TowneBank Reports Second Quarter 2022 Earnings

SUFFOLK, Va., July 28, 2022 (GLOBE NEWSWIRE) -- TowneBank (the "Company" or "Towne") (NASDAQ: TOWN) today reported earnings for the quarter ended June 30, 2022 of $46.55 million, or $0.64 per diluted share, compared to $55.80 million, or $0.77 per diluted share, for the quarter ended June 30, 2021.

"Our second quarter earnings reflected prudent strategic actions taken over the past twenty-four months to prepare our balance sheet for rising interest rates. While mortgage loan production declined sharply due primarily to higher interest rates, stellar growth of the loan portfolio during the quarter led to significant growth in net interest income as we were able to move excess cash into higher yielding assets. Credit quality remains excellent and we believe our unique business model is well positioned to capitalize on opportunities that may arise during this period of economic uncertainty," said G. Robert Aston, Jr., Executive Chairman.

Highlights for Second Quarter 2022 Compared to Second Quarter 2021:

• Total revenues were $166.98 million, a decrease of $0.34 million, or 0.20%. This year-over-year decrease was driven by a decline in residential mortgage banking income of $12.35 million that was mostly offset by an $8.20 million increase in net interest income and increases in insurance and property management revenue.
• Pre-provision, pre-tax, net revenues (non-GAAP), were $57.75 million, a decrease of $1.98 million, or 3.32%.
• Loans held for investment were $10.43 billion, an increase of $1.00 billion, or 10.63%, compared to June 30, 2021, and $0.52 billion, or 5.21%, from March 31, 2022. Excluding the decline in loans from the Paycheck Protection Program ("PPP"), loans held for investment increased $1.49 billion, or 16.75%, compared to June 30, 2021, and $0.56 billion, or 23.03%, on an annualized basis, from the linked quarter.   Total loans at June 30, 2022, June 30, 2021, and March 31, 2022 included $36.19 million, $524.87 million, and $83.99 million, respectively, of PPP loans.
• Total deposits were $14.00 billion, an increase of $1.03 billion, or 7.96% compared to prior year and $0.22 billion, or 6.53% on an annualized basis, from March 31, 2022.
• Noninterest bearing deposits increased by 9.16%, to $5.72 billion, representing 40.89% of total deposits. Compared to the linked quarter, noninterest bearing deposits increased 13.85%, on an annualized basis.
• Annualized return on common shareholders' equity was 10.03% and annualized return on average tangible common shareholders' equity was 14.37% (non-GAAP).
• Net interest margin for the quarter was 2.88% and taxable equivalent net interest margin (non-GAAP) was 2.89%.
• Effective tax rate of 19.32% in the quarter compared to 20.03% in second quarter 2021, and 19.77% in the linked quarter.

"Our results benefited from continued investments in our insurance line of business. Insurance segment revenues were up 11% for the first six months compared to the same period last year. We continue to invest in talent which enables our insurance platform to continue strong organic growth coupled with opportunistic partnerships through strategic acquisitions," stated J. Morgan Davis, Chief Executive Officer.

Quarterly Net Interest Income Compared to Second Quarter 2021:

• Net interest income was $109.34 million compared to $101.14 million as of June 30, 2021. The increase was driven by higher interest rates and increased loan and investment securities balances.
• Tax-equivalent net interest margin (non-GAAP) was 2.89%, including purchase accounting accretion of 3 basis points and PPP interest and fees of 3 basis points, compared to 2.94%, including purchase accounting accretion of 5 basis points and a 10 basis point increase in PPP interest and fees, for second quarter 2021.
• On an average basis, loans held for investment, with a yield of 3.99%, represented 66.91% of earning assets at June 30, 2022 compared to a yield of 4.23% and 69.05% of earning assets in the second quarter of 2021. Excluding PPP loans, loan yields were 3.95% in second quarter 2022 compared to 4.15% in second quarter 2021.
• Interest and fee income on PPP loans was $1.52 million in second quarter 2022, compared to $2.10 million in the linked quarter, and $10.02 million in second quarter 2021.
• Total cost of deposits decreased to 0.16% from 0.23% at June 30, 2021.
• In June 2022, the Company gave notice that on July 30, 2022, it will redeem the $250.00 million outstanding of 4.50% fixed to floating rate subordinated notes due 2027. The Company recognized interest expense related to the notes of $2.81 million in second quarter 2022 and $2.96 million in second quarter 2021.
• Average interest-earning assets totaled $15.24 billion at June 30, 2022 compared to $13.93 billion at June 30, 2021, an increase of 9.45%.
• Average interest-bearing liabilities totaled $8.75 billion, an increase of $0.69 billion from prior year.

Quarterly Provision for Credit Losses:

• The quarterly provision for credit losses for on-balance-sheet loans was an expense of $0.11 million compared to provision benefits of $8.09 million one year ago and $2.10 million in the linked quarter.
• The second quarter 2022 included an increase in the allowance for credit losses on loans of $0.19 million that was driven by core loan growth and partially offset by the release of remaining reserves associated with industries heavily impacted by COVID-19 and net recoveries.
• Net loan recoveries were $0.08 million compared to net recoveries of $0.14 million one year prior and net charge-offs of $0.13 million in the linked quarter. The ratio of net charge-offs to average loans on an annualized basis was zero percent in second quarter 2022, 0.01% in the linked quarter. and (0.01)% in second quarter 2021.
• The allowance for credit losses on loans represented 1.00% of total loans at June 30, 2022, 1.05% on March 31, 2022, and 1.15% at June 30, 2021. The allowance for credit losses on loans was 18.94 times nonperforming loans compared to 21.52 times at March 31, 2022 and 9.67 times at June 30, 2021.

Quarterly Noninterest Income Compared to Second Quarter 2021:

• Total noninterest income was $57.64 million compared to $66.18 million in 2021, a decrease of $8.54 million, or 12.90%. Residential mortgage banking income decreased $12.35 million and real estate brokerage decreased $0.48 million, while property management income increased $2.36 million and insurance commissions increased $1.42 million.
• Residential mortgage banking recorded income of $13.18 million compared to $25.52 million in second quarter 2021. Loan volume decreased to $0.84 billion in second quarter 2022 compared to $1.45 billion in 2021. Recent increases in mortgage rates have resulted in refinance activities dropping below 10% of our total mortgage production volume, the lowest level since June 2018. Residential purchase activity comprised 92.27% of production volume in the second quarter of 2022 compared to 76.95% in the prior year quarter.
• Margins on residential mortgages declined 72 basis points from 3.64% in second quarter 2021 to 2.92% in the current quarter.
• Total Insurance commissions, net increased $1.42 million, or 7.72%, to $19.75 million in second quarter 2022 compared to 2021. This resulted from increases in property and casualty commissions, which were driven by organic growth and higher rates.
• Property management fee revenue increased 33.30%, or $2.36 million, to $9.45 million compared to second quarter 2021. Reservation income is up in the quarter over quarter comparison due primarily to the July 2021 acquisition of a vacation rental company in Tennessee, which contributed $2.22 million in property management fees during the quarter.   Reservation income has declined at all property management locations from the linked quarter. Management anticipates the loosening of COVID-related travel restrictions, giving travelers more destination options, will continue the decline in reservation activity for the remainder of 2022, from the record levels of the past two years.
• In April 2022, the Company implemented changes for personal accounts to eliminate fees for non-sufficient funds and other overdraft program fees. The change did not have a material effect on revenue in second quarter 2022 and is not expected to have a material effect on future revenue.

