SUFFOLK, Va., July 25, 2019 (GLOBE NEWSWIRE) -- TowneBank (the “Company”) (NASDAQ: TOWN) today reported earnings for the quarter ended June 30, 2019 of $34.64 million, or $0.48 per diluted share, compared to $34.80 million, or $0.48 per diluted share, for the quarter ended June 30, 2018.

“Our second quarter performance was highlighted by record top-line revenues coupled with strong deposit growth. We also continued to strategically invest in recruiting, technology, enhanced services, and infrastructure to support future growth," said G. Robert Aston, Jr., Executive Chairman.

Highlights for the Second Quarter of 2019 Compared to the Second Quarter of 2018:

• Total revenues were $144.54 million, an increase of $7.48 million, or 5.46%.
• Loans held for investment increased $351.77 million, or 4.52%, from June 30, 2018, and $21.36 million, or 0.26%, from March 31, 2019, or 1.06% on an annualized basis.
• Total deposits were $9.27 billion, an increase of $1.28 billion, or 15.99%, compared to prior year and $0.54 billion, or 6.15% from March 31, 2019, or 24.67% on an annualized basis.  In comparison to June 30, 2018, total deposits increased 11.70% in our Hampton Roads region, 28.14% in our Richmond region, and 23.39% in our North Carolina region.
• Noninterest bearing deposits increased by 13.60%, to $2.95 billion, representing 31.83% of total deposits.  Compared to the linked quarter, noninterest bearing deposits increased 4.86%, or 19.49% on an annualized basis.
• Annualized return on common shareholders' equity of 8.89% and annualized return on average tangible common shareholders' equity of 14.05% (non-GAAP).
• Net interest margin for the quarter was 3.49% and taxable equivalent net interest margin was 3.52% (non-GAAP).
• Effective tax rate of 20.47% in the quarter compared to 19.89% in the second quarter of 2018.

“In addition to recruiting Jack Clayton as President of Business Strategies for North Carolina in the first quarter of 2019, we continued to build our production teams in Raleigh, Greensboro, and Charlotte adding Private Bankers and Treasury expertise.  We announced that Charity Volman has been appointed President of TowneBank’s newly formed Corporate Banking Group.  Joining her team are Karen Priest, Laura Morgan, and Brian Woodell, who served with her at her former bank.  In addition, Shane Stevens, was recently appointed Director of Merchant and Treasury Services.  Each of these individuals brings a wealth of experience and talent to our HomeTowne Banking platform,” stated J. Morgan Davis, President and Chief Executive Officer.

Quarterly Net Interest Income Compared to the Second Quarter of 2018:

• Net interest income was $89.82 million compared to $86.82 million at June 30, 2018.
• Taxable equivalent net interest margin (non-GAAP) was 3.52%, including accretion of 11 basis points, compared to 3.71%, including accretion of 23 basis points, for 2018.
• Average loans held for investment, with an average yield of 5.08%, represented 78.27% of average earning assets at June 30, 2019 compared to an average yield of 4.97% and 79.99% of average earning assets in the second quarter of 2018.
• Total cost of deposits increased to 0.99% from 0.60% at June 30, 2018.
• Average interest-earning assets totaled $10.32 billion at June 30, 2019 compared to $9.44 billion at June 30, 2018, an increase of 9.26%.
• Average interest-bearing liabilities totaled $6.95 billion, an increase of $0.55 billion from prior year.

Quarterly Provision for Loan Losses:

• Recorded a provision for loan losses of $2.82 million compared to $3.06 million one year ago and $1.44 million in the linked quarter.
• Net charge-offs were $1.60 million compared to $0.26 million one year prior.  The ratio of net charge-offs to average loans on an annualized basis was 0.08% compared to 0.01% in the prior quarter and 0.01% in the second quarter of 2018.  This increase was primarily attributable to the charge-off of one credit relationship.
• The allowance for loan losses represented 0.67% of total loans compared to 0.66% at March 31, 2019 and 0.64% at June 30, 2018.  Loan loss reserve as a percentage of total loans, excluding purchased loans, was 0.81% at June 30, 2019, and March 31, 2019, compared to 0.84% at June 30, 2018.  The allowance for loan losses was 3.00 times nonperforming loans compared to 9.36 times at March 31, 2019 and 12.64 times at June 30, 2018.

Quarterly Noninterest Income Compared to the Second Quarter of 2018:

• Total noninterest income was $54.72 million compared to $50.24 million in 2018, an increase of $4.48 million, or 8.92%.  Residential mortgage banking income was relatively flat in the quarter, while insurance commissions and other title fees increased $2.13 million, real estate brokerage and property management income increased $1.93 million, and service charges on deposit accounts increased $0.22 million.  Credit card merchant fees declined $0.78 million.
• Credit card merchant fee income was roughly $0.90 million below normal seasonal levels in second quarter 2019 due to the impact of converting to a new processing platform that will allow us to provide additional services and capabilities.
• Residential mortgage banking income was $18.57 million compared to $18.75 million in second quarter 2018.  Loan volume in the current quarter was $821.13 million, with purchase activity comprising 84.97% of that volume.  Loan volume in second quarter 2018 was $951.12 million, with purchase activity of 91.23%.  Lower volumes led to the decline in revenue.
• Total Insurance segment revenue increased 14.95% to $20.20 million in the second quarter due primarily to additional commission income from insurance agencies that were acquired in November 2018 and January 2019.
• Property management fee revenue increased 45.89%, or $1.88 million, as compared to second quarter 2018 due to increases in reservation levels.

Quarterly Noninterest Expense Compared to the Second Quarter of 2018:

• Total noninterest expense was $96.56 million compared to $89.22 million in 2018, an increase of $7.34 million, or 8.22%.  This reflects increases of $3.94 million in salary and benefits expense, $1.29 million in professional fees, $0.86 million in occupancy expense, and $0.76 million in outside data processing expenses.
• The increase in salary and benefits expense was attributable to the continued expansion of our functional support teams to enable us to enhance Company infrastructure and meet increased regulatory expectations related to exceeding $10 billion in assets, as well as keep pace with our growth and changing industry standards.  Specific areas of focus include: information technology, risk and compliance, accounting, and internal audit.
• In the wake of the May 2019 tragedy in Virginia Beach, Towne's contribution of $0.50 million to "VBStrong" was included in other expenses.
• Noninterest expense included operational expenses of $1.60 million related to insurance agencies acquired subsequent to second quarter 2018.

Quarterly Income Taxes Compared to the Second Quarter of 2018:

• Income tax expense was $8.92 million compared to $8.64 million one year prior.  This represents an effective tax rate of 20.47% compared to 19.89% in the second quarter of 2018.

