RALEIGH, N.C., Feb. 18, 2020 (GLOBE NEWSWIRE) — West Town Bancorp, Inc. (OTC PINK: WTWB) (the “Company” or “West Town”), the financial holding company for West Town Bank & Trust (“the Bank”), announced today its financial results for the three months ended December 31, 2019.  Highlights include the following:

Fourth quarter net income of $1.73 million or $0.83 per diluted share, compared to $956,000 or $0.30 per diluted share for the fourth quarter of 2018.

• Return on average assets of 2.21%, compared to 0.68% for the fourth quarter of 2018.
• Return on average common equity of 10.22%, compared to 4.87% for the fourth quarter of 2018.
• Return on average tangible common equity (a non-GAAP financial measure) of 15.79%, compared to 7.95% for the fourth quarter of 2018.
• Windsor Advantage, LLC (“Windsor”) processing and servicing revenue of $2.26 million as compared to $1.49 million for the same period last year.

As previously announced, on May 6, 2019, Sound Bank, formerly a wholly owned subsidiary of West Town, completed a recapitalization that resulted in a significant reduction in West Town’s ownership position in the bank, which, effective October 1, 2019, changed its name to Dogwood State Bank.  Due to the reduction in West Town’s ownership position, the financial results for the Company beginning on May 6, 2019 are deconsolidated from the financial results of Sound Bank.  Therefore, on a comparative basis, the Company’s financial results for the fourth quarter of 2019 do not include any operating impact from Sound Bank whereas the financial results for the fourth quarter of 2018 are impacted by the performance of Sound Bank.    

Eric Bergevin, President and CEO commented, “We are pleased with our fourth quarter results and 2019 overall.  The Company went through transformational changes in 2019 by divesting our controlling interest in Sound Bank, repurchasing upwards of a third of our shares outstanding, launching new intuitive deposit programs and expanding our product offerings that are synergistic with our core government guaranteed lending (“GGL”) focus.  The Company was able to deliver strong fourth quarter results, including a 7th consecutive quarter of increased servicing revenue from Windsor Advantage and enhanced revenues from GGL loans of $2.3 million in revenue on $22.9 million of originated loan commitments.  The strong fourth quarter resulted in one of our most profitable years to date with total after tax income exceeding $11 million dollars and over $4.00 per share in earnings.  Our new deposit initiatives for West Town Bank & Trust (excluding Sound Bank) have resulted in a one-year growth in core deposits of over 21% and growth in noninterest-bearing deposits of over 53%.  These funding strategies, coupled with strong capital levels, will allow for future growth.  We are optimistic that 2020 will yield modestly enhanced core earnings, with accretive core earnings per share, as we keep our focus on our core competencies.”

During the fourth quarter of 2019, the Company repurchased 27,500 shares of its voting common stock. 

Balance Sheet

At December 31, 2019, the Company’s total assets were $314.9 million, net loans held for investment were $223.5 million, loans held for sale were $12.6 million, total deposits were $220.4 million and total shareholders’ equity was $67.7 million.  Compared with December 31, 2018, total assets decreased $240.4 million or 43%, loans held for investment decreased $187.1 million or 58%, loans held for sale decreased $4.0 million or 24%, total deposits decreased $212.5 million or 49%, and total shareholders’ equity decreased $9.8 million or 13%.  The decreases in assets, loans and deposits were a result of the Sound Bank recapitalization and deconsolidation of Sound Bank from the consolidated financials as of May 6, 2019.  The decrease in total shareholders’ equity resulted from the Company’s stock repurchase program, partially offset by an increase in retained earnings.

Capital Levels

At December 31, 2019, the regulatory capital ratios of West Town Bank & Trust exceeded the minimum thresholds established for well-capitalized banks under applicable banking regulations.

	“Well Capitalized” Minimums	West Town Bank & Trust
Tier 1 common equity ratio	6.50%	14.95%
Tier 1 risk-based capital ratio	8.00%	14.95%
Total risk-based capital ratio	10.00%	16.21%
Tier 1 leverage ratio	5.00%	12.65%

The Company’s book value per common share increased from $25.52 at December 31, 2018 to $30.78 at December 31, 2019.  The Company’s tangible book value per common share (a non-GAAP financial measure) increased from $15.68 at December 31, 2018 to $21.27 at December 31, 2019 due primarily to the gain on deconsolidation of Sound Bank and the subsequent removal of the intangible assets associated with Sound Bank from the consolidated financial statements. 

Asset Quality

The Company’s nonperforming assets to total assets ratio increased from 1.41% at December 31, 2018 to 3.99% at December 31, 2019 primarily due to the removal of Sound Bank from the consolidated financial statements.  Nonaccrual loans increased $2.4 million as of December 31, 2019 as compared to the prior year while foreclosed assets increased $2.6 million compared to December 31, 2018. The Company has formed Patriarch, LLC as a subsidiary to expedite the liquidation and recovery of certain Bank assets and as of December 31, 2019 Patriarch held $1.8 million in assets (included in the foreclosed assets number) while the Bank also held $1.3 million of guaranteed portions of GGL loans both of which are included in the Company’s nonperforming ratio.  The Bank also regularly conducts impairment analyses on all nonperforming assets with updated appraisals, less cost to sell, to ensure the assets are carried at fair market value with any deficits charged off immediately versus carrying specific reserves.

The Company recorded a $1.2 million provision for loan losses during the fourth quarter of 2019 as compared to a provision of $434,000 in fourth quarter 2018 in response to the increasing nonperforming asset ratios.  The Company recorded $779,000 in net charge-offs during the fourth quarter 2019 with the remaining provision expense due to volume growth.

(Dollars in thousands)	12/31/19	9/30/19	6/30/19	3/31/19	12/31/18
Nonaccrual loans – originated	$	9,200		$	4,813		$	3,290		$	4,666		$	6,538
Nonaccrual loans – acquired		–			–			–			262			272
Foreclosed assets		3,370			2,028			2,069			2,493			723
90 days past due and still accruing – originated		–			–			–			407			67
90 days past due and still accruing – acquired		–			–			–			421			251
Total nonperforming assets		12,570			6,841			5,359			8,249			7,851
Total nonperforming assets – originated		12,570			6,841			5,359			7,566			7,328
Net charge-offs	$	779		$	138		$	200		$	58		$	334
Annualized net charge-offs to total average portfolio loans		1.36	%		0.25	%		0.27	%		0.05	%		0.31	%
Ratio of total nonperforming assets to total assets		3.99	%		2.21	%		1.77	%		1.40	%		1.41	%
Ratio of total nonperforming loans to total net portfolio loans		4.19	%		2.31	%		1.57	%		1.38	%		1.74	%
Ratio of total allowance for loan losses to total portfolio loans		1.72	%		1.64	%		1.62	%		0.98	%		0.97	%

Net Interest Income and Margin

Net interest income for the three months ended December 31, 2019 decreased $2.6 million or 49% in comparison to the fourth quarter 2018, primarily due to the deconsolidation of Sound Bank from the consolidated financial statements as of May 6, 2019. The net interest margin increased from 4.77% for the fourth quarter 2018 to 4.84% for the fourth quarter 2019.  The margin improvement is largely related to the increase in loan yield from 6.54% to 7.14%, due primarily to a change in the makeup of the loan portfolio as the percentage of consumer-related loans decreased while the higher yielding commercially focused loan associated with the GGL department became a larger portion of the portfolio with the deconsolidation of Sound Bank.  

