SUFFOLK, Va., July 24, 2024 (GLOBE NEWSWIRE) -- TowneBank (the "Company" or "Towne") (NASDAQ: TOWN) today reported earnings for the quarter ended June 30, 2024 of $42.86 million, or $0.57 per diluted share, compared to $41.72 million, or $0.56 per diluted share, for the quarter ended June 30, 2023. Excluding certain items affecting comparability, core earnings (non-GAAP) were $42.56 million, or $0.57 per diluted share, in the current quarter, an increase of 10.10% compared to $38.66 million, or $0.52 per diluted share, for the quarter ended June 30, 2023.

"TowneBank delivered another solid quarter of performance, reflective of the strength of our diversified operating model and conservative approach to balance sheet management. It was encouraging to report quarterly sequential growth in tax-equivalent net interest margin and noninterest-bearing demand deposit balances for the first time since 2022 signaling momentum heading into the back half of the year. Lastly, our strategy of continuing to expand our noninterest income sources, resulted in one of the strongest quarters we have seen in recent years. On a personal note, I am grateful for the contributions of our entire TowneBank family as we celebrated our 25th anniversary of Serving Others and Enriching Lives," said G. Robert Aston, Jr., Executive Chairman.

Highlights for Second Quarter 2024:

• Total revenues were $174.97 million, a decrease of $6.60 million, or 3.63%, compared to second quarter 2023. Net interest income declined $4.56 million, driven by the impact of higher rates on deposit costs and continued migration to higher yielding deposit products. Additionally, noninterest income decreased $2.04 million due to a second quarter 2023 gain of $8.83 million related to the sale of BHHS Towne Realty.
• Total deposits were $14.27 billion, an increase of $505.93 million, or 3.68%, compared to second quarter 2023. Total deposits increased 1.04%, or $146.51 million, in comparison to March 31, 2024, 4.17% on an annualized basis.
• Noninterest-bearing deposits decreased 9.87%, to $4.30 billion, compared to second quarter 2023 and represented 30.15% of total deposits. Compared to the linked quarter, noninterest-bearing deposits increased 2.61%, or 10.51% on an annualized basis. This represents the first quarterly sequential increase in noninterest-bearing deposits since June 2022.
• Loans held for investment were $11.45 billion, an increase of $243.73 million, or 2.17%, compared to June 30, 2023, and a decrease of $0.60 million, or 0.01%, compared to March 31, 2024.
• Annualized return on common shareholders' equity was 8.49% compared to 8.52% in second quarter 2023. Annualized return on average tangible common shareholders' equity (non-GAAP) was 12.16% compared to 12.48% in second quarter 2023.
• Net interest margin was 2.86% for the quarter and tax-equivalent net interest margin (non-GAAP) was 2.89%, including purchase accounting accretion of 5 basis points, compared to the prior year quarter net interest margin of 2.98% and tax-equivalent net interest margin (non-GAAP) of 3.01%, including purchase accounting accretion of 4 basis points.
• Net interest margin increased 14 bp and spread increased 13 bp, compared to the linked quarter.
• The effective tax rate was 15.93% in the quarter compared to 18.41% in second quarter 2023 and 17.31% in the linked quarter. The lower tax rate in the current quarter was due to increases in tax-advantaged income investments and investments in Low Income Housing Tax Credits.

"Importantly, we continued to report strong asset quality metrics and healthy capital levels reflective of our conservative approach to Main Street banking. We continuously evaluate investments in people, process and technologies to help improve efficiencies across all lines of business," stated William I. Foster III, President and Chief Executive Officer.

Quarterly Net Interest Income:

• Net interest income was $109.05 million compared to $113.61 million for the quarter ended June 30, 2023. The decrease was driven by increased deposit costs, partially offset by higher yields on earning assets.
• On an average basis, loans held for investment, with a yield of 5.45%, represented 74.76% of earning assets at June 30, 2024 compared to a yield of 5.00% and 73.24% of earning assets in the second quarter of 2023.
• The cost of interest-bearing deposits was 3.32% for the quarter ended June 30, 2024, compared to 2.28% in second quarter 2023. Interest expense on deposits increased $33.35 million, or 68.53%, over the prior year quarter driven by the increase in rate.
• Our total cost of deposits increased to 2.32% from 1.46% for the quarter ended June 30, 2023 due to higher interest-bearing deposit balances coupled with higher rates.
• Average interest-earning assets totaled $15.34 billion at June 30, 2024 compared to $15.31 billion at June 30, 2023, an increase of 0.26%.   The Company anticipates approximately $495 million of cash flows from its securities portfolio to be available for reinvestment in the next two years.
• Average interest-bearing liabilities totaled $10.29 billion, an increase of $0.61 billion, or 6.27%, from prior year, primarily related to deposit growth. Average short term FHLB borrowings were $65.93 million during the quarter compared to $802.75 million one year prior.