Consolidated Balance Sheet June 30, 2019 Compared to June 30, 2018

• Total assets were $11.94 billion for the quarter ended June 30, 2019 compared to $11.16 billion at December 31, 2018 and $10.83 billion at June 30, 2018.  This increase was driven primarily by growth in cash and cash equivalents, available for sale securities, and loans held for investment.  Year-over-year, other assets increased $41.40 million due to the adoption of the leasing standard.
• Loans held for investment increased $0.11 billion, or 1.35%, or 2.73% on an annualized basis, compared to year end 2018, and $0.35 billion, or 4.52% compared to June 30, 2018.
• Total liabilities were $10.34 billion at June 30, 2019, an increase of $0.71 billion, or 7.39%, compared to December 31, 2018 and $0.98 billion, or 10.49%, compared to June 30, 2018.  Total deposits increased $0.90 billion over December 31, 2018 and $1.28 billion over June 30, 2018.  Total borrowings declined $0.26 billion from December 31, 2018 and $0.34 billion from June 30, 2018.

Investment Securities:

• Total investment securities were $1.35 billion compared to $1.20 billion at March 31, 2019 and $1.16 billion at June 30, 2018.  The weighted average duration of the portfolio at June 30, 2019 was 3.1 years.  The carrying value of the available-for-sale portfolio included $19.66 million of net unrealized gains compared to $2.22 million at March 31, 2019 and $20.60 million in net unrealized losses at June 30, 2018.  The increase in net unrealized gains was primarily due to interest rate fluctuations.  The carrying value of the held-to-maturity portfolio does not reflect $1.58 million in net unrealized gains compared to $1.04 million in net unrealized gains at March 31, 2019 and $0.64 million in net unrealized gains at June 30, 2018.

Loans and Asset Quality:

• Total loans held for investment were $8.13 billion at June 30, 2019 compared to $8.11 billion at March 31, 2019 and $7.77 billion at June 30, 2018.
• Nonperforming assets were $34.23 million, or 0.29% of total assets, compared to $26.31 million, or 0.24%, at June 30, 2018.  This increase was primarily driven by a single commercial relationship of approximately $10 million.
• Nonperforming loans were 0.22% of period end loans.
• Foreclosed property decreased to $14.52 million from $20.13 million at June 30, 2018.

Deposits and Borrowings:

• Total deposits were $9.27 billion compared to $8.73 billion at March 31, 2019 and $7.99 billion at June 30, 2018.
• Total loans to deposits were 87.68% compared to 92.83% at March 31, 2019 and 97.29% at June 30, 2018.
• Non-interest bearing deposits were 31.83% of total deposits at June 30, 2019 compared to 32.23% at March 31, 2019 and 32.50% at June 30, 2018.
• Total borrowings were $0.84 billion compared to $1.03 billion and $1.17 billion at March 31, 2019 and June 30, 2018, respectively.

Capital:

• Common equity tier 1 capital ratio of 11.58%.
• Tier 1 leverage capital ratio of 9.86%.
• Tier 1 risk-based capital ratio of 11.62%.
• Total risk-based capital ratio of 14.85%.
• Book value was $21.95 compared to $21.40 at March 31, 2019 and $20.22 at June 30, 2018.
• Tangible book value (non-GAAP)was $15.05 compared to $14.46 at March 31, 2019 and $13.50 at June 30, 2018.

Outlook:
Management reforecasts on a quarterly basis and anticipates:

•  Annualized loan growth to be in the low-to-mid single digits for the remainder of 2019.
• Our quarterly noninterest expense run rate will range between $93 - $94 million for the remainder of 2019.

About TowneBank:
As one of the top community banks in Virginia and North Carolina, TowneBank operates 41 banking offices serving Chesapeake, Chesterfield County, Glen Allen, Hampton, James City County, Mechanicsville, Newport News, Norfolk, Portsmouth, Richmond, Suffolk, Virginia Beach, Williamsburg, and York County in Virginia, along with Raleigh, Cary, Charlotte, Greenville, Moyock, Grandy, Camden County, Southern Shores, Corolla and Nags Head in North Carolina.  TowneBank also offers a full range of financial services through its controlled divisions and subsidiaries that include Towne Investment Group, Towne Wealth Management, Towne Insurance Agency, Towne Benefits, TowneBank Mortgage, TowneBank Commercial Mortgage, Berkshire Hathaway HomeServices Towne Realty, Towne 1031 Exchange, LLC, and Towne Vacations.  Local decision-making is a hallmark of its hometown banking strategy that is delivered through the leadership of each group’s President and Board of Directors.  With total assets of $11.94 billion as of June 30, 2019, TowneBank is one of the largest banks headquartered in Virginia.

