TowneBank Reports Full Year and Fourth Quarter Financial Results For 2023

SUFFOLK, Va., Jan. 24, 2024 (GLOBE NEWSWIRE) -- TowneBank (the "Company" or "Towne") (Nasdaq: TOWN) today reported financial results for the full year and fourth quarter ended December 31, 2023. For the year ended December 31, 2023, earnings were $153.72 million, or $2.06 per diluted share, compared to $188.99 million, or $2.60 per diluted share, for the year ended December 31, 2022. Excluding acquisition-related items, an FDIC special assessment, and certain notable items, adjusted earnings (non-GAAP) for 2023 were $160.94 million, or $2.16 per diluted share, compared to $190.01 million, or $2.62 per diluted share, for 2022. Earnings in the fourth quarter of 2023 were $28.80 million, or $0.39 per diluted share, compared to fourth quarter 2022 earnings of $46.69 million, or $0.64 per diluted share. Excluding acquisition-related items, the FDIC special assessment, and other notable items, adjusted earnings (non-GAAP) for fourth quarter 2023 were $31.10 million, or $0.42 per diluted share, compared to $47.01 million, or $0.65 per diluted share, for fourth quarter 2022.

“The banking industry operated in a challenging environment in 2023 driven by rising interest rates, inflationary impact on expenses and the failure of three somewhat unusual banks in California and New York whose business models carried significantly more risk than most Main Street banks like Towne. Our conservative approach on maintaining strong liquidity, prudent growth rates and robust capital served us well during this period of economic uncertainty. Standing by our members during difficult periods while protecting the interests of our shareholders, employees, and our communities continues to be the hallmark of our success," said G. Robert Aston, Jr., Executive Chairman.

Annual Highlights for 2023 Compared to 2022:

• Total revenues increased $7.19 million, or 1.05%, to $694.12 million, compared to prior year. Noninterest income increased $10.77 million, driven by an $8.83 million gross gain on the sale of Berkshire Hathaway HomeSale ("BHHS") Towne Realty. The increase in noninterest income was partially offset by a decline in net interest income of $3.59 million, driven by increases in interest costs.
• On an annual basis the insurance segment's gross revenue exceeded its targeted $100 million in 2023 with gross revenues of $109.46 million.
• Towne successfully completed the acquisition of Farmers Bankshares, Inc. and its wholly owned subsidiary Farmers Bank ("Farmers") in January 2023. Included in the acquisition were $277.89 million in loans, $244.89 million in securities, and $514.57 million in deposits.
• Loans held for investment increased $534.42 million, or 4.95%, from December 31, 2022.
• Including acquired deposits from the Farmers Bank acquisition, total deposits were $13.89 billion, an increase of $598.98 million, or 4.51%, compared to prior year.
• Noninterest-bearing deposits declined 17.52% to $4.34 billion driven significantly by movement into interest-bearing accounts coupled with lower balances in real estate escrow accounts. Noninterest-bearing deposits represented 31.26% of total deposits at December 31, 2023.
• Return on average common shareholders' equity was 7.85%, and return on average tangible common shareholders' equity (non-GAAP) was 11.50%.
• Net interest margin was 3.03% and taxable equivalent net interest margin (non-GAAP) was 3.06% compared to a prior year net interest margin of 3.08% and taxable equivalent net interest margin (non-GAAP) of 3.10%.
• Effective tax rate of 16.82% compared to 19.77% in 2022. The decline in effective tax rate was related to changes in state taxes between years, increases in tax-advantaged income investments, and deferred taxes related to the sale of BHHS, Towne Realty.
  

Highlights for Fourth Quarter 2023:

• Total revenues were $155.55 million in fourth quarter 2023, a decrease of $19.76 million, or 11.27% from the prior year quarter. This decrease was attributable to the decline in net interest income of $21.05 million, or 16.35%, due to margin compression. Noninterest income increased $1.29 million, or 2.77%, in the quarterly comparison.
• Loans held for investment increased $156.05 million, or 5.54% on an annualized basis, from September 30, 2023.
• Total deposits were relatively flat compared to September 30, 2023, increasing $12.40 million, or 0.35% on an annualized basis.
• Noninterest-bearing deposits decreased $102.16 million, or 9.12%, on an annualized basis compared to the linked quarter.
• In the quarter ended December 31, 2023, annualized return on average common shareholders' equity was 5.79% and annualized return on average tangible common shareholders' equity (non-GAAP) was 8.62%.
• Net interest margin was 2.83% and taxable equivalent net interest margin (non-GAAP) was 2.86% compared to the prior year quarter net interest margin of 3.51% and taxable equivalent net interest margin (non-GAAP) of 3.53%.
• Effective tax rate of 8.46% compared to 19.90% in fourth quarter 2022 and 17.34% in the linked quarter. A decrease in state tax expense in fourth quarter 2023 and an adjustment to deferred taxes related to the sale of BHHS were the primary drivers of the decline in effective tax rates.
  

“2023 was a watershed year for our Towne Insurance team as revenue crossed over the $100 million mark to end the year at $109 million, while continuing to create significant intrinsic value for our shareholders," said William I. Foster III, President and Chief Executive Officer. "Looking ahead, we will continue to seek new investment opportunities to provide new and exciting products for our members."

Quarterly Net Interest Income:

• Net interest income was $107.73 million compared to $128.78 million for the quarter ended December 31, 2022. This decrease was driven by higher costs on deposits outpacing increases in loan and investment securities interest income.
• Taxable equivalent net interest margin (non-GAAP) was 2.86%, including purchase accounting accretion of 4 basis points, compared to 3.53%, including purchase accounting accretion of 1 basis point, for fourth quarter 2022.
• On an average basis, loans held for investment had a yield of 5.22%, which represented 74.39% of earning assets in the fourth quarter of 2023, compared to a yield of 4.60%, which represented 73.41% of earning assets in the fourth quarter of 2022.
• Total cost of deposits increased to 2.09% from 1.84% in the linked quarter and 0.60% in the quarter ended December 31, 2022.
• Average interest-earning assets totaled $15.10 billion at December 31, 2023 compared to $14.58 billion at December 31, 2022, an increase of 3.55%.
• Average interest-bearing liabilities totaled $9.87 billion, an increase of $1.62 billion, or 19.58%, compared to the prior year.

Quarterly Provision for Credit Losses:

• The provision for credit losses was an expense of $2.45 million in the current quarter and $1.01 million in the linked quarter, compared to $6.07 million one year ago.
• The allowance for credit losses on loans increased $1.30 million, compared to the linked quarter. The increase in the allowance was driven by a combination of modest loan growth and changes in our portfolio composition, partially offset by improvements to the macroeconomic forecast scenarios utilized in our models.
• Net charge-offs (recoveries) were $68 thousand compared to $2.90 million one year prior and $(1.07) million in the linked quarter. The ratio of net charge-offs (recoveries) to average loans on an annualized basis was 0.00% in fourth quarter 2023, 0.11% in fourth quarter 2022, and (0.04)% in the linked quarter.
• The allowance for credit losses on loans represented 1.12% of total loans at both December 31, 2023 and September 30, 2023, compared to 1.03% at December 31, 2022. The allowance for credit losses on loans was 18.48 times nonperforming loans compared to 17.60 times at September 30, 2023 and 17.67 times at December 31, 2022.