	Three Months Ended		Year-to-Date
(Dollars in thousands)	12/31/19	9/30/19	6/30/19	3/31/19	12/31/18		12/31/19	12/31/18
Average balances:
Loans	$	229,941		$	220,939		$	297,501		$	435,583		$	424,758		$	295,228		$	433,308
Investment securities		21,572			21,111			20,960			21,119			21,060			21,192			15,461
Interest-bearing balances and other		16,259			16,801			47,025			54,690			41,472			33,537			29,546
Total interest-earning assets		267,772			258,851			365,486			511,392			487,290			349,957			478,315
Noninterest deposits		52,456			47,199			75,643			112,836			96,068			71,802			88,032
Interest-bearing liabilities:
Interest-bearing deposits		179,195			170,390			234,603			338,682			319,900			230,107			302,260
Borrowed funds		6,129			6,452			17,204			37,852			50,792			16,803			67,176
Total interest-bearing liabilities		185,324			176,842			251,807			376,534			370,692			246,910			369,436
Total assets		311,312			300,011			416,840			576,640			553,855			400,199			541,150
Common shareholders’ equity		67,172			68,448			82,090			78,698			77,817			74,064			73,959
Tangible common equity (1)		43,486			47,636			57,825			48,918			47,695			46,836			50,472
Interest income/expense:
Loans	$	4,139		$	4,315		$	5,218		$	7,122		$	7,002		$	20,794		$	27,005
Investment securities		82			76			100			167			171			343			450
Interest-bearing balances and other		83			105			241			356			248			867			665
Total interest income		4,304			4,496			5,559			7,645			7,421			22,004			28,120
Deposits		979			942			1,104			1,432			1,169			4,457			3,661
Borrowings		56			72			172			330			396			630			1,679
Total interest expense		1,035			1,014			1,276			1,762			1,565			5,087			5,340
Net interest income	$	3,269		$	3,482		$	4,283		$	5,883		$	5,856		$	16,917		$	22,780
(1) Non-GAAP financial measure. Tangible common equity is calculated by subtracting intangible assets from common shareholders’ equity

	Three Months Ended				Year-to-Date
	12/31/19	9/30/19	6/30/19	3/31/19	12/31/18		12/31/19	12/31/18
Average yields and costs:
Loans	7.14	%	7.75	%	7.04	%	6.63	%	6.54	%		7.04	%	6.23	%
Investment securities	1.52	%	1.44	%	1.91	%	3.16	%	3.25	%		1.62	%	2.91	%
Interest-bearing balances and other	2.03	%	2.48	%	2.06	%	2.64	%	2.37	%		2.59	%	2.25	%
Total interest-earning assets	6.38	%	6.89	%	6.10	%	6.06	%	6.04	%		6.28	%	5.87	%
Interest-bearing deposits	2.17	%	2.19	%	1.89	%	1.71	%	1.45	%		1.94	%	1.21	%
Borrowed funds	3.62	%	4.43	%	4.01	%	3.54	%	3.09	%		3.75	%	2.50	%
Total interest-bearing liabilities	2.22	%	2.27	%	2.03	%	1.90	%	1.67	%		2.06	%	1.45	%
Cost of funds	1.73	%	1.80	%	1.56	%	1.46	%	1.33	%		1.60	%	1.17	%
Net interest margin	4.84	%	5.34	%	4.70	%	4.67	%	4.77	%		4.83	%	4.76	%

Noninterest Income

Noninterest income for the three months ended December 31, 2019 was $5.4 million, an increase of $697,000 as compared to the same prior year period.  Specific items to note include:

• Windsor processing and servicing revenue totaled $2.3 million, an increase of $763,000, or 51% as compared to the $1.5 million in income earned from the investment in Windsor during the same prior year period.  The increase is directly attributable to the continued growth in the volume in the servicing portfolio as Windsor brings in new customers. 
• GGL revenue of $2.3 million was an increase of $495,000 or 28% in comparison to the fourth quarter of 2018.
• Mortgage revenue totaled $716,000, an increase of $357,000 or 99% as compared to the fourth quarter 2018.  Mortgage loans originated for secondary market sale increased from $11.4 million in the fourth quarter 2018 to $20.6 million in the fourth quarter 2019.

Noninterest Expense

Noninterest expense for the fourth quarter 2019 was $5.8 million, a decrease of $2.4 million or 30%, from $8.2 million for the fourth quarter 2018.  The decreases in all noninterest expense categories, including compensation, occupancy, data processing, communications and other operating expenses are primarily related to the deconsolidation of Sound Bank from the consolidated financial statements as of May 6, 2019.  

About West Town Bancorp, Inc.

West Town Bancorp, Inc. is a financial holding company based in Raleigh, NC.  The Company is the holding company for West Town Bank & Trust, an Illinois state-chartered bank.  West Town Bank & Trust provides banking services through its two full-service offices located in the greater Chicago area. The Company is also the parent company of: Windsor Advantage, LLC, a loan servicing company; West Town Insurance Agency, Inc., an insurance agency; Patriarch, LLC, a real estate management company; SBA Loan Documentation Services, LLC, a loan documentation origination company; and Glenwood Structured Finance, LLC, a loan broker and large loan syndication company.  The Company is registered with, and supervised by, the Federal Reserve.  West Town Bank & Trust’s primary regulators are the Illinois Department of Financial and Professional Regulation and the FDIC. 

For more information, visit https://www.westtownbank.com/

Important Note Regarding Forward-Looking Statements

This release contains certain forward-looking statements with respect to the financial condition, results of operations, and business of the Company. These forward-looking statements involve risks and uncertainties and are based on the beliefs and assumptions of the management of the Company and on the information available to management at the time this release was prepared. These statements can be identified by the use of words such as “expect,” “anticipate,” “estimate,” “believe,” variations of these words, and other similar expressions. Readers should not place undue reliance on forward-looking statements as a number of important factors could cause actual results to differ materially from those in the forward-looking statements. Factors that could cause a difference include, among others: changes in the national and local economies or market conditions; changes in interest rates, deposit flows, loan demand, and asset quality, including real estate and other collateral values; changes in Small Business Administration rules, regulations, or loan products, including the section 7(a) program; changes in other government guaranteed loan programs or our ability to participate in such programs; changes in tax law, including the impact of such changes on our tax assets and liabilities; future governmental shutdowns that may impact revenues associated with our lending and other operations that are dependent on government guaranteed loan programs; changes in banking regulations and accounting principles, policies, or guidelines; the inability to realize cost savings or revenues or to implement integration plans and other consequences associated with the Company’s acquisition and divesture activities; the failure of our strategic investments or acquisitions to perform as anticipated and the impact of any impairments to our intangible assets, such as goodwill; the impact of our strategic initiatives on our ability to retain key employees, and the impact of competition from traditional or new sources. These, and other factors that may emerge, could cause decisions and actual results to differ materially from current expectations. The Company assumes no obligation to revise, update, or clarify forward-looking statements to reflect events or conditions after the date of this release.    

Consolidated Balance Sheet

	Ending Balance
(Dollars in thousands, unaudited)	12/31/19	9/30/19	6/30/19	3/31/19	12/31/18
Assets
Cash and due from banks	$	5,021		$	4,085		$	2,665		$	5,433		$	5,005
Interest-bearing deposits		12,595			18,814			17,196			72,382			43,448
Total cash and cash equivalents		17,616			22,899			19,861			77,815			48,453
Securities, at fair value		21,087			21,804			20,716			21,031			21,332
Loans held for sale		12,568			13,965			14,902			11,037			16,552
Loans held for investment:
Originated loans		223,470			211,647			209,492			336,505			322,038
Acquired loans, net		–			–			–			81,978			88,556
Allowance for loan and lease losses		(3,837	)		(3,462	)		(3,400	)		(4,115	)		(4,000	)
Net loans held for investment		219,633			208,185			206,092			414,368			406,594
Premises and equipment, net		4,762			4,795			4,832			12,099			12,166
Foreclosed assets		3,370			2,028			2,069			2,493			723
Servicing assets		3,358			3,053			3,220			3,619			3,952
Bank owned life insurance		5,021			4,993			4,964			9,090			9,034
Accrued interest receivable		1,116			1,079			1,196			1,637			1,637
Goodwill		13,150			12,721			12,721			19,737			19,745
Other intangible assets, net		7,782			7,968			8,154			9,827			10,157
Other assets		5,428			5,779			4,638			8,066			4,979
Total assets	$	314,891		$	309,269		$	303,365		$	590,819		$	555,324
Liabilities and Shareholders’ Equity
Liabilities
Deposits:
Noninterest bearing	$	49,573		$	54,380		$	46,068		$	128,435		$	97,777
Interest-bearing		170,869			177,472			164,619			345,581			335,140
Total deposits		220,442			231,852			210,687			474,016			432,917
Borrowings		19,295			2,382			5,868			26,294			33,781
Accrued interest payable		429			424			433			927			868
Other liabilities		7,000			8,092			7,562			9,860			10,189
Total liabilities		247,166			242,750			224,550			511,097			477,755
Shareholders’ equity:
Common stock, voting		2,178			2,206			2,674			2,749			2,686
Common stock, non-voting		22			22			129			329			329
Additional paid in capital		24,233			24,771			38,557			45,287			44,760
Retained earnings		41,203			39,446			37,375			31,273			29,928
Accumulated other comprehensive income (loss)		89			74			80			84			(134	)
Total shareholders’ equity		67,725			66,519			78,815			79,722			77,569
Total liabilities and shareholders’ equity	$	314,891		$	309,269		$	303,365		$	590,819		$	555,324