Quarterly Noninterest Expense Compared to Second Quarter 2021:

• Total noninterest expense was $108.73 million compared to $105.39 million in 2021, an increase of $3.33 million, or 3.16%. Increases in salaries and employee benefits of $3.53 million, advertising and marketing expense of $0.83 million, and occupancy expense of $0.78 million were partially offset by declines in other expenses.
• Salary and benefits expense increases were driven by annual base salary adjustments that went into effect mid second quarter 2021, the acquisition of a vacation rental company in July 2021, and increases in health insurance costs.
• The increase in occupancy expense was driven by lower tenant income at McKinnon Tower in Norfolk, Virginia. The company purchased the building in 2020 with an existing lease that termed out at year end 2021.
• Advertising and marketing expense increases were primarily related to internet advertising in our realty segment and post-COVID increases in client business development.

Consolidated Balance Sheet Highlights:

• Total assets were $16.86 billion for the quarter ended June 30, 2022, a $0.20 billion increase compared to $16.67 billion at March 31, 2022. Total assets increased $1.06 billion, or 6.71%, from $15.80 billion at June 30, 2021. The year-over-year increase was driven by growth in loans and investment securities.
• Loans held for investment increased $1.00 billion, or 10.63%, compared to prior year and $0.52 billion, or 5.21%, compared the linked quarter. Excluding PPP loans of $36.19 million in second quarter 2022, $524.87 million in second quarter 2021, and $83.99 million in the linked quarter, loans held for investment increased $1.49 billion, or 16.75%, compared to prior year, and $0.56 billion, or 5.74%, compared to March 31, 2022, or 23.03% on an annualized basis.
• Average loans held for investment, excluding PPP loans, were $10.14 billion in the second quarter of 2022, an increase of $1.29 billion, or 14.55%, compared to prior year. In the linked quarter comparison, average loans held for investment, excluding PPP loans, increased 6.12%, or $0.58 billion, 24.56% on an annualized basis.
• Mortgage loans held for sale decreased $342.73 million, or 61.81%, compared to the prior year and $22.90 million, or 9.76%, compared to the linked quarter.
• Total deposits increased $1.03 billion, or 7.96%, compared to the prior year and $0.22 billion, or 1.63%, compared to the linked quarter.
• Total borrowings increased $9.91 million, or 1.68%, from prior year and decreased $27.93 million, or 4.45%, compared to the linked quarter.

Investment Securities:

• Total investment securities were $2.48 billion compared to $2.30 billion at March 31, 2022 and $1.49 billion at June 30, 2021. The weighted average duration of the portfolio at June 30, 2022 was 3.8 years. The carrying value of the available for sale debt securities portfolio included $120.41 million, and $70.32 million in net unrealized losses at June 30, 2022 and March 31, 2022, respectively, compared to net unrealized gains of $42.18 million at June 30, 2021.

Loans and Asset Quality:

• Total loans held for investment were $10.43 billion at June 30, 2022 compared to $9.91 billion at March 31, 2022 and $9.42 billion at June 30, 2021.
• Nonperforming assets were $6.06 million, or 0.04% of total assets, compared to $15.22 million, or 0.10%, at June 30, 2021.
• Nonperforming loans were 0.05% of period end loans compared to 0.12% at June 30, 2021.
• Foreclosed property decreased to $0.56 million from $4.04 million at June 30, 2021.

Deposits and Borrowings:

• Total deposits were $14.00 billion compared to $13.77 billion at March 31, 2022 and $12.96 billion at June 30, 2021.
• Total loans held for investment to deposits were 74.49% compared to 71.95% at March 31, 2022 and 72.69% at June 30, 2021.
• Non-interest bearing deposits were 40.89% of total deposits at June 30, 2022 compared to 40.17% at March 31, 2022 and 40.44% at June 30, 2021.
• Total borrowings were $0.60 billion compared to $0.63 billion at March 31, 2022 and $0.59 billion at June 30, 2021.

Capital:

• Common equity tier 1 capital ratio of 11.83%.
• Tier 1 leverage capital ratio of 9.19%.
• Tier 1 risk-based capital ratio of 11.97%.
• Total risk-based capital ratio of 16.76%.
• Book value per common share was $25.48 compared to $25.61 at March 31, 2022 and $25.51 at June 30, 2021.
• Tangible book value per common share (non-GAAP) was $18.58 compared to $18.67 at March 31, 2022 and $18.70 at June 30, 2021.

About TowneBank:
Founded in 1999, TowneBank is a company built on relationships, offering a full range of banking and other financial services, with a focus of serving others and enriching lives. Dedicated to a culture of caring, Towne values all employees and members by embracing their diverse talents, perspectives, and experiences.

Today, TowneBank operates over 40 banking offices throughout Hampton Roads and Central Virginia, as well as Northeastern and Central North Carolina – serving as a local leader in promoting the social, cultural, and economic growth in each community. Towne offers a competitive array of business and personal banking solutions, delivered with only the highest ethical standards. Experienced local bankers providing a higher level of expertise and personal attention with local decision-making are key to the TowneBank strategy. TowneBank has grown its capabilities beyond banking to provide expertise through its controlled divisions and subsidiaries that include 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. With total assets of $16.86 billion as of June 30, 2022, TowneBank is one of the largest banks headquartered in Virginia.

Non-GAAP Financial Measures:
This press release contains certain financial measures determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Such non-GAAP financial measures include the following: fully tax-equivalent net interest margin, core operating earnings, core net income, tangible book value per common share, pre-provision, pre-tax net revenues, total risk-based capital ratio, tier one leverage ratio, tier one capital ratio, and the tangible common equity to tangible assets ratio. Management uses these non-GAAP financial measures to assess the performance of TowneBank’s core business and the strength of its capital position. Management believes that these non-GAAP financial measures provide meaningful additional information about TowneBank to assist investors in evaluating operating results, financial strength, and capitalization. The non-GAAP financial measures should be considered as additional views of the way our financial measures are affected by significant charges for credit costs and other factors. These non-GAAP financial measures should not be considered as a substitute for operating results determined in accordance with GAAP and may not be comparable to other similarly titled measures of other companies. The computations of the non-GAAP financial measures used in this presentation are referenced in a footnote or in the appendix to this presentation.

Forward-Looking Statements:
This press release contains certain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts, but instead represent only the beliefs, expectations, or opinions of TowneBank and its management regarding future events, many of which, by their nature, are inherently uncertain. Forward-looking statements may be identified by the use of such words as: "believe," "expect," "anticipate," "intend," "plan,” "estimate," or words of similar meaning, or future or conditional terms, such as "will," "would," "should," "could," "may," "likely," "probably," or "possibly." These statements may address issues that involve significant risks, uncertainties, estimates, and assumptions made by management. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include the impacts of the ongoing the impact of the COVID-19 pandemic and the associated efforts to limit its spread; competitive pressures in the banking industry that may increase significantly; changes in the interest rate environment that may reduce margins and/or the volumes and values of loans made or held as well as the value of other financial assets held; changes in the credit worthiness of customers and the possible impairment of the collectability of loans; general economic conditions, either nationally or regionally, that may be less favorable than expected, resulting in, among other things, a deterioration in credit quality and/or a reduced demand for credit or other services; changes in the legislative or regulatory environment, including changes in accounting standards and tax laws, that may adversely affect our business; costs or difficulties related to the integration of the businesses we have acquired may be greater than expected; expected cost savings associated with pending or recently completed acquisitions may not be fully realized or realized within the expected time frame; cybersecurity threats or attacks, the implementation of new technologies, and the ability to develop and maintain reliable electronic systems; our competitors may have greater financial resources and develop products that enable them to compete more successfully; changes in business conditions; changes in the securities market; and changes in our local economy with regard to our market area. Any forward-looking statements made by us or on our behalf speak only as of the date they are made or as of the date indicated, and we do not undertake any obligation to update forward-looking statements as a result of new information, future events, or otherwise. For additional information on factors that could materially influence forward-looking statements included in this report, see the "Risk Factors" in TowneBank’s Annual Report on Form 10-K for the year ended December 31, 2020 and related disclosures in other filings that have been, or will be, filed by TowneBank with the Federal Deposit Insurance Corporation.