Quarterly Noninterest Income:

• Total noninterest income was $47.81 million compared to $46.52 million in 2022, an increase of $1.29 million, or 2.77%.
• Residential mortgage banking income was $8.04 million compared to $7.37 million in fourth quarter 2022. Loan volume in the current quarter was $428.95 million, with purchase activity comprising 95.06%. Loan volume in fourth quarter 2022 was $456.81 million, with purchase activity of 95.08%. Sustained levels of increased mortgage rates and limited housing inventory have contributed to a decline in production.
• Gross margins on residential mortgages increased 13 basis points from 2.93% in fourth quarter 2022 to 3.06% in the current quarter. Compared to the linked quarter, gross margins declined 11 basis points from 3.17%.
• Property management fee revenue decreased 5.13%, or $398 thousand, in comparison to fourth quarter 2022 driven by lower reservation levels.
• Total insurance commissions and other income increased $3.88 million, or 22.41%, to $21.21 million in the fourth quarter of 2023 due to organic growth and additional commissions from two acquisitions.
  

Quarterly Noninterest Expense:

• Total noninterest expense was $121.90 million compared to $111.14 million, an increase of $10.75 million, or 9.68%. This reflects increases in FDIC and other insurance of $6.24 million, salary and benefits expense of $4.73 million, software expenses of $1.63 million, and amortization of intangibles of $0.94 million.
• Salaries and benefits expense increases were driven by annual base salary adjustments that went into effect July 2023 and an increase in the year-over-year number of employees, primarily related to the Farmers acquisition.
• FDIC and other insurance increased primarily due to an accrued expense of $5.17 million before taxes, pursuant to the FDIC special assessment on certain banks to recover losses to the Deposit Insurance Funds associated with the protection of uninsured depositors in several bank failures that occurred in early 2023.
• Software expense increased due to growth related cost increases and a number of ongoing projects throughout the Company.
• The increase in amortization expense relates to core deposit intangible assets recognized from the recent Farmers acquisition.
  

Consolidated Balance Sheet Highlights:

• Total assets were $16.84 billion at December 31, 2023, an increase of 6.25%, compared to $15.85 billion at December 31, 2022. The increase was driven by modest growth in loans and investment securities in addition to assets acquired with the purchase of Farmers.
• Loans held for investment increased $534.42 million, or 4.95%, compared to year end 2022 and $156.05 million compared to the linked quarter. Management has focused on controlling loan growth in 2023 through pricing.
• Mortgage loans held for sale increased $47.65 million, or 46.56%, compared to prior year but declined $38.06 million, or 20.24%, compared to the linked quarter.
• Total deposits increased $598.98 million, or 4.51%, compared to December 31, 2022 and $12.40 million, or 0.09%, compared to the linked quarter.
• Noninterest-bearing deposits decreased $922.49 million, or 17.52%, compared to prior year, and $102.16 million, or 2.30%, compared to the linked quarter.
• Total loans held for investment to total deposits were 81.54% compared to 80.49% at September 30, 2023 and 81.20% at December 31, 2022.
• Total borrowings increased $174.57 million, or 54.89%, from prior year.
  

Investment Securities:

• Total investment securities were $2.64 billion compared to $2.54 billion at September 30, 2023 and $2.41 billion at December 31, 2022. The weighted average duration of the portfolio at December 31, 2023 was 3.2 years. The carrying value of the AFS debt securities portfolio included $162.12 million in net unrealized losses, related to rising rates, at December 31, 2023 compared to $191.05 million in net unrealized losses at December 31, 2022.
  

Loans and Asset Quality:

• Total loans held for investment were $11.33 billion at December 31, 2023 compared to $11.17 billion at September 30, 2023 and $10.79 billion at December 31, 2022.
• Nonperforming assets were $7.75 million, or 0.05% of total assets, compared to $6.83 million, or 0.04% of total assets, at December 31, 2022.
• Nonperforming loans were 0.06% of period end loans at both December 31, 2023 and 2022.
• Foreclosed property increased marginally, to $0.91 million from $0.56 million at December 31, 2022.

Deposits and Borrowings:

• Total deposits were $13.89 billion compared to $13.88 billion at September 30, 2023 and $13.29 billion at December 31, 2022.
• Noninterest-bearing deposits were 31.26% of total deposits at December 31, 2023 compared to 32.02% at September 30, 2023 and 39.61% at December 31, 2022. Noninterest-bearing deposits have been declining in 2023 driven by declines in noninterest-bearing commercial and escrow balances, a portion of which have moved to interest-bearing deposits.
• Total borrowings were $492.58 million compared to $407.03 million at September 30, 2023 and $318.01 million at December 31, 2022.
  

Capital:

• Common equity tier 1 capital ratio of 12.18% ⁽¹⁾.
• Tier 1 leverage capital ratio of 10.17% ⁽¹⁾.
• Tier 1 risk-based capital ratio of 12.29% ⁽¹⁾.
• Total risk-based capital ratio of 15.06% ⁽¹⁾.
• Book value per share was $27.24 compared to $26.28 at September 30, 2023 and $25.73 at December 31, 2022.
• Tangible book value per share (non-GAAP) was $20.28 compared to $19.28 at September 30, 2023 and $18.84 at December 31, 2022.

⁽¹⁾ Preliminary.

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.

Now celebrating 25 years, TowneBank operates 50 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 affiliated companies that include Towne Wealth Management, Towne Insurance Agency, Towne Benefits, TowneBank Mortgage, TowneBank Commercial Mortgage, Berkshire Hathaway HomeServices, RW Towne Realty, Towne 1031 Exchange, LLC, and Towne Vacations. With total assets of $16.84 billion as of December 31, 2023, 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: core operating earnings, fully tax-equivalent net interest margin, 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 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; an unforeseen outflow of cash or deposits or an inability to access the capital markets, which could jeopardize our overall liquidity or capitalization; changes in the creditworthiness of customers and the possible impairment of the collectability of loans; insufficiency of our allowance for credit losses due to market conditions, inflation, changing interest rates or other factors; adverse developments in the financial industry generally, such as the recent bank failures, responsive measures to mitigate and manage such developments, related supervisory and regulatory actions and costs, and related impacts on customer and client behavior; 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; unusual and infrequently occurring events, such as weather-related or natural disasters, acts of war or terrorism, or public health events (such as the COVID-19 pandemic); 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, 2022 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
William I. Foster III, President and Chief Executive Officer, 757-417-6482

