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Integrated Financial Holdings, Inc. (IFHI – OTC Pink) (Formerly West Town Bancorp, Inc.)
Integrated Financial Holdings, Inc. (“Integrated Financial” or “IFH, Inc.”) is a Raleigh, NC based
financial holding company. The Company changed its name from West Town Bancorp, Inc. in the
third quarter 2020 after a successful shareholder vote approving the action on July 23, 2020. 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 full-service office located in the greater
Chicago area….
Background West Town Bancorp, Inc. (“West Town”) is the Raleigh, NC based holding company for West Town Bank & Trust, a North Riverside, IL based state-chartered bank. The Company is also the parent company of several subsidiaries, two of which are Windsor Advantage, LLC, (“Windsor”) a loan servicing company, and West Town Insurance Agency, Inc., an insurance agency. (We will discuss more about the other subsidiaries in our next report.) 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….
RALEIGH, N.C., May 08, 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 March 31, 2020, reflecting a $3.3 million year-over-year increase in the provision for loan losses which was impacted by the global spread of the coronavirus (“COVID-19”) and its effects on the economic environment. Highlights include the following:
First quarter net loss of $832,000 or $0.37 per diluted share, compared to net income of $1.1 million or $0.34 per diluted share for the first quarter of 2019.
Provision for loan losses of $3.5 million for the first quarter of 2020 compared to $173,000 for the first quarter of 2019.
Return on average assets of -1.08%, compared to 0.74% for the first quarter of 2019.
Return on average common equity of -4.93%, compared to 5.43% for the first quarter of 2019.
Return on average tangible common equity (a non-GAAP financial measure) of -7.09%, compared to 8.73% for the first quarter of 2019.
Windsor Advantage, LLC (“Windsor”) processing and servicing revenue of $1.7 million as compared to $1.5 million for the same period last year.
Mortgage origination and sales revenue of $1.4 million as compared to $435,000 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. Sound Bank, 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 Sound Bank beginning on May 6, 2019 are deconsolidated from the financial results of the Company. Therefore, on a comparative basis, the Company’s financial results for the first quarter of 2020 do not include any operating impact from Sound Bank whereas the financial results for the first quarter of 2019 are impacted by the performance of Sound Bank.
“The COVID-19 pandemic has created never-before-seen challenges for our nation, our communities and the businesses West Town Bank & Trust serves. In late March, we built a technology centric framework that enabled our organization to accept and seamlessly process Paycheck Protection Program (PPP) loan applications in accordance with the U.S. Small Business Administration’s guidelines and the related CARES Act signed into law on March 27, 2020. As of May 5, 2020, WTBT closed and funded 200 loan applications in excess of $21.5 million. I want to thank our dedicated staff members for their commitment to provide the expertise needed to help our small business clients navigate these difficult times,” said Eric Bergevin, President and CEO of West Town Bancorp, Inc. “The way our partners at Windsor Advantage, LLC and SBA Loan Documentation Services, LLC responded to the situation was nothing short of incredible. During this same period, Windsor’s team of 35 full-time employees helped authorize over 10,600 applications totaling more than $2.0 billion for approximately 40 of its institutional lender clients, helping create and preserve jobs for roughly 350,000 employees across the U.S. In addition, the team at SBA Loan Documentation Services helped to document and review over 580 PPP loan closing packages on behalf of its numerous bank clients to ensure that PPP loan closings complied with the CARES Act and the SBA’s guidelines. My extreme gratitude goes out to all of those employees within our family of companies that made it possible for small businesses and their employees, most in need of funds, to gain access to the PPP program and obtain funds needed to sustain their viability.”
Balance Sheet
At March 31, 2020, the Company’s total assets were $312.2 million, net loans held for investment were $211.5 million, loans held for sale were $11.8 million, total deposits were $221.4 million and total shareholders’ equity was $67.0 million. Compared with December 31, 2019, total assets decreased $1.9 million or 1%, net loans held for investment decreased $8.1 million or 4%, loans held for sale decreased $729,000 or 6%, total deposits increased $977,000 or 0.4%, and total shareholders’ equity decreased $715,000 or 1%. The decreases in assets and loans are reflective of an overall slowdown in the economy as a result of the COVID-19 pandemic. The decrease in total shareholders’ equity was primarily a result of the loss posted for the quarter.