Financial Performance (Consolidated)

(Dollars in thousands except share	Three Months Ended		Twelve Months Ended
and per share data; unaudited)	12/31/19	9/30/19	6/30/19	3/31/19	12/31/18		12/31/19	12/31/18
Interest income
Loans	$	4,139	$	4,315		$	5,218	$	7,122	$	7,002		$	20,794	$	27,005
Investment securities and deposits		165		181			341		523		419			1,210		1,115
Total interest income		4,304		4,496			5,559		7,645		7,421			22,004		28,120
Interest expense
Interest on deposits		979		942			1,104		1,432		1,169			4,457		3,661
Interest on borrowed funds		56		72			172		330		396			630		1,679
Total interest expense		1,035		1,014			1,276		1,762		1,565			5,087		5,340
Net interest income		3,269		3,482			4,283		5,883		5,856			16,917		22,780
Provision for loan losses		1,155		200			477		173		434			2,005		1,953
Noninterest income
Windsor processing and servicing
revenue		2,256		1,774			1,970		1,487		1,493			7,487		3,906
Government lending		2,288		983			1,754		880		1,793			5,905		10,209
Mortgage		716		975			1,113		435		359			3,239		2,173
Bank-owned life insurance		28		29			44		56		58			157		238
Service charge		29		23			99		226		228			377		865
Gain on deconsolidation of Sound Bank		–		–			6,635		–		–			6,635		–
Gain on consolidation of Windsor		–		–			–		–		–			–		4,776
Other noninterest		97		153			92		122		163			464		1,612
Total noninterest income		5,414		3,937			11,707		3,206		4,094			24,264		23,779
Noninterest expense
Compensation		3,750		3,199			3,385		4,261		4,689			14,595		16,250
Occupancy and equipment		221		343			338		506		536			1,408		1,933
Loan and special assets		318		(523	)		510		179		437			484		1,273
Professional services		360		432			569		582		511			1,943		1,539
Data processing		109		161			198		345		381			813		1,345
Communications		80		33			110		226		208			449		837
Advertising		86		51			109		112		135			358		754
Loss on sale of foreclosed assets		–		–			35		21		–			56		41
Transaction-related expenses		16		1			916		43		31			976		124
Other operating expenses		820		681			1,040		1,179		1,259			3,720		4,254
Total noninterest expense		5,760		4,378			7,210		7,454		8,187			24,802		28,350
Income before income taxes		1,768		2,841			8,303		1,462		1,329			14,374		16,256
Income tax expense		37		687			2,174		397		373			3,295		4,120
Net income	$	1,731	$	2,154		$	6,129	$	1,065	$	956		$	11,079	$	12,136
Basic earnings per common share	$	0.85	$	0.97		$	2.03	$	0.35	$	0.31		$	4.20	$	4.07
Diluted earnings per common share	$	0.83	$	0.95		$	2.00	$	0.34	$	0.30		$	4.12	$	3.90
Weighted average common shares
outstanding		2,196		2,328			2,997		3,054		3,008			2,639		2,984
Diluted average common shares
outstanding		2,234		2,369			3,045		3,115		3,124			2,688		3,110

Performance Ratios

	Three Months Ended		Year-to-Date
	12/31/19	9/30/19	6/30/19	3/31/19	12/31/18		12/31/19	12/31/18
PER COMMON SHARE
Basic earnings per common share	$	0.85		$	0.97		$	2.03		$	0.35		$	0.31			$	4.20		$	4.07
Diluted earnings per common share	$	0.83		$	0.95		$	2.00		$	0.34		$	0.30			$	4.12		$	3.90
Book value per common share	$	30.78		$	29.86		$	28.12		$	25.70		$	25.52			$	30.78		$	25.52
Tangible book value per common share	$	21.27		$	20.57		$	20.67		$	16.17		$	15.68			$	21.27		$	15.68
FINANCIAL RATIOS (ANNUALIZED)
Return on average assets		2.21	%		2.85	%		5.90	%		0.75	%		0.68	%			2.77	%		2.24	%
Return on average common shareholders’
equity		10.22	%		12.49	%		29.95	%		5.49	%		4.87	%			14.96	%		16.41	%
Return on average tangible common
equity		15.79	%		17.94	%		42.51	%		8.83	%		7.95	%			23.65	%		24.05	%
Net interest margin (FTE)		4.84	%		5.34	%		4.70	%		4.67	%		4.77	%			4.83	%		4.76	%
Efficiency ratio (1)		66.2	%		59.0	%		67.3	%		81.5	%		82.0	%			69.0	%		67.6	%
(1) Efficiency ratio is calculated by dividing noninterest expense less transaction-related costs by the sum of net interest income and noninterest income, less gains or losses on sale of securities and consolidation and the fair value adjustment on the equity investment in Sound Bank

Contact: Eric Bergevin, 252-482-4400

RALEIGH, N.C., Nov. 01, 2019 (GLOBE NEWSWIRE) — West Town Bancorp, Inc. (OTC PINK: WTWB) (the “Company” or “West Town”), the financial holding company for West Town Bank & Trust, announced today its financial results for the three months ended September 30, 2019.  Highlights include the following:

Third quarter net income of $2.15 million or $0.95 per diluted share, compared to $1.03 million or $0.33 per diluted share for the third quarter of 2018.

• Return on average assets of 2.93%, compared to 0.76% for the third quarter of 2018.
• Return on average common equity of 12.49%, compared to 5.29% for the third quarter of 2018.
• Return on average tangible common equity (a non-GAAP financial measure) of 17.94%, compared to 8.74% for the third quarter of 2018.
• Windsor Advantage, LLC (“Windsor”) processing and servicing revenue of $2.39 million as compared to $1.79 million for the same period last year.

As previously announced, on May 6, 2019 Sound Bank, formerly a wholly owned subsidiary of West Town, completed a recapitalization that resulted in a significant reduction in West Town’s ownership position in the bank, which, effective October 1, 2019, changed its name to Dogwood State Bank.  Due to the reduction in West Town’s ownership position, the financial results for the Company for the third quarter of 2019 are deconsolidated from the financial results of Sound Bank.  Therefore, on a comparative basis, the Company’s financial results for the third quarter of 2019 do not include any operating impact from Sound Bank whereas the financial results for the third quarter of 2018 are impacted by the performance of Sound Bank.    

Eric Bergevin, President and CEO, commented, “We are pleased with the results of our first full quarter since the Sound Bank recapitalization.  The Company was able to deliver net income which, excluding past fair value adjustments and gains on consolidation, showed significant improvement over previous pre-recapitalization quarters, and we were able to do so with a smaller asset base and reduced outstanding share levels as a result of our recent stock repurchase program.  This resulted in a strong improvement in our earnings per share.  Windsor had another good quarter with $2.4 million in revenue, driven by a 6^th consecutive quarter of increased servicing revenue.   In addition, our government guaranteed lending department originated loan commitments of $22.9 million and earned $983,000 in revenue for the third quarter.  Finally, given the strong liquidity position of the Company following the divestiture of our controlling interest in Sound Bank, we believe the share repurchases we made were an effective use of our excess cash, resulting in an accretive impact on our earnings per share this quarter and, we anticipate, in future periods.”

During the third quarter of 2019, the Company repurchased 574,919 shares of its voting and nonvoting common stock and all of its outstanding warrants.  In addition, the Company paid off a $1.9 million line of credit balance while keeping the line available for future use if needed.

