TowneBank Reports First Quarter 2022 Earnings

SUFFOLK, Va., April 28, 2022 (GLOBE NEWSWIRE) -- TowneBank (the "Company" or "Towne") (NASDAQ: TOWN) today reported earnings for the quarter ended March 31, 2022 of $45.59 million, or $0.63 per diluted share, compared to $69.00 million, or $0.95 per diluted share, for the quarter ended March 31, 2021.

"TowneBank had a strong start to the year despite the expected revenue decline in our real estate segment as well as a reduction in revenue associated with the forgiveness of Paycheck Protection Program ("PPP") loans. With core annualized loan growth of over 20%, spread across all of our markets, combined with the continued deployment of excess liquidity, we expect the increase in short-term rates will result in improvements in net interest income and margin through the rest of 2022. Credit metrics remained excellent and we strengthened our balance sheet ahead of rising rates by completing a sub debt offering at attractive rates in early February," said G. Robert Aston, Jr., Executive Chairman.

Highlights for First Quarter 2022 Compared to First Quarter 2021:

• Total revenues were $165.41 million, a decrease of $17.10 million, or 9.37%, and pre-provision, pre-tax, net revenues (non-GAAP), were $55.37 million, a decrease of $26.21 million, or 32.13%. These declines were primarily driven by residential mortgage banking income, which declined $22.77 million in the quarter and a reduction in income on PPP loans of $9.53 million.
• Loans held for investment were $9.91 billion, an increase of $0.17 billion, or 1.79%, from March 31, 2021, and $0.40 billion, or 4.24%, from December 31, 2021. Excluding the decline in PPP loans, loans held for investment increased $989.07 million, or 11.19%, compared to March 31, 2021, and $476.79 million, or 20.68% on an annualized basis, from the linked quarter. Total loans at March 31, 2022, March 31, 2021, and December 31, 2021 included $0.08 billion, $0.90 billion, and $0.16 billion, respectively, of PPP loans.
• Total deposits were $13.77 billion, an increase of $1.63 billion, or 13.44% compared to prior year and $0.20 billion, or 5.92% on an annualized basis, from December 31, 2021.
• Noninterest bearing deposits increased by 14.29%, to $5.53 billion, representing 40.17% of total deposits. Compared to the linked quarter, noninterest bearing deposits decreased $14.33 million, primarily in escrow deposits.
• Annualized return on common shareholders' equity was 9.81% and annualized return on average tangible common shareholders' equity was 14.08% (non-GAAP).
• Net interest margin for the quarter was 2.67% and taxable equivalent net interest margin (non-GAAP) was 2.69%.
• Effective tax rate of 19.77% in the quarter compared to 19.37% in first quarter 2021, and 18.97% in the linked quarter.
  

"Our results benefited from healthy loan pipelines as we entered 2022. We opened a new full-service banking office in Charlotte, and we continue to invest in growing our fee-based businesses. We also believe our strong commitment to generating high levels of noninterest bearing deposits should provide a competitive advantage in a rising rate environment," stated J. Morgan Davis, Chief Executive Officer.

Quarterly Net Interest Income Compared to First Quarter 2021:

• Net interest income was $99.20 million compared to $99.99 million as of March 31, 2021.
• Tax-equivalent net interest margin (non-GAAP) was 2.69%, including purchase accounting accretion of 6 basis points and PPP interest and fees of 3 basis points, compared to 3.05%, including purchase accounting accretion of 4 basis points and 11 basis points of PPP interest and fees, for first quarter 2021.
• On an average basis, loans held for investment, with a yield of 4.01%, represented 64.26% of earning assets at March 31, 2022 compared to a yield of 4.28% and 72.33% of earning assets in the first quarter of 2021. Excluding PPP loans, loan yields were 3.97% in first quarter 2022 compared to 4.17% in first quarter 2021.
• Interest and fee income on PPP loans was $2.10 million in first quarter 2022, compared to $3.85 million in the linked quarter, and $11.63 million in first quarter 2021.
• Total cost of deposits decreased to 0.15% from 0.30% at March 31, 2021.
• In February 2022, the Company issued $250.00 million of fixed-to-floating rate subordinated notes. The subordinated notes accrue interest at a fixed rate of 3.13%, resulting in an increase in interest expense of $1.11 million in the quarter.
• Average interest-earning assets totaled $15.05 billion at March 31, 2022 compared to $13.36 billion at March 31, 2021, an increase of 12.65%.
• Average interest-bearing liabilities totaled $8.56 billion, an increase of $0.55 billion from prior year, driven primarily by growth in interest bearing deposits.
• We expect to continue positioning our earning asset portfolio to positively benefit interest margin in a rising rate environment.
  

Quarterly Provision for Credit Losses:

• The quarterly provision for credit losses for on-balance-sheet loans was a benefit of $2.10 million compared to benefits of $3.41 million one year ago and $1.18 million in the linked quarter.
• The first quarter 2022 included a release in the allowance for credit losses of $2.23 million that was driven by improved economic forecasts and the related release of certain reserves associated with industries heavily impacted by COVID-19, partially offset by an increase in reserves driven by core loan growth.
• Net loan charge-offs were $0.13 million compared to $0.67 million one year prior and net recoveries of $0.06 million in the linked quarter. The ratio of net loan charge-offs to average loans on an annualized basis was 0.01% in first quarter 2022, 0.03% in first quarter 2021, and 0.00% in the linked quarter.
• The allowance for credit losses on loans represented 1.05% of total loans at March 31, 2022, 1.12% at December 31, 2021, and 1.19% at March 31, 2021. Excluding PPP loans, which are fully government guaranteed, the allowance for credit losses (non-GAAP) was 1.06%, compared to 1.13% at December 31, 2021 and 1.31% at March 31, 2021. The allowance for credit losses on loans was 21.52 times nonperforming loans compared to 17.76 times at December 31, 2021 and 9.09 times at March 31, 2021.