During the first quarter of 2020, the Company issued 40,217 shares associated with various stock-based compensation program and repurchased 25,000 shares of its voting common stock.
Capital Levels
At March 31, 2020, 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
Basel III Fully Phased-In
West Town Bank & Trust
Tier 1 common equity ratio
6.50%
7.00%
14.47%
Tier 1 risk-based capital ratio
8.00%
8.50%
14.47%
Total risk-based capital ratio
10.00%
10.50%
15.73%
Tier 1 leverage ratio
5.00%
4.00%
12.18%
The Company’s book value per common share increased from $25.70 at March 31, 2019 to $30.25 at March 31, 2020. The Company’s tangible book value per common share (a non-GAAP financial measure) increased from $16.17 at March 31, 2019 to $20.88 at March 31, 2020 primarily due 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 3.99% at December 31, 2019 to 4.16% at March 31, 2020, primarily due to the Company’s efforts to address credit concerns surrounding the potential economic impact of COVID-19 and the widespread societal responses to the pandemic. Nonaccrual loans decreased $1.5 million as of March 31, 2020 as compared to the prior year end while foreclosed assets increased $1.9 million from December 31, 2019 to March 31, 2020. During the fourth quarter of 2019, the Company formed Patriarch, LLC as a subsidiary to expedite the liquidation and recovery of certain Bank assets and as of March 31, 2020, Patriarch held $3.8 million in foreclosed assets. The Bank regularly conducts impairment analyses on all nonperforming assets with updated appraisals to ensure the assets are carried at the lower of fair market value or book value with any deficits charged off immediately versus carrying specific reserves.
The Company recorded a $3.5 million provision for loan losses during the first quarter of 2020 as compared to a provision of $173,000 in first quarter 2019 in response to the increasing nonperforming asset ratios, increased levels of charge-offs and forecasted credit weaknesses due to deteriorating economic conditions driven by the current COVID-19 pandemic. Expected loss estimates consider the impacts of decreased economic activity and higher unemployment and the mitigating benefits of government stimulus and industry wide loan modification efforts. The Company recorded $2.4 million in net charge-offs during the first quarter 2020. Most of the charge-offs were in the hospitality industry.
(Dollars in thousands)
3/31/20
12/31/19
9/30/19
6/30/19
3/31/19
Nonaccrual loans – originated
$
7,732
$
9,200
$
4,813
$
3,290
$
4,666
Nonaccrual loans – acquired
–
–
–
–
262
Foreclosed assets
5,243
3,370
2,028
2,069
2,493
90 days past due and still accruing – originated
–
–
–
–
407
90 days past due and still accruing – acquired
–
–
–
–
421
Total nonperforming assets
12,975
12,570
6,841
5,359
8,249
Total nonperforming assets – originated
12,975
12,570
6,841
5,359
7,566
Net charge-offs
$
2,390
$
779
$
138
$
200
$
58
Annualized net charge-offs to total average portfolio loans
4.39
%
1.36
%
0.25
%
0.27
%
0.05
%
Ratio of total nonperforming assets to total assets
4.16
%
3.99
%
2.21
%
1.77
%
1.40
%
Ratio of total nonperforming loans to total loans
3.66
%
4.19
%
2.31
%
1.57
%
1.38
%
Ratio of total allowance for loan losses to total loans
2.27
%
1.72
%
1.64
%
1.62
%
0.98
%
Net Interest Income and Margin
Net interest income for the three months ended March 31, 2020 decreased $2.1 million or 36% in comparison to the first quarter 2019, primarily due to the deconsolidation of Sound Bank from the consolidated financial statements as of May 6, 2019. The net interest margin increased from 4.61% for the first quarter 2019 to 5.72% for the first quarter 2020. The margin improvement is largely related to the increase in loan yield from 6.56% to 8.16%, due in part to a change in the makeup of the loan portfolio as the percentage of consumer-related loans decreased while higher yielding commercially-focused loans associated with the Government Guaranteed Lending (“GGL”) department became a larger portion of the portfolio with the deconsolidation of Sound Bank loans. In addition, the annualized impact of several large loan pay-offs in the first quarter of 2020 which had associated loan discounts that were brought into income during the period helped to increase loan yield.