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

TOWNEBANK
Selected Financial Highlights (unaudited)
(dollars in thousands, except per share data)
		Three Months Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
			2023				2023				2023				2023				2022
Income and Performance Ratios:
	Total revenue	$	155,546			$	172,864			$	181,568			$	184,144			$	175,307
	Net income		28,545				44,745				43,368				38,478				46,494
	Net income available to common shareholders		28,804				44,862				41,716				38,333				46,685
	Net income per common share - diluted		0.39				0.60				0.56				0.52				0.64
	Book value per common share		27.24				26.28				26.36				26.40				25.73
	Book value per share - tangible(non-GAAP)		20.28				19.28				19.31				19.04				18.84
	Return on average assets		0.68	%			1.06	%			0.99	%			0.95	%			1.16	%
	Return on average assets - tangible(non-GAAP)		0.77	%			1.17	%			1.10	%			1.05	%			1.25	%
	Return on average equity		5.75	%			8.96	%			8.46	%			7.99	%			9.98	%
	Return on average equity - tangible(non-GAAP)		8.53	%			12.97	%			12.35	%			11.71	%			14.26	%
	Return on average common equity		5.79	%			9.04	%			8.52	%			8.05	%			10.07	%
	Return on average common equity - tangible(non-GAAP)		8.62	%			13.11	%			12.48	%			11.83	%			14.44	%
	Noninterest income as a percentage of total revenue		30.74	%			34.60	%			37.43	%			33.00	%			26.54	%
Regulatory Capital Ratios (1)
	Common equity tier 1		12.18	%			12.19	%			11.99	%			11.68	%			11.92	%
	Tier 1		12.29	%			12.31	%			12.11	%			11.80	%			12.04	%
	Total		15.06	%			15.09	%			14.88	%			14.55	%			14.80	%
	Tier 1 leverage ratio		10.17	%			10.06	%			9.85	%			9.86	%			9.87	%
Asset Quality:
	Allowance for credit losses on loans to nonperforming loans	18.48x				17.60x				18.09x				12.87x				17.67x
	Allowance for credit losses on loans to period end loans		1.12	%			1.12	%			1.10	%			1.07	%			1.03	%
	Nonperforming loans to period end loans		0.06	%			0.06	%			0.06	%			0.08	%			0.06	%
	Nonperforming assets to period end assets		0.05	%			0.05	%			0.05	%			0.06	%			0.04	%
	Net charge-offs (recoveries) to average loans (annualized)		—	%		(0.04)%					—	%			0.14	%			0.11	%
	Net charge-offs (recoveries)	$	68			$	(1,074	)		$	9			$	3,874			$	2,904
	Nonperforming loans	$	6,843			$	7,110			$	6,827			$	9,322			$	6,273
	Former bank premises		—				—				1,782				—				—
	Foreclosed property		908				766				738				564				560
	Total nonperforming assets	$	7,751			$	7,876			$	9,347			$	9,886			$	6,833
	Loans past due 90 days and still accruing interest	$	735			$	970			$	360			$	206			$	324
	Allowance for credit losses on loans	$	126,461			$	125,159			$	123,513			$	120,002			$	110,816
Mortgage Banking:
	Loans originated, mortgage	$	302,616			$	348,387			$	409,050			$	280,401			$	299,298
	Loans originated, joint venture		126,332				172,021				207,450				135,818				157,511
	Total loans originated	$	428,948			$	520,408			$	616,500			$	416,219			$	456,809
	Number of loans originated		1,237				1,487				1,715				1,249				1,355
	Number of originators		181				192				196				194				186
	Purchase %		95.06	%			95.96	%			96.32	%			94.99	%			95.08	%
	Loans sold	$	468,014			$	567,291			$	525,078			$	346,288			$	483,254
	Rate lock asset	$	895			$	1,348			$	1,551			$	1,435			$	482
	Gross realized gain on sales and fees as a % of loans originated		3.06	%			3.17	%			2.96	%			3.11	%			2.93	%
Other Ratios:
	Net interest margin		2.83	%			2.95	%			2.98	%			3.36	%			3.51	%
	Net interest margin-fully tax equivalent(non-GAAP)		2.86	%			2.98	%			3.01	%			3.39	%			3.53	%
	Average earning assets/total average assets		90.48	%			90.73	%			90.96	%			90.98	%			91.51	%
	Average loans/average deposits		80.72	%			80.75	%			83.72	%			82.40	%			80.14	%
	Average noninterest deposits/total average deposits		31.69	%			33.50	%			36.07	%			38.35	%			41.07	%
	Period end equity/period end total assets		12.21	%			11.90	%			11.56	%			11.89	%			11.92	%
	Efficiency ratio(non-GAAP)		76.17	%			66.21	%			70.41	%			65.64	%			61.99	%
	(1) Current reporting period regulatory capital ratios are preliminary.

TOWNEBANK
Selected Data (unaudited)
(dollars in thousands)
Investment Securities													% Change
	Q4				Q4				Q3				Q4 23 vs.			Q4 23 vs.
Available-for-sale securities, at fair value		2023				2022				2023			Q4 22			Q3 23
U.S. agency securities	$	306,386			$	293,894			$	300,161			4.25	%		2.07	%
U.S. Treasury notes		27,684				26,693				26,721			3.71	%		3.60	%
Municipal securities		510,134				431,299				484,587			18.28	%		5.27	%
Trust preferred and other corporate securities		86,011				78,436				74,024			9.66	%		16.19	%
Mortgage-backed securities issued by GSE		1,200,625				1,011,666				1,079,303			18.68	%		11.24	%
Allowance for credit losses		(1,498	)			(1,086	)			(1,343	)		37.94	%		11.54	%
Total	$	2,129,342			$	1,840,902			$	1,963,453			15.67	%		8.45	%
Gross unrealized gains (losses) reflected in financial statements
Total gross unrealized gains	$	3,740			$	1,111			$	475			236.63	%		687.37	%
Total gross unrealized losses		(165,863	)			(192,163	)			(238,993	)		(13.69)%			(30.60)%
Net unrealized gains (losses) and other adjustments on AFS securities	$	(162,123	)		$	(191,052	)		$	(238,518	)		(15.14)%			(32.03)%
Held-to-maturity securities, at amortized cost
U.S. agency securities	$	101,850			$	101,092			$	101,659			0.75	%		0.19	%
U.S. Treasury notes		362,593				433,866				433,015			(16.43)%			(16.26)%
Municipal securities		5,272				5,181				5,249			1.76	%		0.44	%
Trust preferred corporate securities		2,172				2,223				2,185			(2.29)%			(0.59)%
Mortgage-backed securities issued by GSE		5,705				6,113				5,746			(6.67)%			(0.71)%
Allowance for credit losses		(84	)			(83	)			(85	)		1.20	%		(1.18)%
Total	$	477,508			$	548,392			$	547,769			(12.93)%			(12.83)%
Total gross unrealized gains	$	380			$	320			$	82			18.75	%		363.41	%
Total gross unrealized losses		(15,316	)			(29,802	)			(23,505	)		N/M			(34.84)%
Net unrealized gains (losses) on HTM securities	$	(14,936	)		$	(29,482	)		$	(23,423	)		(49.34)%			(36.23)%
Total unrealized (losses) gains on AFS and HTM securities	$	(177,059	)		$	(220,534	)		$	(261,941	)		(19.71)%			(32.41)%
													% Change
Loans Held For Investment	Q4				Q4				Q3				Q4 23 vs.			Q4 23 vs.
		2023				2022				2023			Q4 22			Q3 23
Real estate - construction and development	$	1,249,735			$	1,428,376			$	1,325,976			(12.51)%			(5.75)%
Commercial real estate - owner occupied		1,699,386				1,580,099				1,686,888			7.55	%		0.74	%
Commercial real estate - non owner occupied		3,117,071				2,830,620				3,025,985			10.12	%		3.01	%
Real estate - multifamily		583,209				496,190				542,611			17.54	%		7.48	%
Residential 1-4 family		1,852,891				1,634,062				1,818,843			13.39	%		1.87	%
HELOC		382,979				395,526				371,861			(3.17)%			2.99	%
Commercial and industrial business (C&I)		1,265,169				1,256,697				1,237,524			0.67	%		2.23	%
Government		525,261				512,265				523,456			2.54	%		0.34	%
Indirect		558,789				568,190				548,621			(1.65)%			1.85	%
Consumer loans and other		94,531				92,577				91,206			2.11	%		3.65	%
Total	$	11,329,021			$	10,794,602			$	11,172,971			4.95	%		1.40	%
													% Change
Deposits	Q4				Q4				Q3				Q4 23 vs.			Q4 23 vs.
		2023				2022				2023			Q4 22			Q3 23
Noninterest-bearing demand	$	4,342,701			$	5,265,186			$	4,444,861			(17.52)%			(2.30)%
Interest-bearing:
Demand and money market accounts		6,757,619				6,185,075				6,764,415			9.26	%		(0.10)%
Savings		336,492				374,987				350,031			(10.27)%			(3.87)%
Certificates of deposits		2,456,394				1,468,975				2,321,498			67.22	%		5.81	%
Total	$	13,893,206			$	13,294,223			$	13,880,805			4.51	%		0.09	%