Quarterly Noninterest Income Compared to First Quarter 2021:

• Total noninterest income was $66.21 million compared to $82.52 million in 2021, a decrease of $16.31 million, or 19.77%. Residential mortgage banking income decreased $22.77 million, while insurance commissions and property management income increased $2.75 million and $1.66 million, respectively.
• Residential mortgage banking recorded income of $14.64 million compared to $37.41 million in first quarter 2021. Margins declined 100 basis points between quarters and loan volume decreased to $0.82 billion in first quarter 2022 compared to $1.60 billion in 2021. Residential purchase activity comprised 77.93% of production volume in the first quarter of 2022 compared to 53.45% in the prior year quarter as the increase in rates continued to negatively impact refinance activity. Included in first quarter 2022 was a loss on interest rate-locks of $0.45 million, compared to a gain of $0.74 million in first quarter 2021.
• Margins on residential mortgages decreased 100 basis points from first quarter 2021 to 3.01% in the current quarter.
• Total Insurance segment revenue was $23.11 million in first quarter 2022, $3.03 million or 15.11%, higher than first quarter 2021. This increase was attributable to organic growth in property and casualty commissions plus bonus and contingency income.
• Property management fee revenue increased 10.75%, or $1.66 million, to $17.15 million compared to first 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 $4.14 million in property management fees during the quarter. Management anticipates the loosening of COVID-related travel restrictions may result in a decline in reservation activity for the remainder of 2022, from the record levels of the past two years.
• In April 22, the Company implemented changes for personal accounts to eliminate fees for non-sufficient funds and other overdraft program fees. The change is not expected to have a material effect on future revenue.

Quarterly Noninterest Expense Compared to First Quarter 2021:

• Total noninterest expense was $109.38 million compared to $97.33 million in 2021, an increase of $12.05 million, or 12.38%. The higher level of expenses was attributable to increases in salaries and benefits of $5.53 million, advertising and marketing expense of $1.16 million, an earnout adjustment of $1.84 million for a prior year property management company acquisition, and $0.53 million in fixed asset disposals associated with the move of our financial services group headquarters.
• Advertising and marketing expense increases, related primarily to our Realty segment, were driven by production based advertising programs in our property management companies and consumer mortgage advertising in our residential mortgage operations.
• Increased costs associated with our core banking platform resulted in higher software expenses, and higher credit card fees on vacation property reservation activities drove the increase in data processing expense.
  

Consolidated Balance Sheet Highlights:

• Total assets were $16.67 billion for the quarter ended March 31, 2022, an increase of $1.59 billion, or 10.53%, from $15.08 billion at March 31, 2021. Total assets increased $0.31 billion, or 1.87%, from the linked quarter. The year-over-year increase was driven by increases in securities and loans held for investment.
• Loans held for investment increased $0.17 billion, or 1.79%, compared to prior year and $0.40 billion, or 4.24%, compared the linked quarter. Excluding PPP loans of $0.08 billion in first quarter 2022, $0.90 billion in first quarter 2021, and $0.16 billion in the linked quarter, loans held for investment increased $989.07 million, or 11.19%, compared to prior year, and $476.79 million, or 5.10%, compared to December 31, 2021, or 20.68% on an annualized basis. Loan growth was broad-based across almost all of our loan portfolio classifications and market areas.
• Average loans held for investment, excluding PPP loans, were $9.55 billion in the first quarter of 2022, an increase of $699.86 million, or 7.91%, compared to prior year. In the linked quarter comparison, average loans held for investment, excluding PPP loans, increased 4.15%, or $380.77 million, 16.84% on an annualized basis.
• Unamortized fee income related to PPP loans was $2.08 million at March 31, 2022.
• Mortgage loans held for sale decreased $348.29 million, or 59.75%, compared to the prior year and $123.68 million, or 34.52%, compared to the linked quarter.
• Total deposits increased $1.63 billion, or 13.44%, compared to the prior year and $0.20 billion, or 1.46%, compared to the linked quarter.
• Total borrowings decreased $0.13 billion, or 17.02%, from prior year due to the repayment of FHLB borrowings and the FRB PPP Lending Facility. Total borrowings increased $0.15 billion, or 30.33%, compared to the linked quarter due to a new subordinated debt offering in the quarter.
  

Investment Securities:

• Total investment securities were $2.30 billion compared to $1.98 billion at December 31, 2021 and $1.46 billion at March 31, 2021. The weighted average duration of the portfolio at March 31, 2022 was 3.9 years. The carrying value of the available for sale debt securities portfolio included $70.32 million in net unrealized losses at March 31, 2022, and $28.12 million and $17.54 million in net unrealized gains at March 31, 2021 and December 31, 2021, respectively. In first quarter 2022, the net change in carrying value for available-for-sale debt securities resulted in a $1.03 decrease in tangible book value.
  

Loans and Asset Quality:

• Total loans held for investment were $9.91 billion at March 31, 2022 compared to $9.51 billion at December 31, 2021 and $9.73 billion at March 31, 2021.
• Nonperforming assets were $5.39 million, or 0.03% of total assets, compared to $17.27 million, or 0.11%, at March 31, 2021.
• Nonperforming loans were 0.05% of period end loans compared to 0.13% at March 31, 2021.
• Foreclosed property decreased to $0.56 million from $3.75 million at March 31, 2021.

Deposits and Borrowings:

• Total deposits were $13.77 billion compared to $13.57 billion at December 31, 2021 and $12.14 billion at March 31, 2021.
• Total loans held for investment to deposits were 71.95% compared to 70.03% at December 31, 2021 and 80.19% at March 31, 2021.
• Non-interest bearing deposits were 40.17% of total deposits at March 31, 2022 compared to 40.86% at December 31, 2021 and 39.87% at March 31, 2021.
• Total borrowings were $0.63 billion compared to $0.48 billion at December 31, 2021 and $0.76 billion at March 31, 2021.