Media contact:
G. Robert Aston, Jr., Executive Chairman, 757-638-6780
J. Morgan Davis, 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
		June 30,				March 31,				December 31,				September 30,				June 30,
			2022				2022				2021				2021				2021
Income and Performance Ratios:
	Total Revenue	$	166,980			$	165,412			$	160,424			$	170,076			$	167,321
	Net income		47,054				46,250				41,657				52,743				58,002
	Net income available to common shareholders		46,547				45,586				40,183				50,400				55,803
	Pre-provision, pre-tax, net revenues(non-GAAP)		57,748				55,369				48,483				63,647				59,728
	Net income per common share - diluted		0.64				0.63				0.55				0.69				0.77
	Book value per common share		25.48				25.61				26.13				25.91				25.51
	Book value per common share - tangible(non-GAAP)		18.58				18.67				19.15				18.92				18.70
	Return on average assets		1.13	%			1.13	%			0.99	%			1.27	%			1.48	%
	Return on average assets - tangible(non-GAAP)		1.22	%			1.23	%			1.08	%			1.37	%			1.59	%
	Return on average equity		9.94	%			9.73	%			8.38	%			10.59	%			12.21	%
	Return on average equity - tangible(non-GAAP)		14.20	%			13.91	%			12.08	%			15.09	%			17.38	%
	Return on average common equity		10.03	%			9.81	%			8.45	%			10.68	%			12.31	%
	Return on average common equity - tangible(non-GAAP)		14.37	%			14.08	%			12.22	%			15.27	%			17.57	%
	Noninterest income as a percentage of total revenue		34.52	%			40.03	%			37.17	%			40.94	%			39.55	%
Regulatory Capital Ratios (1):
	Common equity tier 1		11.83	%			12.16	%			12.36	%			12.53	%			12.42	%
	Tier 1		11.97	%			12.31	%			12.51	%			12.69	%			12.57	%
	Total		16.76	%			17.34	%			15.56	%			15.85	%			15.76	%
	Tier 1 leverage ratio		9.19	%			9.16	%			9.11	%			9.18	%			9.44	%
Asset Quality:
	Allowance for credit losses on loans to nonperforming loans	18.94x				21.52x				17.75x				12.68x				9.67x
	Allowance for credit losses on loans to period end loans		1.00	%			1.05	%			1.12	%			1.15	%			1.15	%
	Allowance for credit losses on loans to period end loans excluding PPP loans(non-GAAP)		1.00	%			1.06	%			1.13	%			1.18	%			1.22	%
	Nonperforming loans to period end loans		0.05	%			0.05	%			0.06	%			0.09	%			0.12	%
	Nonperforming assets to period end assets		0.04	%			0.03	%			0.06	%			0.09	%			0.10	%
	Net charge-offs (recoveries) to average loans (annualized)		—	%			0.01	%			—	%		(0.03)%				(0.01)%
	Net charge-offs (recoveries)	$	(80	)		$	126			$	(60	)		$	(644	)		$	(137	)
	Nonperforming loans	$	5,493			$	4,825			$	5,973			$	8,451			$	11,178
	Foreclosed property		563				560				4,583				5,409				4,041
	Total nonperforming assets	$	6,056			$	5,385			$	10,556			$	13,860			$	15,219
	Loans past due 90 days and still accruing interest	$	232			$	40			$	372			$	143			$	1,584
	Allowance for credit losses on loans	$	104,019			$	103,833			$	106,059			$	107,177			$	108,130
Mortgage Banking:
	Loans originated, mortgage	$	588,529			$	583,008			$	851,021			$	939,272			$	1,050,663
	Loans originated, joint venture		249,279				236,980				303,362				370,865				403,864
	Total loans originated	$	837,808			$	819,988			$	1,154,383			$	1,310,137			$	1,454,527
	Number of loans originated		2,282				2,237				3,408				3,917				4,514
	Number of originators		201				207				213				219				222
	Purchase %		92.27	%			77.93	%			79.36	%			77.45	%			76.95	%
	Loans sold	$	759,073			$	853,808			$	1,150,996			$	1,394,166			$	1,485,057
	Rate lock asset	$	1,935			$	3,009			$	3,455			$	6,087			$	7,760
	Gross realized gain on sales and fees as a % of loans originated		2.92	%			3.01	%			3.42	%			3.61	%			3.64	%
Other Ratios:
	Net interest margin		2.88	%			2.67	%			2.70	%			2.76	%			2.91	%
	Net interest margin-fully tax equivalent(non-GAAP)		2.89	%			2.69	%			2.72	%			2.77	%			2.94	%
	Average earning assets/total average assets		92.22	%			92.24	%			92.13	%			91.95	%			91.97	%
	Average loans/average deposits		74.57	%			71.61	%			70.68	%			71.69	%			78.31	%
	Average noninterest deposits/total average deposits		40.56	%			40.49	%			41.42	%			40.40	%			40.21	%
	Period end equity/period end total assets		11.09	%			11.28	%			11.71	%			12.02	%			11.83	%
	Efficiency ratio(non-GAAP)		63.51	%			64.42	%			67.03	%			59.58	%			61.46	%
	(1) Current reporting period regulatory capital ratios are preliminary

TOWNEBANK
Selected Data (unaudited)
(dollars in thousands)
Investment Securities													% Change
	Q2				Q2				Q1				Q2 22 vs.			Q2 22 vs.
Available-for-sale securities, at fair value		2022				2021				2022			Q2 21			Q1 22
U.S. agency securities	$	342,702			$	206,151			$	338,490			66.24	%		1.24	%
U.S. Treasury notes		27,496				1,013				970			2,614.31	%		2,734.64	%
Municipal securities		447,927				334,633				400,200			33.86	%		11.93	%
Trust preferred and other corporate securities		84,307				31,680				85,792			166.12	%		(1.73)%
Mortgage-backed securities issued by GSE and GNMA		1,012,690				881,078				1,022,169			14.94	%		(0.93)%
Allowance for credit losses		(1,111	)			(134	)			(1,081	)		729.10	%		2.78	%
Total	$	1,914,011			$	1,454,421			$	1,846,540			31.60	%		3.65	%
Gross unrealized gains (losses) reflected in financial statements
Total gross unrealized gains	$	1,840			$	65,152			$	3,443			(97.18)%			(46.56)%
Total gross unrealized losses		(122,253	)			(22,968	)			(73,758	)		432.28	%		65.75	%
Net unrealized gains (losses) and other adjustments on AFS securities	$	(120,413	)		$	42,184			$	(70,315	)		(385.45)%			71.25	%
Held-to-maturity securities, at amortized cost
U.S. agency securities	$	100,718			$	—			$	83,004			N/M			21.34	%
U.S. Treasury notes		434,432				—				336,193			N/M			29.22	%
Municipal securities		5,138				5,053				5,116			1.68	%		0.43	%
Trust preferred corporate securities		2,248				2,297				2,260			(2.13)%			(0.53)%
Mortgage-backed securities issued by GSE and GNMA		6,547				8,039				6,811			(18.56)%			(3.88)%
Allowance for credit losses		(85	)			(97	)			(92	)		(12.37)%			(7.61)%
Total	$	548,998			$	15,292			$	433,292			3,490.10	%		26.70	%
Total gross unrealized gains	$	448			$	1,708			$	714			(73.77)%			(37.25)%
Total gross unrealized losses		(18,615	)			—				(11,915	)		—	%		—	%
Net unrealized gains (losses) in HTM securities	$	(18,167	)		$	1,708			$	(11,201	)		(1,163.64)%			62.19	%
Loans Held For Investment(1)													% Change
	Q2				Q2				Q1				Q2 22 vs.			Q2 22 vs.
		2022				2021				2022			Q2 21			Q1 22
Real estate - construction and development	$	1,383,791			$	1,029,811			$	1,236,294			34.37	%		11.93	%
Commercial real estate - owner occupied		1,579,464				1,445,328				1,561,117			9.28	%		1.18	%
Commercial real estate - non owner occupied		2,757,651				2,597,405				2,697,929			6.17	%		2.21	%
Real estate - multifamily		371,658				343,764				339,220			8.11	%		9.56	%
Residential 1-4 family		1,513,662				1,166,898				1,392,052			29.72	%		8.74	%
HELOC		386,067				390,726				376,480			(1.19)%			2.55	%
Commercial and industrial business (C&I)		1,261,279				1,529,788				1,212,973			(17.55)%			3.98	%
Government		527,230				479,664				518,839			9.92	%		1.62	%
Indirect		555,638				310,492				485,620			78.95	%		14.42	%
Consumer loans and other		89,320				129,702				88,784			(31.13)%			0.60	%
Total	$	10,425,760			$	9,423,578			$	9,909,308			10.63	%		5.21	%
(1) Paycheck Protection Program loans totaling $0.04 billion, $0.52 billion, and $0.08 billion, primarily in C&I, are included in Q2 22, Q2 21, and Q1 22, respectively.
Deposits													% Change
	Q2				Q2				Q1				Q2 22 vs.			Q2 22 vs.
		2022				2021				2022			Q2 21			Q1 22
Noninterest-bearing demand	$	5,723,415			$	5,243,074			$	5,532,337			9.16	%		3.45	%
Interest-bearing:
Demand and money market accounts		6,384,818				5,373,146				6,432,005			18.83	%		(0.73)%
Savings		388,364				349,552				393,119			11.10	%		(1.21)%
Certificates of deposits		1,499,514				1,998,828				1,414,339			(24.98)%			6.02	%
Total	$	13,996,111			$	12,964,600			$	13,771,800			7.96	%		1.63	%

TOWNEBANK
Average Balances, Yields and Rate Paid (unaudited)
(dollars in thousands)
	Three Months Ended											Three Months Ended											Three Months Ended
	June 30, 2022											March 31, 2022											June 30, 2021
					Interest				Average							Interest				Average							Interest				Average
	Average				Income/				Yield/			Average				Income/				Yield/			Average				Income/				Yield/
	Balance				Expense				Rate (1)			Balance				Expense				Rate (1)			Balance				Expense				Rate (1)
Assets:
Loans (net of unearned income and deferred costs) (2)(3)	$	10,199,019			$	101,463			3.99	%		$	9,668,724			$	95,596			4.01	%		$	9,616,787			$	101,490			4.23	%
Taxable investment securities		2,331,410				11,388			1.95	%			2,059,614				9,013			1.75	%			1,351,922				6,476			1.92	%
Tax-exempt investment securities		132,304				879			2.66	%			110,698				680			2.46	%			128,094				434			1.36	%
Total securities		2,463,714				12,267			1.99	%			2,170,312				9,693			1.79	%			1,480,016				6,910			1.87	%
Interest-bearing deposits		2,368,147				4,616			0.78	%			2,929,929				1,347			0.19	%			2,327,310				619			0.11	%
Loans held for sale		213,109				2,217			4.16	%			276,448				2,375			3.44	%			503,706				3,711			2.95	%
Total earning assets		15,243,989				120,563			3.17	%			15,045,413				109,011			2.94	%			13,927,819				112,730			3.25	%
Less: allowance for credit losses		(103,871	)										(106,172	)										(116,025	)
Total nonearning assets		1,389,692											1,372,757											1,332,094
Total assets	$	16,529,810										$	16,311,998										$	15,143,888
Liabilities and Equity:
Interest-bearing deposits
Demand and money market	$	6,349,725			$	3,094			0.20	%		$	6,178,217			$	2,262			0.15	%		$	5,179,907			$	2,004			0.16	%
Savings		387,498				526			0.54	%			382,839				511			0.54	%			346,177				528			0.61	%
Certificates of deposit		1,392,474				1,953			0.56	%			1,472,942				2,121			0.58	%			1,816,283				4,612			1.02	%
Total interest-bearing deposits		8,129,697				5,573			0.27	%			8,033,998				4,894			0.25	%			7,342,367				7,144			0.39	%
Borrowings		128,276				135			0.42	%			135,775				137			0.40	%			476,122				565			0.47	%
Subordinated debt, net		496,862				5,091			4.10	%			386,934				4,120			4.26	%			249,260				2,962			4.75	%
Total interest-bearing liabilities		8,754,835				10,799			0.49	%			8,556,707				9,151			0.43	%			8,067,749				10,671			0.53	%
Demand deposits		5,547,936											5,467,153											4,937,754
Other noninterest-bearing liabilities		348,678											387,871											304,793
Total liabilities		14,651,449											14,411,731											13,310,296
Shareholders’ equity		1,878,361											1,900,267											1,833,592
Total liabilities and equity	$	16,529,810										$	16,311,998										$	15,143,888
Net interest income (tax-equivalent basis) (6)					$	109,764										$	99,860										$	102,059
Reconciliation of Non-GAAP Financial Measures
Tax-equivalent basis adjustment						(424	)										(656	)										(915	)
Net interest income (GAAP)					$	109,340										$	99,204										$	101,144
Interest rate spread (4)(6)									2.68	%										2.51	%										2.72	%
Interest expense as a percent of average earning assets									0.28	%										0.25	%										0.31	%
Net interest margin (tax equivalent basis) (5)(6)									2.89	%										2.69	%										2.94	%
Total cost of deposits									0.16	%										0.15	%										0.23	%

(1) Yields and interest income are presented on a taxable-equivalent basis using the federal statutory tax rate of 21%.
(2) Average loan balances for June 30, 2021 and related yields have been restated to include, previously excluded, nonaccrual loans of $11.98 million.
(3) June 30, 2022, June 30, 2021, and March 31, 2022 includes average PPP balances of $60.89 million, $766.47 million and $115.51 million, and related interest and fee income of $1.52 million, $10.02 million, and $2.10 million, respectively.
(4) Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities. Fully tax equivalent.
(5) Net interest margin is net interest income expressed as a percentage of average earning assets. Fully tax equivalent.
(6) Non-GAAP.

TOWNEBANK
Average Balances, Yields and Rate Paid (unaudited)
(dollars in thousands)
	Six Months Ended											Six Months Ended											Six Months Ended June 30,
	June 30, 2022											June 30, 2021											2022 Compared with 2021
					Interest				Average							Interest				Average
	Average				Income/				Yield/			Average				Income/				Yield/			Increase				Change Due to
	Balance				Expense				Rate (1)			Balance				Expense				Rate (1)			(Decrease)				Rate				Volume
Assets:
Loans (net of unearned income and deferred costs) (2)(3)	$	9,935,337			$	197,059			4.00	%		$	9,638,329			$	203,451			4.26	%		$	(6,392	)		$	(12,533	)		$	6,141
Taxable investment securities		2,196,263				20,401			1.86	%			1,327,862				13,080			1.97	%			7,321				(785	)			8,106
Tax-exempt investment securities		121,561				1,559			2.57	%			133,944				976			1.46	%			583				681				(98	)
Total securities		2,317,824				21,960			1.89	%			1,461,806				14,056			1.92	%			7,904				(104	)			8,008
Interest-bearing deposits		2,647,485				5,963			0.45	%			2,022,901				1,035			0.10	%			4,928				4,518				410
Loans held for sale		244,604				4,592			3.75	%			520,260				7,072			2.72	%			(2,480	)			2,098				(4,578	)
Total earning assets		15,145,250				229,574			3.06	%			13,643,296				225,614			3.33	%			3,960				(6,021	)			9,981
Less: allowance for credit losses		(105,015	)										(118,466	)
Total nonearning assets		1,381,271											1,344,845
Total assets	$	16,421,506										$	14,869,675
Liabilities and Equity:
Interest-bearing deposits
Demand and money market	$	6,264,444			$	5,355			0.17	%		$	5,043,155			$	4,080			0.16	%		$	1,275			$	242			$	1,033
Savings		385,182				1,037			0.54	%			339,131				1,050			0.62	%			(13	)			(146	)			133
Certificates of deposit		1,432,486				4,074			0.57	%			1,887,359				10,563			1.13	%			(6,489	)			(4,355	)			(2,134	)
Total interest-bearing deposits		8,082,112				10,466			0.26	%			7,269,645				15,693			0.44	%			(5,227	)			(4,259	)			(968	)
Borrowings		132,004				272			0.41	%			519,048				1,387			0.53	%			(1,115	)			(262	)			(853	)
Subordinated debt, net		442,202				9,212			4.17	%			249,188				5,892			4.73	%			3,320				(773	)			4,093
Total interest-bearing liabilities		8,656,318				19,950			0.46	%			8,037,881				22,972			0.58	%			(3,022	)			(5,294	)			2,272
Demand deposits		5,507,768											4,711,854
Other noninterest-bearing liabilities		368,166											304,162
Total liabilities		14,532,252											13,053,897
Shareholders’ equity		1,889,254											1,815,778
Total liabilities and equity	$	16,421,506										$	14,869,675
Net interest income (tax-equivalent basis)(6)					$	209,624										$	202,642						$	6,982			$	(727	)		$	7,709
Reconciliation of Non-GAAP Financial Measures
Tax-equivalent basis adjustment						(1,080	)										(1,508	)						428
Net interest income (GAAP)					$	208,544										$	201,134						$	7,410
Interest rate spread (4)(6)									2.60	%										2.75	%
Interest expense as a percent of average earning assets									0.27	%										0.34	%
Net interest margin (tax equivalent basis) (5)(6)									2.79	%										3.00	%
Total cost of deposits									0.16	%										0.26	%
(1) Yields and interest income are presented on a taxable-equivalent basis using the federal statutory rate of 21%.
(2) Average loan balances for June 30, 2021 and related yields have been restated to include, previously excluded, nonaccrual loans of $12.48 million.
(1) June 30, 2022 and June 30, 2021 includes average PPP balances of $88.05 million and $786.50 million and related interest income of $3.62 million and $21.65 million, respectively.
(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 share data)
	June 30,				December 31,
		2022				2021
	(unaudited)				(audited)
ASSETS
Cash and due from banks	$	72,592			$	17,373
Interest-bearing deposits at FRB - Richmond		2,341,942				3,244,484
Interest-bearing deposits in financial institutions		35,087				34,779
Total Cash and Cash Equivalents		2,449,621				3,296,636
Securities available for sale, at fair value (amortized cost of $2,035,535 and $1,788,853, and allowance for credit losses of $1,111 and $210 at June 30, 2022 and December 31, 2021, respectively.)		1,914,011				1,806,183
Securities held to maturity, at amortized cost (fair value $530,916 and $155,676 at June 30, 2022 and December 31, 2021, respectively.)		549,083				154,221
Less: allowance for credit losses		(85	)			(94	)
Securities held to maturity, net of allowance for credit losses		548,998				154,127
Other equity securities		6,679				6,759
FHLB stock		10,432				13,146
Total Securities		2,480,120				1,980,215
Mortgage loans held for sale		211,716				358,303
Loans, net of unearned income and deferred costs		10,425,760				9,506,252
Less: allowance for credit losses		(104,019	)			(106,059	)
Net Loans		10,321,741				9,400,193
Premises and equipment, net		289,753				270,772
Goodwill		457,162				457,187
Other intangible assets, net		44,878				50,379
BOLI		254,478				251,805
Other assets		354,570				295,897
TOTAL ASSETS	$	16,864,039			$	16,361,387
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand	$	5,723,415			$	5,546,665
Interest-bearing:
Demand and money market accounts		6,384,818				6,139,714
Savings		388,364				371,356
Certificates of deposit		1,499,514				1,515,891
Total Deposits		13,996,111				13,573,626
Advances from the FHLB		55,024				155,367
Subordinated debt, net		497,061				249,652
FRB PPP lending facility		—				—
Repurchase agreements and other borrowings		47,922				76,797
Total Borrowings		600,007				481,816
Other liabilities		397,388				389,771
TOTAL LIABILITIES		14,993,506				14,445,213
Preferred stock, authorized and unissued shares - 2,000,000		—				—
Common stock, $1.667 par: 150,000,000 shares authorized
72,744,374 and 72,683,985 shares issued at
June 30, 2022 and December 31, 2021, respectively		121,265				121,164
Capital surplus		1,051,384				1,050,948
Retained earnings		777,430				716,605
Common stock issued to deferred compensation trust, at cost
945,183 and 911,458 shares at June 30, 2022 and December 31, 2021, respectively		(19,349	)			(18,257	)
Deferred compensation trust		19,349				18,257
Accumulated other comprehensive income (loss)		(96,358	)			10,597
TOTAL SHAREHOLDERS’ EQUITY		1,853,721				1,899,314
Noncontrolling interest		16,812				16,860
TOTAL EQUITY		1,870,533				1,916,174
TOTAL LIABILITIES AND EQUITY	$	16,864,039			$	16,361,387