Three Months Ended
(Dollars in thousands)
3/31/20
12/31/19
9/30/19
6/30/19
3/31/19
Average balances:
Loans
$
226,683
$
229,941
$
220,939
$
297,501
$
435,583
Investment securities
23,861
21,572
21,111
20,960
21,119
Interest-bearing balances and other
17,046
16,259
16,801
47,025
54,690
Total interest-earning assets
267,590
267,772
258,851
365,486
511,392
Noninterest deposits
56,329
52,456
47,199
75,643
112,836
Interest-bearing liabilities:
Interest-bearing deposits
166,567
179,195
170,390
234,603
338,682
Borrowed funds
16,475
6,129
6,452
17,204
37,852
Total interest-bearing liabilities
183,042
185,324
176,842
251,807
376,534
Total assets
313,476
311,312
300,011
416,840
576,640
Common shareholders’ equity
68,445
67,172
68,448
82,090
78,698
Tangible common equity (1)
47,570
46,448
47,636
57,825
48,918
Interest income/expense:
Loans
$
4,559
$
4,139
$
4,315
$
5,218
$
7,122
Investment securities
95
82
76
100
167
Interest-bearing balances and other
76
83
105
241
356
Total interest income
4,730
4,304
4,496
5,559
7,645
Deposits
845
979
942
1,104
1,432
Borrowings
109
56
72
172
330
Total interest expense
954
1,035
1,014
1,276
1,762
Net interest income
$
3,776
$
3,269
$
3,482
$
4,283
$
5,883
(1) Non-GAAP financial measure. Tangible common equity is calculated by subtracting intangible assets from common shareholders’ equity
Three Months Ended
3/31/20
12/31/19
9/30/19
6/30/19
3/31/19
Average yields and costs:
Loans
8.16%
7.14%
7.75%
7.04%
6.56%
Investment securities
1.59%
1.52%
1.44%
1.91%
3.16%
Interest-bearing balances and other
1.81%
2.03%
2.48%
2.06%
2.61%
Total interest-earning assets
7.17%
6.38%
6.89%
6.10%
6.00%
Interest-bearing deposits
2.06%
2.17%
2.19%
1.89%
1.70%
Borrowed funds
2.68%
3.62%
4.43%
4.01%
3.50%
Total interest-bearing liabilities
2.11%
2.22%
2.27%
2.03%
1.88%
Cost of funds
1.62%
1.73%
1.80%
1.56%
1.44%
Net interest margin
5.72%
4.84%
5.34%
4.70%
4.61%
Noninterest Income
Noninterest income for the three months ended March 31, 2020 was $4.6 million, an increase of $1.4 million or 45% as compared to the same prior year period. Specific items to note include:
Windsor, a subsidiary of the Company which offers a SBA and USDA loan servicing platform, had processing and servicing revenue totaling $1.7 million, an increase of $226,000, or 15% 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 $775,000 was decreased by $125,000 or 14% in comparison to the first quarter of 2019. GGL volume was impacted by the restrictions put in place throughout the country as Shelter-In-Place orders in the states in which the Company operates, and reduced economic activity slowed deal flows for the Company.
Mortgage revenue totaled $1.4 million, an increase of $983,000 or 226% as compared to the first quarter 2019. Mortgage loans originated for secondary market sale increased from $10.4 million in the first quarter 2019 to $20.9 million in the first quarter 2020.
Noninterest Expense
Noninterest expense for the first quarter 2020 was $6.0 million, a decrease of $1.4 million or 19%, from $7.5 million for the first quarter 2019. 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.
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.
RALEIGH, N.C., May 08, 2019 (GLOBE NEWSWIRE) — West Town Bancorp, Inc. (OTC PINK: WTWB) (the “Company” or “West Town”), announced today its financial results for the three months ended March 31, 2019. Highlights include the following:
First quarter net income of $1,065,000 or $0.34 per diluted share, compared to $2,481,000 or $0.80 per diluted share for the first quarter of 2018.