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

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

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

Investor contact:
William B. Littreal, Chief Financial Officer, 757-638-681

TOWNEBANK
Selected Financial Highlights (unaudited)
(dollars in thousands, except per share data)
		Three Months Ended
		June 30,				March 31,				December 31,				September 30,				June 30,
		2019				2019				2018				2018				2018
Income and Performance Ratios:
	Total Revenue	$	144,537			$	133,854			$	131,417			$	137,914			$	137,058
	Net income	36,242				32,082				36,440				39,252				36,138
	Net income attributable to TowneBank	34,638				31,409				35,990				38,293				34,804
	Net income per common share - diluted	0.48				0.44				0.50				0.53				0.48
	Book value per common share	21.95				21.40				21.05				20.54				20.22
	Book value per common share - tangible (non-GAAP)	15.05				14.46				14.26				13.83				13.50
	Return on average assets	1.20		%		1.14		%		1.28		%		1.40		%		1.32		%
	Return on average assets - tangible (non-GAAP)	1.35		%		1.29		%		1.43		%		1.56		%		1.48		%
	Return on average equity	8.83		%		8.24		%		9.44		%		10.21		%		9.55		%
	Return on average equity - tangible (non-GAAP)	13.90		%		13.24		%		14.91		%		16.08		%		15.19		%
	Return on average common equity	8.89		%		8.30		%		9.53		%		10.30		%		9.62		%
	Return on average common equity - tangible (non-GAAP)	14.05		%		13.39		%		15.11		%		16.30		%		15.36		%
	Noninterest income as a percentage of total revenue	37.86		%		34.65		%		32.12		%		35.69		%		36.65		%
Regulatory Capital Ratios (1):
	Common equity tier 1	11.58		%		11.49		%		11.51		%		11.53		%		11.33		%
	Tier 1	11.62		%		11.52		%		11.54		%		11.57		%		11.36		%
	Total	14.85		%		14.79		%		14.83		%		14.90		%		14.71		%
	Tier 1 leverage ratio	9.86		%		9.92		%		9.87		%		9.98		%		10.00		%
Asset Quality:
	Allowance for loan losses to nonperforming loans		3.00	x			9.36	x			10.97	x			7.25	x			12.64	x
	Allowance for loan losses to period end loans	0.67		%		0.66		%		0.65		%		0.64		%		0.64		%
	Allowance for loan losses to period end loans excluding purchased loans	0.81		%		0.81		%		0.82		%		0.82		%		0.84		%
	Nonperforming loans to period end loans	0.22		%		0.07		%		0.06		%		0.09		%		0.05		%
	Nonperforming assets to period end assets	0.29		%		0.22		%		0.22		%		0.25		%		0.24		%
	Net charge-offs to average loans (annualized)	0.08		%		0.01		%		0.02		%		0.03		%		0.01		%
	Nonperforming loans	$	18,202			$	5,696			$	4,749			$	6,926			$	3,919
	Former bank premises	1,510				2,223				2,253				2,253				2,253
	Foreclosed property	14,517				17,071				17,163				18,153				20,133
	Total nonperforming assets	$	34,229			$	24,990			$	24,165			$	27,332			$	26,305
	Loans past due 90 days and still accruing interest	$	415			$	117			$	394			$	153			$	22
	Allowance for loan losses	$	54,527			$	53,303			$	52,094			$	50,236			$	49,535
Mortgage Banking:
	Loans originated, mortgage	$	574,638			$	366,643			$	407,787			$	561,543			$	667,189
	Loans originated, joint venture	246,491				146,884				192,280				249,956				283,933
	Total loans originated	$	821,129			$	513,527			$	600,067			$	811,499			$	951,122
	Number of loans originated	3,121				1,977				2,304				3,068				3,687
	Number of originators	234				240				293				303				324
	Purchase %	84.97		%		86.08		%		88.64		%		89.72		%		91.23		%
	Loans sold	$	694,832			$	473,068			$	694,341			$	852,205			$	825,313
	Gross realized gain on sales and fees as a % of loans originated	3.43		%		3.58		%		3.37		%		3.36		%		3.30		%
Other Ratios:
	Net interest margin	3.49		%		3.54		%		3.53		%		3.62		%		3.69		%
	Net interest margin-fully tax equivalent (nonGAAP)	3.52		%		3.57		%		3.55		%		3.64		%		3.71		%
	Average earning assets/total average assets	89.46		%		89.50		%		89.91		%		89.69		%		89.61		%
	Average loans/average deposits	91.60		%		95.83		%		95.32		%		97.55		%		97.79		%
	Average noninterest deposits/total average deposits	31.63		%		31.39		%		31.90		%		32.61		%		32.28		%
	Period end equity/period end total assets	13.45		%		13.53		%		13.78		%		13.49		%		13.63		%
	Efficiency ratio	66.80		%		68.43		%		62.65		%		64.00		%		65.10		%
	(1) Current reporting period regulatory capital ratios are preliminary

TOWNEBANK
Selected Data (unaudited)
(dollars in thousands)
Investment Securities													% Change
	Q2				Q2				Q1				Q2 19 vs.				Q2 19 vs.
Available-for-sale securities, at fair value	2019				2018				2019				Q2 18				Q1 19
U.S. agency securities	$	261,960			$	426,118			$	260,152			(38.52		)%		0.69	%
U.S. Treasury notes	2,241				101,224				2,229				(97.79		)%		0.54	%
Municipal securities	167,466				55,465				107,278				201.93		%		56.10	%
Trust preferred and other corporate securities	43,799				30,718				35,003				42.58		%		25.13	%
Mortgage-backed securities issued by GSE	785,355				444,138				695,115				76.83		%		12.98	%
Total	$	1,260,821			$	1,057,663			$	1,099,777			19.21		%		14.64	%
Held-to-maturity securities, at amortized cost
Municipal securities	$	34,458			$	36,039			$	34,472			(4.39		)%		(0.04	)%
Trust preferred corporate securities	2,393				500				500				378.60		%		378.60	%
Mortgage-backed securities issued by GSE	13,723				17,415				14,715				(21.20		)%		(6.74	)%
Total	$	50,574			$	53,954			$	49,687			(6.26		)%		1.79	%
Loans Held For Investment													% Change
	Q2				Q2				Q1				Q2 19 vs.				Q2 19 vs.
	2019				2018				2019				Q2 18				Q1 19
Real estate-construction and development	$	1,107,762			$	989,910			$	1,111,360			11.91		%		(0.32	)%
Commercial real estate - investment related properties	1,985,990				1,935,013				1,951,292				2.63		%		1.78	%
Commercial real estate - owner occupied	1,288,478				1,227,072				1,279,039				5.00		%		0.74	%
Real estate-multifamily	267,528				288,043				255,649				(7.12		)%		4.65	%
Real estate-residential 1-4 family	1,639,547				1,596,264				1,637,579				2.71		%		0.12	%
Commercial and industrial business	1,523,607				1,440,625				1,547,623				5.76		%		(1.55	)%
Consumer and other loans	313,817				298,029				322,828				5.30		%		(2.79	)%
Total	$	8,126,729			$	7,774,956			$	8,105,370			4.52		%		0.26	%
Deposits													% Change
	Q2				Q2				Q1				Q2 19 vs.				Q2 19 vs.
	2019				2018				2019				Q2 18				Q1 19
Noninterest-bearing demand	$	2,950,615			$	2,597,320			$	2,813,857			13.60		%		4.86	%
Interest-bearing:
Demand and money market accounts	3,409,322				2,987,102				3,290,907				14.13		%		3.60	%
Savings	277,495				305,334				285,790				(9.12		)%		(2.90	)%
Certificates of deposits	2,631,386				2,101,455				2,341,134				25.22		%		12.40	%
Total	$	9,268,818			$	7,991,211			$	8,731,688			15.99		%		6.15	%
The following table sets forth an estimate of the expected effects of the aggregate acquisition accounting adjustments on pre-tax net interest income for the periods shown:
									Discount Accretion (Premium Amortization)
									For the three months ended
									September 30,				December 31,
									2019				2019
Assets:
Investment Securities									$	(67	)		$	(65	)
Loans									1,467				1,447
Liabilities:
Deposits									51				47
Total estimated effect on net interest income									$	1,349			$	1,335
Note:  This information is intended for informational purposes only and is not necessarily indicative of future results.  Actual results may differ due to factors such factors such as changes in estimated prepayment speeds or projected credit loss rates.