TOWNEBANK
Average Balances, Yields and Rate Paid (unaudited)
(dollars in thousands)
	Three Months Ended											Three Months Ended											Three Months Ended
	December 31, 2023											September 30, 2023											December 31, 2022
					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)	$	11,229,965			$	147,647			5.22	%		$	11,169,924			$	144,457			5.13	%		$	10,701,612			$	124,064			4.60	%
Taxable investment securities		2,365,928				18,820			3.18	%			2,373,731				18,645			3.14	%			2,288,344				14,251			2.49	%
Tax-exempt investment securities		195,603				1,989			4.07	%			206,639				1,993			3.86	%			140,108				1,262			3.60	%
Total securities		2,561,531				20,809			3.25	%			2,580,370				20,638			3.20	%			2,428,452				15,513			2.56	%
Interest-bearing deposits		1,141,086				13,967			4.86	%			1,230,582				15,031			4.85	%			1,321,964				11,387			3.42	%
Loans held for sale		162,543				2,886			7.10	%			227,426				3,928			6.91	%			124,949				1,842			5.90	%
Total earning assets		15,095,125				185,309			4.87	%			15,208,302				184,054			4.80	%			14,576,977				152,806			4.16	%
Less: allowance for credit losses		(126,205	)										(125,553	)										(108,288	)
Total nonearning assets		1,714,122											1,680,110											1,461,067
Total assets	$	16,683,042										$	16,762,859										$	15,929,756
Liabilities and Equity:
Interest-bearing deposits
Demand and money market	$	6,786,850			$	46,833			2.74	%		$	6,605,853			$	41,381			2.49	%		$	6,022,582			$	13,903			0.92	%
Savings		345,172				962			1.11	%			356,116				938			1.05	%			378,816				763			0.80	%
Certificates of deposit		2,370,723				25,405			4.25	%			2,236,102				21,852			3.88	%			1,468,589				5,452			1.47	%
Total interest-bearing deposits		9,502,745				73,200			3.06	%			9,198,071				64,171			2.77	%			7,869,987				20,118			1.01	%
Borrowings		114,151				958			3.28	%			299,105				3,382			4.42	%			138,510				909			2.57	%
Subordinated debt, net		255,663				2,236			3.50	%			255,446				2,245			3.52	%			247,319				2,108			3.41	%
Total interest-bearing liabilities		9,872,559				76,394			3.07	%			9,752,622				69,798			2.84	%			8,255,816				23,135			1.11	%
Demand deposits		4,408,712											4,633,856											5,484,477
Other noninterest-bearing liabilities		413,469											389,912											334,033
Total liabilities		14,694,740											14,776,390											14,074,326
Shareholders’ equity		1,988,302											1,986,469											1,855,430
Total liabilities and equity	$	16,683,042										$	16,762,859										$	15,929,756
Net interest income (tax-equivalent basis) (4)					$	108,915										$	114,256										$	129,671
Reconciliation of Non-GAAP Financial Measures
Tax-equivalent basis adjustment						(1,182	)										(1,198	)										(888	)
Net interest income (GAAP)					$	107,733										$	113,058										$	128,783
Interest rate spread (2)(4)									1.80	%										1.96	%										3.05	%
Interest expense as a percent of average earning assets									2.01	%										1.82	%										0.63	%
Net interest margin (tax equivalent basis) (3)(4)									2.86	%										2.98	%										3.53	%
Total cost of deposits									2.09	%										1.84	%										0.60	%

_{⁽¹⁾ Yields and interest income are presented on a taxable-equivalent basis using the federal statutory tax rate of 21%.
⁽²⁾ Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities. Fully tax equivalent.
⁽³⁾ Net interest margin is net interest income expressed as a percentage of average earning assets. Fully tax equivalent.
⁽⁴⁾ Non-GAAP.}

TOWNEBANK
Average Balances, Yields and Rate Paid (unaudited)
(dollars in thousands)
	Year Ended December 31,
		2023											2022
					Interest				Average							Interest				Average
	Average				Income/				Yield/			Average				Income/				Yield/
	Balance				Expense				Rate (1)			Balance				Expense				Rate (1)
Assets:
Loans (net of unearned income and deferred costs)	$	11,177,132			$	565,453			5.06	%		$	10,262,095			$	433,350			4.22	%
Taxable investment securities		2,406,845				71,476			2.97	%			2,267,099				47,594			2.10	%
Tax-exempt investment securities		200,040				7,872			3.94	%			132,694				4,351			3.28	%
Total securities		2,606,885				79,348			3.04	%			2,399,793				51,945			2.16	%
Interest-bearing deposits		1,170,156				54,135			4.63	%			2,099,970				26,859			1.28	%
Loans held for sale		167,240				10,965			6.56	%			200,363				8,880			4.43	%
Total earning assets		15,121,413				709,901			4.69	%			14,962,221				521,034			3.48	%
Less: allowance for credit losses		(121,878	)										(105,629	)
Total nonearning assets		1,657,151											1,411,422
Total assets	$	16,656,686										$	16,268,014
Liabilities and Equity:
Interest-bearing deposits
Demand and money market	$	6,459,679			$	143,574			2.22	%		$	6,158,190			$	25,802			0.42	%
Savings		368,440				3,639			0.99	%			385,154				2,427			0.63	%
Certificates of deposit		2,067,053				72,763			3.52	%			1,447,701				12,586			0.87	%
Total interest-bearing deposits		8,895,172				219,976			2.47	%			7,991,045				40,815			0.51	%
Borrowings		407,125				18,600			4.51	%			124,168				1,320			1.05	%
Subordinated debt, net		254,129				8,886			3.50	%			362,410				14,436			3.98	%
Total interest-bearing liabilities		9,556,426				247,462			2.59	%			8,477,623				56,571			0.67	%
Demand deposits		4,756,681											5,547,835
Other noninterest-bearing liabilities		368,585											364,520
Total liabilities		14,681,692											14,389,978
Shareholders' equity		1,974,994											1,878,036
Total liabilities and equity	$	16,656,686										$	16,268,014
Net interest income (tax-equivalent basis) (4)					$	462,439										$	464,463
Reconciliation of Non-GAAP Financial Measures
Tax-equivalent basis adjustment						(4,659	)										(3,098	)
Net interest income (GAAP)					$	457,780										$	461,365
Interest rate spread (2)(4)									2.10	%										2.81	%
Interest expense as a percent of average earning assets									1.64	%										0.38	%
Net interest margin (tax-equivalent basis) (3)(4)									3.06	%										3.10	%
Total cost of deposits									1.61	%										0.30	%

_{⁽¹⁾ Yields and interest income are presented on a taxable-equivalent basis using the federal statutory rate of 21%.
⁽²⁾ Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities. Fully tax equivalent.
⁽³⁾ Net interest margin is net interest income expressed as a percentage of average earning assets. Fully tax equivalent.
⁽⁴⁾ Non-GAAP.}