Return on average assets of 0.75%, compared to 1.88% for the first quarter of 2018.
Return on average common equity of 5.48%, compared to 15.02% for the first quarter of 2018.
Return on average tangible common equity (a non-GAAP financial measure) of 8.83%, compared to 18.30% for the first quarter of 2018.
Net interest income increased 4% quarter over quarter.
Windsor Advantage LLC (“Windsor”) revenue of $2.1 million as compared to $0.6 million for the same period last year, due primarily to West Town acquiring 100% of Windsor on April 30, 2018.
Noninterest expenses increased $1.7 million as compared to the same period last year due to the impact of the Windsor consolidation, as well as increased compensation and legal fees related to the previously announced Sound Bank recapitalization transaction (“Recapitalization”), which was consummated on May 6, 2019.
Eric Bergevin, President and CEO commented, “The primary driver to the Company’s first quarter performance was the 35-day government shutdown effectively halting loan submission, approvals and sales for our government guaranteed lending (“GGL”) department and Windsor. Upon the government reopening there was still some delay in moving the pipeline forward due to the tremendous back log created, further impacting performance. As a result, our GGL revenue was $1.2 million for the quarter as compared to $3.3 million for the same period last year. Additionally, impacting the comparison performance to the prior year’s quarter was the unwinding of our “originate and hold” strategy that was implemented in the fourth quarter of 2017, which increased our sales in the secondary market in the first quarter of 2018 and as planned, at lower tax rates. These items are somewhat offset by the increased revenue from the acquisition of the remaining interest of Windsor as noted above. Heading into mid-2019, our GGL pipeline is robust and we anticipate originations and sales returning to annually budgeted targets by the end of year.”
Strong Year-Over-Year Loan Balance Sheet Growth
At March 31, 2019, the Company’s total assets were $590,819,000, net loans held for investment were $414,368,000, loans held for sale were $11,037,000, total deposits were $474,016,000 and total shareholder’s equity was $79,722,000. Compared with March 31, 2018, total assets increased $41,392,000 or 8%, loans held for investment increased $27,353,000 or 7%, loans held for sale decreased $50,249,000 or 82%, total deposits increased $88,744,000 or 23%, and total shareholders’ equity increased $11,754,000 or 17%. The decrease in loans held for sale was primarily due to the high level of held for sale inventory at March 31, 2018 as the Company began to unwind its “originate and hold” strategy initiated in the fourth quarter of 2017.
Noninterest-bearing deposits increased $41,874,000 or 48% year over year, while interest-bearing deposits increased $46,870,000 or 16% during the same time-period. The increase in noninterest-bearing deposits at March 31, 2019, is primarily related to an escrow account established at Sound Bank, which temporarily held investor funds in connection with the Recapitalization.
Acquired Loan Summary
The following table presents details of the Company’s acquired loan portfolio:
Dollars in thousands
3/31/19
12/31/18
9/30/18
6/30/18
3/31/18
Performing acquired loans
$
79,150
$
85,600
$
98,482
$
107,404
$
121,852
Less: remaining fair market value (FMV) adjustments
(840
)
(929
)
(1,063
)
(1,181
)
(1,400
)
Performing acquired loans, net
$
78,310
$
84,671
$
97,419
$
106,223
$
120,452
FMV adjustment %
1.1
%
1.1
%
1.1
%
1.1
%
1.1
%
Purchase credit impaired loans (PCI)
$
4,172
$
4,398
$
4,446
$
5,017
$
5,293
Less: remaining FMV adjustments
(504
)
(513
)
(554
)
(801
)
(826
)
PCI loans, net
$
3,668
$
3,885
$
3,892
$
4,216
$
4,467
FMV adjustment %
12.1
%
11.7
%
12.5
%
16.0
%
15.6
%
Total acquired performing loans
78,310
84,671
97,419
106,223
120,452
Total acquired PCI loans
3,668
3,885
3,892
4,216
4,467
Total acquired loans
81,978
88,556
101,311
110,439
124,919
FMV adjustment %
1.6
%
1.6
%
1.6
%
1.8
%
1.8
%
In comparison to March 31, 2018, the performing acquired loan pool decreased $42,702,000 or 35% due to principal payments and renewals. The PCI loan pool decreased $1,121,000 or 21% year-over-year due to principal payments, charge-offs and foreclosures.