TOWNEBANK
Average Balances, Yields and Rate Paid (unaudited)
(dollars in thousands)
	Three Months Ended											Three Months Ended											Three Months Ended
	June 30, 2019											March 31, 2019											June 30, 2018
					Interest				Average							Interest				Average							Interest				Average
	Average				Income/				Yield/			Average				Income/				Yield/			Average				Income/				Yield/
	Balance				Expense				Rate			Balance				Expense				Rate			Balance				Expense				Rate
Assets:
Loans (net of unearned income and deferred costs), excluding nonaccrual loans	$	8,075,054			$	102,366			5.08	%		$	8,030,994			$	100,146			5.06	%		$	7,552,983			$	93,548			4.97	%
Taxable investment securities	1,170,215				8,346				2.85	%		1,036,645				7,529				2.91	%		987,693				5,787				2.34	%
Tax-exempt investment securities	90,942				756				3.33	%		79,310				765				3.86	%		82,839				719				3.47	%
Total securities	1,261,157				9,102				2.89	%		1,115,955				8,294				2.97	%		1,070,532				6,506				2.43	%
Interest-bearing deposits	698,649				4,016				2.31	%		693,365				3,998				2.34	%		499,349				2,159				1.73	%
Loans held for sale	281,775				3,007				4.27	%		178,475				2,003				4.49	%		319,214				3,557				4.46	%
Total earning assets	10,316,635				118,491				4.61	%		10,018,789				114,441				4.63	%		9,442,078				105,770				4.49	%
Less: allowance for loan losses	(53,386		)									(52,844		)									(47,745		)
Total nonearning assets	1,269,029											1,228,808											1,142,514
Total assets	$	11,532,278										$	11,194,753										$	10,536,847
Liabilities and Equity:
Interest-bearing deposits
Demand and money market	$	3,312,313			$	7,025			0.85	%		$	3,174,157			$	6,240			0.80	%		$	2,945,897			$	3,602			0.49	%
Savings	281,221				929				1.33	%		285,499				1,027				1.46	%		306,937				941				1.23	%
Certificates of deposit	2,433,479				13,830				2.28	%		2,290,056				11,907				2.11	%		1,977,973				7,077				1.43	%
Total interest-bearing deposits	6,027,013				21,784				1.45	%		5,749,712				19,174				1.35	%		5,230,807				11,620				0.89	%
Borrowings	678,799				3,318				1.93	%		821,889				4,221				2.05	%		927,216				3,827				1.65	%
Subordinated debt, net	248,064				2,962				4.78	%		247,913				2,962				4.78	%		249,966				2,986				4.78	%
Total interest-bearing liabilities	6,953,876				28,064				1.62	%		6,819,514				26,357				1.57	%		6,407,989				18,433				1.15	%
Demand deposits	2,788,596											2,630,813											2,493,211
Other noninterest-bearing liabilities	215,951											198,527											173,832
Total liabilities	9,958,423											9,648,854											9,075,032
Shareholders’ equity	1,573,855											1,545,899											1,461,815
Total liabilities and equity	$	11,532,278										$	11,194,753										$	10,536,847
Net interest income (tax-equivalent basis)					$	90,427										$	88,084										$	87,337
Reconcilement of Non-GAAP Financial Measures
Tax-equivalent basis adjustment					(608		)									(611		)									(514		)
Net interest income (GAAP)					$	89,819										$	87,473										$	86,823
Interest rate spread (1)(3)									2.99	%										3.06	%										3.34	%
Interest expense as a percent of average earning assets									1.09	%										1.07	%										0.78	%
Net interest margin (tax equivalent basis) (2)(3)									3.52	%										3.57	%										3.71	%
Total cost of deposits									0.99	%										0.93	%										0.60	%

(1) Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities.  Fully tax equivalent.
(2) Net interest margin is net interest income expressed as a percentage of average earning assets.  Fully tax equivalent.
(3) Non-GAAP.

TOWNEBANK
Average Balances, Yields and Rate Paid (unaudited)
(dollars in thousands)
	Six Months Ended											Six Months Ended											Six Months Ended June 30,
	June 30, 2019											June 30, 2018											2019 Compared with 2018
					Interest				Average							Interest				Average
	Average				Income/				Yield/			Average				Income/				Yield/			Increase				Change due to
	Balance				Expense				Rate			Balance				Expense				Rate			(Decrease)				Rate				Volume
Assets:
Loans (net of unearned income and deferred costs), excluding nonaccrual loans	$	8,053,146			$	202,512			5.07	%		$	7,255,533			$	175,458			4.88	%		$	27,054			$	7,201			$	19,853
Taxable investment securities	1,103,799				15,875				2.88	%		945,229				10,811				2.29	%		5,064				3,066				1,998
Tax-exempt investment securities	85,158				1,522				3.57	%		77,964				1,408				3.61	%		114				(14		)		128
Total securities	1,188,957				17,397				2.93	%		1,023,193				12,219				2.39	%		5,178				3,052				2,126
Interest-bearing deposits	695,999				8,013				2.32	%		564,041				4,522				1.62	%		3,491				2,272				1,219
Loans held for sale	230,411				5,010				4.35	%		279,380				5,936				4.25	%		(926		)		136				(1,062		)
Total earning assets	10,168,513				232,932				4.62	%		9,122,147				198,135				4.38	%		34,797				12,661				22,136
Less: allowance for loan losses	(53,117		)									(46,976		)
Total nonearning assets	1,249,052											1,119,336
Total assets	$	11,364,448										$	10,194,507
Liabilities and Equity:
Interest-bearing deposits
Demand and money market	$	3,243,616			$	13,264			0.82	%		$	2,860,596			$	6,571			0.46	%		$	6,693			$	5,713			$	980
Savings	283,348				1,956				1.39	%		307,734				1,817				1.19	%		139				290				(151		)
Certificates of deposit	2,362,165				25,738				2.20	%		1,922,737				12,718				1.33	%		13,020				9,623				3,397
Total interest-bearing deposits	5,889,129				40,958				1.40	%		5,091,067				21,106				0.84	%		19,852				15,626				4,226
Borrowings	749,948				7,540				2.00	%		874,385				6,705				1.53	%		835				1,882				(1,047		)
Subordinated debt, net	247,989				5,923				4.78	%		254,560				6,143				4.83	%		(220		)		(63		)		(157		)
Total interest-bearing liabilities	6,887,066				54,421				1.59	%		6,220,012				33,954				1.10	%		20,467				17,445				3,022
Demand deposits	2,710,141											2,398,693
Other noninterest-bearing   liabilities	207,287											167,108
Total liabilities	9,804,494											8,785,813
Shareholders’ equity	1,559,954											1,408,694
Total liabilities and equity	$	11,364,448										$	10,194,507
Net interest income (tax-equivalent basis)					$	178,511										$	164,181						$	14,330			$	(4,784	)		$	19,114
Reconcilement of Non-GAAP Financial Measures
Tax-equivalent basis adjustment					(1,219		)									(1,013		)					(206		)
Net interest income (GAAP)					$	177,292										$	163,168						$	14,124
Interest rate spread (1)(3)									3.03	%										3.28	%
Interest expense as a percent of average earning assets									1.08	%										0.75	%
Net interest margin (tax equivalent basis) (2)(3)									3.54	%										3.63	%
Total cost of deposits									0.96	%										0.57	%
(1) Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities.  Fully tax equivalent.
(2) Net interest margin is net interest income expressed as a percentage of average earning assets.  Fully tax equivalent.
(3) Non-GAAP.