Balance Sheet

At September 30, 2019, the Company’s total assets were $309.3 million, net loans held for investment were $211.8 million, loans held for sale were $14.0 million, total deposits were $231.9 million and total shareholder’s equity was $66.5 million.  Compared with September 30, 2018, total assets decreased $242.2 million or 44%, loans held for investment decreased $95.5 million or 31%, loans held for sale decreased $1.9 million or 12%, total deposits decreased $168.2 million or 42%, and total shareholders’ equity decreased $9.9 million or 13%.  The decreases in assets, loans and deposits were a result of the Sound Bank recapitalization and elimination of Sound Bank from the consolidated financials as of May 6, 2019.  The decrease in total shareholders’ equity resulted from the Company’s stock repurchase program partially offset by an increase in retained earnings.

Capital Levels

At September 30, 2019, the regulatory capital ratios of West Town Bank & Trust exceeded the minimum thresholds established for well-capitalized banks under applicable banking regulations.

	“Well Capitalized” Minimums	West Town Bank & Trust
Tier 1 common equity ratio	6.50	%	15.32	%
Tier 1 risk-based capital ratio	8.00	%	15.32	%
Total risk-based capital ratio	10.00	%	16.58	%
Tier 1 leverage ratio	5.00	%	13.09	%

The Company’s book value per common share increased from $25.31 at September 30, 2018 to $29.86 at September 30, 2019.  The Company’s tangible book value per common share (a non-GAAP financial measure) increased from $15.30 at September 30, 2018 to $20.57 at September 30, 2019 due primarily to the gain on deconsolidation of Sound Bank and the subsequent removal of the intangible assets associated with Sound Bank from the consolidated financial statements. 

Asset Quality

The Company’s nonperforming assets to total assets ratio increased 91 basis points from 1.30% at September 30, 2018 to 2.21% at September 30, 2019 primarily due to the removal of Sound Bank from the consolidated financial statements.  Nonaccrual loans decreased $993,000 as of September 30, 2019 as compared to the prior year while foreclosed assets increased $1.2 million compared to September 30, 2018.

The Company recorded a $200,000 provision for loan losses during the third quarter of 2019 as compared to a provision of $789,000 in third quarter 2018.  The Company recorded $138,000 in net charge-offs during the third quarter 2019 with the remaining provision expense due to volume growth.

(Dollars in thousands)	9/30/19	6/30/19	3/31/19	12/31/18	9/30/18
Nonaccrual loans – originated	$	4,813		$	3,290		$	4,666		$	6,538		$	5,806
Nonaccrual loans – acquired		–			–			262			272			280
Foreclosed assets – originated		2,028			2,069			2,493			723			796
90 days past due and still accruing – originated		–			–			407			67			3
90 days past due and still accruing – acquired		–			–			421			251			280
Total nonperforming assets		6,841			5,359			8,249			7,851			7,165
Total nonperforming assets – originated		6,841			5,359			7,566			7,328			6,605
Net charge-offs	$	138		$	200		$	58		$	334		$	725
Annualized net charge-offs to total average portfolio loans		0.25	%		0.27	%		0.05	%		0.31	%		0.68	%
Ratio of total nonperforming assets to total assets		2.21	%		1.77	%		1.40	%		1.41	%		1.30	%
Ratio of total nonperforming loans to total net portfolio loans		2.31	%		1.57	%		1.38	%		1.74	%		1.56	%
Ratio of total allowance for loan losses to total portfolio loans		1.64	%		1.62	%		0.98	%		0.97	%		0.95	%

Net Interest Income and Margin

Net interest income for the three months ended September 30, 2019 decreased $2.4 million or 46% in comparison to the third quarter 2018, primarily due to the deconsolidation of Sound Bank from the consolidated financial statements as of May 6, 2019. The net interest margin decreased from 4.45% for the third quarter 2018 to 4.39% for the third quarter 2019.  The margin compression is largely related to the increase in the cost of funds from 1.18% to 1.80%, due primarily to the deconsolidation of Sound Bank from the Company’s consolidated financial statements and the inclusion of the $9,990,000 resulting equity investment in Sound Bank in the Company’s investment portfolio, which reduced the Company’s average yield on assets and net interest margin by approximately 23 basis points and 18 basis points, respectively, due to the lack of dividend income. 

	Three Months Ended				Year-to-Date
(Dollars in thousands)	9/30/19	6/30/19	3/31/19	12/31/18	9/30/18		9/30/19	9/30/18
Average balances:
Loans	$	220,939	$	297,501	$	435,583	$	424,758	$	426,160		$	317,221	$	436,189
Investment securities		21,111		20,960		21,119		21,060		15,377			21,063		13,575
Interest-bearing balances and other		16,801		47,025		54,690		41,472		28,481			39,367		25,527
Total interest-earning assets		258,851		365,486		511,392		487,290		470,018			377,651		475,291
Noninterest deposits		47,199		75,643		112,836		96,068		90,073			78,319		85,324
Interest-bearing liabilities:
Interest-bearing deposits		170,390		234,603		338,682		319,900		294,502			247,275		296,315
Borrowed funds		6,452		17,204		37,852		50,792		63,356			20,387		72,697
Total interest-bearing liabilities		176,842		251,807		376,534		370,692		357,858			267,662		369,012
Total assets		300,011		416,840		576,640		553,855		536,172			430,151		536,869
Common shareholders’ equity		68,448		82,090		78,698		77,817		77,129			76,375		72,659
Tangible common equity (1)		47,636		57,825		48,918		47,695		46,667			51,456		51,408
Interest income/expense:
Loans	$	3,698	$	4,607	$	6,523	$	6,379	$	6,329		$	14,828	$	18,942
Investment securities		76		100		167		171		111			343		280
Interest-bearing balances and other		105		241		356		248		170			702		416
Total interest income		3,879		4,948		7,046		6,798		6,610			15,873		19,638
Deposits		942		1,104		1,432		1,169		906			3,478		2,492
Borrowings		72		172		330		396		431			574		1,283
Total interest expense		1,014		1,276		1,762		1,565		1,337			4,052		3,775
Net interest income	$	2,865	$	3,672	$	5,284	$	5,233	$	5,273		$	11,821	$	15,863
(1) Non-GAAP financial measure. Tangible common equity is calculated by subtracting intangible assets from common shareholders’ equity

	Three Months Ended				Year-to-Date
	9/30/19	6/30/19	3/31/19	12/31/18	9/30/18		9/30/19	9/30/18
Average yields and costs:
Loans	6.64	%	6.21	%	6.07	%	5.96	%	5.89	%		6.25	%	5.76	%
Investment securities	1.44	%	1.91	%	3.16	%	3.25	%	2.89	%		2.17	%	2.65	%
Interest-bearing balances and other	2.48	%	2.06	%	2.64	%	2.37	%	2.37	%		2.38	%	2.07	%
Total interest-earning assets	5.95	%	5.43	%	5.59	%	5.53	%	5.58	%		5.61	%	5.50	%
Interest-bearing deposits	2.19	%	1.89	%	1.71	%	1.45	%	1.22	%		1.88	%	1.08	%
Borrowed funds	4.43	%	4.01	%	3.54	%	3.09	%	2.70	%		3.76	%	2.22	%
Total interest-bearing liabilities	2.27	%	2.03	%	1.90	%	1.67	%	1.48	%		2.02	%	1.31	%
Cost of funds	1.80	%	1.56	%	1.46	%	1.33	%	1.18	%		1.57	%	1.07	%
Net interest margin	4.39	%	4.03	%	4.19	%	4.26	%	4.45	%		4.18	%	4.47	%

Noninterest Income

Noninterest income for the three months ended September 30, 2019 was $4.6 million, an increase of $685,000 as compared to the same prior year period.  Specific items to note include:

• Windsor processing and servicing revenue totaled $2.4 million, an increase of $600,000 or 34% as compared to the $1.8 million in income earned from the investment in Windsor during the same prior year period.  The increase is directly attributable to the continued growth in the volume in the servicing portfolio as the company brings in new customers. 
• Government lending revenue of $983,000 was a decrease of $138,000 or 12% in comparison to the third quarter of 2018.
• Mortgage revenue totaled $975,000, an increase of $484,000 or 99% as compared to the third quarter 2018.  Loans originated for secondary market sale increased from $13.6 million in the third quarter 2018 to $26.4 million in the third quarter 2019.          