Capital Levels
At March 31, 2019, the capital ratios of both West Town Bank & Trust and Sound Bank exceeded the minimum thresholds established for well-capitalized banks by regulatory measures.
“Well Capitalized” Minimums
West Town Bank & Trust
Sound Bank
Tier 1 common equity ratio
6.5
%
15.32
%
10.74
%
Tier 1 risk-based capital ratio
8.0
%
15.32
%
10.74
%
Total risk-based capital ratio
10.0
%
16.57
%
11.19
%
Tier 1 leverage ratio
5.0
%
12.19
%
8.33
%
The Company’s book value per common share increased from $23.02 at March 31, 2018 to $25.70 at March 31, 2019. The Company’s tangible book value per common share (a non-GAAP financial measure) decreased from $19.94 at March 31, 2018 to $16.17 at March 31, 2019 due to the impact of the Company’s acquisition of the remaining 56.5% of Windsor, which occurred on April 30, 2018. The tangible book value per common share increased from $14.96 at June 30, 2018 (post acquisition) to $16.17 at March 31, 2019. The impact of the Sound Bank Recapitalization, which closed on May 6, 2019 and subsequent to quarter end, is not reflected in the foregoing book value calculations.
Asset Quality
The Company’s nonperforming assets to total assets ratio increased 14 basis points from 1.26% at March 31, 2018 to 1.40% at March 31, 2019. Compared to the prior year, non-acquired nonaccrual loan balances declined $1,244,000 while foreclosed assets increased $2,493,000.
The Company recorded a $173,000 provision for loan losses during the first quarter of 2019 as compared to a provision of $469,000 in first quarter 2018. The Company recorded $58,000 in net charge-offs during the 2019 first quarter with the remaining provision expense due to volume growth.
Dollars in thousands
Ending Balance
3/31/19
12/31/18
9/30/18
6/30/18
3/31/18
Nonaccrual loans – originated
$
4,666
$
6,538
$
5,806
$
6,233
$
5,910
Nonaccrual loans – acquired
262
272
280
292
182
Foreclosed assets – originated
2,493
723
796
54
54
90 days past due – originated
407
67
3
8
186
90 days past due – acquired
421
251
280
553
594
Total nonperforming assets
8,249
7,851
7,165
7,140
6,926
Total nonperforming assets – originated
7,566
7,328
6,605
6,295
6,150
Net charge-offs
$
58
$
334
$
725
$
216
$
105
Annualized net charge-offs to total average portfolio loans
0.05
%
0.31
%
0.68
%
0.20
%
0.09
%
Ratio of total nonperforming assets to total assets
1.40
%
1.41
%
1.30
%
1.31
%
1.26
%
Ratio of total nonperforming loans to total portfolio loans
1.39
%
1.75
%
1.57
%
1.77
%
1.78
%
Ratio of total allowance for loan losses to total portfolio loans
0.98
%
0.97
%
0.95
%
0.95
%
0.97
%
Net Interest Income and Margin
Net interest income for the three months ended March 31, 2019 increased $213,000 or 4% in comparison to the first quarter of 2018, while the net interest margin decreased from 4.26% for the first quarter of 2018 to 4.19% for the first quarter of 2019. The margin compression is largely related to the increase in the cost of funds from 1.01% to 1.46% due to increased deposit competition and short-term interest rates.