Quarterly Provision for Credit Losses:

• The quarterly provision for credit losses was a benefit of $177 thousand compared to an expense of $3.56 million in the prior year quarter and a benefit of $0.88 million in the linked quarter.
• The allowance for credit losses on loans decreased $283 thousand in second quarter 2024, compared to the linked quarter. The decrease in the allowance was driven by net recoveries during the quarter, continued strength in credit quality, and a continuation of improvements in macroeconomic forecast scenarios utilized in our model.  
• Net loan recoveries were $19 thousand in the quarter compared to net charge-offs of $9 thousand in the prior year quarter and $520 thousand in the linked quarter.
• The ratio of net charge-offs to average loans on an annualized basis was 0.00% in second quarter 2024 and 2023, compared to 0.02% in the linked quarter.
• The allowance for credit losses on loans represented 1.10% of total loans at each of June 30, 2024, June 30, 2023, and March 31, 2024. The allowance for credit losses on loans was 19.08 times nonperforming loans compared to 18.09 times at June 30, 2023 and 18.01 times at March 31, 2024.

Quarterly Noninterest Income:

• Total noninterest income was $65.92 million compared to $67.96 million in 2023, a decrease of $2.04 million, or 2.99%. Excluding a gain of $8.83 million on the sale of BHHS TowneRealty in second quarter 2023, total noninterest income increased $6.80 million compared to second quarter 2023, or 11.50%.
• Residential mortgage banking income was $13.42 million compared to $11.36 million in second quarter 2023. Loan volume increased to $0.63 billion in second quarter 2024 from $0.62 billion in second quarter 2023. The number of loans originated was lower than second quarter 2023, but higher per-loan average balances resulted in higher production volume.   Residential purchase activity comprised 94.85% of production volume in the second quarter of 2024 compared to 96.32% in the prior year quarter.
• Gross margins on residential mortgage sales increased 32 basis points to 3.28% in the current quarter from 2.96% in second quarter 2023.
• Total net insurance commissions increased $1.53 million, or 6.81%, to $24.03 million in second quarter 2024 compared to 2023. This increase was attributable to increases in property and casualty commissions, which were driven by organic growth.
• Property management fee revenue increased 18.30%, or $2.21 million, to $14.31 million in second quarter 2024 compared to 2023. Reservation income increased compared to the prior year due to an acquisition in March 2024.

Quarterly Noninterest Expense:

• Total noninterest expense was $123.98 million compared to $125.23 million in 2023, a decrease of $1.24 million, or 0.99%. Decreases in FDIC and other insurance of $1.57 million, acquisition expenses of $2.98 million, and various expense line items were partially offset by an increase in salaries and employee benefits of $3.90 million, software expense of $0.89 million, and data processing expense of $0.60 million.
• Salaries and benefits expense increases were driven by annual base salary adjustments effective third quarter 2023, production incentives, and higher health insurance costs.
• Software increased due to higher core system costs while data processing increased due to seasonal merchant fee increases and core conversion expenses in our property management line of business.

