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

West Town Bancorp, Inc. Announces Second Quarter 2018 Financial Results.

RALEIGH, NC, August 1, 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 $7,671,000 or $2.47 per diluted share for the second quarter 2018 compared to net income of $514,000, or $0.34 per diluted share for the second quarter of 2017, an increase of $7,157,000, or 1,392%. Return on average assets was 5.72% and return on average shareholders’ equity was 41.73% as compared to 0.75% and 6.78%, respectively, in the second quarter 2017….

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