TOWNEBANK
Consolidated Balance Sheets
(dollars in thousands, except share data)
	June 30,				December 31,
	2019				2018
	(unaudited)				(audited)
ASSETS
Cash and due from banks	$	110,580			$	94,604
Interest-bearing deposits at Federal Reserve Bank	834,505				570,425
Interest-bearing deposits in financial institutions	21,527				21,667
Total Cash and Cash Equivalents	966,612				686,696
Securities available for sale, at fair value	1,260,821				1,095,339
Securities held to maturity, at amortized cost	50,574				50,598
Other equity securities	5,396				4,797
Federal Home Loan Bank stock	32,657				43,229
Total Securities	1,349,448				1,193,963
Mortgage loans held for sale	362,773				220,986
Loans, net of unearned income and deferred costs	8,126,729				8,018,233
Less: allowance for loan losses	(54,527		)		(52,094		)
Net Loans	8,072,202				7,966,139
Premises and equipment, net	230,177				211,796
Goodwill	442,881				433,658
Other intangible assets, net	58,391				58,752
Bank-owned life insurance policies	240,621				237,371
Other assets	219,375				153,669
TOTAL ASSETS	$	11,942,480			$	11,163,030
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand	$	2,950,615			$	2,622,761
Interest-bearing:
Demand and money market accounts	3,409,322				3,223,215
Savings	277,495				286,684
Certificates of deposit	2,631,386				2,237,762
Total Deposits	9,268,818				8,370,422
Advances from the Federal Home Loan Bank	532,004				799,315
Subordinated debt, net	248,160				247,861
Repurchase agreements and other borrowings	56,355				47,156
Total Borrowings	836,519				1,094,332
Other liabilities	230,691				159,856
TOTAL LIABILITIES	10,336,028				9,624,610
Preferred stock
Authorized and unissued shares - 2,000,000	—				—
Common stock, $1.667 par: 90,000,000 shares authorized
72,608,253 and 72,465,923 shares issued at
June 30, 2019 and December 31, 2018, respectively	121,038				120,801
Capital surplus	1,036,982				1,034,676
Retained earnings	420,600				379,239
Common stock issued to deferred compensation trust, at cost
807,939 and 769,200 shares at
June 30, 2019 and December 31, 2018, respectively	(15,160		)		(13,955		)
Deferred compensation trust	15,160				13,955
Accumulated other comprehensive loss	15,143				(9,190		)
TOTAL SHAREHOLDERS’ EQUITY	1,593,763				1,525,526
Noncontrolling interest	12,689				12,894
TOTAL EQUITY	1,606,452				1,538,420
TOTAL LIABILITIES AND EQUITY	$	11,942,480			$	11,163,030

TOWNEBANK
Consolidated Statements of Income (unaudited)
(dollars in thousands, except per share data)
	Three Months Ended								Six Months Ended
	June 30,								June 30,
	2019				2018				2019				2018
INTEREST INCOME:
Loans, including fees	$	101,874			$	93,150			$	201,569			$	174,682
Investment securities	8,987				6,390				17,121				11,982
Interest-bearing deposits in financial institutions and federal funds sold	4,015				2,159				8,013				4,522
Mortgage loans held for sale	3,007				3,557				5,010				5,936
Total interest income	117,883				105,256				231,713				197,122
INTEREST EXPENSE:
Deposits	21,784				11,620				40,958				21,106
Advances from the Federal Home Loan Bank	3,201				3,764				7,354				6,602
Subordinated debt, net	2,962				2,986				5,924				6,143
Repurchase agreements and other borrowings	117				63				185				103
Total interest expense	28,064				18,433				54,421				33,954
Net interest income	89,819				86,823				177,292				163,168
PROVISION FOR LOAN LOSSES	2,824				3,056				4,262				5,009
Net interest income after provision for loan losses	86,995				83,767				173,030				158,159
NONINTEREST INCOME:
Residential mortgage banking income, net	18,565				18,745				32,073				36,348
Insurance commissions and other title fees and income, net	17,213				15,087				32,795				28,459
Real estate brokerage and property management income, net	8,843				6,910				18,111				17,340
Service charges on deposit accounts	3,185				2,969				6,046				5,852
Credit card merchant fees, net	660				1,443				1,843				2,611
Bank owned life insurance	1,635				1,633				3,233				3,165
Other income	4,617				3,448				7,774				6,389
Net gain/(loss) on investment securities	—				—				(776		)		3
Total noninterest income	54,718				50,235				101,099				100,167
NONINTEREST EXPENSE:
Salaries and employee benefits	54,263				50,324				107,123				101,108
Occupancy expense	7,662				6,802				15,913				13,279
Furniture and equipment	3,578				3,546				6,949				7,244
Amortization - intangibles	3,113				2,996				6,305				5,591
Software expense	2,788				2,648				5,533				4,988
Outside data processing	3,616				2,859				6,782				4,980
Professional fees	3,707				2,415				6,386				4,387
Advertising and marketing	3,182				3,124				6,011				5,774
Other expenses	14,647				14,507				27,677				34,173
Total noninterest expense	96,556				89,221				188,679				181,524
Income before income tax expense and noncontrolling interest	45,157				44,781				85,450				76,802
Provision for income tax expense	8,915				8,643				17,126				14,720
Net income	$	36,242			$	36,138			$	68,324			$	62,082
Net income attributable to noncontrolling interest	(1,604		)		(1,334		)		(2,277		)		(2,572		)
Net income attributable to TowneBank	$	34,638			$	34,804			$	66,047			$	59,510
Per common share information
Basic earnings	$	0.48			$	0.48			$	0.92			$	0.84
Diluted earnings	$	0.48			$	0.48			$	0.92			$	0.84
Cash dividends declared	$	0.18			$	0.16			$	0.34			$	0.30