TOWNEBANK
Consolidated Statements of Income (unaudited)
(dollars in thousands, except per share data)
	Three Months Ended								Six Months Ended
	June 30,								June 30,
		2022				2021				2022				2021
INTEREST INCOME:
Loans, including fees	$	101,043			$	100,614			$	196,005			$	202,011
Investment securities		12,263				6,871				21,934				13,988
Interest-bearing deposits in financial institutions and federal funds sold		4,616				619				5,963				1,035
Mortgage loans held for sale		2,217				3,711				4,592				7,072
Total interest income		120,139				111,815				228,494				224,106
INTEREST EXPENSE:
Deposits		5,573				7,144				10,467				15,693
Advances from the FHLB		86				274				178				771
Subordinated debt, net		5,091				2,962				9,211				5,892
Repurchase agreements and other borrowings		49				291				94				616
Total interest expense		10,799				10,671				19,950				22,972
Net interest income		109,340				101,144				208,544				201,134
PROVISION FOR CREDIT LOSSES		56				(10,055	)			(1,393	)			(14,082	)
Net interest income after provision for credit losses		109,284				111,199				209,937				215,216
NONINTEREST INCOME:
Residential mortgage banking income, net		13,176				25,524				27,814				62,937
Insurance commissions and other title fees and income, net		19,746				18,331				38,820				34,656
Property management income, net		9,452				7,091				26,599				22,574
Real estate commission income, net		3,412				3,893				5,966				6,344
Service charges on deposit accounts		2,446				2,391				5,020				4,580
Credit card merchant fees, net		1,906				1,667				3,281				2,969
BOLI		1,853				1,541				3,570				3,060
Other income		5,649				5,487				12,778				10,324
Net gain/(loss) on investment securities		—				252				—				1,252
Total noninterest income		57,640				66,177				123,848				148,696
NONINTEREST EXPENSE:
Salaries and employee benefits		64,892				61,365				128,855				119,801
Occupancy expense		8,342				7,559				16,669				15,630
Furniture and equipment		3,643				3,622				7,333				7,134
Amortization - intangibles		2,684				2,719				5,501				5,442
Software expense		4,762				4,494				9,254				8,688
Data processing		3,556				3,414				7,150				6,652
Professional fees		1,761				2,259				3,788				4,598
Advertising and marketing		4,091				3,257				8,218				6,225
Other expenses		14,994				16,705				31,336				28,549
Total noninterest expense		108,725				105,394				218,104				202,719
Income before income tax expense and noncontrolling interest		58,199				71,982				115,681				161,193
Provision for income tax expense		11,145				13,980				22,377				30,559
Net income	$	47,054			$	58,002			$	93,304			$	130,634
Net income attributable to noncontrolling interest		(507	)			(2,199	)			(1,171	)			(5,835	)
Net income attributable to TowneBank	$	46,547			$	55,803			$	92,133			$	124,799
Per common share information
Basic earnings	$	0.64			$	0.77			$	1.27			$	1.72
Diluted earnings	$	0.64			$	0.77			$	1.27			$	1.72
Cash dividends declared	$	0.23			$	0.20			$	0.43			$	0.38

TOWNEBANK
Consolidated Balance Sheets - Five Quarter Trend
(dollars in thousands, except share data)
	June 30,				March 31,				December 31,				September 30,				June 30,
		2022				2022				2021				2021				2021
	(unaudited)				(unaudited)				(unaudited)				(audited)				(unaudited)
ASSETS
Cash and due from banks	$	72,592			$	74,991			$	17,373			$	75,370			$	117,797
Interest-bearing deposits at FRB - Richmond		2,341,942				2,857,327				3,244,484				3,155,039				2,970,490
Interest-bearing deposits in financial institutions		35,087				34,684				34,779				33,506				31,971
Total Cash and Cash Equivalents		2,449,621				2,967,002				3,296,636				3,263,915				3,120,258
Securities available for sale		1,914,011				1,846,540				1,806,183				1,560,402				1,454,421
Securities held to maturity		549,083				433,384				154,221				14,898				15,389
Less: allowance for credit losses		(85	)			(92	)			(94	)			(94	)			(97	)
Securities held to maturity, net of allowance for credit losses		548,998				433,292				154,127				14,804				15,292
Other equity securities		6,679				6,789				6,759				6,621				6,395
FHLB stock		10,432				10,432				13,146				13,146				16,909
Total Securities		2,480,120				2,297,053				1,980,215				1,594,973				1,493,017
Mortgage loans held for sale		211,716				234,620				358,303				431,846				554,447
Loans, net of unearned income and deferred costs		10,425,760				9,909,308				9,506,252				9,297,565				9,423,578
Less: allowance for credit losses		(104,019	)			(103,833	)			(106,059	)			(107,177	)			(108,130	)
Net Loans		10,321,741				9,805,475				9,400,193				9,190,388				9,315,448
Premises and equipment, net		289,753				277,764				270,772				270,810				265,644
Goodwill		457,162				457,162				457,187				457,187				452,328
Other intangible assets, net		44,878				47,562				50,379				50,839				42,271
BOLI		254,478				253,112				251,805				249,862				249,213
Other assets		354,570				326,838				295,897				301,552				311,209
TOTAL ASSETS	$	16,864,039			$	16,666,588			$	16,361,387			$	15,811,372			$	15,803,835
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand	$	5,723,415			$	5,532,337			$	5,546,665			$	5,394,952			$	5,243,074
Interest-bearing:
Demand and money market accounts		6,384,818				6,432,005				6,139,714				5,681,181				5,373,146
Savings		388,364				393,119				371,356				366,165				349,552
Certificates of deposit		1,499,514				1,414,339				1,515,891				1,571,752				1,998,828
Total Deposits		13,996,111				13,771,800				13,573,626				13,014,050				12,964,600
Advances from the FHLB		55,024				55,196				155,367				155,537				255,706
Subordinated debt, net		497,061				496,757				249,652				249,503				249,353
FRB PPP lending facility		—				—				—				—				—
Repurchase agreements and other borrowings		47,922				75,988				76,797				82,413				85,042
Total Borrowings		600,007				627,941				481,816				487,453				590,101
Other liabilities		397,388				387,087				389,771				409,435				379,278
TOTAL LIABILITIES		14,993,506				14,786,828				14,445,213				13,910,938				13,933,979
Preferred stock
Authorized shares - 2,000,000		—				—				—				—				—
Common stock, $1.667 par value		121,265				121,231				121,164				121,163				121,144
Capital surplus		1,051,384				1,050,387				1,050,948				1,049,367				1,048,332
Retained earnings		777,430				747,614				716,605				690,960				655,095
Common stock issued to deferred compensation
trust, at cost		(19,349	)			(18,323	)			(18,257	)			(18,076	)			(18,076	)
Deferred compensation trust		19,349				18,323				18,257				18,076				18,076
Accumulated other comprehensive income (loss)		(96,358	)			(56,712	)			10,597				21,597				29,273
TOTAL SHAREHOLDERS’ EQUITY		1,853,721				1,862,520				1,899,314				1,883,087				1,853,844
Noncontrolling interest		16,812				17,240				16,860				17,347				16,012
TOTAL EQUITY		1,870,533				1,879,760				1,916,174				1,900,434				1,869,856
TOTAL LIABILITIES AND EQUITY	$	16,864,039			$	16,666,588			$	16,361,387			$	15,811,372			$	15,803,835

