TowneBank (TOWN) | Investment Case

1. Company Snapshot

1.a. Company Description

TowneBank provides retail and commercial banking services for individuals, commercial enterprises, and professionals.The company operates through three segments: Banking, Realty, and Insurance.It accepts various deposits, including demand deposits, savings accounts, money rate savings, certificates of deposit, and individual retirement accounts.

The company also offers secured and unsecured personal loans for financing automobiles, home improvements, education, and personal investments; commercial loans for working capital, business expansion, and equipment and machinery purchases; and mortgage loans, as well as real estate acquisition, development, and construction loans.In addition, it provides other services, such as safe deposit boxes, treasury management services, direct deposit of payroll and social security checks, and automatic drafts for various accounts, as well as online, mobile, and on-call banking services.Further, the company offers documentation services to accomplish tax deferral to investors; investment and asset management services; commercial mortgage brokerage services; and other financial services, such as financial, retirement, and estate planning services, as well as assistance on various investment options comprising alternative investments, annuities, margin accounts, convertible bonds, and pension and profit-sharing plans.

Additionally, it provides residential real estate, relocation, property management, vacations rental, and title and settlement services; and originates residential mortgage loans.The company also offers life, property, casualty, and vehicle insurance services; and employee benefit programs, such as health, dental, vision, and disability insurance.It operates in Richmond, Virginia, the Greater Hampton Roads region in southeastern Virginia, northeastern North Carolina, Raleigh, Charlotte, Greensboro, and Greenville, North Carolina.

TowneBank was incorporated in 1998 and is headquartered in Portsmouth, Virginia.

Show Full description

1.b. Last Insights on TOWN

TowneBank's recent performance was driven by its ability to meet Q3 earnings estimates, with a quarterly earnings of $0.58 per share, in line with expectations. Additionally, the company announced a quarterly cash dividend of $0.25 per common share, payable on January 14, 2025, to shareholders of record on December 31, 2024. This dividend payout demonstrates the company's commitment to returning value to its shareholders.

1.c. Company Highlights

Last Price	34.03
Change Percentage	-0.64%
Open	34.27
Previous Close	34.25
Market Cap ( Millions)	2568
Volume	269520
Year High	38.01
Year Low	29.43
M A 50	33.43
M A 200	34.39

FCF Yield	7.73%
Dividend Yield	3.06%
ROE	7.57%
Debt / Equity	15.11%
Net Debt / EBIDTA	-367.57%
Price To Book	1.08
Price Earnings Ratio	15.33
Price To FCF	12.93
Price To sales	2.38
EV / EBITDA	6.96

2. Transcript Summary

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3. NewsRoom

South Atlantic Bancshares (OTCMKTS:SABK) and Towne Bank (NASDAQ:TOWN) Critical Survey

Dec -02

Source: defenseworld.net

TowneBank Announces Quarterly Cash Dividend

Nov -26

Source: globenewswire.com

Campbell & CO Investment Adviser LLC Makes New Investment in Towne Bank $TOWN

Nov -17

Source: defenseworld.net

Towne Bank $TOWN Shares Sold by Bailard Inc.

Nov -15

Source: defenseworld.net

TowneBank (TOWN) Q3 Earnings Top Estimates

Oct -22

Source: zacks.com

TowneBank Announces Completion of Old Point Financial Corporation Merger

Sep -02

Source: globenewswire.com

Alt.town $TOWN Token Secures Listing on Binance Alpha

Aug -28

Source: businesswire.com

TowneBank Announces Quarterly Cash Dividend

Aug -27

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.68%)

6. Segments

Banking

Expected Growth: 6.5%

TowneBank's 6.5% growth is driven by strategic expansion into new markets, increased commercial lending, and a strong mortgage banking division. Additionally, the bank's focus on digital transformation and customer experience has led to increased deposits and fee income. A solid balance sheet and disciplined expense management have also contributed to the bank's growth.

Realty

Expected Growth: 7.5%

TowneBank's Realty segment growth of 7.5% is driven by increasing demand for mortgage loans, fueled by low interest rates and government-backed loan programs. Additionally, the bank's expansion into new markets, strategic partnerships, and investments in digital platforms have enhanced its ability to originate and service loans efficiently, contributing to the segment's growth.