TOWNEBANK
Consolidated Balance Sheets - Five Quarter Trend
(dollars in thousands, except share data)
	June 30,				March 31,				December 31,				September 30,				June 30,
	2019				2019				2018				2018				2018
	(unaudited)				(unaudited)				(audited)				(unaudited)				(unaudited)
ASSETS
Cash and due from banks	$	110,580			$	104,091			$	94,604			$	106,485			$	98,339
Interest-bearing deposits at Federal Reserve Bank	834,505				775,208				570,425				582,099				341,715
Interest-bearing deposits in financial institutions	21,527				21,001				21,667				20,910				17,749
Total Cash and Cash Equivalents	966,612				900,300				686,696				709,494				457,803
Securities available for sale, at fair value	1,260,821				1,099,777				1,095,339				1,051,773				1,057,663
Securities held to maturity, at amortized cost	50,574				49,687				50,598				52,002				53,954
Other equity securities	5,396				5,022				4,797				5,519				5,206
Federal Home Loan Bank stock	32,657				41,464				43,229				46,393				46,393
Total Securities	1,349,448				1,195,950				1,193,963				1,155,687				1,163,216
Mortgage loans held for sale	362,773				247,021				220,986				333,354				396,185
Loans, net of unearned income and deferred costs	8,126,729				8,105,370				8,018,233				7,881,692				7,774,956
Less: allowance for loan losses	(54,527		)		(53,303		)		(52,094		)		(50,236		)		(49,535		)
Net Loans	8,072,202				8,052,067				7,966,139				7,831,456				7,725,421
Premises and equipment, net	230,177				227,458				211,796				210,724				207,997
Goodwill	442,881				442,881				433,658				427,117				425,625
Other intangible assets, net	58,391				61,333				58,752				58,165				60,669
Bank-owned life insurance policies	240,621				238,977				237,371				235,348				233,682
Other assets	219,375				202,276				153,669				159,887				161,055
TOTAL ASSETS	$	11,942,480			$	11,568,263			$	11,163,030			$	11,121,232			$	10,831,653
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand	$	2,950,615			$	2,813,857			$	2,622,761			$	2,671,558			$	2,597,320
Interest-bearing:
Demand and money market accounts	3,409,322				3,290,907				3,223,215				3,096,317				3,017,767
Savings	277,495				285,790				286,684				298,368				305,334
Certificates of deposit	2,631,386				2,341,134				2,237,762				2,233,188				2,070,790
Total Deposits	9,268,818				8,731,688				8,370,422				8,299,431				7,991,211
Advances from the Federal Home Loan Bank	532,004				739,160				799,315				873,469				873,622
Subordinated debt, net	248,160				248,010				247,861				247,712				247,563
Repurchase agreements and other borrowings	56,355				44,775				47,156				45,591				50,981
Total Borrowings	836,519				1,031,945				1,094,332				1,166,772				1,172,166
Other liabilities	230,691				238,974				159,856				155,205				191,490
TOTAL LIABILITIES	10,336,028				10,002,607				9,624,610				9,621,408				9,354,867
Preferred stock
Authorized shares - 2,000,000	—				—				—				—				—
Common stock, $1.667 par value	121,038				121,047				120,801				120,613				120,615
Capital surplus	1,036,982				1,035,563				1,034,676				1,032,863				1,031,965
Retained earnings	420,600				399,030				379,239				354,842				328,125
Common stock issued to deferred compensation
trust, at cost	(15,160		)		(14,067		)		(13,955		)		(13,780		)		(13,500		)
Deferred compensation trust	15,160				14,067				13,955				13,780				13,500
Accumulated other comprehensive loss	15,143				(1,792		)		(9,190		)		(22,348		)		(17,944		)
TOTAL SHAREHOLDERS’ EQUITY	1,593,763				1,553,848				1,525,526				1,485,970				1,462,761
Noncontrolling interest	12,689				11,808				12,894				13,854				14,025
TOTAL EQUITY	1,606,452				1,565,656				1,538,420				1,499,824				1,476,786
TOTAL LIABILITIES AND EQUITY	$	11,942,480			$	11,568,263			$	11,163,030			$	11,121,232			$	10,831,653

TOWNEBANK
Consolidated Statements of Income - Five Quarter Trend (unaudited)
(dollars in thousands, except share data)
	Three Months Ended
	June 30,				March 31,				December 31,				September 30,				June 30,
	2019				2019				2018				2018				2018
INTEREST INCOME:
Loans, including fees	$	101,874			$	99,695			$	99,446			$	97,215			$	93,150
Investment securities	8,987				8,134				8,126				7,019				6,390
Interest-bearing deposits in financial institutions and federal funds sold	4,015				3,998				3,559				2,148				2,159
Mortgage loans held for sale	3,007				2,003				3,176				4,012				3,557
Total interest income	117,883				113,830				114,307				110,394				105,256
INTEREST EXPENSE:
Deposits	21,784				19,174				17,495				14,540				11,620
Advances from the Federal Home Loan Bank	3,201				4,153				4,585				4,153				3,764
Subordinated debt	2,962				2,962				2,961				2,962				2,986
Repurchase agreements and other borrowings	117				68				58				42				63
Total interest expense	28,064				26,357				25,099				21,697				18,433
Net interest income	89,819				87,473				89,208				88,697				86,823
PROVISION FOR LOAN LOSSES	2,824				1,438				2,292				1,241				3,056
Net interest income after provision for loan losses	86,995				86,035				86,916				87,456				83,767
NONINTEREST INCOME:
Residential mortgage banking income, net	18,565				13,508				12,951				15,804				18,745
Insurance commissions and other title fees and income, net	17,213				15,582				13,212				14,493				15,087
Real estate brokerage and property management income, net	8,843				9,268				5,982				8,542				6,910
Service charges on deposit accounts	3,185				2,861				2,928				3,028				2,969
Credit card merchant fees, net	660				1,183				1,298				1,563				1,443
Bank owned life insurance	1,635				1,598				2,014				1,657				1,633
Other income	4,617				3,157				3,824				4,130				3,448
Net gain/(loss) on investment securities	—				(776		)		—				—				—
Total noninterest income	54,718				46,381				42,209				49,217				50,235
NONINTEREST EXPENSE:
Salaries and employee benefits	54,263				52,860				50,233				50,497				50,324
Occupancy expense	7,662				8,251				7,352				7,013				6,802
Furniture and equipment	3,578				3,371				3,587				3,646				3,546
Amortization - intangibles	3,113				3,192				3,123				2,996				2,996
Software expense	2,788				2,745				2,694				2,940				2,648
Outside data processing	3,616				3,166				2,466				2,917				2,859
Professional fees	3,707				2,679				2,028				1,908				2,415
Advertising and marketing	3,182				2,829				2,546				2,874				3,124
Other expenses	14,647				13,030				8,308				13,471				14,507
Total noninterest expense	96,556				92,123				82,337				88,262				89,221
Income before income tax expense and noncontrolling interest	45,157				40,293				46,788				48,411				44,781
Provision for income tax expense	8,915				8,211				10,348				9,159				8,643
Net income	36,242				32,082				36,440				39,252				36,138
Net income attributable to noncontrolling interest	(1,604		)		(673		)		(450		)		(959		)		(1,334		)
Net income attributable to TowneBank	$	34,638			$	31,409			$	35,990			$	38,293			$	34,804
Per common share information
Basic earnings	$	0.48			$	0.44			$	0.50			$	0.53			$	0.48
Diluted earnings	$	0.48			$	0.44			$	0.50			$	0.53			$	0.48
Basic weighted average shares outstanding	72,044,817				71,992,330				71,905,956				71,875,085				71,787,980
Diluted weighted average shares outstanding	72,145,600				$	72,099,558			72,043,369				72,044,355				71,949,590
Cash dividends declared	$	0.18			$	0.16			$	0.16			$	0.16			$	0.16