TOWNEBANK
Consolidated Statements of Income - Five Quarter Trend (unaudited)
(dollars in thousands, except share data)
	Three Months Ended
	June 30,				March 31,				December 31,				September 30,				June 30,
		2022				2022				2021				2021				2021
INTEREST INCOME:
Loans, including fees	$	101,043			$	94,962			$	95,054			$	98,258			$	100,614
Investment securities		12,263				9,671				10,484				7,000				6,871
Interest-bearing deposits in financial institutions and federal funds sold		4,616				1,347				1,215				1,182				619
Mortgage loans held for sale		2,217				2,375				2,750				3,405				3,711
Total interest income		120,139				108,355				109,503				109,845				111,815
INTEREST EXPENSE:
Deposits		5,573				4,894				5,389				6,028				7,144
Advances from the FHLB		86				92				206				247				274
Subordinated debt		5,091				4,120				2,962				2,962				2,962
Repurchase agreements and other borrowings		49				45				154				165				291
Total interest expense		10,799				9,151				8,711				9,402				10,671
Net interest income		109,340				99,204				100,792				100,443				101,144
PROVISION FOR CREDIT LOSSES		56				(1,449	)			(1,110	)			(1,582	)			(10,055	)
Net interest income after provision for credit losses		109,284				100,653				101,902				102,025				111,199
NONINTEREST INCOME:
Residential mortgage banking income, net		13,176				14,638				20,945				25,422				25,524
Insurance commissions and other title fees and income, net		19,746				19,074				15,486				17,398				18,331
Property management income, net		9,452				17,147				9,099				10,502				7,091
Real estate commission income, net		3,412				2,554				3,165				3,781				3,893
Service charges on deposit accounts		2,446				2,574				2,479				2,524				2,391
Credit card merchant fees, net		1,906				1,375				1,412				1,660				1,667
BOLI		1,853				1,717				1,904				2,301				1,541
Other income		5,649				7,129				5,142				6,045				5,487
Net gain/(loss) on investment securities		—				—				—				—				252
Total noninterest income		57,640				66,208				59,632				69,633				66,177
NONINTEREST EXPENSE:
Salaries and employee benefits		64,892				63,963				64,814				61,230				61,365
Occupancy expense		8,342				8,327				8,371				7,656				7,559
Furniture and equipment		3,643				3,690				3,528				3,513				3,622
Amortization - intangibles		2,684				2,817				2,935				2,750				2,719
Software expense		4,762				4,492				4,014				4,209				4,494
Data processing		3,556				3,594				3,524				3,603				3,414
Professional fees		1,761				2,027				2,723				2,227				2,259
Advertising and marketing		4,091				4,127				3,414				3,865				3,257
Other expenses		14,994				16,342				17,144				15,033				16,705
Total noninterest expense		108,725				109,379				110,467				104,086				105,394
Income before income tax expense and noncontrolling interest		58,199				57,482				51,067				67,572				71,982
Provision for income tax expense		11,145				11,232				9,410				14,829				13,980
Net income		47,054				46,250				41,657				52,743				58,002
Net income attributable to noncontrolling interest		(507	)			(664	)			(1,474	)			(2,343	)			(2,199	)
Net income attributable to TowneBank	$	46,547			$	45,586			$	40,183			$	50,400			$	55,803
Per common share information
Basic earnings	$	0.64			$	0.63			$	0.55			$	0.70			$	0.77
Diluted earnings	$	0.64			$	0.63			$	0.55			$	0.69			$	0.77
Basic weighted average shares outstanding		72,559,537				72,498,075				72,525,504				72,506,877				72,468,094
Diluted weighted average shares outstanding		72,568,886				72,562,122				72,624,610				72,591,281				72,560,234
Cash dividends declared	$	0.23			$	0.20			$	0.20			$	0.20			$	0.20

TOWNEBANK
Banking Segment Financial Information (unaudited)
(dollars in thousands)
	Three Months Ended												Six Months Ended								Increase/(Decrease)
	June 30,								March 31,				June 30,								2022 over 2021
		2022				2021				2022				2022				2021			Amount				Percent
Revenue
Net interest income	$	107,417			$	98,135			$	96,770			$	204,187			$	195,739			$	8,448			4.32	%
Service charges on deposit
accounts		2,446				2,391				2,574				5,020				4,580				440			9.61	%
Credit card merchant fees		1,906				1,667				1,375				3,281				2,969				312			10.51	%
Other income		5,042				5,403				6,710				11,751				10,375				1,376			13.26	%
Subtotal		9,394				9,461				10,659				20,052				17,924				2,128			11.87	%
Net gain/(loss) on investment securities		—				252				—				—				1,252				(1,252	)		(100.00)%
Total noninterest income		9,394				9,713				10,659				20,052				19,176				876			4.57	%
Total revenue		116,811				107,848				107,429				224,239				214,915				9,324			4.34	%
Provision for credit losses		(160	)			(9,532	)			(1,833	)			(1,993	)			(12,932	)			10,939			(84.59)%
Expenses
Salaries and employee benefits		38,673				35,776				37,059				75,733				67,637				8,096			11.97	%
Occupancy expense		5,633				5,012				5,659				11,292				10,558				734			6.95	%
Furniture and equipment		2,747				2,816				2,709				5,456				5,484				(28	)		(0.51)%
Amortization of intangibles		777				912				827				1,603				1,875				(272	)		(14.51)%
Other expenses		17,856				18,392				18,228				36,083				32,441				3,642			11.23	%
Total expenses		65,686				62,908				64,482				130,167				117,995				12,172			10.32	%
Income before income tax, corporate allocation and noncontrolling interest		51,285				54,472				44,780				96,065				109,852				(13,787	)		(12.55)%
Corporate allocation		1,325				1,249				1,292				2,617				2,540				77			3.03	%
Income before income tax provision and noncontrolling interest		52,610				55,721				46,072				98,682				112,392				(13,710	)		(12.20)%
Provision for income tax expense		9,756				10,535				8,519				18,275				20,236				(1,961	)		(9.69)%
Net income		42,854				45,186				37,553				80,407				92,156				(11,749	)		(12.75)%
Noncontrolling interest		—				1				—				—				(3	)			3			(100.00)%
Net income attributable to TowneBank	$	42,854			$	45,187			$	37,553			$	80,407			$	92,153			$	(11,746	)		(12.75)%
Efficiency ratio (non-GAAP)		55.57	%			57.62	%			59.25	%			57.33	%			54.35	%			2.98	%		5.48	%

TOWNEBANK
Realty Segment Financial Information (unaudited)
(dollars in thousands)
	Three Months Ended												Six Months Ended								Increase/(Decrease)
	June 30,								March 31,				June 30,								2022 over 2021
		2022				2021				2022				2022				2021			Amount				Percent
Revenue
Residential mortgage brokerage income, net	$	14,858			$	26,383			$	15,906			$	30,765			$	64,260			$	(33,495	)		(52.12)%
Real estate brokerage income, net		3,412				3,893				2,554				5,966				6,344				(378	)		(5.96)%
Title insurance and settlement fees		561				688				504				1,065				1,212				(147	)		(12.13)%
Property management fees, net		9,452				7,091				17,147				26,599				22,574				4,025			17.83	%
Income from unconsolidated subsidiary		115				289				167				282				695				(413	)		(59.42)%
Net interest and other income		2,411				3,332				2,932				5,343				6,068				(725	)		(11.95)%
Total revenue		30,809				41,676				39,210				70,020				101,153				(31,133	)		(30.78)%
Provision for credit losses		216				(523	)			384				600				(1,150	)			1,750			(152.17)%
Expenses
Salaries and employee benefits		16,501				16,018				17,291				33,791				32,865				926			2.82	%
Occupancy expense		1,997				1,935				1,898				3,895				3,806				89			2.34	%
Furniture and equipment		707				592				761				1,467				1,242				225			18.12	%
Amortization of intangible assets		816				590				816				1,633				1,180				453			38.39	%
Other expenses		9,932				10,442				10,852				20,785				19,669				1,116			5.67	%
Total expenses		29,953				29,577				31,618				61,571				58,762				2,809			4.78	%
Income before income tax, corporate allocation and noncontrolling interest		640				12,622				7,208				7,849				43,541				(35,692	)		(81.97)%
Corporate allocation		(1,000	)			(1,000	)			(1,000	)			(2,000	)			(2,000	)			—			—	%
Income before income tax provision and noncontrolling interest		(360	)			11,622				6,208				5,849				41,541				(35,692	)		(85.92)%
Provision for income tax expense		(144	)			2,255				1,374				1,230				8,471				(7,241	)		(85.48)%
Net income		(216	)			9,367				4,834				4,619				33,070				(28,451	)		(86.03)%
Noncontrolling interest		(507	)			(2,200	)			(664	)			(1,171	)			(5,832	)			4,661			(79.92)%
Net income attributable to TowneBank	$	(723	)		$	7,167			$	4,170			$	3,448			$	27,238			$	(23,790	)		(87.34)%
Efficiency ratio(non-GAAP)		94.57	%			69.55	%			78.56	%			85.60	%			56.93	%			28.67	%		50.36	%