Noninterest Expense

Noninterest expense for the third quarter 2019 was $4.4 million, a decrease of $2.6 million or 37%, from $7.0 million for the third quarter 2018.  The decreases in compensation, occupancy, data processing, communications and other operating expenses are primarily related to the deconsolidation of Sound Bank from the consolidated financial statements as of May 6, 2019.  Also impacting noninterest expenses for the quarter were decreased loan and legal related expenses pertaining to the guaranteed loan portfolio as the Company was able to recapture some of its previously expensed costs due to pari passu loss sharing and expense sharing agreements resulting in a negative expense for the quarter, which is nonrecurring.  

About West Town Bancorp, Inc.

West Town Bancorp, Inc. is a financial holding company based in Raleigh, NC.  The Company is the holding company for West Town Bank & Trust, an Illinois state-chartered bank.  West Town Bank & Trust provides banking services through its two full-service offices located in the greater Chicago area. The Company is also the parent company of: Windsor Advantage, LLC, a loan servicing company; West Town Insurance Agency, Inc., an insurance agency; Patriarch, LLC, a real estate management company; SBA Loan Documentation Services, LLC, a loan documentation origination company; and Glenwood Structured Finance, LLC, a loan broker and large loan syndication company.  The Company is registered with, and supervised by, the Federal Reserve.  West Town Bank & Trust’s primary regulators are the Illinois Department of Financial and Professional Regulation and the FDIC. 

For more information, visit https://www.westtownbank.com/

Important Note Regarding Forward-Looking Statements

This release contains certain forward-looking statements with respect to the financial condition, results of operations, and business of the Company. These forward-looking statements involve risks and uncertainties and are based on the beliefs and assumptions of the management of the Company and on the information available to management at the time this release was prepared. These statements can be identified by the use of words such as “expect,” “anticipate,” “estimate,” “believe,” variations of these words, and other similar expressions. Readers should not place undue reliance on forward-looking statements as a number of important factors could cause actual results to differ materially from those in the forward-looking statements. Factors that could cause a difference include, among others: changes in the national and local economies or market conditions; changes in interest rates, deposit flows, loan demand, and asset quality, including real estate and other collateral values; changes in Small Business Administration rules, regulations, or loan products, including the section 7(a) program; changes in other government guaranteed loan programs or our ability to participate in such programs; changes in tax law, including the impact of such changes on our tax assets and liabilities; future governmental shutdowns that may impact revenues associated with our lending and other operations that are dependent on government guaranteed loan programs; changes in banking regulations and accounting principles, policies, or guidelines; the inability to realize cost savings or revenues or to implement integration plans and other consequences associated with the Company’s acquisition and divesture activities; the failure of our strategic investments or acquisitions to perform as anticipated and the impact of any impairments to our intangible assets, such as goodwill; the impact of our strategic initiatives on our ability to retain key employees, and the impact of competition from traditional or new sources. These, and other factors that may emerge, could cause decisions and actual results to differ materially from current expectations. The Company assumes no obligation to revise, update, or clarify forward-looking statements to reflect events or conditions after the date of this release.    

Consolidated Balance Sheet

	Ending Balance
(Dollars in thousands, unaudited)	9/30/19	6/30/19	3/31/19	12/31/18	9/30/18
Assets
Cash and due from banks	$	4,085		$	2,665		$	5,433		$	5,005			5,292
Interest-bearing deposits		18,814			17,196			72,382			43,448			38,779
	Total cash and cash equivalents		22,899			19,861			77,815			48,453			44,071
Securities, at fair value		21,804			20,716			21,031			21,332			20,615
Loans held for sale		13,965			14,902			11,037			16,552			15,819
Loans held for investment:
	Originated loans		211,647			209,492			336,505			322,038			307,166
	Acquired loans, net		–			–			81,978			88,556			101,311
	Allowance for loan and lease losses		(3,462	)		(3,400	)		(4,115	)		(4,000	)		(3,900	)
		Net loans held for investment		208,185			206,092			414,368			406,594			404,577
Premises and equipment, net		4,795			4,832			12,099			12,166			12,263
Foreclosed assets		2,028			2,069			2,493			723			796
Servicing assets		3,053			3,220			3,619			3,952			4,280
Bank owned life insurance		4,993			4,964			9,090			9,034			8,977
Accrued interest receivable		1,079			1,196			1,637			1,637			1,758
Goodwill		12,721			12,721			19,737			19,745			19,745
Other intangible assets, net		7,968			8,154			9,827			10,157			10,493
Other assets		5,779			4,638			8,066			4,979			8,100
			Total assets	$	309,269		$	303,365		$	590,819		$	555,324		$	551,494
Liabilities and Shareholders’ Equity
Liabilities
Deposits:
	Noninterest bearing	$	54,380		$	46,068		$	128,435		$	97,777		$	94,829
	Interest-bearing		177,472			164,619			345,581			335,140			305,257
		Total deposits		231,852			210,687			474,016			432,917			400,086
Borrowings		2,382			5,868			26,294			33,781			65,667
Accrued interest payable		424			433			927			868			550
Other liabilities		8,092			7,562			9,860			10,189			8,746
	Total liabilities		242,750			224,550			511,097			477,755			475,049
Shareholders’ equity:
Common stock, voting		2,206			2,674			2,749			2,686			2,666
Common stock, non-voting		22			129			329			329			329
Additional paid in capital		24,771			38,557			45,287			44,760			44,576
Retained earnings		39,446			37,375			31,273			29,928			29,154
Accumulated other comprehensive income (loss)		74			80			84			(134	)		(280	)
	Total shareholders’ equity		66,519			78,815			79,722			77,569			76,445
			Total liabilities and shareholders’ equity	$	309,269		$	303,365		$	590,819		$	555,324		$	551,494

Financial Performance (Consolidated)

(Dollars in thousands except share	Three Months Ended				Nine Months Ended
and per share data; unaudited)	9/30/19	6/30/19	3/31/19	12/31/18	9/30/18		9/30/19	9/30/18
Interest income
Loans	$	3,698		$	4,607	$	6,523	$	6,379	$	6,329		$	14,828	$	18,942
Invesment securities and deposits		181			341		523		419		281			1,045		696
Total interest income		3,879			4,948		7,046		6,798		6,610			15,873		19,638
Interest expense
Interest on deposits		942			1,104		1,432		1,169		906			3,478		2,492
Interest on borrowed funds		72			172		330		396		431			574		1,283
Total interest expense		1,014			1,276		1,762		1,565		1,337			4,052		3,775
Net interest income		2,865			3,672		5,284		5,233		5,273			11,821		15,863
Provision for loan losses		200			477		173		434		789			850		1,519
Noninterest income
Windsor processing and servicing
revenue		2,391			2,581		2,086		2,116		1,791			7,058		3,474
Government lending		983			1,754		880		1,793		1,121			3,617		8,416
Mortgage		975			1,113		435		359		491			2,523		1,814
Bank-owned life insurance		29			44		56		58		59			129		180
Service charge		23			99		226		228		196			348		637
Gain on deconsolidation of Sound Bank		–			6,635		–		–		–			6,635		–
Gain on consolidation of Windsor		–			–		–		–		–			–		4,776
Income from Windsor investment		–			–		–		–		–			–		933
Other noninterest		153			92		122		163		211			367		516
Total noninterest income		4,554			12,318		3,805		4,717		3,869			20,677		20,746
Noninterest expense
Compensation		3,199			3,385		4,261		4,689		4,245			10,845		11,561
Occupancy and equipment		343			338		506		536		522			1,187		1,397
Loan and special assets		(523	)		510		179		437		67			166		836
Professional services		432			569		582		511		437			1,583		1,028
Data processing		161			198		345		381		326			704		964
Communications		33			110		226		208		191			369		629
Advertising		51			109		112		135		147			272		619
Loss on sale of foreclosed assets		–			35		21		–		–			56		41
Transaction-related expenses		1			916		43		31		5			960		93
Other operating expenses		681			1,040		1,179		1,259		1,013			2,900		2,995
Total noninterest expense		4,378			7,210		7,454		8,187		6,953			19,042		20,163
Income before income taxes		2,841			8,303		1,462		1,329		1,400			12,606		14,927
Income tax expense		687			2,174		397		373		372			3,258		3,747
Net income	$	2,154		$	6,129	$	1,065	$	956	$	1,028		$	9,348	$	11,180
Basic earnings per common share	$	0.97		$	2.03	$	0.35	$	0.31	$	0.34		$	2.58	$	3.76
Diluted earnings per common share	$	0.95		$	2.00	$	0.34	$	0.30	$	0.33		$	2.47	$	3.60
Weighted average common shares
outstanding		2,328			2,997		3,054		3,008		2,996			2,980		2,976
Diluted average common shares
outstanding		2,369			3,045		3,115		3,124		3,127			3,115		3,106