TOWNEBANK
Banking Segment Financial Information
(dollars in thousands)
	Three Months Ended												Six Months Ended								Increase/(Decrease)
	June 30,								March 31,				June 30,								2019 over 2018
	2019				2018				2019				2019				2018				Amount				Percent
Revenue
Net interest income	$	88,442			$	83,686			$	86,400			$	174,842			$	157,729			$	17,113			10.85	%
Service charges on deposit
accounts	3,185				2,969				2,861				6,046				5,852				194				3.32	%
Credit card merchant fees	660				1,443				1,183				1,843				2,611				(768		)		(29.41	)%
Other income	5,273				4,062				3,927				9,200				8,017				1,183				14.76	%
Subtotal	9,118				8,474				7,971				17,089				16,480				609				3.70	%
Gain/(loss) on investment securities	—				—				(776		)		(776		)		3				(779		)		N/M
Total noninterest income	9,118				8,474				7,195				16,313				16,483				(170		)		(1.03	)%
Total revenue	97,560				92,160				93,595				191,155				174,212				16,943				9.73	%
Provision for loan losses	2,824				3,056				1,438				4,262				5,009				(747		)		(14.91	)%
Expenses
Salaries and employee benefits	32,353				27,840				31,087				63,440				58,042				5,398				9.30	%
Occupancy expense	5,007				4,274				5,244				10,251				8,291				1,960				23.64	%
Furniture and equipment	2,517				2,491				2,367				4,884				5,022				(138		)		(2.75	)%
Amortization of intangibles	1,315				1,530				1,366				2,681				2,751				(70		)		(2.54	)%
Other expenses	18,938				15,364				16,181				35,119				36,111				(992		)		(2.75	)%
Total expenses	60,130				51,499				56,245				116,375				110,217				6,158				5.59	%
Income before income tax, corporate allocation and noncontrolling interest	34,606				37,605				35,912				70,518				58,986				11,532				19.55	%
Corporate allocation	546				476				452				998				932				66				7.08	%
Income before income tax provision and noncontrolling interest	35,152				38,081				36,364				71,516				59,918				11,598				19.36	%
Provision for income tax expense	6,650				7,142				7,192				13,842				11,023				2,819				25.57	%
Net income	28,502				30,939				29,172				57,674				48,895				8,779				17.95	%
Noncontrolling interest	1				(6		)		2				3				(8		)		11				N/M
Net income attributable to TowneBank	$	28,503			$	30,933			$	29,174			$	57,677			$	48,887			$	8,790			17.98	%
Efficiency ratio	61.63		%		55.88		%		59.60		%		60.63		%		63.27		%		(2.64		)%		(4.17	)%

TOWNEBANK
Realty Segment Financial Information
(dollars in thousands)
	Three Months Ended												Six Months Ended								Increase/(Decrease)
	June 30,								March 31,				June 30,								2019 over 2018
	2019				2018				2019				2019				2018				Amount				Percent
Revenue
Residential mortgage brokerage income, net	$	18,898			$	19,344			$	13,756			$	32,654			$	37,005			$	(4,351	)		(11.76	)%
Real estate brokerage income, net	2,873				2,818				1,561				4,434				4,517				(83		)		(1.84	)%
Title insurance and settlement fees	594				579				368				962				895				67				7.49	%
Property management fees, net	5,970				4,092				7,708				13,678				12,823				855				6.67	%
Income from unconsolidated subsidiary	162				100				94				256				194				62				31.96	%
Net interest and other income	1,677				3,342				1,372				3,049				5,887				(2,838		)		(48.21	)%
Total revenue	30,174				30,275				24,859				55,033				61,321				(6,288		)		(10.25	)%
Expenses
Salaries and employee benefits	13,309				15,403				12,895				26,204				29,280				(3,076		)		(10.51	)%
Occupancy expense	2,028				1,964				2,345				4,373				3,858				515				13.35	%
Furniture and equipment	803				835				768				1,571				1,816				(245		)		(13.49	)%
Amortization of intangible assets	695				672				725				1,420				1,343				77				5.73	%
Other expenses	7,234				8,158				6,241				13,475				14,452				(977		)		(6.76	)%
Total expenses	24,069				27,032				22,974				47,043				50,749				(3,706		)		(7.30	)%
Income before income tax, corporate allocation and noncontrolling interest	6,105				3,243				1,885				7,990				10,572				(2,582		)		(24.42	)%
Corporate allocation	(328		)		(293		)		(263		)		(591		)		(582		)		(9		)		1.55	%
Income before income tax provision and noncontrolling interest	5,777				2,950				1,622				7,399				9,990				(2,591		)		(25.94	)%
Provision for income tax expense	1,287				633				551				1,838				2,192				(354		)		(16.15	)%
Net income	4,490				2,317				1,071				5,561				7,798				(2,237		)		(28.69	)%
Noncontrolling interest	(1,248		)		(891		)		(252		)		(1,500		)		(1,512		)		12				(0.79	)%
Net income attributable to TowneBank	$	3,242			$	1,426			$	819			$	4,061			$	6,286			$	(2,225	)		(35.40	)%
Efficiency ratio	79.77		%		89.29		%		92.42		%		85.48		%		82.76		%		2.72		%		3.29	%

