%
Total expenses38,349 32,181 41,515 6,168 19.17% (3,166) (7.63)%
Income before income tax, corporate allocation and noncontrolling interest24,250 19,502 23,967 4,748 24.35% 283 1.18%
Corporate allocation484 360 519 $124 34.44% (35) (6.74)%
Income before income tax provision and noncontrolling interest24,734 19,862 24,486 4,872 24.53% 248 1.01%
Provision for income tax expense6,765 5,729 6,546 1,036 18.08% 219 3.35%
Net income17,969 14,133 17,940 3,836 27.14% 29 0.16%
Noncontrolling interest(2) (9) (2) N/M 7 (77.78)%
Net income attributable to TowneBank$17,967 $14,133 $17,931 $3,834 27.13% $36 0.20%
Efficiency ratio58.87% 62.58% 61.71% (3.71)% (5.93)% (2.84)% (4.60)%


TOWNEBANK
Realty Segment Financial Information
(dollars in thousands)
Increase/(Decrease)
Three Months Ended March 31, 2017 March 31, 2017
March 31, December 31, March 31, 2016 December 31, 2016
2017 2016 2016 Amount Percent Amount Percent
Revenue
Residential mortgage brokerage income, net$17,775 $7,310 $18,378 $10,465 143.16% $(603) (3.28)%
Real estate brokerage income, net1,460 1,412 1,761 48 3.40% (301) (17.09)%
Title insurance and settlement fees355 350 422 5 1.43% (67) (15.88)%
Property management fees, net3,533 3,415 1,163 118 3.46% 2,370 203.78%
Income from unconsolidated subsidiary124 165 218 (41) (24.85)% (94) (43.12)%
Net interest and other income2,203 762 2,959 1,441 189.11% (756) (25.55)%
Total revenue25,450 13,414 24,901 12,036 89.73% 549 2.20%
Expenses
Salaries and employee benefits13,708 6,706 13,551 7,002 104.41% 157 1.16%
Occupancy expense1,964 1,013 2,002 951 93.88% (38) (1.90)%
Furniture and equipment869 268 807 601 224.25% 62 7.68%
Amortization of intangible assets559 353 565 206 58.36% (6) (1.06)%
Other expenses5,978 2,844 5,909 3,134 110.20% 69 1.17%
Total expenses23,078 11,184 22,834 11,894 106.35% 244 1.07%
Income before income tax, corporate allocation and noncontrolling interest2,372 2,230 2,067 142 6.37% 305 14.76%
Corporate allocation(307) (170) (364) (137) 80.59% 57 (15.66)%
Income before income tax provision and noncontrolling interest2,065 2,060 1,703 5 0.24% 362 21.26%
Provision for income tax expense627 659 355 (32) (4.86)% 272 76.62%
Net income1,438 1,401 1,348 37 2.64% 90 6.68%
Noncontrolling interest(512) (368) (675) (144) 39.13% 163 (24.15)%
Net income attributable to TowneBank$926 $1,033 $673 $(107) (10.36)% $253 37.59%
Efficiency ratio90.68% 83.38% 91.70% 7.30% 8.76% (1.02)% (1.11)%


TOWNEBANK
Insurance Segment Financial Information
(dollars in thousands)
Increase/(Decrease)
Three Months Ended March 31, 2017 March 31, 2017
March 31, December 31, March 31, 2016 December 31, 2016
2017 2016 2016 Amount Percent Amount Percent
Commission and fee income
Property and casualty$8,457 $8,086 $7,614 $371 4.59% $843 11.07%
Employee benefits2,974 2,898 2,930 76 2.62% 44 1.50%
Travel insurance1,627 1,456 828 171 11.74% 799 96.50%
Specialized benefit services165 153 164 12 7.84% 1 0.61%
Total commissions and fees13,223 12,593 11,536 630 5.00% 1,687 14.62%
Contingency and bonus revenue3,539 3,411 67 128 3.75% 3,472 N/M
Other income88 77 71 11 14.29% 17 23.94%
Total revenue16,850 16,081 11,674 769 4.78% 5,176 44.34%
Employee commission expense2,273 2,168 2,221 105 4.84% 52 2.34%
Revenue, net of commission expense14,577 13,913 9,453 664 4.77% 5,124 54.21%
Salaries and employee benefits6,159 5,968 5,749 191 3.20% 410 7.13%
Occupancy expense592 529 535 63 11.91% 57 10.65%
Furniture and equipment200 224 196 (24) (10.71)% 4 2.04%
Amortization of intangible assets697 685 701 12 1.75% (4) (0.57)%
Other expenses1,173 1,390 1,304 (217) (15.61)% (131) (10.05)%
Total operating expenses8,821 8,796 8,485 25 0.28% 336 3.96%
Income before income tax, corporate allocation and noncontrolling interest5,756 5,117 968 639 12.49% 4,788 494.63%
Corporate allocation(177) (190) (155) 13 (6.84)% (22) 14.19%
Income before income tax provision and noncontrolling interest5,579 4,927 813 652 13.23% 4,766 586.22%
Provision for income tax expense1,994 1,800 259 194 10.78% 1,735 669.88%
Net income3,585 3,127 554 458 14.65% 3,031 547.11%
Noncontrolling interest(510) (474) (162) (36) 7.59% (348) 214.81%
Net income attributable to TowneBank$3,075 $2,653 $392 $422 15.91% $2,683 684.44%
Efficiency ratio60.51% 63.22% 89.76% (2.71)% (4.29)% (29.25)% (32.59)%


TOWNEBANK
Reconcilement of Non-GAAP Financial Measures:
Three Months Ended
March 31, March 31, December 31,
2017 2016 2016
Return on average assets (GAAP basis)1.11% 1.14% 0.95%
Impact of excluding average goodwill and other intangibles and amortization0.11% 0.07% 0.10%
Return on average tangible assets (Non-GAAP)1.22% 1.21% 1.05%
Return on average equity (GAAP basis)8.15% 8.63% 6.95%
Impact of excluding average goodwill and other intangibles and amortization3.73% 2.93% 3.32%
Return on average tangible equity (Non-GAAP)11.88% 11.56% 10.27%
Return on average common equity (GAAP basis)8.23% 8.73% 7.02%
Impact of excluding average goodwill and other intangibles and amortization3.82% 2.99% 3.40%
Return on average tangible common equity (Non-GAAP)12.05% 11.72% 10.42%
Book value (GAAP basis)$17.42 $16.00 $17.20
Impact of excluding average goodwill and other intangibles and amortization(4.83) (3.62) (4.84)
Tangible book value$12.59 $12.38 $12.36


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 Investor Relations Officer and CSO, 757-638-6813

Source:TowneBank