TOWNEBANK
Consolidated Balance Sheets
(dollars in thousands, except per share data)
		2023				2022
	(unaudited)				(audited)
ASSETS
Cash and due from banks	$	85,584			$	55,381
Interest-bearing deposits at FRB - Richmond		939,356				1,000,205
Federal funds sold and interest-bearing deposits in financial institutions		103,417				97,244
Total Cash and Cash Equivalents		1,128,357				1,152,830
Securities available for sale, at fair value (amortized cost of $2,292,963 and $2,033,040, and allowance for credit losses of $1,498 and $1,086 at December 31, 2023 and December 31, 2022, respectively.		2,129,342				1,840,902
Securities held to maturity, at amortized cost (fair value $462,656 and $518,993 at December 31, 2023 and December 31, 2022, respectively.		477,592				548,475
Less: allowance for credit losses		(84	)			(83	)
Securities held to maturity, net of allowance for credit losses		477,508				548,392
Other equity securities		13,792				6,424
FHLB stock		21,372				9,617
Total Securities		2,642,014				2,405,335
Mortgage loans held for sale		149,987				102,339
Loans, net of unearned income and deferred costs		11,329,021				10,794,602
Less: allowance for credit losses		(126,461	)			(110,816	)
Net Loans		11,202,560				10,683,786
Premises and equipment, net		337,598				304,802
Goodwill		456,335				458,482
Other intangible assets, net		64,634				43,163
BOLI		277,445				258,069
Other assets		576,109				436,461
TOTAL ASSETS	$	16,835,039			$	15,845,267
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand	$	4,342,701			$	5,265,186
Interest-bearing:
Demand and money market accounts		6,757,619				6,185,075
Savings		336,492				374,987
Certificates of deposit		2,456,394				1,468,975
Total Deposits		13,893,206				13,294,223
Advances from the FHLB		203,958				29,674
Subordinated debt, net		255,796				247,420
Repurchase agreements and other borrowings		32,826				40,918
Total Borrowings		492,580				318,012
Other liabilities		393,375				344,275
TOTAL LIABILITIES		14,779,161				13,956,510
Preferred stock, authorized and unissued shares - 2,000,000		—				—
Common stock, $1.667 par: Authorized shares - 150,000,000
Issued and outstanding shares 74,893,462 in 2023 and 72,841,379 in 2022		124,847				121,426
Capital surplus		1,112,761				1,052,262
Retained earnings		921,126				840,777
Common stock issued to deferred compensation trust, at cost
1,004,717 shares in 2023 and 931,030 shares in 2022		20,813				18,974
Deferred compensation trust		(20,813	)			(18,974	)
Accumulated other comprehensive income (loss)		(118,762	)			(140,505	)
TOTAL SHAREHOLDERS’ EQUITY		2,039,972				1,873,960
Noncontrolling interest		15,906				14,797
TOTAL EQUITY		2,055,878				1,888,757
TOTAL LIABILITIES AND EQUITY	$	16,835,039			$	15,845,267

     

TOWNEBANK
Consolidated Statements of Income
(dollars in thousands, except per share data)
	Three Months Ended							Twelve Months Ended
	December 31,							December 31,
		2023				2022			2023				2022
	(unaudited)				(unaudited)			(unaudited)				(audited)
INTEREST INCOME:
Loans, including fees	$	146,810			$	123,395		$	562,160			$	430,990
Investment securities		20,464				15,294			77,982				51,207
Interest-bearing deposits in financial institutions and federal funds sold		13,967				11,387			54,135				26,859
Mortgage loans held for sale		2,886				1,842			10,965				8,880
Total interest income		184,127				151,918			705,242				517,936
INTEREST EXPENSE:
Deposits		73,200				20,118			219,976				40,815
Advances from the FHLB		917				665			17,754				926
Subordinated debt, net		2,236				2,108			8,886				14,436
Repurchase agreements and other borrowings		41				244			846				394
Total interest expense		76,394				23,135			247,462				56,571
Net interest income		107,733				128,783			457,780				461,365
PROVISION FOR CREDIT LOSSES		2,446				6,074			18,679				8,606
Net interest income after provision for credit losses		105,287				122,709			439,101				452,759
NONINTEREST INCOME:
Residential mortgage banking income, net		8,035				7,368			39,415				47,150
Insurance commissions and other income, net		21,207				17,324			90,305				75,579
Property management income, net		7,358				7,756			47,791				44,246
Real estate brokerage (loss) income, net		(32	)			2,355			3,530				11,253
Service charges on deposit accounts		3,035				2,655			11,706				10,130
Credit card merchant fees, net		1,476				1,653			6,709				6,592
BOLI		2,206				1,985			7,402				7,140
Gain (loss) on sale of equity investment		(10	)			—			9,377				—
Other income		4,538				5,428			20,107				23,480
Total noninterest income		47,813				46,524			236,342				225,570
NONINTEREST EXPENSE:
Salaries and employee benefits		66,035				61,307			270,158				255,625
Occupancy		9,308				9,252			36,886				34,669
Furniture and equipment		4,445				3,983			17,178				15,080
Amortization - intangibles		3,411				2,475			14,155				10,620
Software expense		6,743				5,111			24,666				18,959
Data processing		3,529				3,096			15,033				13,874
Professional fees		3,339				3,605			12,286				10,020
Advertising and marketing		3,377				3,489			15,390				15,997
Other expenses		21,708				18,823			83,470				66,435
Total noninterest expense		121,895				111,141			489,222				441,279
Income before income tax expense and noncontrolling interest		31,205				58,092			186,221				237,050
Provision for income tax expense		2,660				11,598			31,085				46,581
Net income	$	28,545			$	46,494		$	155,136			$	190,469
Net (income) loss attributable to noncontrolling interest		259				191			(1,421	)			(1,482	)
Net income attributable to TowneBank	$	28,804			$	46,685		$	153,715			$	188,987
Per common share information
Basic earnings	$	0.39			$	0.64		$	2.06			$	2.60
Diluted earnings	$	0.39			$	0.64		$	2.06			$	2.60
Cash dividends declared	$	0.25			$	0.23		$	0.98			$	0.89