Performance Ratios

		Three Months Ended				Year-to-Date
		9/30/19	6/30/19	3/31/19	12/31/18	9/30/18		9/30/19	9/30/18
PER COMMON SHARE
	Basic earnings per common share	$	0.97		$	2.03		$	0.35		$	0.31		$	0.34			$	2.58		$	3.76
	Diluted earnings per common share	$	0.95		$	2.00		$	0.34		$	0.30		$	0.33			$	2.47		$	3.60
	Book value per common share	$	29.86		$	28.12		$	25.70		$	25.52		$	25.31			$	29.86		$	25.31
	Tangible book value per common share	$	20.57		$	20.67		$	16.17		$	15.68		$	15.30			$	20.57		$	15.30
FINANCIAL RATIOS (ANNUALIZED)
	Return on average assets		2.93	%		5.98	%		0.75	%		0.68	%		0.76	%			2.91	%		2.78	%
	Return on average common shareholders’ equity		12.49	%		30.35	%		5.48	%		4.87	%		5.29	%			16.36	%		20.56	%
	Return on tangible common equity		17.94	%		42.51	%		8.83	%		7.95	%		8.40	%			24.29	%		29.08	%
	Net interest margin (FTE)		4.39	%		4.03	%		4.19	%		4.26	%		4.45	%			4.18	%		4.46	%
	Efficiency ratio (1)		59.0	%		77.1	%		82.0	%		82.3	%		76.1	%			69.9	%		63.0	%
	(1) Efficiency ratio is calculated by dividing noninterest expense less transaction-related costs by the sum of net interest income and noninterest income, less gains or losses on sale of securities and consolidation and the fair value adjustment on the equity investment in Sound Bank

Contact: Eric Bergevin, 252-482-4400

RALEIGH, N.C., July 29, 2019 (GLOBE NEWSWIRE) — West Town Bancorp, Inc. (OTC PINK: WTWB) (the “Company” or “West Town”), the financial holding company for West Town Bank & Trust, announced today its financial results for the three months ended June 30, 2019.  Highlights include the following:

Second quarter net income of $6,129,000 or $2.00 per diluted share, compared to $7,671,000 or $2.47 per diluted share for the second quarter of 2018.

• Return on average assets of 5.98%, compared to 5.72% for the second quarter of 2018.
• Return on average common equity of 30.35%, compared to 41.73% for the second quarter of 2018.
• Return on average tangible common equity (a non-GAAP financial measure) of 42.51%, compared to 61.68% for the second quarter of 2018.
• Windsor Advantage, LLC (“Windsor”) revenue of $2,581,000 as compared to $2,052,000 for the same period last year, due primarily to West Town acquiring 100% of Windsor on April 30, 2018.

Sound Bank Recapitalization

As previously announced, on May 6, 2019 Sound Bank, formerly a wholly-owned subsidiary of West Town, completed a recapitalization that resulted in West Town’s ownership position in the bank being significantly diluted.  As part of the recapitalization, West Town sold a substantial portion of its interest in Sound Bank through a series of concurrent secondary sales of shares of Sound Bank common stock, which resulted in gross proceeds to West Town of $28,010,000 and a pre-tax gain of approximately $6.6 million.  West Town retains an ownership interest in Sound Bank’s voting common stock of approximately 4.9% and a 9.9% total equity interest in Sound Bank.

Eric Bergevin, President and CEO commented, “We are pleased with the positive financial impact of the Sound Bank recapitalization, whereby West Town successfully monetized its investment with an over 20% return on investment in just over one and a half years.  The $6.6 million pre-tax gain obviously impacted our financial performance for the second quarter; however, at the same time, we continue to perform on all cylinders.  Our government guaranteed lending department originated loan commitments of $65.9 million and earned $1.8 million in revenue for the second quarter, while Windsor turned in a record quarter of $2.6 million in revenue, driven by a 5^th consecutive quarter of increased servicing revenue.  Additionally, we paid off the Company’s outstanding $1.9 million line of credit balance while keeping the line available and deployed capital from the Sound Bank transaction into a stock repurchase program.  As of June 30, 2019, we had completed the repurchase of 103,793 shares of the Company’s voting common stock and 200,000 shares of non-voting common stock.”

Balance Sheet

At June 30, 2019, the Company’s total assets were $303,365,000, net loans held for investment were $206,092,000, loans held for sale were $14,902,000, total deposits were $210,687,000 and total shareholder’s equity was $78,815,000.  Compared with June 30, 2018, total assets decreased $241,123,000 or 44%, loans held for investment decreased $194,983,000 or 49%, loans held for sale decreased $17,092,000 or 53%, total deposits decreased $166,901,000 or 44%, and total shareholders’ equity increased $3,135,000 or 4%.  The decreases in assets, loans and deposits were a result of the Sound Bank recapitalization and elimination from the consolidated financials as of May 6, 2019.  The increase in total shareholders’ equity resulted from retained earnings, partially offset by the Company’s stock repurchase program.

Capital Levels

At June 30, 2019, the regulatory capital ratios of West Town Bank & Trust exceeded the minimum thresholds established for well-capitalized banks under applicable banking regulations.

	“Well Capitalized” Minimums	West Town Bank & Trust
Tier 1 common equity ratio	6.5	%	15.37	%
Tier 1 risk-based capital ratio	8.0	%	15.37	%
Total risk-based capital ratio	10.0	%	16.62	%
Tier 1 leverage ratio	5.0	%	12.64	%

The Company’s book value per common share increased from $25.11 at June 30, 2018 to $28.12 at June 30, 2019.  The Company’s tangible book value per common share (a non-GAAP financial measure) increased from $14.96 at June 30, 2018 to $20.67 at June 30, 2019 due primarily to the gain on sale of Sound Bank and the subsequent removal of the intangible assets associated with Sound Bank from the consolidated financial statements. 

Asset Quality

The Company’s nonperforming assets to total assets ratio increased 46 basis points from 1.31% at June 30, 2018 to 1.77% at June 30, 2019 primarily due to the removal of Sound Bank from the consolidated financial statements.  Non-acquired nonaccrual loans decreased $2,943,000 as of June 30, 2019 as compared to the prior year while foreclosed assets increased $2,015,000.

The Company recorded a $477,000 provision for loan losses during the second quarter of 2019 as compared to a provision of $261,000 in second quarter 2018.  The Company recorded $200,000 in net charge-offs during the second quarter 2019 with the remaining provision expense due to volume growth.

Dollars in thousands	Ending Balance
		6/30/19		3/31/19		12/31/18		9/30/18		6/30/18
Nonaccrual loans – originated	$	3,290		$	4,666		$	6,538		$	5,806		$	6,233
Nonaccrual loans – acquired		0			262			272			280			292
Foreclosed assets – originated		2,069			2,493			723			796			54
90 days past due – originated		0			407			67			3			8
90 days past due – acquired		0			421			251			280			553
Total nonperforming assets		5,359			8,249			7,851			7,165			7,140
Total nonperforming assets – originated		5,359			7,566			7,328			6,605			6,295
Net charge-offs	$	200		$	58		$	334		$	725		$	216
Annualized net charge-offs to total average portfolio loans		0.27	%		0.05	%		0.31	%		0.68	%		0.20	%
Ratio of total nonperforming assets to total assets		1.77	%		1.40	%		1.41	%		1.30	%		1.31	%
Ratio of total nonperforming loans to total portfolio loans		1.57	%		1.38	%		1.74	%		1.56	%		1.75	%
Ratio of total allowance for loan losses to total portfolio loans		1.62	%		0.98	%		0.97	%		0.95	%		0.95	%

Net Interest Income and Margin

Net interest income for the three months ended June 30, 2019 decreased $1,847,000 or 33% in comparison to the second quarter 2018, primarily due to the removal of Sound Bank from the consolidated financial statements as of May 6, 2019. The net interest margin decreased from 4.68% for the second quarter 2018 to 4.03% for the second quarter 2019.  The margin compression is largely related to the increase in the cost of funds from 1.14% to 1.56%, due primarily to the deconsolidation of Sound Bank from the Company’s consolidated financial statements and the inclusion of the $9,990,000 resulting equity investment in Sound Bank in the Company’s investment portfolio, which reduced the Company’s average yield on assets by approximately 10 basis points due to it not earning dividend income. 

