Market Overview

West Town Bancorp, Inc. Announces Third Quarter 2017 Financial Results

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RALEIGH, N.C., Oct. 31, 2017 (GLOBE NEWSWIRE) -- West Town Bancorp, Inc. (OTC:WTWB) (the "Company" or "West Town"), the multi-bank holding company for West Town Bank & Trust and Sound Bank, announced today its financial results for the quarter ended September 30, 2017.  Highlights for the third quarter of 2017 include the following:

• Net income of $947,000, or $0.56 per diluted share, compared to $837,000 or $0.58 per diluted share for the third quarter of 2016.

  • Return on average assets of 1.09%, compared to 1.33% for third quarter of 2016.
  • Return on average common equity of 9.20%, compared to 12.71% for the third quarter of 2016.
  • Return on average tangible common equity of 9.99%, compared to 12.71% for third quarter of 2016.
  • West Town Bank & Trust earned net income totaling $887,000 for the third quarter of 2017, resulting in a return on average assets of 1.29% and a return on average common equity of 12.02%.
  • Sound Bank contributed net income of $135,000 for the third quarter of 2017 resulting in a return on average assets of 0.83% and a return on average common equity of 6.51%.  Due to acquisition on August 31, 2017, third quarter earnings only include the month of September 2017.

 • Completed acquisition of Sound Banking Company on August 31, 2017.

  • In connection with the acquisition, the Company made the strategic decision to operate as a multi-bank holding company with two separately chartered banking subsidiaries.
  • Pursuant to the merger agreement, each share of Sound Banking Company common stock was converted into the right to receive either $12.75 in cash or 0.60 shares of West Town voting common stock.  Shareholders had the opportunity to elect between West Town common stock, cash or a combination of West Town stock and cash, subject to the limitation that 65% of Sound Banking Company shares would be converted to West Town stock and 35% of shares would be converted to the cash consideration.  The election period ended on October 9, 2017 with approximately 83% of Sound Banking Company shareholders making an election ("Electors").
    • The Electors elected 75.5% stock and 7.5% cash.  As a result of the 65% stock limitation, the stock election was prorated using a proration factor of 0.86.
    • All Sound Banking Company shareholders who did not make an election received the cash merger consideration.
  • As of the acquisition date, Sound Banking Company had total assets of $190,298,000, including $152,572,000 in loans and $171,486,000 in deposits. 
  • In connection with the acquisition, goodwill totaling $7,399,000 and a core deposit intangible totaling $2,510,000 was recorded by Sound Bank.
  • The operating results of West Town for the period ended September 30, 2017 include the results of Sound Bank subsequent to the acquisition date of August 31, 2017.  The conversion of Sound Bank's computer systems occurred in October 2017.

 • Closed on private placement of securities with aggregate gross proceeds of approximately $17.5 million and a $4.0 million debt facility with The Private Bank.

  • Issued 453,490 shares of West Town voting common stock, $1.00 par value, at a purchase price of $23.00 per share.
  • Issued 30,738 shares of a non-voting, convertible perpetual preferred stock, Series A, $100.00 par value, at a purchase price of $230.00 per share.
  • Issued a warrant to purchase 43,478 shares of West Town common stock, $1.00 par value, at a purchase price of $23.00 per share.  The warrant expires on August 31, 2022.
  • The Company down-streamed $6.0 million to West Town Bank & Trust and $2.0 million to Sound Bank during September 2017 to further strengthen bank capital ratios and support continued growth.
    • West Town Bank & Trust plans on leveraging down-streamed capital by funding and holding whole loans (SBA/USDA) for the entire 4th quarter and then resume the sale of the guaranteed portion of these loans into the secondary market in the first quarter of 2018.  This will impact short-term earnings, but will enhance our earning assets and consequently the overall earnings profile of West Town Bank & Trust and the Company.

                         
 Financial Performance (Consolidated)

In thousands, except per share data   Three Months Ended
      Nine Months Ended
 
    9/30/17
    6/30/17     3/31/17     12/31/16
    9/30/16       9/30/17     9/30/16  
Interest income                                    
Interest and fees on loans $ 4,223   $ 3,288   $ 3,373   $ 3,311   $ 3,111     $ 10,884   $ 8,584  
Investment securities & deposits   142     78     73     55     58       293     153  
Total interest income   4,365     3,366     3,446     3,366     3,169       11,177     8,737  
Interest expense                                    
Interest on deposits   712     684     677     674     594       2,073     1,679  
Interest on borrowed funds   102     92     56     38     39       250     80  
Total interest expense   814     776     733     712     633       2,323     1,759  
Net interest income   3,551     2,590     2,713     2,654     2,536       8,854     6,979  
Provision for loan losses   491     281     276     570     225       1,048     749  
Noninterest income                                    
Government lending revenue   1,537     730     1,636     2,111     1,651       3,903     5,017  
Mortgage revenue   699     1,938     1,555     1,809     2,406       4,192     6,730  
Service charge revenue   89     15     17     21     25       121  
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