Consolidated Balance Sheet Highlights:

• Management is focused on strategic balance sheet management with a concentration on controlled loan growth and maintaining strong levels of liquidity.
• Total assets were $17.07 billion for the quarter ended June 30, 2024, a $184.61 million increase compared to $16.88 billion at March 31, 2024. Total assets decreased $156.23 million, or 0.91%, from $17.23 billion at June 30, 2023.
• Loans held for investment increased $243.73 million, or 2.17%, compared to prior year but declined $0.60 million, or 0.01%, compared to the linked quarter.
• Mortgage loans held for sale decreased $28.74 million, or 12.52%, compared to prior year but increased $50.04 million, or 33.20%, compared to the linked quarter.
• Total deposits increased $505.93 million, or 3.68%, primarily in interest-bearing demand and time deposits, compared to prior year. In the linked quarter comparison, total deposits increased $146.51 million, or 4.17% on an annualized basis.
• Noninterest-bearing deposits decreased $471.06 million or 9.87%, compared to prior year, but increased $109.64 million, or 2.61%, compared to the linked quarter. This linked quarter increase is the first quarter-end increase in balances since June 30, 2022.
• Total borrowings decreased $764.41 million, or 72.14%, compared to second quarter 2023 and increased $4.19 million, or 1.44%, compared to the linked quarter. Short-term FHLB advances decreased in the current quarter compared to both the prior year quarter and the linked quarter.

Investment Securities:

• Total investment securities were $2.49 billion compared to $2.54 billion at March 31, 2024 and $2.61 billion at June 30, 2023. The weighted average duration of the portfolio at June 30, 2024 was 3.4 years. The carrying value of the available for sale debt securities portfolio included net unrealized losses of $172.93 million at June 30, 2024, compared to $170.84 million at March 31, 2024 and $195.98 million at June 30, 2023, with the changes related to market valuation adjustments due to changing interest rates.

Loans and Asset Quality:

• Total loans held for investment were $11.45 billion at both June 30, 2024 and March 31, 2024, and $11.21 billion at June 30, 2023.
• Nonperforming assets were $7.16 million, or 0.04% of total assets, compared to $9.35 million, or 0.05%, at June 30, 2023, and $7.77 million, or 0.05%, in the linked quarter end.
• Nonperforming loans were 0.06% of period end loans at June 30, 2024, June 30, 2023, and the linked quarter end.
• Foreclosed property decreased to $581 thousand from $738 thousand at June 30, 2023.  

Deposits and Borrowings:

• Total deposits were $14.27 billion compared to $14.13 billion at March 31, 2024 and $13.77 billion at June 30, 2023.
• The ratio of period end loans held for investment to deposits was 80.24% compared to 81.07% at March 31, 2024 and 81.41% at June 30, 2023.
• Noninterest-bearing deposits were 30.15% of total deposits at June 30, 2024 compared to 29.69% at March 31, 2024 and 34.68% at June 30, 2023. Noninterest-bearing deposits declined $471.06 million, or 9.87%, compared to June 30, 2023, but increased 109.64 million, or 2.61%, compared to the linked quarter.
• Total borrowings were $295.17 million compared to $290.98 million at March 31, 2024 and $1.06 billion at June 30, 2023.

Capital:

• Common equity tier 1 capital ratio of 12.43%⁽¹⁾.
• Tier 1 leverage capital ratio of 10.25%⁽¹⁾.
• Tier 1 risk-based capital ratio of 12.55%⁽¹⁾.
• Total risk-based capital ratio of 15.34% ⁽¹⁾ .
• Book value per common share was $27.62 compared to $27.33 at March 31, 2024 and $26.36 at June 30, 2023.
• Tangible book value per common share (non-GAAP) was $20.65 compared to $20.31 at March 31, 2024 and $19.31 at June 30, 2023.

⁽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 $17.07 billion as of June 30, 2024, TowneBank is one of the largest banks headquartered in Virginia.