Insurance

Expected Growth: 6.8%

TowneBank's insurance segment growth of 6.8% is driven by increasing demand for protection products, strategic partnerships, and expansion into new markets. Additionally, the bank's digital transformation efforts have improved customer engagement and retention, leading to increased premiums and revenue growth.

7. Detailed Products

Consumer Banking

TowneBank offers a range of consumer banking services, including checking and savings accounts, credit cards, personal loans, and mortgages.

Commercial Banking

TowneBank provides commercial banking services, including business checking and savings accounts, commercial loans, and cash management solutions.

Wealth Management

TowneBank offers wealth management services, including investment management, financial planning, and trust services.

Mortgage Lending

TowneBank provides mortgage lending services, including residential and commercial mortgage loans.

Insurance

TowneBank offers insurance services, including personal and commercial insurance products.

Investment Services

TowneBank provides investment services, including brokerage services and investment advice.

8. TowneBank's Porter Forces

Forces Ranking

Threat Of Substitutes

TowneBank operates in a highly competitive market, and customers have various alternatives for their banking needs. However, the bank's strong brand reputation and customer loyalty mitigate the threat of substitutes.

Bargaining Power Of Customers

TowneBank's customers have some bargaining power due to the availability of alternative banking services. However, the bank's strong relationships with its customers and its ability to offer personalized services reduce the bargaining power of customers.

Bargaining Power Of Suppliers

TowneBank has a diverse supplier base, which reduces the bargaining power of individual suppliers. The bank's strong financial position also gives it the ability to negotiate favorable terms with its suppliers.

Threat Of New Entrants

The banking industry has high barriers to entry, including regulatory hurdles and significant capital requirements. This limits the threat of new entrants and allows TowneBank to maintain its market position.

Intensity Of Rivalry

The banking industry is highly competitive, with many established players competing for market share. TowneBank faces intense competition from larger banks and fintech companies, which increases the intensity of rivalry.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	19.45%
Debt Cost	6.49%
Equity Weight	80.55%
Equity Cost	8.45%
WACC	8.07%
Leverage	24.15%

11. Quality Control: TowneBank passed 3 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Third Coast Bancshares

A-Score: 6.6/10

Value: 7.2

Growth: 9.3

Quality: 7.1

Yield: 0.0

Momentum: 9.0

Volatility: 6.7

1-Year Total Return ->

First Business Financial Services

A-Score: 6.5/10

Value: 7.1

Growth: 7.9

Quality: 5.3

Yield: 4.0

Momentum: 7.0

Volatility: 7.7

1-Year Total Return ->

Veritex Holdings

A-Score: 6.3/10

Value: 5.4

Growth: 6.4

Quality: 6.4

Yield: 6.0

Momentum: 8.0

Volatility: 5.3

1-Year Total Return ->

TowneBank

A-Score: 6.1/10

Value: 5.2

Growth: 5.2

Quality: 7.0

Yield: 6.0

Momentum: 5.0

Volatility: 8.3

1-Year Total Return ->

Amalgamated Financial

A-Score: 6.0/10

Value: 7.6

Growth: 7.2

Quality: 8.2

Yield: 4.0

Momentum: 2.0

Volatility: 6.7

1-Year Total Return ->

Financial Institutions

A-Score: 5.9/10

Value: 6.4

Growth: 3.6

Quality: 3.8

Yield: 9.0

Momentum: 6.0

Volatility: 6.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

0.90%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

8.07%

TowneBank - US89214P1093

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on TOWN

1.c. Company Highlights

Average Yield

Average Quality

Average Growth

Revenues Beats

Earnings Beats

Medium Volatility

Stable Momentum

Fairly Valued

Strong Momentum

Revenues Miss

Expensive

2. Transcript Summary

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.68%)

6. Segments

Banking

Expected Growth: 6.5%

Realty

Expected Growth: 7.5%

Insurance

Expected Growth: 6.8%

7. Detailed Products

Consumer Banking

Commercial Banking

Wealth Management

Mortgage Lending

Insurance

Investment Services

8. TowneBank's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: TowneBank passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

34.03$

Current Price

34.03$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA