TowneBank Reports Full Year and Fourth Quarter Financial Results for 2020

SUFFOLK, Va., Jan. 28, 2021 (GLOBE NEWSWIRE) -- TowneBank (the “Company”) (Nasdaq: TOWN) today reported financial results for the full year and the fourth quarter ended December 31, 2020. For the year ended December 31, 2020, earnings were $145.54 million, or $2.01 per diluted share, compared to $138.78 million, or $1.92 per diluted share for the year ended December 31, 2019. Earnings in the fourth quarter of 2020 were $50.08 million, or $0.69 per diluted share, compared to fourth quarter 2019 earnings of $35.08 million, or $0.49 per diluted share.

“We were pleased to deliver our 21^St consecutive year of increased earnings during a year filled with challenges and opportunities. We achieved solid financial results while facing economic headwinds and prudently building substantial reserves to address future economic uncertainty. Our unique business model enabled our HomeTowne bankers to support our members and the communities we serve with more than $1.1 billion in funds through the Paycheck Protection Program. Additionally, our diverse sources of revenue resulted in record levels of total revenues which eclipsed $664 million for the year. TowneMortgage achieved record volumes and delivered a strong performance by closing more than $5.88 billion in mortgages. These accomplishments were the result of hard work and dedication from our more than 2,800 team members who work each day defining our culture of caring,” said G. Robert Aston, Jr., Executive Chairman.

Quarter Highlights:

• Total revenues were $171.85 million, in fourth quarter 2020, an increase over the prior year quarter of $32.18 million, or 23.04%.
• Quarterly pre-provision, pre-tax, net revenues (non-GAAP) were $62.11 million, an increase of $15.65 million, or 33.67%.
• During fourth quarter 2020, we completed a core banking system conversion to allow the Company to provide a greater variety of financial services to our members through new technologies and enhanced digital solutions.
• Loans held for investment increased $1.21 billion, or 14.37%, from December 31, 2019, and decreased $141.50 million, or 1.45%, from September 30, 2020. The balance at December 31, 2020 and September 30, 2020 included $0.86 billion and $1.10 billion, respectively, of loans originated under the Small Business Administration's Paycheck Protection Program ("PPP"). Excluding PPP, loans held for investment increased $353.89 million, or 4.20%, compared to prior year, and $105.75 million, or 4.85% on an annualized basis, compared to the linked quarter.
• Total deposits were $11.57 billion, an increase of $2.30 billion, or 24.83%, compared to prior year but a decrease, due to expected runoff and seasonality, of $131.80 million, or 1.13%, from September 30, 2020.
• Noninterest bearing deposits increased by 48.23%, to $4.37 billion, compared to prior year, representing 37.80% of total deposits. Compared to the linked quarter, noninterest bearing deposits decreased 2.01%.
• In the quarter ended December 31, 2020, annualized return on average common shareholders' equity was 11.36% and annualized return on average tangible common shareholders' equity was 16.48% (non-GAAP). For the full 12 months, return on average common shareholders' equity was 8.52% and return on average tangible common shareholders' equity was 12.76% (non-GAAP).
• Net interest margin of 2.97% and taxable equivalent net interest margin of 2.98% (non-GAAP) compared to the prior year quarter of 3.33% and 3.35%, respectively.
• Effective tax rate of 17.21% compared to 18.17% at December 31, 2019.

“In addition to our financial results, we concluded a multi-year system conversion during the fourth quarter. This system will enable us to improve our digital capabilities and drive revenue growth. We opened the door to over 700 new relationships through our efforts with the Paycheck Protection Program, having onboarded 65% of those new banking relationships throughout 2020. We continue to have strong interest in nonbank acquisitions and completed an insurance agency acquisition in late December,” said J. Morgan Davis, President and Chief Executive Officer.

Quarterly Net Interest Income Compared to the Fourth Quarter of 2019:

• Net interest income was $100.61 million compared to $89.96 million for the quarter ended December 31, 2019. Included in net interest income was PPP interest and fee income of $11.29 million and $0, respectively.
• Taxable equivalent net interest margin was 2.98%, including purchase accounting accretion of 5 basis points and PPP accretion of 5 basis points, compared to 3.35%, including purchase accounting accretion of 9 basis points, for 2019.
• Average loans held for investment, with an average yield of 4.28%, represented 72.32% of average earning assets in the fourth quarter of 2020 compared to an average yield of 4.81%, which represented 77.25% of average earning assets in the fourth quarter of 2019.
• Total cost of deposits decreased to 0.37% from 0.92% at December 31, 2019.
• Average interest-earning assets totaled $13.48 billion at December 31, 2020 compared to $10.72 billion at December 31, 2019, an increase of 25.76%.
• Average interest-bearing liabilities totaled $8.03 billion, an increase of $0.97 billion, or 13.74%, from the prior year.
• Total interest expense decreased 42.04%, to $15.37 million in fourth quarter 2020 compared to $26.52 million in fourth quarter 2019, and decreased $3.40 million, or 18.11%, compared to the linked quarter.

Quarterly Provision for Loan Losses:

• Recorded a provision for loan losses of $1.21 million compared to $3.60 million one year ago and $28.26 million in the linked quarter. A combination of modest loan growth, significantly higher provisions in the two previous quarters, and improvements in the economic forecast were the drivers in the lower fourth quarter 2020 provision.
• Net charge-offs were $0.11 million compared to $0.80 million one year prior. The ratio of net charge-offs (recoveries) to average loans on an annualized basis was 0.00% in fourth quarter 2020, (0.01)% in the linked quarter, and 0.04% in fourth quarter 2019.
• Recorded a provision for credit losses on off-balance sheet commitments of $0.06 million compared to $3.50 million in the linked quarter.
• The allowance for loan losses represented 1.25% of total loans compared to 1.22% at September 30, 2020 and 0.69% at December 31, 2019. Excluding PPP loans, which are fully government guaranteed, the allowance for credit losses (non-GAAP) was 1.37%, at December 31, 2020 and September 30, 2020. The allowance for loan losses was 10.74 times nonperforming loans compared to 7.31 times at September 30, 2020 and 3.34 times at December 31, 2019.

Quarterly Noninterest Income Compared to the Fourth Quarter of 2019:

• Total noninterest income was $71.23 million compared to $49.71 million in 2019, an increase of $21.52 million, or 43.29%. Residential mortgage banking income increased $21.62 million, insurance commissions decreased $1.13 million, and real estate brokerage and property management income increased $2.49 million.
• Residential mortgage banking income was $37.50 million compared to $15.88 million in fourth quarter 2019. Loan volume in the current quarter was $1.69 billion, with purchase activity comprising 59.76%. Loan volume in fourth quarter 2019 was $860.16 million, with purchase activity of 70.32%. Loan volume in the linked quarter was $1.79 billion with purchase activity of 61.21%.
• Total insurance segment revenue decreased $2.89 million, or 14.51%, to $17.00 million in the fourth quarter of 2020. This decrease is attributable to several factors. The prior year quarter included proceeds from life insurance policies of $1.64 million. Contingency income and benefits commissions declined, compared to the prior year quarter. Additionally, there were no commissions on travel insurance in the fourth quarter of 2020, compared to $0.79 million in the prior year quarter, due to the sale of Red Sky Insurance in the third quarter of 2020. We also acquired an insurance agency, which is expected to add approximately $2.4 million in gross revenue for 2021, at the end of December 2020.
• Property management fee revenue increased 35.30%, or $1.48 million, as compared to fourth quarter 2019 due to increases in reservation levels and stronger fourth quarter 2020 advanced reservations.
• Service charges on deposit accounts declined $0.54 million, or 23.96%, compared to the prior year quarter due to fee waivers for members experiencing financial hardship and the waiving of various member service charges during our core conversion.

Quarterly Noninterest Expense Compared to the Fourth Quarter of 2019:

• Total noninterest expense was $105.93 million compared to $92.34 million, an increase of $13.60 million, or 14.72%. This reflects increases of $5.46 million in salary and benefits expense, $1.09 million in software expense, and $0.68 million in occupancy expenses.
• FDIC insurance assessments increased $1.84 million in fourth quarter 2020 compared to 2019 due to the Company's receipt of small bank assessment credits for $1.66 million in the fourth quarter of 2019.
• Increases in salaries and benefits were driven by incentives related to a strong full-year performance and conversion and production related overtime. Software increases were largely driven by core conversion costs, and the costs associated with software needed to facilitate the adoption of CECL. Occupancy expense increases were driven by a full quarter expense related to the November 2019 expansion into the Greensboro, North Carolina market.
• Recorded a loss on early extinguishment of debt of $2.63 million in the fourth quarter of 2020, associated with restructuring of certain borrowings to reduce future interest expense and deploy excess liquidity.   The impact of this nonrecurring expense was a reduction to our EPS of $0.03.

Quarterly Income Taxes Compared to the Fourth Quarter of 2019:

• Income tax expense was $10.41 million compared to $7.79 million one year prior. This represents an effective tax rate of 17.21% compared to 18.17% in the fourth quarter of 2019.

Consolidated Balance Sheet December 31, 2020 Compared to December 31, 2019

• Total assets were $14.63 billion at December 31, 2020, an increase of 22.42%, compared to $11.95 billion at December 31, 2019. This increase was driven primarily by increased liquidity levels and additional loan balances attributable to PPP loans.
• Loans held for investment increased $1.21 billion, or 14.37%, compared to year end 2019, but decreased $0.14 billion compared to the linked quarter.  
• Mortgage loans held for sale increased $121.57 million, or 29.00%, compared to prior year and decreased $128.22 million, or 19.17%, compared to the linked quarter.
• Total deposits increased $2.30 billion, or 24.83%, over December 31, 2019, and decreased $0.13 billion, or 1.13%, compared to the linked quarter.

Investment Securities:

• Total investment securities were $1.42 billion compared to $1.38 billion at September 30, 2020 and $1.52 billion at December 31, 2019. The weighted average duration of the portfolio at December 31, 2020 was 4.10 years. The carrying value of the AFS debt securities portfolio included $58.32 million in net unrealized gains compared to $19.73 million in net unrealized gains at December 31, 2019.

Loans and Asset Quality:

• Total loans held for investment were $9.63 billion at December 31, 2020 compared to $9.77 billion at September 30, 2020 and $8.42 billion at December 31, 2019.
• Nonperforming assets were $16.21 million, or 0.11% of total assets, compared to $32.80 million, or 0.27% of total assets, at December 31, 2019.
• Nonperforming loans were 0.12% of period end loans compared to 0.21% at December 31, 2019.
• Foreclosed property decreased to $4.28 million from $13.84 million at December 31, 2019.
• Expected loss estimates are subject to change based on continuing review of models and assumptions, portfolio performance, changes in forecasted macroeconomic conditions and loan mix which could result in material changes to the reserve in future periods.
• At December 31, 2020 we had $340.81 million in loan modifications made in accordance with section 4013 of the Cares Act, 64% are currently paying interest.

Deposits and Borrowings:

• Total deposits were $11.57 billion compared to $11.70 billion at September 30, 2020 and $9.27 billion at December 31, 2019.
• Total loans to total deposits were 83.20% compared to 83.47% at September 30, 2020 and 90.81% at December 31, 2019.
• Non-interest bearing deposits were 37.80% of total deposits at December 31, 2020 compared to 38.14% at September 30, 2020 and 31.83% at December 31, 2019. Non-interest bearing deposits experienced typical seasonality during the fourth quarter.
• Total borrowings were $0.96 billion compared to $1.04 billion and $0.77 billion at September 30, 2020 and December 31, 2019, respectively.

Capital:

• Common equity tier 1 capital ratio of 11.87%.
• Tier 1 leverage capital ratio of 8.99%.
• Tier 1 risk-based capital ratio of 12.04%.
• Total risk-based capital ratio of 15.42%.
• Book value was $24.31 compared to $23.83 at September 30, 2020 and $22.58 at December 31, 2019.
• Tangible book value (non-GAAP) was $17.46 compared to $17.06 at September 30, 2020 and $15.69 at December 31, 2019.

Annual Meeting of Shareholders:
TowneBank intends to hold its 2021 Annual Meeting of Shareholders at 11:30 a.m. on Wednesday, May 26, 2021 at the Virginia Beach Convention Center, 1000 19th Street in Virginia Beach, Virginia.

About TowneBank:
As one of the top community banks in Virginia and North Carolina, TowneBank operates 42 banking offices serving Chesapeake, Chesterfield County, Glen Allen, Hampton, James City County, Mechanicsville, Newport News, Norfolk, Portsmouth, Richmond, Suffolk, Virginia Beach, Williamsburg, and York County in Virginia, along with Raleigh, Cary, Charlotte, Greensboro, Greenville, Moyock, Grandy, Camden County, Southern Shores, Corolla and Nags Head in North Carolina. TowneBank also offers a full range of financial services through its controlled divisions and subsidiaries that include Towne Investment Group, Towne Wealth Management, Towne Insurance Agency, Towne Benefits, TowneBank Mortgage, TowneBank Commercial Mortgage, Berkshire Hathaway HomeServices Towne Realty, Towne 1031 Exchange, LLC, and Towne Vacations. Local decision-making is a hallmark of its hometown banking strategy that is delivered through the leadership of each group’s President and Board of Directors. With total assets of $14.63 billion as of December 31, 2020, TowneBank is one of the largest banks headquartered in Virginia.

Non-GAAP Financial Measures:

This press release contains financial information determined by methods other than in accordance with GAAP. The Company's management uses these non-GAAP financial measures in their analysis of the Company's performance. These measures typically adjust GAAP performance measures to exclude the effects of the amortization of intangibles and include the tax benefit associated with revenue items that are tax-exempt, as well as adjust income available to common shareholders for certain significant activities or transactions that are infrequent in nature. Management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of the Company’s core businesses. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of GAAP to non-GAAP disclosures are included as tables at the end of this release.

Forward-Looking Statements:

Certain statements contained in this release constitute forward-looking statements within the meaning of U.S. federal securities laws. These forward-looking statements speak only as of the date of this release, are based on current expectations, and involve a number of assumptions. These include statements regarding TowneBank’s future economic performance, financial condition, prospects, growth, strategies and expectations, and objectives of management, and are generally identified by the use of words such as “believe,” “expect,” “intend,” “anticipate,” “estimate,” or “project” or similar expressions. TowneBank intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is including this statement for purposes of these safe harbor provisions. You should not place undue reliance on forward-looking statements, which are subject to assumptions that are subject to change. TowneBank’s ability to predict results, or the actual effect of future plans or strategies, is inherently uncertain. These forward-looking statements are subject to a number of factors and uncertainties that could cause actual results to differ from those indicated or implied in the forward-looking statements and such differences may be material. Factors which could have a material effect on the operations and future prospects of TowneBank include but are not limited to: the impact of the COVID-19 pandemic and the associated efforts to limit its spread, changes in interest rates, general economic and business conditions; legislative/regulatory changes; the monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System; the quality and composition of TowneBank’s loan and securities portfolios; demand for loan products; deposit flows; competition; demand for financial services in TowneBank’s market areas; cybersecurity threats or attacks, the implementation of new technologies, and the ability to develop and maintain reliable electronic systems; changes in the securities markets; changes in accounting principles, policies and guidelines; and other risk factors detailed from time to time in filings made by TowneBank with the Federal Deposit Insurance Corporation. TowneBank undertakes no obligation to update or clarify these forward-looking statements, whether as a result of new information, future events or otherwise.

Media contact:
G. Robert Aston, Jr., Executive Chairman, 757-638-6780
J. Morgan Davis, President and Chief Executive Officer, 757-673-1673

Investor contact:
William B. Littreal, Chief Financial Officer, 757-638-6813

TOWNEBANK
Selected Financial Highlights (unaudited)
(dollars in thousands, except per share data)
		Three Months Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
		2020				2020				2020				2020				2019
Income and Performance Ratios:
	Total Revenue	$	171,848			$	192,135			$	162,656			$	137,696			$	139,671
	Net income	53,891				50,715				37,222				27,605				35,948
	Net income available to common shareholders	50,082				34,464				34,605				26,384				35,075
	Pre-provision, pre-tax, net revenues (non-GAAP)	62,107				73,903				69,014				39,587				46,462
	Net income per common share - diluted	0.69				0.48				0.48				0.36				0.49
	Book value per common share	24.31				23.83				23.50				22.77				22.58
	Book value per share - tangible (non-GAAP)	17.46				17.06				16.68				15.91				15.69
	Return on average assets	1.35		%		0.89		%		0.97		%		0.88		%		1.16		%
	Return on average assets - tangible (non-GAAP)	1.46		%		0.97		%		1.07		%		1.00		%		1.30		%
	Return on average equity	11.26		%		7.85		%		8.18		%		6.37		%		8.44		%
	Return on average equity - tangible (non-GAAP)	16.28		%		11.66		%		12.32		%		9.91		%		12.97		%
	Return on average common equity	11.36		%		7.91		%		8.24		%		6.42		%		8.51		%
	Return on average common equity - tangible (non-GAAP)	16.48		%		11.79		%		12.44		%		10.01		%		13.12		%
	Noninterest income as a percentage of total revenue	41.45		%		49.64		%		42.66		%		35.00		%		35.59		%
Regulatory Capital Ratios (1):
	Common equity tier 1	11.87		%		11.75		%		11.54		%		11.23		%		11.46		%
	Tier 1	12.04		%		11.91		%		11.67		%		11.35		%		11.49		%
	Total	15.42		%		15.35		%		14.91		%		14.40		%		14.58		%
	Tier 1 leverage ratio	8.99		%		8.89		%		9.05		%		10.11		%		9.95		%
Asset Quality:
	Allowance for loan losses to nonperforming loans	10.74x				7.31x				5.34x				3.85x				3.34x
	Allowance for loan losses to period end loans	1.25		%		1.22		%		0.92		%		0.73		%		0.69		%
	Allowance for loan losses to period end loans excluding PPP loans (non-GAAP)	1.37		%		1.37		%		1.04		%		0.73		%		0.69		%
	Nonperforming loans to period end loans	0.12		%		0.17		%		0.17		%		0.19		%		0.21		%
	Nonperforming assets to period end assets	0.11		%		0.19		%		0.19		%		0.24		%		0.27		%
	Net charge-offs (recoveries) to average loans (annualized)	—		%		(0.01		)%		—		%		0.03		%		0.04		%
	Nonperforming loans	$	11,188			$	16,295			$	16,935			$	16,700			$	17,437
	Former bank premises	750				750				—				—				1,521
	Foreclosed property	4,276				11,695				12,315				13,053				13,839
	Total nonperforming assets	$	16,214			$	28,740			$	29,250			$	29,753			$	32,797
	Loans past due 90 days and still accruing interest	$	528			$	19			$	464			$	91			$	309
	Allowance for loan losses	120,157				119,058				90,467				64,372				58,234
Mortgage Banking:
	Loans originated, mortgage	$	1,257,963			$	1,292,801			$	1,116,782			$	718,681			$	628,279
	Loans originated, joint venture	429,848				498,100				357,815				204,522				231,879
	Total loans originated	$	1,687,811			$	1,790,901			$	1,474,597			$	923,203			$	860,158
	Number of loans originated	5,481				5,817				4,818				3,025				2,984
	Number of originators	228				224				216				223				217
	Purchase %	59.76		%		61.21		%		51.26		%		61.31		%		70.32		%
	Loans sold	$	1,845,926			$	1,833,590			$	1,398,649			$	809,834			$	879,910
	Rate lock asset	$	11,781			$	10,480			$	7,202			$	3,691			$	1,525
	Gross realized gain on sales and fees as a % of loans originated	4.02		%		3.65		%		3.17		%		1.80		%		3.38		%
Other Ratios:
	Net interest margin	2.97		%		2.70		%		2.85		%		3.35		%		3.33		%
	Net interest margin-fully tax equivalent (non-GAAP)	2.98		%		2.72		%		2.87		%		3.37		%		3.35		%
	Average earning assets/total average assets	91.59		%		92.09		%		91.33		%		89.15		%		89.57		%
	Average loans/average deposits	83.42		%		86.29		%		91.81		%		92.99		%		88.41		%
	Average noninterest deposits/total average deposits	39.61		%		37.76		%		36.52		%		32.21		%		32.14		%
	Period end equity/period end total assets	12.20		%		11.82		%		11.05		%		13.19		%		13.84		%
	Efficiency ratio (non-GAAP)	60.02		%		57.36		%		55.17		%		70.79		%		63.96		%
	(1) Current reporting period regulatory capital ratios are preliminary.

TOWNEBANK
Selected Data (unaudited)
(dollars in thousands)
Investment Securities													% Change
	Q4				Q4				Q3				Q4 20 vs.			Q4 20 vs.
Available-for-sale securities, at fair value	2020				2019				2020				Q4 19			Q3 20
U.S. agency securities	$	184,657			$	129,038			$	167,275			43.10	%		10.39	%
U.S. Treasury notes	1,000				1,000				1,006				—	%		(0.60	)%
Municipal securities	353,651				223,106				292,792				58.51	%		20.79	%
Trust preferred and other corporate securities	31,499				53,367				24,236				(40.98	)%		29.97	%
Mortgage-backed securities issued by GSE and GNMA	797,765				1,034,797				825,378				(22.91	)%		(3.35	)%
Allowance for credit losses	(348		)		—				(4		)		n/m			n/m
Total	$	1,368,224			$	1,441,308			$	1,310,683			(5.07	)%		4.39	%
Gross unrealized gains (losses) reflected in financial statements
Total gross unrealized gains	$	60,025			$	23,950			$	62,206			150.63	%		(3.51	)%
Total gross unrealized losses	(1,703		)		(4,215		)		(773		)		(59.60	)%		120.31	%
Net unrealized gain (loss) on AFS securities	$	58,322			$	19,735			$	61,433			195.53	%		(5.06	)%
Held-to-maturity securities, at amortized cost
Municipal securities	$	5,012			$	29,167			$	2,333			(82.82	)%		114.83	%
Trust preferred corporate securities	2,321				2,369				4,992				(2.03	)%		(53.51	)%
Mortgage-backed securities issued by GSE and GNMA	9,179				12,152				9,806				(24.47	)%		(6.39	)%
Allowance for credit losses	(97		)		—				(90		)		n/a			7.78	%
Total	$	16,415			$	43,688			$	17,041			(62.43	)%		(3.67	)%
Gross unrealized gains (losses) not reflected in financial statements
Total gross unrealized gains	$	1,957			$	1,520			$	1,971			28.75	%		(0.71	)%
Total gross unrealized losses	—				(37		)		—				(100.00	)%		n/m
Net unrealized gain (loss) on HTM securities	$	1,957			$	1,483			$	1,971			31.96	%		(0.71	)%
Loans Held For Investment (1)													% Change
	Q4				Q4				Q3				Q4 20 vs.			Q4 20 vs.
	2020				2019				2020				Q4 19			Q3 20
Real estate - construction and development	$	1,199,772			$	1,120,533			$	1,143,202			7.07	%		4.95	%
Commercial real estate - investment related properties	2,335,235				2,183,232				2,338,532				6.96	%		(0.14	)%
Commercial real estate - owner occupied	1,380,516				1,329,144				1,378,443				3.87	%		0.15	%
Real estate - multifamily	295,488				243,041				289,270				21.58	%		2.15	%
Real estate - residential 1-4 family	1,629,105				1,653,084				1,660,535				(1.45	)%		(1.89	)%
Commercial and industrial business	2,370,051				1,574,275				2,499,801				50.55	%		(5.19	)%
Consumer and other loans	418,901				315,979				460,787				32.57	%		(9.09	)%
Total	$	9,629,068			$	8,419,288			$	9,770,570			14.37	%		(1.45	)%
(1) PPP loans totaling $0.86 billion and $1.10 billion, primarily in C&I, are included in Q4 2020 and Q3 2020, respectively.
Deposits													% Change
	Q4				Q4				Q3				Q4 20 vs.			Q4 20 vs.
	2020				2019				2020				Q4 19			Q3 20
Noninterest-bearing demand	$	4,374,566			$	2,951,225			$	4,464,178			48.23	%		(2.01	)%
Interest-bearing:
Demand and money market accounts	4,819,604				3,586,364				4,642,482				34.39	%		3.82	%
Savings	330,091				276,205				312,444				19.51	%		5.65	%
Certificates of deposits	2,048,905				2,457,123				2,285,859				(16.61	)%		(10.37	)%
Total	$	11,573,166			$	9,270,917			$	11,704,963			24.83	%		(1.13	)%

TOWNEBANK
Average Balances, Yields and Rate Paid (unaudited)
(dollars in thousands)
	Three Months Ended											Three Months Ended											Three Months Ended
	December 31, 2020											September 30, 2020											December 31, 2019
					Interest				Average							Interest				Average							Interest				Average
	Average				Income/				Yield/			Average				Income/				Yield/			Average				Income/				Yield/
	Balance				Expense				Rate			Balance				Expense				Rate			Balance				Expense				Rate
Assets:
Loans (net of unearned income and deferred costs), excluding nonaccrual loans (1)	$	9,752,150			$	104,799			4.28	%		$	9,752,746			$	103,401			4.22	%		$	8,283,388			$	100,504			4.81	%
Taxable investment securities	1,250,375				6,878				2.20	%		1,206,679				6,726				2.23	%		1,331,175				9,179				2.76	%
Tax-exempt investment securities	139,572				520				1.49	%		144,999				779				2.15	%		118,298				908				3.07	%
Total securities	1,389,947				7,398				2.13	%		1,351,678				7,505				2.22	%		1,449,473				10,087				2.78	%
Interest-bearing deposits	1,754,365				435				0.10	%		2,523,644				632				0.10	%		519,737				2,067				1.58	%
Loans held for sale	587,517				3,867				2.63	%		634,309				4,587				2.89	%		469,725				4,413				3.76	%
Total earning assets	13,483,979				116,499				3.44	%		14,262,377				116,125				3.24	%		10,722,323				117,071				4.33	%
Less: allowance for loan losses	(121,402		)									(95,594		)									(56,766		)
Total nonearning assets	1,359,808											1,320,369											1,305,036
Total assets	$	14,722,385										$	15,487,152										$	11,970,593
Liabilities and Equity:
Interest-bearing deposits
Demand and money market	$	4,582,588			$	2,633			0.23	%		$	4,311,920			$	2,663			0.25	%		$	3,533,912			$	6,421			0.72	%
Savings	317,561				552				0.69	%		304,753				555				0.72	%		278,910				638				0.91	%
Certificates of deposit	2,159,573				7,578				1.40	%		2,417,772				9,747				1.60	%		2,544,845				14,685				2.29	%
Total interest-bearing deposits	7,059,722				10,763				0.61	%		7,034,445				12,965				0.73	%		6,357,667				21,744				1.36	%
Borrowings	722,291				1,645				0.89	%		1,931,120				2,841				0.58	%		454,621				1,810				1.56	%
Subordinated debt, net	248,965				2,962				4.76	%		248,807				2,962				4.76	%		248,361				2,962				4.77	%
Total interest-bearing liabilities	8,030,978				15,370				0.76	%		9,214,372				18,768				0.81	%		7,060,649				26,516				1.49	%
Demand deposits	4,630,665											4,268,443											3,011,688
Other noninterest-bearing liabilities	291,836											257,304											250,327
Total liabilities	12,953,479											13,740,119											10,322,664
Shareholders’ equity	1,768,906											1,747,033											1,647,929
Total liabilities and equity	$	14,722,385										$	15,487,152										$	11,970,593
Net interest income (tax-equivalent basis)					$	101,129										$	97,357										$	90,555
Reconcilement of Non-GAAP Financial Measures
Tax-equivalent basis adjustment					(515		)									(598		)									(596		)
Net interest income (GAAP)					$	100,614										$	96,759										$	89,959
Interest rate spread (2)(3)									2.68	%										2.43	%										2.84	%
Interest expense as a percent of average earning assets									0.45	%										0.52	%										0.98	%
Net interest margin (tax equivalent basis) (3)(4)									2.98	%										2.72	%										3.35	%
Total cost of deposits									0.37	%										0.46	%										0.92	%

(1) December 31, and September 30, 2020 balances include average PPP balances of $1.04 billion and $1.10 billion, and related interest and fee income of $11.29 million and $9.82 million, respectively. There were no PPP balances at December 31, 2019.
(2) Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities. Fully tax equivalent.
(3) Net interest margin is net interest income expressed as a percentage of average earning assets. Fully tax equivalent.
(4) Non-GAAP.

TOWNEBANK
Average Balances, Yields and Rate Paid (unaudited)
(dollars in thousands)
	Year Ended December 31,
	2020											2019											2018
					Interest				Average							Interest				Average							Interest				Average
	Average				Income/				Yield/			Average				Income/				Yield/			Average				Income/				Yield/
	Balance				Expense				Rate			Balance				Expense				Rate			Balance				Expense				Rate
Assets:
Loans (net of unearned income and deferred costs), excluding nonaccrual loans (1)	$	9,420,584			$	411,421			4.37	%		$	8,122,210			$	405,511			4.99	%		$	7,567,570			$	373,057			4.93	%
Taxable investment securities	1,252,926				30,181				2.41	%		1,202,107				34,141				2.84	%		1,004,080				24,729				2.46	%
Tax-exempt investment securities	140,078				2,997				2.14	%		102,731				3,426				3.34	%		79,720				2,920				3.66	%
Total securities	1,393,004				33,178				2.38	%		1,304,838				37,567				2.88	%		1,083,800				27,649				2.55	%
Interest-bearing deposits	689,715				2,603				0.38	%		665,903				13,825				2.08	%		560,368				10,229				1.83	%
Mortgage loans held for sale	505,502				15,252				3.02	%		335,588				13,379				3.99	%		293,017				13,124				4.48	%
Total earning assets	12,008,805				462,454				3.85	%		10,428,539				470,282				4.51	%		9,504,755				424,059				4.46	%
Less: allowance for loan losses	(85,570		)									(54,476		)									(48,737		)
Total nonearning assets	2,248,971											1,264,363											1,143,167
Total assets	$	14,172,206										$	11,638,426										$	10,599,185
Liabilities and Equity:
Interest-bearing deposits
Demand and money market	$	4,070,562			$	13,105			0.32	%		$	3,351,135			$	26,909			0.80	%		$	2,951,038			$	16,458			0.56	%
Savings	297,441				2,254				0.76	%		280,894				3,296				1.17	%		302,435				3,824				1.26	%
Certificates of deposit	2,378,281				42,502				1.79	%		2,478,663				56,050				2.26	%		2,060,587				32,859				1.59	%
Total interest-bearing deposits	6,746,284				57,861				0.86	%		6,110,692				86,255				1.41	%		5,314,060				53,141				1.00	%
Borrowings	1,269,064				10,306				0.80	%		609,142				11,368				1.84	%		897,574				15,542				1.71	%
Subordinated debt, net	248,736				11,847				4.76	%		248,139				11,847				4.77	%		251,097				12,067				4.81	%
Total interest-bearing liabilities	8,264,084				80,014				0.97	%		6,967,973				109,470				1.57	%		6,462,731				80,750				1.25	%
Demand deposits	3,924,797											2,844,178											2,517,173
Other noninterest-bearing liabilities	262,266											228,994											164,486
Total liabilities	12,451,147											10,041,145											9,144,390
Shareholders' equity	1,721,059											1,597,281											1,454,795
Total liabilities and equity	$	14,172,206										$	11,638,426										$	10,599,185
Net interest income (tax-equivalent basis)					$	382,440										$	360,812										$	343,309
Reconcilement of Non-GAAP Financial Measures
Tax-equivalent basis adjustment					(2,296		)									(2,457		)									(2,236		)
Net interest income (GAAP)					$	380,144										$	358,355										$	341,073
Interest rate spread (2)(4)									2.88	%										2.94	%										3.21	%
Interest expense as a percent of average earning assets									0.67	%										1.05	%										0.85	%
Net interest margin (tax-equivalent basis) (3)(4)									3.18	%										3.46	%										3.61	%
Total cost of deposits									0.54	%										0.96	%										0.68	%

(1) December 31, 2020 balances include average PPP balances of $0.74 billion and related interest and fee income of $26.94 million. There were no PPP balances at December 31, 2019 or 2018.
(2) Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities. Fully tax equivalent.
(3) Net interest margin is net interest income expressed as a percentage of average earning assets. Fully tax equivalent.
(4) Non-GAAP.

TOWNEBANK
Consolidated Balance Sheets
(dollars in thousands, except per share data)
	2020				2019
	(unaudited)				(audited)
ASSETS
Cash and due from banks	$	41,514			$	97,593
Interest-bearing deposits at FRB - Richmond	1,795,241				322,505
Interest-bearing deposits in financial institutions	27,532				22,518
Total Cash and Cash Equivalents	1,864,287				442,616
Securities available for sale, at fair value (amortized cost $1,310,250, allowance for credit losses of $348)(1)	1,368,224				1,441,308
Securities held to maturity, at amortized cost (fair value $18,469)(1)	16,512				43,688
Less: allowance for credit losses	(97		)		—
Securities held to maturity, net of allowance for credit losses	16,415				43,688
Other equity securities	6,492				6,462
FHLB stock	30,135				30,094
Total Securities	1,421,266				1,521,552
Mortgage loans held for sale	540,798				419,233
Loans, net of unearned income and deferred costs	9,629,068				8,419,288
Less: allowance for credit losses	(120,157		)		(58,234		)
Net Loans	9,508,911				8,361,054
Premises and equipment, net	260,242				231,806
Goodwill	452,328				446,816
Other intangible assets, net	45,533				54,399
BOLI	246,109				243,062
Other assets	286,970				227,125
TOTAL ASSETS	$	14,626,444			$	11,947,663
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand	$	4,374,566			$	2,951,225
Interest-bearing:
Demand and money market accounts	4,819,604				3,586,364
Savings	330,091				276,205
Certificates of deposit	2,048,905				2,457,123
Total Deposits	11,573,166				9,270,917
Advances from the FHLB	456,038				471,687
Subordinated debt, net	249,055				248,458
FRB PPP Lending Facility	182,852				—
Repurchase agreements and other borrowings	67,786				52,391
Total Borrowings	955,731				772,536
Other liabilities	313,719				250,516
TOTAL LIABILITIES	12,842,616				10,293,969
Preferred stock
Authorized and unissued shares - 2,000,000	—				—
Common stock, $1.667 par: Authorized shares - 150,000,000
Issued and outstanding shares 72,667,541 in 2020 and 72,649,682 in 2019	121,132				121,107
Capital surplus	1,046,642				1,041,160
Retained earnings	557,889				467,186
Common stock issued to deferred compensation trust, at cost
873,486 shares in 2020 and 818,578 shares in 2019	(16,969		)		(15,555		)
Deferred compensation trust	16,969				15,555
Accumulated other comprehensive income (loss)	41,184				11,302
TOTAL SHAREHOLDERS’ EQUITY	1,766,847				1,640,755
Noncontrolling interest	16,981				12,939
TOTAL EQUITY	1,783,828				1,653,694
TOTAL LIABILITIES AND EQUITY	$	14,626,444			$	11,947,663

(1) For 2020, disclosures are presented in compliance with ASC 326.

TOWNEBANK
Consolidated Statements of Income
(dollars in thousands, except per share data)
	Three Months Ended								Twelve Months Ended
	December 31,								December 31,
	2020				2019				2020				2019
	(unaudited)				(unaudited)				(unaudited)				(audited)
INTEREST INCOME:
Loans, including fees	$	104,182			$	100,059			$	409,252			$	403,675
Investment securities	7,499				9,936				33,052				36,946
Interest-bearing deposits in financial institutions and federal funds sold	435				2,067				2,603				13,825
Mortgage loans held for sale	3,867				4,413				15,252				13,379
Total interest income	115,983				116,475				460,159				467,825
INTEREST EXPENSE:
Deposits	10,762				21,744				57,862				86,255
Advances from the FHLB	1,404				1,730				8,393				11,018
Subordinated debt, net	2,962				2,962				11,847				11,847
Repurchase agreements and other borrowings	241				80				1,913				350
Total interest expense	15,369				26,516				80,015				109,470
Net interest income	100,614				89,959				380,144				358,355
PROVISION FOR CREDIT LOSSES	1,617				3,601				67,177				9,371
Net interest income after provision for credit losses	98,997				86,358				312,967				348,984
NONINTEREST INCOME:
Residential mortgage banking income, net	37,504				15,884				112,166				66,812
Insurance commissions and other title fees and income, net	13,868				15,001				65,840				64,478
Real estate brokerage and property management income, net	9,229				6,737				38,249				34,292
Service charges on deposit accounts	1,707				2,245				8,021				10,544
Credit card merchant fees, net	1,377				1,389				5,170				4,746
BOLI	1,990				3,865				8,285				9,215
Other income	5,559				4,591				36,826				16,346
Net gain/(loss) on investment securities	—				—				9,634				(845		)
Total noninterest income	71,234				49,712				284,191				205,588
NONINTEREST EXPENSE:
Salaries and employee benefits	61,475				56,013				235,676				218,920
Occupancy expense	8,193				7,516				31,317				31,381
Furniture and equipment	3,462				3,598				13,914				14,351
Amortization - intangibles	2,797				3,005				11,498				12,370
Software expense	4,066				2,976				14,622				11,717
Data processing	2,363				2,510				10,985				11,825
Professional fees	2,591				2,990				11,268				12,943
Advertising and marketing	2,204				2,839				9,643				12,279
Other expenses	18,781				10,889				56,902				52,516
Total noninterest expense	105,932				92,336				395,825				378,302
Income before income tax expense and noncontrolling interest	64,299				43,734				201,333				176,270
Provision for income tax expense	10,408				7,786				31,900				32,596
Net income	$	53,891			$	35,948			$	169,433			$	143,674
Net income attributable to noncontrolling interest	(3,809		)		(873		)		(23,898		)		(4,891		)
Net income attributable to TowneBank	$	50,082			$	35,075			$	145,535			$	138,783
Per common share information
Basic earnings	$	0.69			$	0.49			$	2.01			$	1.93
Diluted earnings	$	0.69			$	0.49			$	2.01			$	1.92
Cash dividends declared	$	0.18			$	0.18			$	0.72			$	0.70

TOWNEBANK
Consolidated Balance Sheets - Five Quarter Trend
(dollars in thousands, except per share data)
	December 31,				September 30,				June 30,				March 31,				December 31,
	2020				2020				2020				2020				2019
	(unaudited)				(unaudited)				(unaudited)				(unaudited)				(audited)
ASSETS
Cash and due from banks	$	41,514			$	114,604			$	115,724			$	108,929			$	97,593
Interest-bearing deposits at FRB - Richmond	1,795,241				1,670,186				2,511,152				753,643				322,505
Interest-bearing deposits in financial institutions	27,532				24,890				24,374				23,564				22,518
Total Cash and Cash Equivalents	1,864,287				1,809,680				2,651,250				886,136				442,616
Securities available for sale, at fair value	1,368,224				1,310,683				1,266,624				1,248,420				1,441,308
Securities held to maturity	16,512				17,131				41,595				42,431				43,688
Less: allowance for credit losses	(97		)		(90		)		(121		)		(133		)		—
Securities held to maturity, net of allowance for credit losses	16,415				17,041				41,474				42,298				43,688
Other equity securities	6,492				6,497				6,497				6,462				6,462
Federal Home Loan Bank stock	30,135				41,829				49,277				52,042				30,094
Total Securities	1,421,266				1,376,050				1,363,872				1,349,222				1,521,552
Mortgage loans held for sale	540,798				669,020				610,369				453,143				419,233
Loans, net of unearned income and deferred costs	9,629,068				9,770,570				9,801,889				8,784,195				8,419,288
Less: allowance for credit losses	(120,157		)		(119,058		)		(90,467		)		(64,372		)		(58,234		)
Net Loans	9,508,911				9,651,512				9,711,422				8,719,823				8,361,054
Premises and equipment, net	260,242				256,909				257,533				236,735				231,806
Goodwill	452,328				446,725				446,725				446,725				446,816
Other intangible assets, net	45,533				45,781				48,632				51,448				54,399
BOLI	246,109				244,103				242,493				240,924				243,062
Other assets	286,970				295,637				247,962				239,670				227,125
TOTAL ASSETS	$	14,626,444			$	14,795,417			$	15,580,258			$	12,623,826			$	11,947,663
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand	$	4,374,566			$	4,464,178			$	4,226,208			$	3,060,515			$	2,951,225
Interest-bearing:
Demand and money market accounts	4,819,604				4,642,482				4,223,391				3,573,926				3,586,364
Savings	330,091				312,444				298,673				280,807				276,205
Certificates of deposit	2,048,905				2,285,859				2,516,666				2,392,744				2,457,123
Total Deposits	11,573,166				11,704,963				11,264,938				9,307,992				9,270,917
Advances from the FHLB	456,038				731,202				906,365				971,527				471,687
Subordinated debt, net	249,055				248,906				248,756				248,607				248,458
FRB PPP Lending Facility	182,852				—				1,111,429				—				—
Repurchase agreements and other borrowings	67,786				58,061				60,913				171,762				52,391
Total Borrowings	955,731				1,038,169				2,327,463				1,391,896				772,536
Other liabilities	313,719				303,582				266,314				258,306				250,516
TOTAL LIABILITIES	12,842,616				13,046,714				13,858,715				10,958,194				10,293,969
Preferred stock
Authorized shares - 2,000,000	—				—				—				—				—
Common stock, $1.667 par value	121,132				121,115				121,101				121,057				121,107
Capital surplus	1,046,642				1,045,170				1,043,774				1,041,870				1,041,160
Retained earnings	557,889				520,888				499,502				477,972				467,186
Common stock issued to deferred compensation trust, at cost	(16,969		)		(16,951		)		(16,776		)		(15,562		)		(15,555		)
Deferred compensation trust	16,969				16,951				16,776				15,562				15,555
Accumulated other comprehensive income (loss)	41,184				44,569				43,218				12,301				11,302
TOTAL SHAREHOLDERS’ EQUITY	1,766,847				1,731,742				1,707,595				1,653,200				1,640,755
Noncontrolling interest	16,981				16,961				13,948				12,432				12,939
TOTAL EQUITY	1,783,828				1,748,703				1,721,543				1,665,632				1,653,694
TOTAL LIABILITIES AND EQUITY	$	14,626,444			$	14,795,417			$	15,580,258			$	12,623,826			$	11,947,663

TOWNEBANK
Consolidated Statements of Income - Five Quarter Trend (unaudited)
(dollars in thousands, except per share data)
	Three Months Ended
	December 31,				September 30,				June 30,				March 31,				December 31,
	2020				2020				2020				2020				2019
INTEREST INCOME:
Loans, including fees	$	104,182			$	102,869			$	102,139			$	100,062			$	100,059
Investment securities	7,499				7,440				8,163				9,949				9,936
Interest-bearing deposits in financial institutions and federal funds sold	435				632				433				1,102				2,067
Mortgage loans held for sale	3,867				4,587				3,811				2,988				4,413
Total interest income	115,983				115,528				114,546				114,101				116,475
INTEREST EXPENSE:
Deposits	10,762				12,966				15,072				19,062				21,744
Advances from the FHLB	1,404				1,901				2,595				2,492				1,730
Subordinated debt	2,962				2,962				2,962				2,962				2,962
Repurchase agreements and other borrowings	241				940				643				89				80
Total interest expense	15,369				18,769				21,272				24,605				26,516
Net interest income	100,614				96,759				93,274				89,496				89,959
PROVISION FOR CREDIT LOSSES	1,617				31,598				26,945				7,016				3,601
Net interest income after provision for credit losses	98,997				65,161				66,329				82,480				86,358
NONINTEREST INCOME:
Residential mortgage banking income, net	37,504				37,531				29,715				7,416				15,884
Insurance commissions and other title fees and income, net	13,868				17,468				17,612				16,893				15,001
Real estate brokerage and property management income, net	9,229				11,301				10,781				6,938				6,737
Service charges on deposit accounts	1,707				1,986				1,888				2,440				2,245
Credit card merchant fees, net	1,377				1,506				1,109				1,179				1,389
BOLI	1,990				1,605				1,584				3,105				3,865
Other income	5,559				22,278				3,763				5,227				4,591
Net gain/(loss) on investment securities	—				1,701				2,930				5,002				—
Total noninterest income	71,234				95,376				69,382				48,200				49,712
NONINTEREST EXPENSE:
Salaries and employee benefits	61,475				61,408				56,926				55,867				56,013
Occupancy expense	8,193				8,396				7,227				7,502				7,516
Furniture and equipment	3,462				3,247				3,564				3,640				3,598
Amortization - intangibles	2,797				2,851				2,901				2,950				3,005
Software expense	4,066				3,572				3,492				3,492				2,976
Data processing	2,363				3,113				2,718				2,791				2,510
Professional fees	2,591				2,637				2,972				3,067				2,990
Advertising and marketing	2,204				1,870				1,986				3,584				2,839
Other expenses	18,781				14,887				9,239				13,995				10,889
Total noninterest expense	105,932				101,981				91,025				96,888				92,336
Income before income tax expense and noncontrolling interest	64,299				58,556				44,686				33,792				43,734
Provision for income tax expense	10,408				7,841				7,464				6,187				7,786
Net income	53,891				50,715				37,222				27,605				35,948
Net income attributable to noncontrolling interest	(3,809		)		(16,251		)		(2,617		)		(1,221		)		(873		)
Net income attributable to TowneBank	$	50,082			$	34,464			$	34,605			$	26,384			$	35,075
Per common share information
Basic earnings	$	0.69			$	0.48			$	0.48			$	0.37			$	0.49
Diluted earnings (1)	$	0.69			$	0.48			$	0.48			$	0.36			$	0.49
Basic weighted average shares outstanding	72,357,177				72,307,961				72,280,555				72,206,228				72,122,476
Diluted weighted average shares outstanding	72,455,096				72,344,284				72,317,988				72,299,721				72,302,414
Cash dividends declared	$	0.18			$	0.18			$	0.18			$	0.18			$	0.18

(1) The quarterly diluted EPS do not sum to the total year diluted EPS due to rounding.

TOWNEBANK Banking Segment Financial Information (dollars in thousands)
	Three Months Ended												Year Ended								Increase/(Decrease)
	December 31,								September 30,				December 31,								2020 over 2019
		2020				2019				2020				2020				2019				Amount			Percent
Revenue
Net interest income	$	97,412			$	87,637			$	92,869			$	367,353			$	351,969			$	15,384			4.37	%
Noninterest income
Service charges on deposit accounts	1,707				2,245				1,986				8,021				10,544				(2,523		)		(23.93	)%
Credit card merchant fees	1,377				1,389				1,506				5,169				4,746				423				8.91	%
Other income	5,983				5,271				4,876				21,809				19,620				2,189				11.16	%
Subtotal	9,067				8,905				8,368				34,999				34,910				89				0.25	%
Gain (loss) on investment securities	—				—				1,701				9,634				(845		)		10,479				n/m
Total noninterest income	9,067				8,905				10,069				44,633				34,065				10,568				31.02	%
Total revenue	106,479				96,542				102,938				411,986				386,034				25,952				6.72	%
Provision for credit losses	1,628				3,601				31,070				65,799				9,371				56,428				602.16	%
Expenses
Salaries and employee benefits	37,358				34,183				36,535				142,328				131,149				11,179				8.52	%
Occupancy expense	5,681				4,959				5,829				21,237				20,419				818				4.01	%
Furniture and equipment	2,625				2,577				2,424				10,425				10,240				185				1.81	%
Amortization of intangible assets	1,013				1,214				1,063				4,354				5,160				(806		)		(15.62	)%
Other expenses	19,892				14,078				15,793				65,107				66,295				(1,188		)		(1.79	)%
Total expenses	66,569				57,011				61,644				243,451				233,263				10,188				4.37	%
Income before income tax, corporate allocation and noncontrolling interest	38,282				35,930				10,224				102,736				143,400				(40,664		)		(28.36	)%
Corporate allocation	643				627				595				2,534				2,011				523				26.01	%
Income before income tax provision and noncontrolling interest	38,925				36,557				10,819				105,270				145,411				(40,141		)		(27.61	)%
Provision for income tax expense	5,163				6,368				474				14,467				25,706				(11,239		)		(43.72	)%
Net income	33,762				30,189				10,345				90,803				119,705				(28,902		)		(24.14	)%
Noncontrolling interest	4				(1		)		(2		)		6				2				4				n/m
Net income attributable to TowneBank	$	33,766			$	30,188			$	10,343			$	90,809			$	119,707			$	(28,898	)		(24.14	)%
Efficiency ratio (non-GAAP)	61.57		%		57.80		%		59.84		%		59.42		%		58.96		%

TOWNEBANK
Realty Segment Financial Information
(dollars in thousands)
	Three Months Ended												Year Ended								Increase/(Decrease)
	December 31,								September 30,				December 31,								2020 over 2019
	2020				2019				2020				2020				2019				Amount				Percent
Revenue
Residential mortgage brokerage income, net	$	38,040			$	16,617			$	38,074			$	114,589			$	68,443			$	46,146			67.42	%
Real estate brokerage income, net	3,564				2,550				3,688				11,776				9,865				1,911				19.37	%
Title insurance and settlement fees	669				531				654				2,397				2,111				286				13.55	%
Property management fees, net	5,665				4,187				7,613				26,473				24,427				2,046				8.38	%
Income from unconsolidated subsidiary	398				75				451				1,336				516				820				158.91	%
Net interest and other income	3,627				2,787				4,101				13,889				7,724				6,165				79.82	%
Total revenue	51,963				26,747				54,581				170,460				113,086				57,374				50.73	%
Provision for (recovery of) credit losses	(11		)		—				528				1,378				—				$	1,378			n/m
Expenses
Salaries and employee benefits	$	16,168			$	12,941			$	15,744			$	58,263			$	52,619			$	5,644			10.73	%
Occupancy expense	1,869				1,857				1,906				7,465				8,285				(820		)		(9.90	)%
Furniture and equipment	614				773				620				2,622				3,099				(477		)		(15.39	)%
Amortization of intangible assets	658				655				658				2,630				2,741				(111		)		(4.05	)%
Other expenses	8,779				7,030				9,226				33,143				27,982				5,161				18.44	%
Total expenses	28,088				23,256				28,154				104,123				94,726				9,397				9.92	%
Income (loss) before income tax, corporate allocation, and noncontrolling interest	23,886				3,491				25,899				64,959				18,360				46,599				253.81	%
Corporate allocation	(403		)		(362		)		(356		)		(1,522		)		(1,163		)		(359		)		30.87	%
Income (loss) before income tax provision and noncontrolling interest	23,483				3,129				25,543				63,437				17,197				46,240				268.88	%
Provision for income tax	4,421				416				4,780				12,035				3,707				8,328				224.66	%
Net income (loss)	19,062				2,713				20,763				51,402				13,490				37,912				281.04	%
Noncontrolling interest	(3,813		)		(715		)		(4,790		)		(11,809		)		(3,711		)		(8,098		)		218.22	%
Net income (loss) attributable to TowneBank	$	15,249			$	1,998			$	15,973			$	39,593			$	9,779			$	29,814			304.88	%
Efficiency ratio (non-GAAP)	52.79		%		84.50		%		50.38		%		59.54		%		81.34		%

TOWNEBANK
Insurance Segment Financial Information
(dollars in thousands)
	Three Months Ended												Year Ended								Increase/(Decrease)
	December 31,								September 30,				December 31,								2020 over 2019
	2020				2019				2020				2020				2019				Amount				Percent
Commission and fee income
Property and casualty	$	11,942			$	11,957			$	14,072			$	52,726			$	50,380			$	2,346			4.66	%
Employee benefits	3,725				3,758				3,825				15,259				14,726				533				3.62	%
Travel insurance (1)	—				794				1,399				3,526				4,085				(559		)		(13.68	)%
Specialized benefit services	175				173				165				664				672				(8		)		(1.19	)%
Total commissions and fees	15,842				16,682				19,461				72,175				69,863				2,312				3.31	%
Contingency and bonus revenue	1,087				1,396				1,112				6,230				6,307				(77		)		(1.22	)%
Other income (1)	69				1,805				17,697				17,976				2,032				15,944				784.65	%
Total revenue	16,998				19,883				38,270				96,381				78,202				18,179				23.25	%
Employee commission expense	3,592				3,501				3,654				14,492				13,379				1,113				8.32	%
Revenue, net of commission expense	13,406				16,382				34,616				81,889				64,823				17,066				26.33	%
Expenses
Salaries and employee benefits	$	7,949			$	8,889			$	9,129			$	35,085			$	35,152			$	(67	)		(0.19	)%
Occupancy expense	643				700				661				2,615				2,677				(62		)		(2.32	)%
Furniture and equipment	223				248				203				867				1,012				(145		)		(14.33	)%
Amortization of intangible assets	1,126				1,136				1,130				4,514				4,469				45				1.01	%
Other expenses	1,334				1,096				1,060				5,170				7,003				(1,833		)		(26.17	)%
Total operating expenses	11,275				12,069				12,183				48,251				50,313				(2,062		)		(4.10	)%
Income before income tax and noncontrolling interest	2,131				4,313				22,433				33,638				14,510				19,128				131.83	%
Corporate allocation	(240		)		(265		)		(239		)		(1,012		)		(848		)		(164		)		19.34	%
Income before income tax provision and noncontrolling interest	1,891				4,048				22,194				32,626				13,662				18,964				138.81	%
Provision for income tax expense	824				1,002				2,587				5,398				3,183				2,215				69.59	%
Net income	1,067				3,046				19,607				27,228				10,479				16,749				159.83	%
Noncontrolling interest (1)	—				(157		)		(11,459		)		(12,095		)		(1,182		)		(10,913		)		923.27	%
Net income attributable to TowneBank	$	1,067			$	2,889			$	8,148			$	15,133			$	9,297			$	5,836			62.77	%
Provision for income taxes	824				1,002				2,587				5,398				3,183				2,215				69.59	%
Depreciation, amortization and interest expense	1,274				1,333				1,285				5,151				5,312				(161		)		(3.03	)%
EBITDA (non-GAAP)	$	3,165			$	5,224			$	12,020			$	25,682			$	17,792			$	7,890			44.35	%
Efficiency ratio (non-GAAP)	75.70		%		66.74		%		65.06		%		68.06		%		70.72		%
(1) In third quarter 2020 we sold Red Sky Insurance, our travel insurance joint venture. We recorded a gross gain on sale in other income of $17,626. Our re-tax net gain, after distributions to noncontrolling interest was $6,521.

TOWNEBANK
Reconciliation of Non-GAAP Financial Measures:
	Three Months Ended												Twelve Months Ended
	December 31,				September 30,				December 31,				December 31,
	2020				2020				2019				2020				2019
Return on average assets (GAAP)	1.35		%		0.89		%		1.16		%		1.03		%		1.19		%
Impact of excluding average goodwill and other intangibles and amortization	0.11		%		0.08		%		0.14		%		0.10		%		0.15		%
Return on average tangible assets (non-GAAP)	1.46		%		0.97		%		1.30		%		1.13		%		1.33		%
Return on average equity (GAAP)	11.26		%		7.85		%		8.44		%		8.46		%		8.69		%
Impact of excluding average goodwill and other intangibles and amortization	5.02		%		3.81		%		4.53		%		4.16		%		4.89		%
Return on average tangible equity (non-GAAP)	16.28		%		11.66		%		12.97		%		12.62		%		13.58		%
Return on average common equity (GAAP)	11.36		%		7.91		%		8.51		%		8.52		%		8.75		%
Impact of excluding average goodwill and other intangibles and amortization	5.12		%		3.88		%		4.61		%		4.24		%		4.98		%
Return on average tangible common equity (non-GAAP)	16.48		%		11.79		%		13.12		%		12.76		%		13.73		%
Book value (GAAP)	$	24.31			$	23.83			$	22.58			$	24.31			$	22.58
Impact of excluding average goodwill and other intangibles and amortization	(6.85		)		(6.77		)		(6.89		)		(6.85		)		(6.89		)
Tangible book value (non-GAAP)	$	17.46			$	17.06			$	15.69			$	17.46			15.69
Efficiency ratio (GAAP)	61.64		%		53.08		%		66.11		%		59.58		%		67.08		%
Impact of excluding g/l on investments and amortization expense	(1.62		)%		4.28		%		(2.15		)%		(0.88		)%		(2.29		)%
Efficiency ratio (non-GAAP)	60.02		%		57.36		%		63.96		%		58.70		%		64.79		%
Average assets (GAAP)	$	14,722,385			$	15,487,152			$	11,970,593			$	14,172,206			$	11,638,426
Less: average goodwill and intangible assets	491,453				494,238				502,767				495,707				503,108
Average tangible assets (non-GAAP)	$	14,230,932			$	14,992,914			$	11,467,826			$	13,676,499			$	11,135,318
Average equity (GAAP)	$	1,768,906			$	1,747,033			$	1,647,929			$	1,721,059			$	1,597,281
Less: average goodwill and intangible assets	491,453				494,238				502,767				495,707				503,108
Average tangible equity (non-GAAP)	$	1,277,453			$	1,252,795			$	1,145,162			$	1,225,352			$	1,094,173
Average common equity (GAAP)	$	1,753,596			$	1,732,881			$	1,635,394			$	1,707,635			$	1,585,238
Less: average goodwill and intangible assets	491,453				494,238				502,767				495,707				503,108
Average tangible common equity (non-GAAP)	$	1,262,143			$	1,238,643			$	1,132,627			$	1,211,928			$	1,082,130
Net income (GAAP)	$	50,082			$	34,464			$	35,075			$	145,535			$	138,783
Amortization of intangibles, net of tax	2,210				2,252				2,374				9,086				9,772
Tangible net income (non-GAAP)	$	52,292			$	36,716			$	37,449			$	154,621			$	148,555
Net income (GAAP)	$	50,082			$	34,464			$	35,075			$	145,535			$	138,783
Provision for credit losses	1,617				31,598				3,601				67,177				9,371
Provision for income taxes	10,408				7,841				7,786				31,900				32,596
Pre-provision, pre-tax net revenues (non-GAAP)	$	62,107			$	73,903			$	46,462			$	244,612			$	180,750
Total revenue (GAAP)	$	171,848			$	192,135			$	139,671			$	664,335			$	563,943
Net (gain) loss on equity investment	—				(17,625		)		—				—				—
Net (gain)/loss on investment securities	—				(1,701		)		—				(9,634		)		845
Total revenue for efficiency calculation (non-GAAP)	$	171,848			$	172,809			$	139,671			$	654,701			$	564,788
Noninterest expense (GAAP)	$	105,932			$	101,981			$	92,336			$	395,825			$	378,302
Less: Amortization of intangibles	2,797				2,851				3,005				11,498				12,370
Noninterest expense net of amortization (non-GAAP)	$	103,135			$	99,130			$	89,331			$	384,327			$	365,932