TOWNEBANK
Consolidated Balance Sheets - Five Quarter Trend
(dollars in thousands, except per share data)
	December 31,				September 30,				June 30,				March 31,				December 31,
		2023				2023				2023				2023				2022
	(unaudited)				(unaudited)				(unaudited)				(unaudited)				(audited)
ASSETS
Cash and due from banks	$	85,584			$	83,949			$	106,994			$	97,502			$	55,381
Interest-bearing deposits at FRB - Richmond		939,356				1,029,276				1,427,044				1,040,112				1,000,205
Federal funds sold and interest-bearing deposits in financial institutions		103,417				102,527				102,231				104,924				97,244
Total Cash and Cash Equivalents		1,128,357				1,215,752				1,636,269				1,242,538				1,152,830
Securities available for sale		2,129,342				1,963,453				2,005,851				2,078,483				1,840,902
Securities held to maturity		477,592				547,854				548,017				548,226				548,475
Less: allowance for credit losses		(84	)			(85	)			(87	)			(88	)			(83	)
Securities held to maturity, net of allowance for credit losses		477,508				547,769				547,930				548,138				548,392
Other equity securities		13,792				14,062				13,798				13,341				6,424
FHLB stock		21,372				16,634				40,454				29,837				9,617
Total Securities		2,642,014				2,541,918				2,608,033				2,669,799				2,405,335
Mortgage loans held for sale		149,987				188,048				229,502				157,161				102,339
Loans, net of unearned income and deferred costs		11,329,021				11,172,971				11,208,014				11,173,785				10,794,602
Less: allowance for credit losses		(126,461	)			(125,159	)			(123,513	)			(120,002	)			(110,816	)
Net Loans		11,202,560				11,047,812				11,084,501				11,053,783				10,683,786
Premises and equipment, net		337,598				335,522				326,686				321,944				304,802
Goodwill		456,335				456,684				456,695				477,234				458,482
Other intangible assets, net		64,634				67,496				71,106				73,238				43,163
BOLI		277,445				275,240				273,435				271,704				258,069
Other assets		576,109				551,884				538,848				463,076				436,461
TOTAL ASSETS	$	16,835,039			$	16,680,356			$	17,225,075			$	16,730,477			$	15,845,267
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand	$	4,342,701			$	4,444,861			$	4,774,830			$	5,069,363			$	5,265,186
Interest-bearing:
Demand and money market accounts		6,757,619				6,764,415				6,529,336				6,284,184				6,185,075
Savings		336,492				350,031				361,891				389,173				374,987
Certificates of deposit		2,456,394				2,321,498				2,100,604				1,855,411				1,468,975
Total Deposits		13,893,206				13,880,805				13,766,661				13,598,131				13,294,223
Advances from the FHLB		203,958				104,139				754,319				504,497				29,674
Subordinated debt, net		255,796				255,580				255,365				255,151				247,420
Repurchase agreements and other borrowings		32,826				47,315				49,898				46,602				40,918
Total Borrowings		492,580				407,034				1,059,582				806,250				318,012
Other liabilities		393,375				408,305				408,333				336,201				344,275
TOTAL LIABILITIES		14,779,161				14,696,144				15,234,576				14,740,582				13,956,510
Preferred stock		—				—				—				—				—
Common stock, $1.667 par value		124,847				124,837				124,805				124,682				121,426
Capital surplus		1,112,761				1,111,152				1,109,526				1,109,387				1,052,262
Retained earnings		921,126				911,042				884,901				861,905				840,777
Common stock issued to deferred compensation trust, at cost		(20,813	)			(20,740	)			(20,134	)			(18,839	)			(18,974	)
Deferred compensation trust		20,813				20,740				20,134				18,839				18,974
Accumulated other comprehensive income (loss)		(118,762	)			(179,043	)			(145,392	)			(121,297	)			(140,505	)
TOTAL SHAREHOLDERS’ EQUITY		2,039,972				1,967,988				1,973,840				1,974,677				1,873,960
Noncontrolling interest		15,906				16,224				16,659				15,218				14,797
TOTAL EQUITY		2,055,878				1,984,212				1,990,499				1,989,895				1,888,757
TOTAL LIABILITIES AND EQUITY	$	16,835,039			$	16,680,356			$	17,225,075			$	16,730,477			$	15,845,267

TOWNEBANK
Consolidated Statements of Income - Five Quarter Trend (unaudited)
(dollars in thousands, except per share data)
	Three Months Ended
	December 31,				September 30,				June 30,				March 31,				December 31,
		2023				2023				2023				2023			2022
INTEREST INCOME:
Loans, including fees	$	146,810			$	143,605			$	138,977			$	132,768			$	123,395
Investment securities		20,464				20,292				18,851				18,375				15,294
Interest-bearing deposits in financial institutions and federal funds sold		13,967				15,031				14,488				10,649				11,387
Mortgage loans held for sale		2,886				3,928				2,547				1,604				1,842
Total interest income		184,127				182,856				174,863				163,396				151,918
INTEREST EXPENSE:
Deposits		73,200				64,171				48,671				33,934				20,118
Advances from the FHLB		917				3,438				10,407				2,992				665
Subordinated debt, net		2,236				2,245				2,236				2,169				2,108
Repurchase agreements and other borrowings		41				(56	)			(62	)			923				244
Total interest expense		76,394				69,798				61,252				40,018				23,135
Net interest income		107,733				113,058				113,611				123,378				128,783
PROVISION FOR CREDIT LOSSES		2,446				1,007				3,556				11,670				6,074
Net interest income after provision for credit losses		105,287				112,051				110,055				111,708				122,709
NONINTEREST INCOME:
Residential mortgage banking income, net		8,035				10,648				11,360				9,372				7,368
Insurance commissions and other income, net		21,207				23,777				22,498				22,823				17,324
Property management income, net		7,358				12,800				12,098				15,535				7,756
Real estate brokerage (loss) income, net		(32	)			(63	)			1,834				1,791				2,355
Service charges on deposit accounts		3,035				2,802				3,018				2,851				2,655
Credit card merchant fees, net		1,476				2,006				1,682				1,545				1,653
BOLI		2,206				1,814				1,710				1,672				1,985
Other income		4,528				6,022				13,757				5,177				5,428
Total noninterest income		47,813				59,806				67,957				60,766				46,524
NONINTEREST EXPENSE:
Salaries and employee benefits		66,035				67,258				67,445				69,420				61,307
Occupancy		9,308				9,027				9,487				9,064				9,252
Furniture and equipment		4,445				4,100				4,389				4,244				3,983
Amortization - intangibles		3,411				3,610				3,610				3,524				2,475
Software		6,743				6,130				6,169				5,624				5,111
Data processing		3,529				4,140				4,011				3,353				3,096
Professional fees		3,339				2,770				3,166				3,011				3,605
Advertising and marketing		3,377				3,653				3,959				4,401				3,489
Other expenses		21,708				17,014				22,992				21,756				18,823
Total noninterest expense		121,895				117,702				125,228				124,397				111,141
Income before income tax expense and noncontrolling interest		31,205				54,155				52,784				48,077				58,092
Provision for income tax expense		2,660				9,410				9,416				9,599				11,598
Net income	$	28,545			$	44,745			$	43,368			$	38,478			$	46,494
Net (income) loss attributable to noncontrolling interest		259				117				(1,652	)			(145	)			191
Net income attributable to TowneBank	$	28,804			$	44,862			$	41,716			$	38,333			$	46,685
Per common share information
Basic earnings	$	0.39			$	0.60			$	0.56			$	0.52			$	0.64
Diluted earnings	$	0.39			$	0.60			$	0.56			$	0.52			$	0.64
Basic weighted average shares outstanding		74,773,335				74,750,294				74,691,121				74,363,222				72,686,303
Diluted weighted average shares outstanding		74,793,557				74,765,515				74,699,810				74,390,614				72,724,189
Cash dividends declared	$	0.25			$	0.25			$	0.25			$	0.23			$	0.23