Dollars in thousands
Three Months Ended
Year-to-Date
3/31/19
12/31/18
9/30/18
6/30/18
3/31/18
3/31/19
3/31/18
Quarterly average balances:
Loans
$
435,583
$
424,758
$
426,160
$
435,778
$
446,857
$
435,583
$
446,857
Investment securities
21,119
21,060
15,377
13,949
11,353
21,119
11,353
Interest-bearing balances and other
54,690
41,472
28,481
23,258
24,803
54,690
24,803
Total interest-earning assets
511,392
487,290
470,018
472,985
483,013
511,392
483,013
Noninterest-bearing deposits
112,836
96,068
90,073
82,971
82,849
112,836
82,849
Interest-bearing liabilities:
Interest-bearing deposits
338,682
319,900
294,502
292,409
302,119
338,682
302,119
Borrowed funds
37,852
50,792
63,356
78,457
76,422
37,852
76,422
Total interest-bearing liabilities
376,534
370,692
357,858
370,866
378,541
376,534
378,541
Total assets
576,640
553,855
536,172
538,249
536,185
576,640
536,185
Common shareholders’ equity
78,698
77,817
77,129
73,725
67,013
78,698
67,013
Tangible common equity (1)
48,918
47,695
46,667
49,882
57,799
48,918
57,799
(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
3/31/19
12/31/18
9/30/18
6/30/18
3/31/18
3/31/19
3/31/18
Interest Income/Expense:
Loans
$
6,523
$
6,379
$
6,329
$
6,577
$
6,036
$
6,523
$
6,036
Investment securities
167
171
111
105
64
167
64
Interest-bearing balances and other
356
248
170
126
120
356
120
Total interest income
7,046
6,798
6,610
6,808
6,220
7,046
6,220
Deposits
1,432
1,169
906
815
771
1,432
771
Borrowings
330
396
431
474
378
330
378
Total interest expense
1,762
1,565
1,337
1,289
1,149
1,762
1,149
Net interest income
$
5,284
$
5,233
$
5,273
$
5,519
$
5,071
$
5,284
$
5,071
Average Yields and Costs:
Loans
6.07
%
5.96
%
5.89
%
6.05
%
5.48
%
6.07
%
5.48
%
Investment securities
3.16
%
3.25
%
2.89
%
3.01
%
2.25
%
3.16
%
2.25
%
Interest-bearing balances and other
2.64
%
2.37
%
2.37
%
2.17
%
1.96
%
2.64
%
1.96
%
Total interest-earning assets
5.59
%
5.53
%
5.58
%
5.77
%
5.22
%
5.59
%
5.22
%
Total interest-bearing deposits
1.71
%
1.45
%
1.22
%
1.12
%
1.03
%
1.71
%
1.03
%
Borrowed funds
3.54
%
3.09
%
2.70
%
2.42
%
2.01
%
3.54
%
2.01
%
Total interest-bearing liabilities
1.90
%
1.67
%
1.48
%
1.39
%
1.23
%
1.90
%
1.23
%
Cost of funds
1.46
%
1.33
%
1.18
%
1.14
%
1.01
%
1.46
%
1.01
%
Net interest margin
4.19
%
4.26
%
4.45
%
4.68
%
4.26
%
4.19
%
4.26
%
Noninterest Income
Noninterest income for the three months ended March 31, 2019 was $3,805,000, a decrease of $716,000 or 16% as compared to the same prior year period. Specific items to note for the first quarter of 2019 include:
Governmental lending revenue of $880,000 was a decrease of $2,174,000 or 71% in comparison to the first quarter of 2018 primarily due to the impact of the government shutdown as well as the partial unwinding in the first three months of 2018 of the originate-and-hold strategy instituted in the fourth quarter of 2017; and
Windsor revenue totaled $2,086,000, an increase of $1,522,000 or 270% as compared to the $564,000 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.
Noninterest Expense
Noninterest expense for the first quarter of 2019 was $7,454,000, an increase of $1,638,000 or 28% from $5,795,000 for the first quarter of 2018. The increases in compensation, occupancy, and other operating expenses are primarily related to the inclusion of Windsor expenses for the full three-month period in 2019 as compared to no expenses in the first quarter of 2018. Also impacting noninterest expenses for the quarter were increased compensation and legal fees related to the previously announced Sound Bank Recapitalization, which was consummated on May 6, 2019.
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.
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
3/31/19
12/31/18
9/30/18
6/30/18
3/31/18
Assets
Cash and due from banks
$
5,433
$
5,005
$
5,292
$
4,961
$
4,725
Interest-bearing deposits
72,382
43,448
38,779
27,532
30,299
Total cash and cash equivalents
77,815
48,453
44,071
32,493
35,024
Securities available for sale, at fair value
21,031
21,332
20,615
13,769
14,171
Loans held for sale
11,037
16,552
15,819
31,994
61,286
Loans held for investment:
Originated loans
336,505
322,038
307,166
294,471
265,887
Acquired loans, net
81,978
88,556
101,311
110,439
124,919
Allowance for loan losses
(4,115
)
(4,000
)
(3,900
)
(3,835
)
(3,791
)
Net loans held for investment
414,368
406,594
404,577
401,075
387,015
Premises and equipment, net
12,099
12,166
12,263
11,586
11,502
Foreclosed assets
2,493
723
796
54
54
Servicing assets
3,619
3,952
4,280
4,598
4,969
Bank owned life insurance
9,090
9,034
8,977
8,917
8,853
Accrued interest receivable
1,637
1,637
1,758
1,776
1,870
Goodwill
19,737
19,745
19,745
19,745
7,016
Other intangible assets, net
9,827
10,157
10,493
10,837
2,102
Other assets
8,066
4,979
8,100
7,644
15,565
Total assets
$
590,819
$
555,324
$
551,494
$
544,488
$
549,427
Liabilities and Shareholders’ Equity
Liabilities
Deposits:
Noninterest-bearing
$
128,435
$
97,777
$
94,829
$
88,172
$
86,561
Interest-bearing
345,581
335,140
305,257
289,416
298,711
Total deposits
474,016
432,917
400,086
377,588
385,272
Short term borrowings
20,000
27,000
58,400
73,400
81,500
Long term borrowings
6,294
6,781
7,267
7,754
6,314
Accrued interest payable
927
868
550
466
389
Other liabilities
9,860
10,189
8,746
9,600
7,984
Total liabilities
511,097
477,755
475,049
468,808
481,459
Shareholders’ equity
Preferred stock
0
0
0
0
0
Common stock, voting
2,749
2,686
2,666
2,660
2,623
Common stock, non-voting
329
329
329
329
329
Additional paid-in capital
45,287
44,760
44,576
44,429
44,385
Retained earnings
31,273
29,928
29,154
28,436
20,765
Accumulated other comprehensive income (loss)
84
(134
)
(280
)
(174
)
(134
)
Total shareholders’ equity
79,722
77,569
76,445
75,680
67,968
Total liabilities and shareholders’ equity
$
590,819
$
555,324
$
551,494
$
544,488
$
549,427
Financial Performance (Consolidated)
Dollars in thousands, except per share data; unaudited
Three Months Ended
Year-to-Date
3/31/19
12/31/18
9/30/18
6/30/18
3/31/18
3/31/19
3/31/18
Interest income
Interest and fees on loans
$
6,523
$
6,379
$
6,329
$
6,577
$
6,036
$
6,523
$
6,036
Investment securities & deposits
523
419
281
231
184
523
184
Total interest income
7,046
6,798
6,610
6,808
6,220
7,046
6,220
Interest expense
Interest on deposits
1,432
1,169
906
815
771
1,432
771
Interest on borrowed funds
330
396
431
474
378
330
378
Total interest expense
1,762
1,565
1,337
1,289
1,149
1,762
1,149
Net interest income
5,284
5,233
5,273
5,519
5,071
5,284
5,071
Provision for loan losses
173
434
789
261
469
173
469
Noninterest income
Government lending revenue
880
1,793
1,121
4,241
3,054
880
3,054
Mortgage revenue
435
359
491
868
455
435
455
Service charge revenue
226
228
196
222
219
226
219
Bank owned life insurance income
56
58
59
64
57
56
57
Windsor revenue
2,086
2,116
1,791
1,683
0
2,086
0
Income from Windsor investment
0
0
0
369
564
0
564
Loss on sale of securities
0
0
0
0
0
0
0
Gain on consolidation of Windsor
0
0
0
4,776
0
0
0
Other noninterest income
122
163
211
133
172
122
172
Total noninterest income
3,805
4,717
3,869
12,356
4,521
3,805
4,521
Noninterest expense
Compensation
4,261
4,689
4,245
4,050
3,266
4,261
3,266