Dollars in thousands	Three Months Ended	Year-to-Date
		6/30/19		3/31/19		12/31/18		9/30/18		6/30/18			6/30/19		6/30/18
Quarterly average balances:
Loans	$	297,501	$	435,583	$	424,758	$	426,160	$	435,778		$	366,161	$	441,287
Investment securities		20,960		21,119		21,060		15,377		13,949			21,039		12,658
Interest-bearing balances and other		47,025		54,690		41,472		28,481		23,258			50,836		24,026
Total interest-earning assets		365,486		511,392		487,290		470,018		472,985			438,036		477,971
Noninterest-bearing deposits		75,643		112,836		96,068		90,073		82,971			94,137		82,910
Interest-bearing liabilities:
Interest-bearing deposits		234,603		338,682		319,900		294,502		292,409			286,355		297,237
Borrowed funds		17,204		37,852		50,792		63,356		78,457			27,470		77,445
Total interest-bearing liabilities		251,807		376,534		370,692		357,858		370,866			313,825		374,682
Total assets		416,840		576,640		553,855		536,172		538,249			496,299		537,222
Common shareholders’ equity		82,090		78,698		77,817		77,129		73,725			80,403		70,387
Tangible common equity (1)		57,825		48,918		47,695		46,667		49,882			53,396		53,818

(1) Non-GAAP financial measure.  Tangible common equity is calculated by subtracting intangible assets from common shareholders’ equity.

Dollars in thousands	Three Months Ended		Year-to-Date
		6/30/19		3/31/19		12/31/18		9/30/18		6/30/18			6/30/19		6/30/18
Interest Income/Expense:
Loans	$	4,607		$	6,523		$	6,379		$	6,329		$	6,577			$	11,130		$	12,613
Investment securities		100			167			171			111			105				267			168
Interest-bearing balances and other		241			356			248			170			126				597			247
Total interest income		4,948			7,046			6,798			6,610			6,808				11,994			13,028
Deposits		1,104			1,432			1,169			906			815				2,536			1,586
Borrowings		172			330			396			431			474				502			852
Total interest expense		1,276			1,762			1,565			1,337			1,289				3,038			2,438
Net interest income	$	3,672		$	5,284		$	5,233		$	5,273		$	5,519			$	8,956		$	10,590
Average Yields and Costs:
Loans		6.21	%		6.07	%		5.96	%		5.89	%		6.05	%			6.13	%		5.76	%
Investment securities		1.91	%		3.16	%		3.25	%		2.89	%		3.01	%			2.54	%		2.65	%
Interest-bearing balances and other		2.06	%		2.64	%		2.37	%		2.37	%		2.17	%			2.37	%		2.07	%
Total interest-earning assets		5.43	%		5.59	%		5.53	%		5.58	%		5.77	%			5.51	%		5.50	%
Total interest-bearing deposits		1.89	%		1.71	%		1.45	%		1.22	%		1.12	%			1.79	%		1.08	%
Borrowed funds		4.01	%		3.54	%		3.09	%		2.70	%		2.42	%			3.69	%		2.22	%
Total interest-bearing liabilities		2.03	%		1.90	%		1.67	%		1.48	%		1.39	%			1.95	%		1.31	%
Cost of funds		1.56	%		1.46	%		1.33	%		1.18	%		1.14	%			1.50	%		1.07	%
Net interest margin		4.03	%		4.19	%		4.26	%		4.45	%		4.68	%			4.12	%		4.47	%

Noninterest Income

Noninterest income for the three months ended June 30, 2019 was $12,318,000, a decrease of $38,000 as compared to the same prior year period.  Specific items to note include:

• Government lending revenue of $1,754,000 was a decrease of $2,487,000 or 59% in comparison to the second quarter of 2018 primarily due to the unwinding in the first six months of 2018 of the originate-and-hold strategy instituted in the fourth quarter of 2017; and
• Windsor revenue totaled $2,581,000, an increase of $529,000 or 26% as compared to the $2,052,000 income earned from the investment in Windsor during the same prior year period.  The increase is directly attributable to the Company’s acquisition of the remaining 56.5% of Windsor on April 30, 2018. 
• Mortgage revenue totaled $1,113,000, an increase of $245,000 or 28% as compared to the second quarter 2018.  Loans originated for secondary market sale increased from $21,175,000 in the second quarter 2018 to $22,195,000 in the second quarter 2019.
• The fair value adjustment on the Sound Bank equity investment was $6,635,000 for the quarter and was based on the Sound Bank recapitalization pricing.

Noninterest Expense

Noninterest expense for the second quarter 2019 was $7,210,000, a decrease of $205,000 or 3%, from $7,415,000 for the second quarter 2018.  The decreases in compensation, occupancy, data processing, communications and other operating expenses are primarily related to the removal of Sound Bank from the consolidated financial statements as of May 6, 2019.  Also impacting noninterest expenses for the quarter were increased legal fees and transaction-related expenses pertaining to the Sound Bank recapitalization.  

Expanded Stock Repurchase Program

Following the close of the 2019 second quarter, the Company received approval from the Federal Reserve Bank of Chicago to expand its current stock repurchase program and has since repurchased an additional 436,014 of the Company’s voting common shares and 107,380 of the Company’s non-voting common shares.  These most recent share repurchases occurred subsequent to June 30^th and are not reflected in the Company’s reported June 30, 2019 financial information.  In commenting on the Company’s repurchase activity, Mr. Bergevin said, “We are pleased with the participation in the repurchase program to date and still have capacity to repurchase about an additional $2 million of common stock.  Given the strong liquidity position of the Company following the divestiture of our controlling interest in Sound Bank, we believe the share repurchases are an effective use of our excess cash, while also offering additional liquidity options to our shareholders.  With the reduction in the number of outstanding shares of Company common stock, we expect the repurchases will be accretive to our earnings per share in future periods.”

About West Town Bancorp, Inc.

West Town Bancorp, Inc. is the financial holding company for West Town Bank & Trust, an Illinois state-chartered bank.  West Town Bank & Trust provides banking services through its two full-service offices located in the greater Chicago area. Primary deposit products are checking, savings, and certificate of deposit accounts, and primary lending products are government guaranteed lending, residential mortgage, commercial, and installment loans. The Company is also the parent company of Windsor Advantage, LLC, a loan servicing company, and West Town Insurance Agency, Inc., an insurance agency.  The Company is registered with, and supervised by, the Federal Reserve.  West Town Bank & Trust’s primary regulators are the Illinois Department of Financial and Professional Regulation and the FDIC. 

For more information, visit https://www.westtownbank.com/

Important Note Regarding Forward-Looking Statements

This release contains certain forward-looking statements with respect to the financial condition, results of operations, and business of the Company. These forward-looking statements involve risks and uncertainties and are based on the beliefs and assumptions of the management of the Company and on the information available to management at the time this release was prepared. These statements can be identified by the use of words such as “expect,” “anticipate,” “estimate,” “believe,” variations of these words, and other similar expressions. Readers should not place undue reliance on forward-looking statements as a number of important factors could cause actual results to differ materially from those in the forward-looking statements. Factors that could cause a difference include, among others: changes in the national and local economies or market conditions; changes in interest rates, deposit flows, loan demand, and asset quality, including real estate and other collateral values; changes in Small Business Administration rules, regulations, or loan products, including the section 7(a) program; changes in other government guaranteed loan programs or our ability to participate in such programs; changes in tax law, including the impact of such changes on our tax assets and liabilities; future governmental shutdowns that may impact revenues associated with our lending and other operations that are dependent on government guaranteed loan programs; changes in banking regulations and accounting principles, policies, or guidelines; the inability to realize cost savings or revenues or to implement integration plans and other consequences associated with the Company’s acquisition and divesture activities; the failure of our strategic investments or acquisitions to perform as anticipated and the impact of any impairments to our intangible assets, such as goodwill; the impact of our strategic initiatives on our ability to retain key employees, and the impact of competition from traditional or new sources. These, and other factors that may emerge, could cause decisions and actual results to differ materially from current expectations. The Company assumes no obligation to revise, update, or clarify forward-looking statements to reflect events or conditions after the date of this release.    