TOWNEBANK
Banking Segment Financial Information
(dollars in thousands)
	Three Months Ended												Year Ended								Increase/(Decrease)
	December 31,								September 30, 2023				December 31,								2023 over 2022
		2023				2022								2023				2022			Amount				Percent
Revenue
Net interest income	$	106,906			$	128,655			$	112,189			$	456,071			$	455,881			$	190			0.04	%
Service charges on deposit accounts		3,035				2,656				2,802				11,706				10,130				1,576			15.56	%
Credit card merchant fees		1,476				1,653				2,006				6,709				6,592				117			1.77	%
Other income		6,544				5,799		3		6,608				25,043				22,883				2,160			9.44	%
Total noninterest income		11,055				10,108				11,416				43,458				39,605				3,853			9.73	%
Total revenue		117,961				138,763				123,605				499,529				495,486				4,043			0.82	%
Provision for credit losses		2,831				6,312				1,206				19,273				8,559				10,714			125.18	%
Expenses
Salaries and employee benefits		42,573				37,788				42,727				170,733				152,870				17,863			11.69	%
Occupancy		6,981				6,500				6,637				26,698				23,901				2,797			11.70	%
Furniture and equipment		3,621				3,061				3,273				13,771				11,320				2,451			21.65	%
Amortization of intangible assets		1,236				676				1,296				5,154				3,006				2,148			71.46	%
Other expenses		29,602				24,141				22,595				109,819				81,299				28,520			35.08	%
Total expenses		84,013				72,166				76,528				326,175				272,396				53,779			19.74	%
Income before income tax, corporate allocation and noncontrolling interest		31,117				60,285				45,871				154,081				214,531				(60,450	)		(28.18)%
Corporate allocation		1,054				861				1,291				4,817				4,381				436			9.95	%
Income before income tax provision and noncontrolling interest		32,171				61,146				47,162				158,898				218,912				(60,014	)		(27.41)%
Provision for income tax expense		2,661				12,162				7,440				23,866				41,944				(18,078	)		(43.10)%
Net income		29,510				48,984				39,722				135,032				176,968				(41,936	)		(23.70)%
Noncontrolling interest		—				—				—				—				—				—			n/m
Net income attributable to TowneBank	$	29,510			$	48,984			$	39,722			$	135,032			$	176,968			$	(41,936	)		(23.70)%
Efficiency ratio(non-GAAP)		70.17	%			51.52	%			60.86	%			64.26	%			54.37	%

TOWNEBANK
Realty Segment Financial Information
(dollars in thousands)
	Three Months Ended												Year Ended								Increase/(Decrease)
	December 31,								September 30,				December 31,								2023 over 2022
		2023				2022				2023				2023				2022			Amount				Percent
Revenue
Residential mortgage banking income, net	$	8,322			$	8,292			$	10,955			$	41,287			$	51,783			$	(10,496	)		(20.27)%
Real estate brokerage (loss) income, net		(32	)			2,354				(63	)			3,530				11,253				(7,723	)		(68.63)%
Title insurance and settlement fees		—				391				—				443				1,981				(1,538	)		(77.64)%
Property management fees, net		7,358				7,757				12,800				47,791				44,246				3,545			8.01	%
(Loss) income from unconsolidated subsidiary		(425	)			10				(63	)			(1,309	)			368				(1,677	)		(455.71)%
Gain on sale of equity investment		—				—				—				8,833				—				8,833			100.00	%
Net interest and other income		1,111				626				1,163				3,095				7,478				(4,383	)		(58.61)%
Total revenue		16,334				19,430				24,792				103,670				117,109				(13,439	)		(11.48)%
Provision for credit losses		(385	)			(238	)			(199	)			(594	)			47			$	(641	)		n/m
Expenses
Salaries and employee benefits	$	11,288			$	13,617			$	12,881			$	52,958			$	63,263			$	(10,305	)		(16.29)%
Occupancy		1,600				1,970				1,669				7,158				7,784				(626	)		(8.04)%
Furniture and equipment		611				738				600				2,544				2,970				(426	)		(14.34)%
Amortization of intangible assets		737				653				742				2,903				3,102				(199	)		(6.42)%
Other expenses		7,240				8,056				9,544				34,559				37,527				(2,968	)		(7.91)%
Total expenses		21,476				25,034				25,436				100,122				114,646				(14,524	)		(12.67)%
Income (loss) before income tax, corporate allocation, and noncontrolling interest		(4,757	)			(5,366	)			(445	)			4,142				2,416				1,726			71.44	%
Corporate allocation		(352	)			(600	)			(600	)			(2,152	)			(3,202	)			1,050			(32.79)%
Income (loss) before income tax provision and noncontrolling interest		(5,109	)			(5,966	)			(1,045	)			1,990				(786	)			2,776			(353.18)%
Provision for income tax		(1,072	)			(1,296	)			(99	)			698				(186	)			884			(475.27)%
Net income (loss)		(4,037	)			(4,670	)			(946	)			1,292				(600	)			1,892			(315.33)%
Noncontrolling interest		259				191				117				(1,421	)			(1,482	)			61			(4.12)%
Net income (loss) attributable to TowneBank	$	(3,778	)		$	(4,479	)		$	(829	)		$	(129	)		$	(2,082	)		$	1,953			(93.80)%
Efficiency ratio (non-GAAP)		126.97	%			125.48	%			99.61	%			102.51	%			95.25	%

TOWNEBANK
Insurance Segment Financial Information
(dollars in thousands)
	Three Months Ended												Year Ended								Increase/(Decrease)
	December 31,								September 30,				December 31,								2023 over 2022
		2023				2022				2023				2023				2022			Amount				Percent
Commission and fee income
Property and casualty	$	19,795			$	15,221			$	22,103			$	80,054			$	64,672			$	15,382			23.78	%
Employee benefits		4,332				3,949				4,245				17,726				16,054				1,672			10.41	%
Specialized benefit services		36				169				133				481				658				(177	)		(26.90)%
Total commissions and fees		24,163				19,339				26,481				98,261				81,384				16,877			20.74	%
Contingency and bonus revenue		1,276				2,033				2,335				10,619				10,085				534			5.29	%
Other income		8				12				557				580				84				496			590.48	%
Total revenue		25,447				21,384				29,373				109,460				91,553				17,907			19.56	%
Employee commission expense		4,197				4,270				4,906				18,537				17,213				1,324			7.69	%
Revenue, net of commission expense		21,250				17,114				24,467				90,923				74,340				16,583			22.31	%
Expenses
Salaries and employee benefits	$	12,174			$	9,902			$	11,650			$	46,467			$	39,492			$	6,975			17.66	%
Occupancy		727				782				721				3,030				2,984				46			1.54	%
Furniture and equipment		213				184				227				863				790				73			9.24	%
Amortization of intangible assets		1,438				1,146				1,572				6,098				4,512				1,586			35.15	%
Other expenses		1,853				1,927				1,568				6,467				6,459				8			0.12	%
Total operating expenses		16,405				13,941				15,738				62,925				54,237				8,688			16.02	%
Income before income tax and noncontrolling interest		4,845				3,173				8,729				27,998				20,103				7,895			39.27	%
Corporate allocation		(702	)			(261	)			(691	)			(2,665	)			(1,179	)			(1,486	)		126.04	%
Income (loss) before income tax, corporate allocation, and noncontrolling interest		4,143				2,912				8,038				25,333				18,924				6,409			33.87	%
Provision for income tax expense		1,071				732				2,069				6,521				4,823				1,698			35.21	%
Net income		3,072				2,180				5,969				18,812				14,101				4,711			33.41	%
Noncontrolling interest		—				—				—				—				—				—			N/M
Net income attributable to TowneBank	$	3,072			$	2,180			$	5,969			$	18,812			$	14,101			$	4,711			33.41	%
Provision for income taxes		1,071				732				2,069				6,521				4,823				1,698			35.21	%
Depreciation, amortization and interest expense		1,588				1,285				1,726				6,702				5,052				1,650			32.66	%
EBITDA(non-GAAP)	$	5,731			$	4,197			$	9,764			$	32,035			$	23,976			$	8,059			33.61	%
Efficiency ratio(non-GAAP)		70.43	%			74.76	%			59.21	%			62.88	%			66.89	%