Capital:

• Common equity tier 1 capital ratio of 12.16%.
• Tier 1 leverage capital ratio of 9.16%.
• Tier 1 risk-based capital ratio of 12.31%.
• Total risk-based capital ratio of 17.34%.
• Book value per common share was $25.61 compared to $26.13 at December 31, 2021 and $24.78 at March 31, 2021.
• Tangible book value per common share (non-GAAP) was $18.67 compared to $19.15 at December 31, 2021 and $17.94 at March 31, 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 $16.67 billion as of March 31, 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, 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, 2021 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
		March 31,				December 31,				September 30,				June 30,				March 31,
			2022				2021				2021				2021				2021
Income and Performance Ratios:
	Total Revenue	$	165,412			$	160,424			$	170,076			$	167,321			$	182,509
	Net income		46,250				41,657				52,743				58,002				72,631
	Net income available to common shareholders		45,586				40,183				50,400				55,803				68,995
	Pre-provision, pre-tax, net revenues(non-GAAP)		55,369				48,483				63,647				59,728				81,578
	Net income per common share - diluted		0.63				0.55				0.69				0.77				0.95
	Book value per common share		25.61				26.13				25.91				25.51				24.78
	Book value per common share - tangible(non-GAAP)		18.67				19.15				18.92				18.70				17.94
	Return on average assets		1.13	%			0.99	%			1.27	%			1.48	%			1.92	%
	Return on average assets - tangible(non-GAAP)		1.23	%			1.08	%			1.37	%			1.59	%			2.05	%
	Return on average equity		9.73	%			8.38	%			10.59	%			12.21	%			15.56	%
	Return on average equity - tangible(non-GAAP)		13.91	%			12.08	%			15.09	%			17.38	%			22.19	%
	Return on average common equity		9.81	%			8.45	%			10.68	%			12.31	%			15.70	%
	Return on average common equity - tangible(non-GAAP)		14.08	%			12.22	%			15.27	%			17.57	%			22.45	%
	Noninterest income as a percentage of total revenue		40.03	%			37.17	%			40.94	%			39.55	%			45.21	%
Regulatory Capital Ratios (1):
	Common equity tier 1		12.16	%			12.36	%			12.53	%			12.42	%			12.15	%
	Tier 1		12.31	%			12.51	%			12.69	%			12.57	%			12.30	%
	Total		17.34	%			15.56	%			15.85	%			15.76	%			15.59	%
	Tier 1 leverage ratio		9.16	%			9.11	%			9.18	%			9.44	%			9.54	%
Asset Quality:
	Allowance for credit losses on loans to nonperforming loans	21.52x				17.76x				12.68x				9.67x				9.09x
	Allowance for credit losses on loans to period end loans		1.05	%			1.12	%			1.15	%			1.15	%			1.19	%
	Allowance for credit losses on loans to period end loans excluding PPP loans(non-GAAP)		1.06	%			1.13	%			1.18	%			1.22	%			1.31	%
	Nonperforming loans to period end loans		0.05	%			0.06	%			0.09	%			0.12	%			0.13	%
	Nonperforming assets to period end assets		0.03	%			0.06	%			0.09	%			0.10	%			0.11	%
	Net charge-offs (recoveries) to average loans (annualized)		0.01	%			—	%		(0.03)        %				(0.01)        %					0.03	%
	Net charge-offs (recoveries)	$	126			$	(60	)		$	(644	)		$	(137	)		$	669
	Nonperforming loans	$	4,825			$	5,973			$	8,451			$	11,178			$	12,768
	Former bank premises		—				—				—				—				750
	Foreclosed property		560				4,583				5,409				4,041				3,748
	Total nonperforming assets	$	5,385			$	10,556			$	13,860			$	15,219			$	17,266
	Loans past due 90 days and still accruing interest	$	40			$	372			$	143			$	1,584			$	108
	Allowance for credit losses on loans	$	103,833			$	106,059			$	107,177			$	108,130			$	116,077
Mortgage Banking:
	Loans originated, mortgage	$	583,008			$	851,021			$	939,272			$	1,050,663			$	1,187,595
	Loans originated, joint venture		236,980				303,362				370,865				403,864				417,177
	Total loans originated	$	819,988			$	1,154,383			$	1,310,137			$	1,454,527			$	1,604,772
	Number of loans originated		2,237				3,408				3,917				4,514				5,164
	Number of originators		207				213				219				222				229
	Purchase %		77.93	%			79.36	%			77.45	%			76.95	%			53.45	%
	Loans sold	$	853,808			$	1,150,996			$	1,394,166			$	1,485,057			$	1,601,480
	Rate lock asset	$	3,009			$	3,455			$	6,087			$	7,760			$	12,522
	Gross realized gain on sales and fees as a % of loans originated		3.01	%			3.42	%			3.61	%			3.64	%			4.01	%
Other Ratios:
	Net interest margin		2.67	%			2.70	%			2.76	%			2.91	%			3.04	%
	Net interest margin-fully tax equivalent(non-GAAP)		2.69	%			2.72	%			2.77	%			2.94	%			3.05	%
	Average earning assets/total average assets		92.24	%			92.13	%			91.95	%			91.97	%			91.52	%
	Average loans/average deposits		71.61	%			70.68	%			71.69	%			78.22	%			82.71	%
	Average noninterest deposits/total average deposits		40.49	%			41.42	%			40.40	%			40.21	%			38.39	%
	Period end equity/period end total assets		11.28	%			11.71	%			12.02	%			11.83	%			12.04	%
	Efficiency ratio(non-GAAP)		64.42	%			67.03	%			59.58	%			61.46	%			52.11	%
	(1) Current reporting period regulatory capital ratios are preliminary

TOWNEBANK
Selected Data (unaudited)
(dollars in thousands)
	Time Period												% Change
Investment Securities	Q1				Q1				Q4				Q1 22 vs.			Q1 22 vs.
Available-for-sale securities, at fair value		2022				2021				2021			Q1 21			Q4 21
U.S. agency securities	$	338,490			$	201,787			$	310,587			67.75	%		8.98	%
U.S. Treasury notes		970				1,019				1,000			(4.81)	%		(3.00)	%
Municipal securities		400,200				334,751				385,673			19.55	%		3.77	%
Trust preferred and other corporate securities		85,792				31,241				53,950			174.61	%		59.02	%
Mortgage-backed securities issued by GSE and GNMA		1,022,169				849,418				1,055,183			20.34	%		(3.13)	%
Allowance for credit losses		(1,081	)			(210	)			(210	)		414.76	%		414.76	%
Total	$	1,846,540			$	1,418,006			$	1,806,183			30.22	%		2.23	%
Gross unrealized gains (losses) reflected in financial statements
Total gross unrealized gains	$	3,443			$	38,751			$	32,054			(91.12)	%		(89.26)	%
Total gross unrealized losses		(73,758	)			(10,632	)			(14,514	)		593.74	%		408.19	%
Net unrealized gains (losses) and other adj. on AFS securities	$	(70,315	)		$	28,119			$	17,540			(350.06)	%		(500.88)	%
Held-to-maturity securities, at amortized cost
U.S. agency securities		83,004			$	—			$	73,360			N/M			13.15	%
U.S. Treasury notes		336,193				—				66,326			N/M			406.88	%
Municipal securities		5,116				5,032				5,095			1.67	%		0.41	%
Trust preferred corporate securities		2,260				2,309				2,272			(2.12)	%		(0.53)	%
Mortgage-backed securities issued by GSE and GNMA		6,811				8,639				7,168			(21.16)	%		(4.98)	%
Allowance for credit losses		(92	)			(97	)			(94	)		(5.15)	%		(2.13)	%
Total	$	433,292			$	15,883			$	154,127			2,628.02	%		181.13	%
Gross unrealized gains (losses) not reflected in financial statements
Total gross unrealized gains	$	714			$	1,598			$	1,561			(55.32)	%		(54.26)	%
Total gross unrealized losses		(11,915	)			—				(106	)		—	%		—	%
Net unrealized gains (losses) in HTM securities	$	(11,201	)		$	1,598			$	1,455			(800.94)	%		(869.83)	%
Loans Held For Investment(1)	Q1				Q1				Q4				Q1 22 vs.			Q1 22 vs.
		2022				2021				2021			Q1 21			Q4 21
Real estate - construction and development	$	1,236,294			$	1,031,267			$	1,125,863			19.88	%		9.81	%
Commercial real estate - owner occupied		1,561,117				1,439,412				1,494,000			8.46	%		4.49	%
Commercial real estate - non owner occupied		2,697,929				2,477,315				2,620,334			8.91	%		2.96	%
Real estate - multifamily		339,220				360,125				332,659			(5.80)	%		1.97	%
Residential 1-4 family		1,392,052				1,173,761				1,305,915			18.60	%		6.60	%
HELOC		376,480				400,314				380,834			(5.95)	%		(1.14)	%
Commercial and industrial business (C&I)		1,212,973				2,005,558				1,206,911			(39.52)	%		0.50	%
Government		518,839				398,579				525,358			30.17	%		(1.24)	%
Indirect		485,620				278,567				394,802			74.33	%		23.00	%
Consumer loans and other		88,784				169,685				119,576			(47.68)	%		(25.75)	%
Total	$	9,909,308			$	9,734,583			$	9,506,252			1.79	%		4.24	%
(1) Paycheck Protection Program loans totaling $0.08 billion, $0.90 billion, and $0.16 billion, primarily in C&I, are included in Q1 22, Q1 21, and Q4 21, respectively.
Deposits	Q1				Q1				Q4				Q1 22 vs.			Q1 22 vs.
		2022				2021				2021			Q1 21			Q4 21
Noninterest-bearing demand	$	5,532,337			$	4,840,678			$	5,546,665			14.29	%		(0.26)	%
Interest-bearing:
Demand and money market accounts		6,432,005				5,062,461				6,139,714			27.05	%		4.76	%
Savings		393,119				342,554				371,356			14.76	%		5.86	%
Certificates of deposits		1,414,339				1,893,951				1,515,891			(25.32)	%		(6.70)	%
Total	$	13,771,800			$	12,139,644			$	13,573,626			13.44	%		1.46	%

TOWNEBANK
Average Balances, Yields and Rate Paid (unaudited)
(dollars in thousands)
	Three Months Ended											Three Months Ended											Three Months Ended
	March 31, 2022											December 31, 2021											March 31, 2021
					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), (1)(2)	$	9,668,724			$	95,596			4.01	%		$	9,372,187			$	95,696			4.05	%		$	9,660,111			$	101,960			4.28	%
Taxable investment securities		2,059,614				9,013			1.75	%			1,625,683				10,217			2.51	%			1,303,535				6,604			2.03	%
Tax-exempt investment securities		110,698				680			2.46	%			157,855				292			0.74	%			139,859				542			1.55	%
Total securities		2,170,312				9,693			1.79	%			1,783,538				10,509			2.36	%			1,443,394				7,146			1.98	%
Interest-bearing deposits		2,929,929				1,347			0.19	%			3,274,392				1,215			0.15	%			1,715,110				416			0.10	%
Loans held for sale		276,448				2,375			3.44	%			379,808				2,750			2.90	%			536,997				3,361			2.50	%
Total earning assets		15,045,413				109,011			2.94	%			14,809,925				110,170			2.95	%			13,355,612				112,883			3.42	%
Less: allowance for credit losses		(106,172	)										(107,215	)										(120,934	)
Total nonearning assets		1,372,757											1,372,799											1,357,738
Total assets	$	16,311,998										$	16,075,509										$	14,592,416
Liabilities and Equity:
Interest-bearing deposits
Demand and money market	$	6,178,217			$	2,262			0.15	%		$	5,853,873			$	2,148			0.15	%		$	4,904,885			$	2,075			0.17	%
Savings		382,839				511			0.54	%			371,901				534			0.57	%			332,006				522			0.64	%
Certificates of deposit		1,472,942				2,121			0.58	%			1,541,483				2,707			0.70	%			1,959,225				5,951			1.23	%
Total interest-bearing deposits		8,033,998				4,894			0.25	%			7,767,257				5,389			0.28	%			7,196,116				8,548			0.48	%
Borrowings		135,775				137			0.40	%			245,622				360			0.58	%			562,451				822			0.58	%
Subordinated debt, net		386,934				4,120			4.26	%			249,555				2,962			4.75	%			249,114				2,930			4.70	%
Total interest-bearing liabilities		8,556,707				9,151			0.43	%			8,262,434				8,711			0.42	%			8,007,681				12,300			0.62	%
Demand deposits		5,467,153											5,492,894											4,483,444
Other noninterest-bearing liabilities		387,871											417,707											303,524
Total liabilities		14,411,731											14,173,035											12,794,649
Shareholders’ equity		1,900,267											1,902,474											1,797,767
Total liabilities and equity	$	16,311,998										$	16,075,509										$	14,592,416
Net interest income (tax-equivalent basis)					$	99,860										$	101,459										$	100,583
Reconciliation of Non-GAAP Financial Measures
Tax-equivalent basis adjustment						(656	)										(667	)										(593	)
Net interest income (GAAP)					$	99,204										$	100,792										$	99,990
Interest rate spread (3)(4)									2.51	%										2.53	%										2.80	%
Interest expense as a percent of average earning assets									0.25	%										0.23	%										0.37	%
Net interest margin (tax equivalent basis) (4)(5)									2.69	%										2.72	%										3.05	%
Total cost of deposits									0.15	%										0.16	%										0.30	%

(1) Average loans balances for December 31, 2021 and March 31, 2021 and related yields have been restated to include, previously excluded, nonaccrual loans of $7.69 million and $12.98 million, respectively.
(2) March 31, 2022, March 31, 2021, and December 31, 2021 includes average PPP balances of $0.12 billion, $0.81 billion and $0.20 billion, and related interest and fee income of $2.10 million, $11.63 million, and $3.85 million, respectively.
(3) Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities. Fully tax equivalent.
(4) Net interest margin is net interest income expressed as a percentage of average earning assets. Fully tax equivalent.
(5) Non-GAAP.

TOWNEBANK
Consolidated Balance Sheets
(dollars in thousands, except share data)
	March 31,				December 31,
		2022				2021
	(unaudited)				(audited)
ASSETS
Cash and due from banks	$	74,991			$	17,373
Interest-bearing deposits at FRB - Richmond		2,857,327				3,244,484
Interest-bearing deposits in financial institutions		34,684				34,779
Total Cash and Cash Equivalents		2,967,002				3,296,636
Securities available for sale, at fair value (amortized cost of $1,917,936 and $1,788,853, and allowance for credit losses of $1,081 and $210 at March 31, 2022 and December 31, 2021, respectively.)		1,846,540				1,806,183
Securities held to maturity, at amortized cost (fair value $422,183 and $155,676 at March 31, 2022 and December 31, 2021, respectively.)		433,384				154,221
Less: allowance for credit losses		(92	)			(94	)
Securities held to maturity, net of allowance for credit losses		433,292				154,127
Other equity securities		6,789				6,759
FHLB stock		10,432				13,146
Total Securities		2,297,053				1,980,215
Mortgage loans held for sale		234,620				358,303
Loans, net of unearned income and deferred costs		9,909,308				9,506,252
Less: allowance for credit losses		(103,833	)			(106,059	)
Net Loans		9,805,475				9,400,193
Premises and equipment, net		277,764				270,772
Goodwill		457,162				457,187
Other intangible assets, net		47,562				50,379
BOLI		253,112				251,805
Other assets		326,838				295,897
TOTAL ASSETS	$	16,666,588			$	16,361,387
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand	$	5,532,337			$	5,546,665
Interest-bearing:
Demand and money market accounts		6,432,005				6,139,714
Savings		393,119				371,356
Certificates of deposit		1,414,339				1,515,891
Total Deposits		13,771,800				13,573,626
Advances from the FHLB		55,196				155,367
Subordinated debt, net		496,757				249,652
FRB PPP lending facility		—				—
Repurchase agreements and other borrowings		75,988				76,797
Total Borrowings		627,941				481,816
Other liabilities		387,087				389,771
TOTAL LIABILITIES		14,786,828				14,445,213
Preferred stock, authorized and unissued shares - 2,000,000		—				—
Common stock, $1.667 par: 150,000,000 shares authorized
72,724,275 and 72,683,985 shares issued at
March 31, 2022 and December 31, 2021, respectively		121,231				121,164
Capital surplus		1,050,387				1,050,948
Retained earnings		747,614				716,605
Common stock issued to deferred compensation trust, at cost
910,304 and 911,458 shares at March 31, 2022 and December 31, 2021, respectively		(18,323	)			(18,257	)
Deferred compensation trust		18,323				18,257
Accumulated other comprehensive income (loss)		(56,712	)			10,597
TOTAL SHAREHOLDERS’ EQUITY		1,862,520				1,899,314
Noncontrolling interest		17,240				16,860
TOTAL EQUITY		1,879,760				1,916,174
TOTAL LIABILITIES AND EQUITY	$	16,666,588			$	16,361,387

TOWNEBANK
Consolidated Statements of Income (unaudited)
(dollars in thousands, except per share data)
	Three Months Ended
	March 31,
		2022				2021
INTEREST INCOME:
Loans, including fees	$	94,962			$	101,396
Investment securities		9,671				7,117
Interest-bearing deposits in financial institutions and federal funds sold		1,347				416
Mortgage loans held for sale		2,375				3,361
Total interest income		108,355				112,290
INTEREST EXPENSE:
Deposits		4,894				8,548
Advances from the FHLB		92				497
Subordinated debt, net		4,120				2,930
Repurchase agreements and other borrowings		45				325
Total interest expense		9,151				12,300
Net interest income		99,204				99,990
PROVISION FOR CREDIT LOSSES		(1,449	)			(4,027	)
Net interest income after provision for credit losses		100,653				104,017
NONINTEREST INCOME:
Residential mortgage banking income, net		14,638				37,412
Insurance commissions and other title fees and income, net		19,074				16,325
Property management income, net		17,147				15,483
Real estate commission income, net		2,554				2,451
Service charges on deposit accounts		2,574				2,190
Credit card merchant fees, net		1,375				1,302
BOLI		1,717				1,519
Other income		7,129				4,837
Net gain/(loss) on investment securities		—				1,000
Total noninterest income		66,208				82,519
NONINTEREST EXPENSE:
Salaries and employee benefits		63,963				58,435
Occupancy expense		8,327				8,072
Furniture and equipment		3,690				3,512
Amortization - intangibles		2,817				2,723
Software expense		4,492				4,194
Data processing		3,594				3,239
Professional fees		2,027				2,339
Advertising and marketing		4,127				2,968
Other expenses		16,342				11,844
Total noninterest expense		109,379				97,326
Income before income tax expense and noncontrolling interest		57,482				89,210
Provision for income tax expense		11,232				16,579
Net income	$	46,250			$	72,631
Net income attributable to noncontrolling interest		(664	)			(3,636	)
Net income attributable to TowneBank	$	45,586			$	68,995
Per common share information
Basic earnings	$	0.63			$	0.95
Diluted earnings	$	0.63			$	0.95
Cash dividends declared	$	0.20			$	0.18

TOWNEBANK
Consolidated Balance Sheets - Five Quarter Trend
(dollars in thousands, except share data)
	March 31,				December 31,				September 30,				June 30,				March 31,
		2022				2021				2021				2021				2021
	(unaudited)				(unaudited)				(unaudited)				(audited)				(unaudited)
ASSETS
Cash and due from banks	$	74,991			$	17,373			$	75,370			$	117,797			$	141,545
Interest-bearing deposits at FRB - Richmond		2,857,327				3,244,484				3,155,039				2,970,490				1,936,458
Interest-bearing deposits in financial institutions		34,684				34,779				33,506				31,971				30,031
Total Cash and Cash Equivalents		2,967,002				3,296,636				3,263,915				3,120,258				2,108,034
Securities available for sale		1,846,540				1,806,183				1,560,402				1,454,421				1,418,006
Securities held to maturity		433,384				154,221				14,898				15,389				15,980
Less: allowance for credit losses		(92	)			(94	)			(94	)			(97	)			(97	)
Securities held to maturity, net of allowance for credit losses		433,292				154,127				14,804				15,292				15,883
Other equity securities		6,789				6,759				6,621				6,395				6,355
FHLB stock		10,432				13,146				13,146				16,909				16,909
Total Securities		2,297,053				1,980,215				1,594,973				1,493,017				1,457,153
Mortgage loans held for sale		234,620				358,303				431,846				554,447				582,905
Loans, net of unearned income and deferred costs		9,909,308				9,506,252				9,297,565				9,423,578				9,734,583
Less: allowance for credit losses		(103,833	)			(106,059	)			(107,177	)			(108,130	)			(116,077	)
Net Loans		9,805,475				9,400,193				9,190,388				9,315,448				9,618,506
Premises and equipment, net		277,764				270,772				270,810				265,644				261,831
Goodwill		457,162				457,187				457,187				452,328				452,328
Other intangible assets, net		47,562				50,379				50,839				42,271				44,808
BOLI		253,112				251,805				249,862				249,213				247,655
Other assets		326,838				295,897				301,552				311,209				306,176
TOTAL ASSETS	$	16,666,588			$	16,361,387			$	15,811,372			$	15,803,835			$	15,079,396
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand	$	5,532,337			$	5,546,665			$	5,394,952			$	5,243,074			$	4,840,678
Interest-bearing:
Demand and money market accounts		6,432,005				6,139,714				5,681,181				5,373,146				5,062,461
Savings		393,119				371,356				366,165				349,552				342,554
Certificates of deposit		1,414,339				1,515,891				1,571,752				1,998,828				1,893,951
Total Deposits		13,771,800				13,573,626				13,014,050				12,964,600				12,139,644
Advances from the FHLB		55,196				155,367				155,537				255,706				255,872
Subordinated debt, net		496,757				249,652				249,503				249,353				249,204
FRB PPP lending facility		—				—				—				—				183,164
Repurchase agreements and other borrowings		75,988				76,797				82,413				85,042				68,509
Total Borrowings		627,941				481,816				487,453				590,101				756,749
Other liabilities		387,087				389,771				409,435				379,278				366,697
TOTAL LIABILITIES		14,786,828				14,445,213				13,910,938				13,933,979				13,263,090
Preferred stock
Authorized shares - 2,000,000		—				—				—				—				—
Common stock, $1.667 par value		121,231				121,164				121,163				121,144				121,108
Capital surplus		1,050,387				1,050,948				1,049,367				1,048,332				1,047,312
Retained earnings		747,614				716,605				690,960				655,095				613,826
Common stock issued to deferred compensation
trust, at cost		(18,323	)			(18,257	)			(18,076	)			(18,076	)			(17,063	)
Deferred compensation trust		18,323				18,257				18,076				18,076				17,063
Accumulated other comprehensive income (loss)		(56,712	)			10,597				21,597				29,273				17,969
TOTAL SHAREHOLDERS’ EQUITY		1,862,520				1,899,314				1,883,087				1,853,844				1,800,215
Noncontrolling interest		17,240				16,860				17,347				16,012				16,091
TOTAL EQUITY		1,879,760				1,916,174				1,900,434				1,869,856				1,816,306
TOTAL LIABILITIES AND EQUITY	$	16,666,588			$	16,361,387			$	15,811,372			$	15,803,835			$	15,079,396

TOWNEBANK
Consolidated Statements of Income - Five Quarter Trend (unaudited)
(dollars in thousands, except share data)
	Three Months Ended
	March 31,				December 31,				September 30,				June 30,				March 31,
		2022				2021				2021				2021				2021
INTEREST INCOME:
Loans, including fees	$	94,962			$	95,054			$	98,258			$	100,614			$	101,396
Investment securities		9,671				10,484				7,000				6,871				7,117
Interest-bearing deposits in financial institutions and federal funds sold		1,347				1,215				1,182				619				416
Mortgage loans held for sale		2,375				2,750				3,405				3,711				3,361
Total interest income		108,355				109,503				109,845				111,815				112,290
INTEREST EXPENSE:
Deposits		4,894				5,389				6,028				7,144				8,548
Advances from the FHLB		92				206				247				274				497
Subordinated debt		4,120				2,962				2,962				2,962				2,930
Repurchase agreements and other borrowings		45				154				165				291				325
Total interest expense		9,151				8,711				9,402				10,671				12,300
Net interest income		99,204				100,792				100,443				101,144				99,990
PROVISION FOR CREDIT LOSSES		(1,449	)			(1,110	)			(1,582	)			(10,055	)			(4,027	)
Net interest income after provision for credit losses		100,653				101,902				102,025				111,199				104,017
NONINTEREST INCOME:
Residential mortgage banking income, net		14,638				20,945				25,422				25,524				37,412
Insurance commissions and other title fees and income, net		19,074				15,486				17,398				18,331				16,325
Property management income, net		17,147				9,099				10,502				7,091				15,483
Real estate commission income, net		2,554				3,165				3,781				3,893				2,451
Service charges on deposit accounts		2,574				2,479				2,524				2,391				2,190
Credit card merchant fees, net		1,375				1,412				1,660				1,667				1,302
BOLI		1,717				1,904				2,301				1,541				1,519
Other income		7,129				5,142				6,045				5,487				4,837
Net gain/(loss) on investment securities		—				—				—				252				1,000
Total noninterest income		66,208				59,632				69,633				66,177				82,519
NONINTEREST EXPENSE:
Salaries and employee benefits		63,963				64,814				61,230				61,365				58,435
Occupancy expense		8,327				8,371				7,656				7,559				8,072
Furniture and equipment		3,690				3,528				3,513				3,622				3,512
Amortization - intangibles		2,817				2,935				2,750				2,719				2,723
Software expense		4,492				4,014				4,209				4,494				4,194
Data processing		3,594				3,524				3,603				3,414				3,239
Professional fees		2,027				2,723				2,227				2,259				2,339
Advertising and marketing		4,127				3,414				3,865				3,257				2,968
Other expenses		16,342				17,144				15,033				16,705				11,844
Total noninterest expense		109,379				110,467				104,086				105,394				97,326
Income before income tax expense and noncontrolling interest		57,482				51,067				67,572				71,982				89,210
Provision for income tax expense		11,232				9,410				14,829				13,980				16,579
Net income		46,250				41,657				52,743				58,002				72,631
Net income attributable to noncontrolling interest		(664	)			(1,474	)			(2,343	)			(2,199	)			(3,636	)
Net income attributable to TowneBank	$	45,586			$	40,183			$	50,400			$	55,803			$	68,995
Per common share information
Basic earnings	$	0.63			$	0.55			$	0.70			$	0.77			$	0.95
Diluted earnings	$	0.63			$	0.55			$	0.69			$	0.77			$	0.95
Basic weighted average shares outstanding		72,498,075				72,525,504				72,506,877				72,468,094				72,414,953
Diluted weighted average shares outstanding		72,562,122				72,624,610				72,591,281				72,560,234				72,517,008
Cash dividends declared	$	0.20			$	0.20			$	0.20			$	0.20			$	0.18

TOWNEBANK
Banking Segment Financial Information (unaudited)
(dollars in thousands)
	Three Months Ended												Increase/(Decrease)
	March 31,								December 31,				2022 over 2021
		2022				2021				2021			Amount				Percent
Revenue
Net interest income	$	96,770			$	97,604			$	98,345			$	(834	)		(0.85)	%
Service charges on deposit
accounts		2,574				2,190				2,479				384			17.53	%
Credit card merchant fees		1,375				1,302				1,412				73			5.61	%
Other income		6,710				4,970				4,876				1,740			35.01	%
Subtotal		10,659				8,462				8,767				2,197			25.96	%
Net gain/(loss) on investment securities		—				1,000				—				(1,000	)		(100.00)	%
Total noninterest income		10,659				9,462				8,767				1,197			12.65	%
Total revenue		107,429				107,066				107,112				363			0.34	%
Provision for credit losses		(1,833	)			(3,401	)			(1,199	)			1,568			(46.10)	%
Expenses
Salaries and employee benefits		37,059				31,861				37,678				5,198			16.31	%
Occupancy expense		5,659				5,546				5,541				113			2.04	%
Furniture and equipment		2,709				2,668				2,570				41			1.54	%
Amortization of intangibles		827				962				812				(135	)		(14.03)	%
Other expenses		18,228				14,050				19,484				4,178			29.74	%
Total expenses		64,482				55,087				66,085				9,395			17.05	%
Income before income tax, corporate allocation and noncontrolling interest		44,780				55,380				42,226				(10,600	)		(19.14)	%
Corporate allocation		1,292				1,292				1,260				—			—	%
Income before income tax provision and noncontrolling interest		46,072				56,672				43,486				(10,600	)		(18.70)	%
Provision for income tax expense		8,519				9,701				7,123				(1,182	)		(12.18)	%
Net income		37,553				46,971				36,363				(9,418	)		(20.05)	%
Noncontrolling interest		—				(5	)			(3	)			5			(100.00)	%
Net income attributable to TowneBank	$	37,553			$	46,966			$	36,360				(9,413	)		(20.04)	%
Efficiency ratio(non-GAAP)		59.25	%			51.03	%			60.94	%

TOWNEBANK
Realty Segment Financial Information (unaudited)
(dollars in thousands)
	Three Months Ended												Increase/(Decrease)
	March 31,								December 31,				2022 over 2021
		2022				2021				2021			Amount				Percent
Revenue
Residential mortgage brokerage income, net	$	15,906			$	37,877			$	22,257			$	(21,971	)		(58.01)	%
Real estate brokerage income, net		2,554				2,451				3,165				103			4.20	%
Title insurance and settlement fees		504				525				610				(21	)		(4.00)	%
Property management fees, net		17,147				15,483				9,099				1,664			10.75	%
Income from unconsolidated subsidiary		167				406				113				(239	)		(58.87)	%
Net interest and other income		2,932				2,736				3,010				196			7.16	%
Total revenue		39,210				59,478				38,254				(20,268	)		(34.08)	%
Provision for credit losses		384				(626	)			89				1,010			(161.34)	%
Expenses
Salaries and employee benefits		17,291				16,847				17,682				444			2.64	%
Occupancy expense		1,898				1,871				1,957				27			1.44	%
Furniture and equipment		761				649				727				112			17.26	%
Amortization of intangible assets		816				590				931				226			38.31	%
Other expenses		10,852				9,229				9,805				1,623			17.59	%
Total expenses		31,618				29,186				31,102				2,432			8.33	%
Income before income tax, corporate allocation and noncontrolling interest		7,208				30,918				7,063				(23,710	)		(76.69)	%
Corporate allocation		(1,000	)			(1,000	)			(1,000	)			—			—	%
Income before income tax provision and noncontrolling interest		6,208				29,918				6,063				(23,710	)		(79.25)	%
Provision for income tax expense		1,374				6,216				1,894				(4,842	)		(77.90)	%
Net income		4,834				23,702				4,169				(18,868	)		(79.61)	%
Noncontrolling interest		(664	)			(3,631	)			(1,471	)			2,967			(81.71)	%
Net income attributable to TowneBank	$	4,170			$	20,071			$	2,698				(15,901	)		(79.22)	%
Efficiency ratio(non-GAAP)		78.56	%			48.08	%			78.87	%