Consolidated Balance Sheet

Dollars in thousands; unaudited	Ending Balance
		6/30/19		3/31/19		12/31/18		9/30/18		6/30/18
Assets
Cash and due from banks	$	2,665		$	5,433		$	5,005		$	5,292		$	4,961
Interest-bearing deposits		17,196			72,382			43,448			38,779			27,532
Total cash and cash equivalents		19,861			77,815			48,453			44,071			32,493
Securities available for sale, at fair value		20,716			21,031			21,332			20,615			13,769
Loans held for sale		14,902			11,037			16,552			15,819			31,994
Loans held for investment:
Originated loans		209,492			336,505			322,038			307,166			294,471
Acquired loans, net		0			81,978			88,556			101,311			110,439
Allowance for loan losses		(3,400	)		(4,115	)		(4,000	)		(3,900	)		(3,835	)
Net loans held for investment		206,092			414,368			406,594			404,577			401,075
Premises and equipment, net		4,832			12,099			12,166			12,263			11,586
Foreclosed assets		2,069			2,493			723			796			54
Servicing assets		3,220			3,619			3,952			4,280			4,598
Bank owned life insurance		4,964			9,090			9,034			8,977			8,917
Accrued interest receivable		1,196			1,637			1,637			1,758			1,776
Goodwill		12,721			19,737			19,745			19,745			19,745
Other intangible assets, net		8,154			9,827			10,157			10,493			10,837
Other assets		4,638			8,066			4,979			8,100			7,644
Total assets	$	303,365		$	590,819		$	555,324		$	551,494		$	544,488
Liabilities and Shareholders’ Equity
Liabilities
Deposits:
Noninterest-bearing	$	46,068		$	128,435		$	97,777		$	94,829		$	88,172
Interest-bearing		164,619			345,581			335,140			305,257			289,416
Total deposits		210,687			474,016			432,917			400,086			377,588
Short term borrowings		1,968			20,000			27,000			58,400			73,400
Long term borrowings		3,900			6,294			6,781			7,267			7,754
Accrued interest payable		433			927			868			550			466
Other liabilities		7,562			9,860			10,189			8,746			9,600
Total liabilities		224,550			511,097			477,755			475,049			468,808
Shareholders’ equity
Preferred stock		0			0			0			0			0
Common stock, voting		2,674			2,749			2,686			2,666			2,660
Common stock, non-voting		129			329			329			329			329
Additional paid-in capital		38,557			45,287			44,760			44,576			44,429
Retained earnings		37,375			31,273			29,928			29,154			28,436
Accumulated other comprehensive income (loss)		80			84			(134	)		(280	)		(174	)
Total shareholders’ equity		78,815			79,722			77,569			76,445			75,680
Total liabilities and shareholders’ equity	$	303,365		$	590,819		$	555,324		$	551,494		$	544,488

Financial Performance (Consolidated)

Dollars in thousands, except per share data; unaudited	Three Months Ended		Year-to-Date
		6/30/19		3/31/19		12/31/18		9/30/18		6/30/18			6/30/19		6/30/18
Interest income
Interest and fees on loans	$	4,607	$	6,523	$	6,379	$	6,329	$	6,577		$	11,130	$	12,613
Investment securities & deposits		341		523		419		281		231			864		415
Total interest income		4,948		7,046		6,798		6,610		6,808			11,994		13,028
Interest expense
Interest on deposits		1,104		1,432		1,169		906		815			2,536		1,586
Interest on borrowed funds		172		330		396		431		474			502		852
Total interest expense		1,276		1,762		1,565		1,337		1,289			3,038		2,438
Net interest income		3,672		5,284		5,233		5,273		5,519			8,956		10,590
Provision for loan losses		477		173		434		789		261			650		730
Noninterest income
Government lending revenue		1,754		880		1,793		1,121		4,241			2,634		7,295
Mortgage revenue		1,113		435		359		491		868			1,548		1,323
Service charge revenue		99		226		228		196		222			325		441
Bank owned life insurance income		44		56		58		59		64			100		121
Windsor revenue		2,581		2,086		2,116		1,791		1,683			4,667		2,616
Income from Windsor investment		0		0		0		0		369			0		0
Fair value adjustment on equity investment		6,635		0		0		0		0			6,635		0
Gain on consolidation of Windsor		0		0		0		0		4,776			0		4,776
Other noninterest income		92		122		163		211		133			214		305
Total noninterest income		12,318		3,805		4,717		3,869		12,356			16,123		16,877
Noninterest expense
Compensation		3,385		4,261		4,689		4,245		4,050			7,646		7,316
Occupancy and equipment		338		506		536		522		462			844		875
Loan and special assets		510		179		437		67		407			689		769
Professional services		569		582		511		437		317			1,151		591
Data processing		198		345		381		326		325			543		638
Communication		110		226		208		191		203			336		438
Advertising		109		112		135		147		418			221		472
Loss on sale of foreclosed assets		35		21		0		0		41			56		41
Transaction-related expenses		916		43		31		5		74			959		88
Other operating expense		1,040		1,179		1,259		1,013		1,118			2,219		1,982
Total noninterest expense		7,210		7,454		8,187		6,953		7,415			14,664		13,210
Income before income taxes		8,303		1,462		1,329		1,400		10,199			9,765		13,527
Income tax expense		2,174		397		373		372		2,528			2,571		3,375
Net income	$	6,129	$	1,065	$	956	$	1,028	$	7,671		$	7,194	$	10,152
Basic earnings per common share	$	2.03	$	0.35	$	0.31	$	0.34	$	2.58		$	2.38	$	3.42
Diluted earnings per common share	$	2.00	$	0.34	$	0.30	$	0.33	$	2.47		$	2.34	$	3.27
Weighted average common shares outstanding		2,997		3,054		3,008		2,996		2,980			3,025		2,966
Diluted average common shares outstanding		3,045		3,115		3,124		3,127		3,115			3,080		3,101

Performance Ratios

	Three Months Ended		Year-to-Date
		6/30/19		3/31/19		12/31/18		9/30/18		6/30/18			6/30/19		6/30/18
PER COMMON SHARE
Basic earnings per common share	$	2.03		$	0.35		$	0.31		$	0.34		$	2.58			$	2.38		$	3.42
Diluted earnings per common share	$	2.00		$	0.34		$	0.30		$	0.33		$	2.47			$	2.34		$	3.27
Book value per common share	$	28.12		$	25.70		$	25.52		$	25.31		$	25.11			$	28.12		$	25.11
Tangible book value per common share	$	20.67		$	16.17		$	15.68		$	15.30		$	14.96			$	20.67		$	14.96
FINANCIAL RATIOS (ANNUALIZED)
Return on average assets		5.98	%		0.75	%		0.68	%		0.76	%		5.72	%			2.96	%		3.81	%
Return on average common shareholders’ equity		30.35	%		5.48	%		4.87	%		5.29	%		41.73	%			18.25	%		29.08	%
Return on tangible common equity		42.51	%		8.83	%		7.95	%		8.74	%		61.68	%			27.17	%		38.04	%
Net interest margin (FTE)		4.03	%		4.19	%		4.26	%		4.45	%		4.68	%			4.12	%		4.47	%
Efficiency ratio(1)		77.1	%		82.0	%		82.3	%		76.1	%		56.6	%			79.5	%		58.2	%

⁽¹⁾       Efficiency ratio is calculated by dividing noninterest expense by the sum of net interest income and noninterest income, less gains or losses on sale of securities or consolidation.

Contact: Eric Bergevin, 252-482-4400