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

Forward-Looking Statements:
This press release contains certain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts, but instead represent only the beliefs, expectations, or opinions of TowneBank and its management regarding future events, many of which, by their nature, are inherently uncertain. Forward-looking statements may be identified by the use of such words as: "believe," "expect," "anticipate," "intend," "plan,” "estimate," or words of similar meaning, or future or conditional terms, such as "will," "would," "should," "could," "may," "likely," "probably," or "possibly." These statements may address issues that involve significant risks, uncertainties, estimates, and assumptions made by management. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include among others, 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; geopolitical instability, including wars, conflicts, civil unrest, and terrorist attacks and the potential impact, directly or indirectly, on our business; the effects of weather-related or natural disasters, which may negatively affect our operations and/or our loan portfolio and increase our cost of conducting business; public health events (such as the COVID-19 pandemic) and governmental and societal responses to them; 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, whether directed at us or at vendors or other third parties with which we interact, 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, 2023, 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
		June 30,				March 31,				December 31,				September 30,				June 30,
			2024				2024				2023				2023				2023
Income and Performance Ratios:
	Total revenue	$	174,970			$	167,102			$	155,546			$	172,864			$	181,568
	Net income		43,039				35,127				28,545				44,745				43,368
	Net income available to common shareholders		42,856				34,687				28,804				44,862				41,716
	Net income per common share - diluted		0.57				0.46				0.39				0.60				0.56
	Book value per common share		27.62				27.33				27.24				26.28				26.36
	Book value per common share - tangible(non-GAAP)		20.65				20.31				20.28				19.28				19.31
	Return on average assets		1.01	%			0.83	%			0.68	%			1.06	%			0.99	%
	Return on average assets - tangible(non-GAAP)		1.11	%			0.92	%			0.77	%			1.17	%			1.10	%
	Return on average equity		8.43	%			6.84	%			5.75	%			8.96	%			8.46	%
	Return on average equity - tangible(non-GAAP)		12.03	%			9.87	%			8.53	%			12.97	%			12.35	%
	Return on average common equity		8.49	%			6.89	%			5.79	%			9.04	%			8.52	%
	Return on average common equity - tangible(non-GAAP)		12.16	%			9.98	%			8.62	%			13.11	%			12.48	%
	Noninterest income as a percentage of total revenue		37.68	%			38.23	%			30.74	%			34.60	%			37.43	%
Regulatory Capital Ratios (1):
	Common equity tier 1		12.43	%			12.20	%			12.18	%			12.19	%			11.99	%
	Tier 1		12.55	%			12.32	%			12.29	%			12.31	%			12.11	%
	Total		15.34	%			15.10	%			15.06	%			15.09	%			14.88	%
	Tier 1 leverage ratio		10.25	%			10.15	%			10.17	%			10.06	%			9.85	%
Asset Quality:
	Allowance for credit losses on loans to nonperforming loans	19.08x				18.01x				18.48x				17.60x				18.09x
	Allowance for credit losses on loans to period end loans		1.10	%			1.10	%			1.12	%			1.12	%			1.10	%
	Nonperforming loans to period end loans		0.06	%			0.06	%			0.06	%			0.06	%			0.06	%
	Nonperforming assets to period end assets		0.04	%			0.05	%			0.05	%			0.05	%			0.05	%
	Net charge-offs (recoveries) to average loans (annualized)		—	%			0.02	%			—	%		(0.04)%					—	%
	Net charge-offs (recoveries)	$	(19	)		$	520			$	68			$	(1,074	)		$	9
	Nonperforming loans	$	6,582			$	6,987			$	6,843			$	7,110			$	6,827
	Former bank premises		—				—				—				—				1,782
	Foreclosed property		581				780				908				766				738
	Total nonperforming assets	$	7,163			$	7,767			$	7,751			$	7,876			$	9,347
	Loans past due 90 days and still accruing interest	$	368			$	323			$	735			$	970			$	360
	Allowance for credit losses on loans	$	125,552			$	125,835			$	126,461			$	125,159			$	123,513
Mortgage Banking:
	Loans originated, mortgage	$	430,398			$	289,191			$	302,616			$	348,387			$	409,050
	Loans originated, joint venture		196,583				135,197				126,332				172,021				207,450
	Total loans originated	$	626,981			$	424,388			$	428,948			$	520,408			$	616,500
	Number of loans originated		1,700				1,247				1,237				1,487				1,715
	Number of originators		169				176				181				192				196
	Purchase %		94.85	%			95.66	%			95.06	%			95.96	%			96.32	%
	Loans sold	$	605,134			$	410,895			$	468,014			$	567,291			$	525,078
	Rate lock asset	$	1,930			$	1,681			$	895			$	1,348			$	1,551
	Gross realized gain on sales and fees as a % of loans originated		3.28	%			3.34	%			3.06	%			3.17	%			2.96	%
Other Ratios:
	Net interest margin		2.86	%			2.72	%			2.83	%			2.95	%			2.98	%
	Net interest margin-fully tax-equivalent(non-GAAP)		2.89	%			2.75	%			2.86	%			2.98	%			3.01	%
	Average earning assets/total average assets		90.36	%			90.52	%			90.48	%			90.73	%			90.96	%
	Average loans/average deposits		80.80	%			81.48	%			80.72	%			80.75	%			83.72	%
	Average noninterest deposits/total average deposits		30.06	%			30.25	%			31.69	%			33.50	%			36.07	%
	Period end equity/period end total assets		12.24	%			12.24	%			12.21	%			11.90	%			11.56	%
	Efficiency ratio(non-GAAP)		68.98	%			73.25	%			76.17	%			66.21	%			70.41	%
	(1) Current reporting period regulatory capital ratios are preliminary.