TOWNEBANK
Insurance Segment Financial Information
(dollars in thousands)
	Three Months Ended												Six Months Ended								Increase/(Decrease)
	June 30,								March 31,				June 30,								2019 over 2018
	2019				2018				2019				2019				2018				Amount				Percent
Commission and fee income
Property and casualty	$	13,067			$	11,059			$	11,873			$	24,940			$	20,416			$	4,524			22.16	%
Employee benefits	3,833				3,454				3,506				7,339				6,650				689				10.36	%
Travel insurance	1,169				1,389				1,289				2,458				3,157				(699		)		(22.14	)%
Specialized benefit services	163				171				170				333				340				(7		)		(2.06	)%
Total commissions and fees	18,232				16,073				16,838				35,070				30,563				4,507				14.75	%
Contingency and bonus revenue	1,893				1,433				1,585				3,479				2,566				913				35.58	%
Other income	79				71				75				154				141				13				9.22	%
Total revenue	20,204				17,577				18,498				38,703				33,270				5,433				16.33	%
Employee commission expense	3,401				2,953				3,098				6,500				5,468				1,032				18.87	%
Revenue, net of commission expense	16,803				14,624				15,400				32,203				27,802				4,401				15.83	%
Salaries and employee benefits	8,601				7,081				8,878				17,479				13,786				3,693				26.79	%
Occupancy expense	627				564				662				1,289				1,130				159				14.07	%
Furniture and equipment	258				220				236				494				406				88				21.67	%
Amortization of intangible assets	1,103				794				1,101				2,204				1,497				707				47.23	%
Other expenses	1,768				2,032				2,027				3,795				3,739				56				1.50	%
Total operating expenses	12,357				10,691				12,904				25,261				20,558				4,703				22.88	%
Income before income tax, corporate allocation and noncontrolling interest	4,446				3,933				2,496				6,942				7,244				(302		)		(4.17	)%
Corporate allocation	(218		)		(183		)		(189		)		(407		)		(350		)		(57		)		16.29	%
Income before income tax provision and noncontrolling interest	4,228				3,750				2,307				6,535				6,894				(359		)		(5.21	)%
Provision for income tax expense	978				868				468				1,446				1,505				(59		)		(3.92	)%
Net income	3,250				2,882				1,839				5,089				5,389				(300		)		(5.57	)%
Noncontrolling interest	(357		)		(437		)		(423		)		(780		)		(1,052		)		272				(25.86	)%
Net income attributable to TowneBank	$	2,893			$	2,445			$	1,416			$	4,309			$	4,337			$	(28	)		(0.65	)%
Provision for income taxes	978				868				468				1,446				1,505				(59		)		(3.92	)%
Depreciation, amortization and interest expense	1,309				1,007				1,333				2,642				1,913				729				38.11	%
EBITDA (non-GAAP)	$	5,180			$	4,320			$	3,217			$	8,397			$	7,755			$	642			8.28	%
Efficiency ratio	73.54		%		73.11		%		83.79		%		78.44		%		73.94		%		4.50		%		6.09	%

TOWNEBANK
Reconcilement of Non-GAAP Financial Measures
	Three Months Ended												Six Months Ended
	June 30,				June 30,				March 31,				June 30,				June 30,
	2019				2018				2019				2019				2018
Return on average assets (GAAP)	1.20		%		1.32		%		1.14		%		1.17		%		1.18		%
Impact of excluding average goodwill and other intangibles and amortization	0.15		%		0.16		%		0.15		%		0.15		%		0.14		%
Return on average tangible assets (non-GAAP)	1.35		%		1.48		%		1.29		%		1.32		%		1.32		%
Return on average equity (GAAP)	8.83		%		9.55		%		8.24		%		8.54		%		8.52		%
Impact of excluding average goodwill and other intangibles and amortization	5.07		%		5.64		%		5.00		%		5.03		%		4.95		%
Return on average tangible equity (non-GAAP)	13.90		%		15.19		%		13.24		%		13.57		%		13.47		%
Return on average common equity (GAAP)	8.89		%		9.62		%		8.30		%		8.60		%		8.59		%
Impact of excluding average goodwill and other intangibles and amortization	5.16		%		5.74		%		5.09		%		5.13		%		5.03		%
Return on average tangible common equity (non-GAAP)	14.05		%		15.36		%		13.39		%		13.73		%		13.62		%
Book value (GAAP)	$	21.95			$	20.22			$	21.40			$	21.95			$	20.22
Impact of excluding average goodwill and other intangibles and amortization	(6.90		)		(6.72		)		(6.94		)		(6.90		)		(6.72		)
Tangible book value (non-GAAP)	$	15.05			$	13.50			$	14.46			$	15.05			$	13.50

TOWNEBANK
Reconcilement 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
		June 30,				March 31,				December 31,				September 30,				June 30,
		2019				2019				2018				2018				2018
Net income (GAAP)		$	34,638			$	31,409			$	35,990			$	38,293			$	34,804
Acquisition-related expenses		20				411				(1,518		)		424				797
Income tax expense -tax reform legislation		—				—				696				—				—
Income tax expense (benefit) - other items		(3		)		(52		)		355				(44		)		(93		)
Income tax expense (benefit)		(3		)		(52		)		1,051				(44		)		(93		)
Total charges, net of taxes		17				359				(467		)		380				704
Operating earnings, excluding certain items affecting comparability (non-GAAP)		$	34,655			$	31,768			$	35,523			$	38,673			$	35,508
Weighted average diluted shares		72,145,600				72,099,558				72,043,369				72,044,355				71,949,590
Diluted EPS (GAAP)		$	0.48			$	0.44			$	0.50			$	0.53			$	0.48
Diluted EPS, excluding certain items affecting comparability (non-GAAP)		$	0.48			$	0.44			$	0.49			$	0.54			$	0.49
Average assets		$	11,532,278			$	11,194,753			$	11,149,960			$	10,844,570			$	10,536,847
Average tangible equity		$	1,070,634			$	1,039,630			1,022,982				$	1,003,151			$	981,607
Return on average assets, excluding certain items affecting comparability (non-GAAP)		1.21		%		1.15		%		1.26		%		1.41		%		1.35		%
Return on average tangible equity, excluding certain items affecting comparability (non-GAAP)		13.90		%		13.38		%		14.73		%		16.23		%		15.48		%
Return on average common tangible equity, excluding certain items affecting comparability (non-GAAP)		14.06		%		13.53		%		14.93		%		16.45		%		15.66		%
Efficiency ratio, excluding certain items affecting comparability (non-GAAP)		66.79		%		68.12		%		63.81		%		63.69		%		64.52		%

TOWNEBANK
Reconcilement of Non-GAAP Financial Measures
(dollars in thousands, except per share data)
Reconcilement of GAAP Earnings to Operating Earnings Excluding Certain Items Affecting Comparability		Six months ended
		June 30,				June 30,
		2019				2018
Net income (GAAP)		$	66,047			$	59,510
Acquisition-related expenses		431				9,523
Total charges		431				9,523
Income tax expense (benefit) - other items		(55		)		(1,732		)
Income tax expense (benefit)		(55		)		(1,732		)
Total charges, net of taxes		376				7,791
Operating earnings, excluding certain items affecting comparability (non-GAAP)		$	66,423			$	67,301
Weighted average diluted shares		72,122,467				70,551,537
Diluted EPS (GAAP)		$	0.92			$	0.84
Diluted EPS, excluding certain items affecting comparability (non-GAAP)		$	0.92			$	0.95
Average assets		$	11,364,448			$	10,194,507
Average tangible equity		$	1,055,218			$	957,021
Return on average assets, excluding certain items affecting comparability (non-GAAP)		1.18		%		1.33		%
Return on average tangible equity, excluding certain items affecting comparability (non-GAAP)		13.65		%		15.11		%
Return on average common tangible equity, excluding certain items affecting comparability (non-GAAP)		13.80		%		15.29		%
Efficiency ratio, excluding certain items affecting comparability (non-GAAP)		67.43		%		65.32		%

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