Occupancy and equipment
506
536
522
462
413
506
413
Loan and special assets
179
437
67
407
362
179
362
Professional services
582
511
437
317
274
582
274
Data processing
345
381
326
325
313
345
313
Communication
226
208
191
203
235
226
235
Advertising
112
135
147
418
54
112
54
Loss on sale of foreclosed assets
21
0
0
41
0
21
0
Transaction-related expenses
43
31
5
74
14
43
14
Other operating expense
1,179
1,259
1,013
1,118
864
1,179
864
Total noninterest expense
7,454
8,187
6,953
7,415
5,795
7,454
5,795
Income before income taxes
1,462
1,329
1,400
10,199
3,328
1,462
3,328
Income tax expense
397
373
372
2,528
847
397
847
Net income
$
1,065
$
956
$
1,028
$
7,671
$
2,481
$
1,065
$
2,481
Basic earnings per common share
$
0.35
$
0.31
$
0.34
$
2.58
$
0.84
$
0.35
$
0.84
Diluted earnings per common share
$
0.34
$
0.30
$
0.33
$
2.47
$
0.80
$
0.34
$
0.80
Weighted average common shares outstanding
3,054
3,008
2,996
2,980
2,952
3,054
2,952
Diluted average common shares outstanding
3,115
3,124
3,127
3,115
3,087
3,115
3,087
Performance Ratios
Three Months Ended
Year-to-Date
3/31/19
12/31/18
9/30/18
6/30/18
3/31/18
3/31/19
3/31/18
PER COMMON SHARE
Basic earnings per common share
$
0.35
$
0.31
$
0.34
$
2.58
$
0.84
$
0.35
$
0.84
Diluted earnings per common share
$
0.34
$
0.30
$
0.33
$
2.47
$
0.80
$
0.34
$
0.80
Book value per common share
$
25.70
$
25.52
$
25.31
$
25.11
$
23.02
$
25.70
$
23.02
Tangible book value per common share
$
16.17
$
15.68
$
15.30
$
14.96
$
19.94
$
16.17
$
19.94
FINANCIAL RATIOS (ANNUALIZED)
Return on average assets
0.75
%
0.68
%
0.76
%
5.72
%
1.88
%
0.75
%
1.88
%
Return on average common shareholders’ equity
5.48
%
4.87
%
5.29
%
41.73
%
15.02
%
5.48
%
15.02
%
Return on tangible common equity
8.83
%
7.95
%
8.74
%
61.68
%
18.30
%
8.83
%
18.30
%
Net interest margin (FTE)
4.19
%
4.26
%
4.45
%
4.68
%
4.26
%
4.19
%
4.26
%
Efficiency ratio(1)
82.0
%
82.3
%
76.1
%
56.6
%
60.4
%
82.0
%
60.4
%
(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.
Background With $549 million in assets, West Town Bancorp, Inc. is the Raleigh, NC based multi-bank holding company for West Town Bank & Trust, a North Riverside, IL based state-chartered bank and Sound Bank, a Morehead City, NC based state-chartered bank. West Town Bank & Trust provides banking services through its offices in Illinois and North Carolina, while Sound Bank provides banking services through its offices in North Carolina. Primary deposit products are checking, savings, and time certificate accounts, and primary lending products are residential mortgage, commercial, and installment loans. Additionally, both banks engage in Government Guaranteed Lending (SBA and USDA) activities as well as mortgage banking activities and, as such, originate and sell loans from multiple states into the secondary markets….
West Town Bancorp, Inc. Announces First Quarter 2018 Financial Results.
Company Release 04/27/2018 08:30 AM Contact: Eric Bergevin, 252-482-4400 RALEIGH, NC, April 27, 2018 — West Town Bancorp, Inc. (OTC PINK: WTWB) (the “Company” or “West Town”), the multi-bank holding company for West Town Bank & Trust and Sound Bank, reported record quarterly net income of $2,481,000 or $0.80 per diluted share for the first quarter 2018 compared to net income of $879,000, or $0.57 per diluted share for the first quarter of 2017, an increase of $1,602,000, or 182%. Return on average assets was 1.88%, and return on average shareholders’ equity was 15.02% as compared to 1.31% and 12.40%, respectively, in the first quarter 2017….