TOWNEBANK
Reconciliation of Non-GAAP Financial Measures:
	Three Months Ended												Twelve Months Ended
	December 31,				September 30,				December 31,				December 31,
		2023				2023				2022				2023				2022
Return on average assets (GAAP)		0.68	%			1.06	%			1.16	%			0.92	%			1.16	%
Impact of excluding average goodwill and other intangibles and amortization		0.09	%			0.11	%			0.09	%			0.10	%			0.09	%
Return on average tangible assets (non-GAAP)		0.77	%			1.17	%			1.25	%			1.02	%			1.25	%
Return on average equity (GAAP)		5.75	%			8.96	%			9.98	%			7.78	%			10.06	%
Impact of excluding average goodwill and other intangibles and amortization		2.78	%			4.01	%			4.28	%			3.60	%			4.31	%
Return on average tangible equity (non-GAAP)		8.53	%			12.97	%			14.26	%			11.38	%			14.37	%
Return on average common equity (GAAP)		5.79	%			9.04	%			10.07	%			7.85	%			10.15	%
Impact of excluding average goodwill and other intangibles and amortization		2.83	%			4.07	%			4.37	%			3.65	%			4.39	%
Return on average tangible common equity (non-GAAP)		8.62	%			13.11	%			14.44	%			11.50	%			14.54	%
Book value (GAAP)	$	27.24			$	26.28			$	25.73			$	27.24			$	25.73
Impact of excluding average goodwill and other intangibles and amortization		(6.96	)			(7.00	)			(6.89	)			(6.96	)			(6.89	)
Tangible book value (non-GAAP)	$	20.28			$	19.28			$	18.84			$	20.28			$	18.84
Efficiency ratio (GAAP)		78.36	%			68.09	%			63.40	%			70.48	%			64.24	%
Impact of exclusions	(2.19)%				(1.88) %				(1.41)%				(1.10)%				(1.55)%
Efficiency ratio (non-GAAP)		76.17	%			66.21	%			61.99	%			69.38	%			62.69	%
Average assets (GAAP)	$	16,683,041			$	16,762,859			$	15,929,756			$	16,656,686			$	16,268,014
Less: average goodwill and intangible assets		523,086				526,445				502,539				525,546				504,167
Average tangible assets (non-GAAP)	$	16,159,955			$	16,236,414			$	15,427,217			$	16,131,140			$	15,763,847
Average equity (GAAP)	$	1,988,302			$	1,986,469			$	1,855,430			$	1,974,994			$	1,878,036
Less: average goodwill and intangible assets		523,086				526,445				502,539				525,546				504,167
Average tangible equity (non-GAAP)	$	1,465,216			$	1,460,024			$	1,352,891			$	1,449,448			$	1,373,869
Average common equity (GAAP)	$	1,972,138			$	1,969,898			$	1,838,895			$	1,959,208			$	1,861,496
Less: average goodwill and intangible assets		523,086				526,445				502,539				525,546				504,167
Average tangible common equity (non-GAAP)	$	1,449,052			$	1,443,453			$	1,336,356			$	1,433,662			$	1,357,329
Net income (GAAP)	$	28,804			$	44,862			$	46,685			$	153,715			$	188,987
Amortization of intangibles, net of tax		2,695				2,852				1,955				11,182				8,390
Tangible net income (non-GAAP)	$	31,499			$	47,714			$	48,640			$	164,897			$	197,377
Noninterest expense (GAAP)	$	121,895			$	117,702			$	111,141			$	489,222			$	441,279
Less: Amortization of intangibles		3,411				3,610				2,475				14,155				10,620
Noninterest expense net of amortization (non-GAAP)	$	118,484			$	114,092			$	108,666			$	475,067			$	430,659

TOWNEBANK
Reconciliation of Non-GAAP Financial Measures
(dollars in thousands, except per share data)
Reconcilement of GAAP Earnings to Operating Earnings Excluding Certain Items Affecting Comparability		Three Months Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
			2023				2023				2023				2023				2022
Net income (GAAP)		$	28,804			$	44,862			$	41,716			$	38,333			$	46,685
Adjustments
Plus: Acquisition-related expenses, net of tax			56				458				2,457				4,803				320
Plus: Initial provision for acquired loans, net of tax			—				—				—				3,166				—
Plus: FDIC special assessment, net of tax			4,083				—				—				—				—
Less: Gain on sale of equity investments, net of noncontrolling interest			(1,846	)			(438	)			(5,513	)			—				—
Core operating earnings, excluding certain items affecting comparability (non-GAAP)		$	31,097			$	44,882			$	38,660			$	46,302			$	47,005
Weighted average diluted shares			74,793,557				74,765,515				74,699,810				74,390,614				72,724,189
Diluted EPS (GAAP)		$	0.39			$	0.60			$	0.56			$	0.52			$	0.64
Diluted EPS, excluding certain items affecting comparability (non-GAAP)		$	0.42			$	0.60			$	0.52			$	0.62			$	0.65
Average assets		$	16,683,041			$	16,762,859			$	16,826,965			$	16,349,040			$	15,929,756
Average tangible equity		$	1,465,216			$	1,460,024			$	1,447,955			$	1,424,030			$	1,352,891
Average common tangible equity		$	1,449,052			$	1,443,453			$	1,432,506			$	1,409,091			$	1,336,356
Return on average assets, excluding certain items affecting comparability (non-GAAP)			0.74	%			1.06	%			0.92	%			1.15	%			1.17	%
Return on average tangible equity, excluding certain items affecting comparability (non-GAAP)			9.15	%			12.97	%			11.50	%			13.98	%			14.36	%
Return on average common tangible equity, excluding certain items affecting comparability (non-GAAP)			9.25	%			13.13	%			11.62	%			14.13	%			14.54	%
Efficiency ratio, excluding certain items affecting comparability (non-GAAP)			78.33	%			67.76	%			67.32	%			64.32	%			63.20	%

TOWNEBANK
Reconciliation of Non-GAAP Financial Measures
(dollars in thousands, except per share data)
Reconcilement of GAAP Earnings to Operating Earnings Excluding Certain Items Affecting Comparability		Year Ended
		December 31,				December 31,
			2023				2022
Net income (GAAP)		$	153,715			$	188,987
Plus: Acquisition-related expenses, net of tax			7,774				1,025
Plus: Initial provision for acquired loans, net of tax			3,166				—
Plus: FDIC special assessment, net of tax			4,083				—
Less: Gain on sale of equity investments, net of noncontrolling interest			(7,797	)			—
Core operating earnings, excluding certain items affecting comparability (non-GAAP)		$	160,941			$	190,012
Weighted average diluted shares			74,661,576				72,577,943
Diluted EPS (GAAP)		$	2.06			$	2.60
Diluted EPS, excluding certain items affecting comparability (non-GAAP)		$	2.16			$	2.62
Average assets		$	16,656,686			$	16,268,014
Average tangible equity		$	1,449,448			$	1,373,869
Average tangible common equity		$	1,433,662			$	1,357,329
Return on average assets, excluding certain items affecting comparability (non-GAAP)			0.97	%			1.17	%
Return on average tangible equity, excluding certain items affecting comparability (non-GAAP)			11.88	%			14.44	%
Return on average common tangible equity, excluding certain items affecting comparability (non-GAAP)			12.01	%			14.62	%
Efficiency ratio, excluding certain items affecting comparability (non-GAAP)			70.04	%			64.08	%