TOWNEBANK
Insurance Segment Financial Information (unaudited)
(dollars in thousands)
	Three Months Ended												Six Months Ended								Increase/(Decrease)
	June 30,								March 31,				June 30,								2022 over 2021
		2022				2021				2022				2022				2021			Amount				Percent
Commission and fee income
Property and casualty	$	16,546			$	14,941			$	15,337			$	31,884			$	29,129			$	2,755			9.46	%
Employee benefits		3,924				3,430				4,161				8,085				7,315				770			10.53	%
Specialized benefit services		160				163				170				330				329				1			0.30	%
Total commissions and fees		20,630				18,534				19,668				40,299				36,773				3,526			9.59	%
Contingency and bonus revenue		2,994				3,323				3,404				6,398				5,082				1,316			25.90	%
Other income		15				43				33				48				117				(69	)		(58.97)%
Total revenue		23,639				21,900				23,105				46,745				41,972				4,773			11.37	%
Employee commission expense		4,279				4,103				4,332				8,612				8,210				402			4.90	%
Revenue, net of commission expense		19,360				17,797				18,773				38,133				33,762				4,371			12.95	%
Salaries and employee benefits		9,718				9,571				9,613				19,331				19,299				32			0.17	%
Occupancy expense		712				612				770				1,482				1,266				216			17.06	%
Furniture and equipment		189				214				220				410				408				2			0.49	%
Amortization of intangible assets		1,091				1,217				1,174				2,265				2,387				(122	)		(5.11)%
Other expenses		1,376				1,295				1,502				2,878				2,602				276			10.61	%
Total operating expenses		13,086				12,909				13,279				26,366				25,962				404			1.56	%
Income before income tax, corporate allocation and noncontrolling interest		6,274				4,888				5,494				11,767				7,800				3,967			50.86	%
Corporate allocation		(325	)			(249	)			(292	)			(617	)			(540	)			(77	)		14.26	%
Income before income tax provision and noncontrolling interest		5,949				4,639				5,202				11,150				7,260				3,890			53.58	%
Provision for income tax expense		1,533				1,190				1,339				2,872				1,852				1,020			55.08	%
Net income		4,416				3,449				3,863				8,278				5,408				2,870			53.07	%
Noncontrolling interest		—				—				—				—				—				—			N/M
Net income attributable to TowneBank	$	4,416			$	3,449			$	3,863			$	8,278			$	5,408				2,870			53.07	%
Provision for income taxes		1,533				1,190				1,339				2,872				1,852				1,020			55.08	%
Depreciation, amortization and interest expense		1,220				1,361				1,319				2,539				2,669				(130	)		(4.87)%
EBITDA (non-GAAP)	$	7,169			$	6,000			$	6,521			$	13,689			$	9,929			$	3,760			37.87	%
Efficiency ratio (non-GAAP)		61.96	%			65.70	%			64.48	%			63.20	%			69.83	%		(6.63)%				(9.49)%

TOWNEBANK
Reconciliation of Non-GAAP Financial Measures
(dollars in thousands)
	Three Months Ended												Six Months Ended
	June 30,				June 30,				March 31,				June 30,				June 30,
		2022				2021				2022				2022				2021
Return on average assets (GAAP)		1.13	%			1.48	%			1.13	%			1.13	%			1.69	%
Impact of excluding average goodwill and other intangibles and amortization		0.09	%			0.11	%			0.10	%			0.09	%			0.12	%
Return on average tangible assets (non-GAAP)		1.22	%			1.59	%			1.23	%			1.22	%			1.81	%
Return on average equity (GAAP)		9.94	%			12.21	%			9.73	%			9.83	%			13.86	%
Impact of excluding average goodwill and other intangibles and amortization		4.26	%			5.17	%			4.18	%			4.23	%			5.88	%
Return on average tangible equity (non-GAAP)		14.20	%			17.38	%			13.91	%			14.06	%			19.74	%
Return on average common equity (GAAP)		10.03	%			12.31	%			9.81	%			9.92	%			13.98	%
Impact of excluding average goodwill and other intangibles and amortization		4.34	%			5.26	%			4.27	%			4.30	%			5.98	%
Return on average tangible common equity (non-GAAP)		14.37	%			17.57	%			14.08	%			14.22	%			19.96	%
Book value (GAAP)	$	25.48			$	25.51			$	25.61			$	25.48			$	25.51
Impact of excluding average goodwill and other intangibles and amortization		(6.90	)			(6.81	)			(6.94	)			(6.90	)			(6.81	)
Tangible book value (non-GAAP)	$	18.58			$	18.70			$	18.67			$	18.58			$	18.70
Efficiency ratio (GAAP)		65.11	%			62.99	%			66.13	%			65.62	%			57.95	%
Impact of exclusions	(1.60)%				(1.53)%				(1.71)%				(1.66)%				(1.36)%
Efficiency ratio (non-GAAP)		63.51	%			61.46	%			64.42	%			63.96	%			56.59	%
Average assets (GAAP)	$	16,529,810			$	15,143,888			$	16,311,998			$	16,421,506			$	14,869,675
Less: average goodwill and intangible assets		503,678				496,059				506,496				505,079				496,748
Average tangible assets (non-GAAP)	$	16,026,132			$	14,647,829			$	15,805,502			$	15,916,427			$	14,372,927
Average equity (GAAP)	$	1,878,361			$	1,833,592			$	1,900,267			$	1,889,254			$	1,815,778
Less: average goodwill and intangible assets		503,678				496,059				506,496				505,079				496,748
Average tangible equity (non-GAAP)	$	1,374,683			$	1,337,533			$	1,393,771			$	1,384,175			$	1,319,030
Average common equity (GAAP)	$	1,861,635			$	1,818,664			$	1,884,101			$	1,872,806			$	1,800,829
Less: average goodwill and intangible assets		503,678				496,059				506,496				505,079				496,748
Average tangible common equity (non-GAAP)	$	1,357,957			$	1,322,605			$	1,377,605			$	1,367,727			$	1,304,081
Net Income (GAAP)	$	46,547			$	55,803			$	45,586			$	92,133			$	124,799
Amortization of Intangibles, net of tax		2,120				2,148				2,225				4,346				4,299
Tangible net income (non-GAAP)	$	48,667			$	57,951			$	47,811			$	96,479			$	129,098
Net Income (GAAP)	$	46,547			$	55,803			$	45,586			$	92,133			$	124,799
Provision for credit losses		56				(10,055	)			(1,449	)			(1,393	)			(14,082	)
Provision for income tax		11,145				13,980				11,232				22,377				30,559
Other nonrecurring (income) loss		—				—				—				—				30
Pre-provision, pre-tax net revenues (non-GAAP)	$	57,748			$	59,728			$	55,369			$	113,117			$	141,306
Total Revenue (GAAP)	$	166,980			$	167,321			$	165,412			$	332,392			$	349,830
Net (gain)/loss on investment securities		—				(252	)			—				—				(1,252	)
Other nonrecurring (income) loss		—				—				—				—				30
Total Revenue for efficiency calculation (non-GAAP)	$	166,980			$	167,069			$	165,412			$	332,392			$	348,608
Noninterest expense (GAAP)	$	108,725			$	105,394			$	109,379			$	218,104			$	202,719
Less: amortization of intangibles		2,684				2,719				2,817				5,501				5,442
Noninterest expense net of amortization (non-GAAP)	$	106,041			$	102,675			$	106,562			$	212,603			$	197,277