TOWNEBANK
Insurance Segment Financial Information (unaudited)
(dollars in thousands)
	Three Months Ended												Increase/(Decrease)
	March 31,								December 31,				2022 over 2021
		2022				2021				2021			Amount				Percent
Commission and fee income
Property and casualty	$	15,337			$	14,188			$	13,135			$	1,149			8.10	%
Employee benefits		4,161				3,884				3,682				277			7.13	%
Specialized benefit services		170				167				172				3			1.80	%
Total commissions and fees		19,668				18,239				16,989				1,429			7.83	%
Contingency and bonus revenue		3,404				1,759				2,231				1,645			93.52	%
Other income		33				74				40				(41	)		(55.41)	%
Total revenue		23,105				20,072				19,260				3,033			15.11	%
Employee commission expense		4,332				4,107				4,202				225			5.48	%
Revenue, net of commission expense		18,773				15,965				15,058				2,808			17.59	%
Salaries and employee benefits		9,613				9,727				9,454				(114	)		(1.17)	%
Occupancy expense		770				655				873				115			17.56	%
Furniture and equipment		220				195				231				25			12.82	%
Amortization of intangible assets		1,174				1,171				1,192				3			0.26	%
Other expenses		1,502				1,305				1,530				197			15.10	%
Total operating expenses		13,279				13,053				13,280				226			1.73	%
Income before income tax, corporate allocation and noncontrolling interest		5,494				2,912				1,778				2,582			88.67	%
Corporate allocation		(292	)			(292	)			(260	)			—			—	%
Income before income tax provision and noncontrolling interest		5,202				2,620				1,518				2,582			98.55	%
Provision for income tax expense		1,339				662				393				677			102.27	%
Net income		3,863				1,958				1,125				1,905			97.29	%
Noncontrolling interest		—				—				—				—			N/M
Net income attributable to TowneBank	$	3,863			$	1,958			$	1,125				1,905			97.29	%
Provision for income taxes		1,339				662				393				677			102.27	%
Depreciation, amortization and interest expense		1,319				1,308				1,342				11			0.84	%
EBITDA(non-GAAP)	$	6,521			$	3,928			$	2,860				2,593			66.01	%
Efficiency ratio(non-GAAP)		64.48	%			74.43	%			80.28	%

TOWNEBANK
Reconciliation of Non-GAAP Financial Measures
(dollars in thousands)
	Three Months Ended
	March 31,				March 31,				December 31,
		2022				2021				2021
Return on average assets (GAAP)		1.13	%			1.92	%			0.99	%
Impact of excluding average goodwill and other intangibles and amortization		0.10	%			0.13	%			0.09	%
Return on average tangible assets (non-GAAP)		1.23	%			2.05	%			1.08	%
Return on average equity (GAAP)		9.73	%			15.56	%			8.38	%
Impact of excluding average goodwill and other intangibles and amortization		4.18	%			6.63	%			3.70	%
Return on average tangible equity (non-GAAP)		13.91	%			22.19	%			12.08	%
Return on average common equity (GAAP)		9.81	%			15.70	%			8.45	%
Impact of excluding average goodwill and other intangibles and amortization		4.27	%			6.75	%			3.77	%
Return on average tangible common equity (non-GAAP)		14.08	%			22.45	%			12.22	%
Book value (GAAP)	$	25.61			$	24.78			$	26.13
Impact of excluding average goodwill and other intangibles and amortization		(6.94	)			(6.84	)			(6.98	)
Tangible book value (non-GAAP)	$	18.67			$	17.94			$	19.15
Efficiency ratio (GAAP)		66.13	%			53.33	%			68.86	%
Impact of exclusions	(1.71)		%		(1.22)		%		(1.83)		%
Efficiency ratio (non-GAAP)		64.42	%			52.11	%			67.03	%
Average assets (GAAP)	$	16,311,998			$	14,592,416			$	16,075,509
Less: average goodwill and intangible assets		506,496				497,446				506,867
Average tangible assets (non-GAAP)	$	15,805,502			$	14,094,970			$	15,568,642
Average equity (GAAP)	$	1,900,267			$	1,797,767			$	1,902,474
Less: average goodwill and intangible assets		506,496				497,446				506,867
Average tangible equity (non-GAAP)	$	1,393,771			$	1,300,321			$	1,395,607
Average common equity (GAAP)	$	1,884,101			$	1,782,795			$	1,886,279
Less: average goodwill and intangible assets		506,496				497,446				506,867
Average tangible common equity (non-GAAP)	$	1,377,605			$	1,285,349			$	1,379,412
Net Income (GAAP)	$	45,586			$	68,995			$	40,183
Amortization of Intangibles, net of tax		2,225				2,151				2,318
Tangible net income (non-GAAP)	$	47,811			$	71,146			$	42,501
Net Income (GAAP)	$	45,586			$	68,995			$	40,183
Provision for credit losses		(1,449	)			(4,027	)			(1,110	)
Provision for income tax		11,232				16,579				9,410
Pre-provision, pre-tax net revenues (non-GAAP)	$	55,369			$	81,547			$	48,483
Total Revenue (GAAP)	$	165,412			$	182,509			$	160,424
Net (gain)/loss on investment securities		—				(1,000	)			—
Other nonrecurring (income) loss		—				30				—
Total Revenue for efficiency calculation (non-GAAP)	$	165,412			$	181,539			$	160,424
Noninterest expense (GAAP)	$	109,379			$	97,326			$	110,467
Less: Amortization of intangibles		2,817				2,723				2,935
Noninterest expense net of amortization (non-GAAP)	$	106,562			$	94,603			$	107,532