TOWNEBANK
Selected Data (unaudited)
(dollars in thousands)
Investment Securities													% Change
	Q2				Q2				Q1				Q2 24 vs.			Q2 24 vs.
Available-for-sale securities, at fair value		2024				2023				2024			Q2 23			Q1 24
U.S. agency securities	$	281,934			$	318,354			$	294,723			(11.44)%			(4.34)%
U.S. Treasury notes		27,701				26,874				27,534			3.08	%		0.61	%
Municipal securities		442,474				503,792				447,323			(12.17)%			(1.08)%
Trust preferred and other corporate securities		88,228				71,116				87,983			24.06	%		0.28	%
Mortgage-backed securities issued by GSEs and GNMA		1,411,883				1,086,947				1,347,920			29.89	%		4.75	%
Allowance for credit losses		(1,541	)			(1,232	)			(1,382	)		25.08	%		11.51	%
Total	$	2,250,679			$	2,005,851			$	2,204,101			12.21	%		2.11	%
Gross unrealized gains (losses) reflected in financial statements
Total gross unrealized gains	$	1,983			$	975			$	1,868			103.38	%		6.16	%
Total gross unrealized losses		(174,911	)			(196,954	)			(172,708	)		(11.19)%			1.28	%
Net unrealized gains (losses) and other adjustments on AFS securities	$	(172,928	)		$	(195,979	)		$	(170,840	)		(11.76)%			1.22	%
Held-to-maturity securities, at amortized cost
U.S. agency securities	$	102,234			$	101,469			$	102,042			0.75	%		0.19	%
U.S. Treasury notes		97,171				433,298				197,356			(77.57)%			(50.76)%
Municipal securities		5,318				5,226				5,294			1.76	%		0.45	%
Trust preferred corporate securities		2,147				2,198				2,159			(2.32)%			(0.56)%
Mortgage-backed securities issued by GSEs		5,618				5,826				5,659			(3.57)%			(0.72)%
Allowance for credit losses		(79	)			(87	)			(82	)		(9.20)%			(3.66)%
Total	$	212,409			$	547,930			$	312,428			(61.23)%			(32.01)%
Total gross unrealized gains	$	175			$	272			$	265			(35.66)%			(33.96)%
Total gross unrealized losses		(12,880	)			(25,914	)			(14,262	)		(50.30)%			(9.69)%
Net unrealized gains (losses) in HTM securities	$	(12,705	)		$	(25,642	)		$	(13,997	)		(50.45)%			(9.23)%
Total unrealized gains (losses) on AFS and HTM securities	$	(185,633	)		$	(221,621	)		$	(184,837	)		(16.24)%			0.43	%
													% Change
Loans Held For Investment	Q2				Q2				Q1				Q2 24 vs.			Q2 24 vs.
		2024				2023				2024			Q2 23			Q1 24
Real estate - construction and development	$	1,190,768			$	1,364,575			$	1,255,741			(12.74)%			(5.17)%
Commercial real estate - owner occupied		1,673,582				1,687,261				1,700,753			(0.81)%			(1.60)%
Commercial real estate - non owner occupied		3,155,958				3,034,548				3,178,947			4.00	%		(0.72)%
Real estate - multifamily		682,537				520,464				595,075			31.14	%		14.70	%
Residential 1-4 family		1,887,420				1,790,225				1,882,296			5.43	%		0.27	%
HELOC		408,273				380,501				386,361			7.30	%		5.67	%
Commercial and industrial business (C&I)		1,297,538				1,259,743				1,291,201			3.00	%		0.49	%
Government		517,954				520,994				528,341			(0.58)%			(1.97)%
Indirect		558,216				562,161				555,482			(0.70)%			0.49	%
Consumer loans and other		79,501				87,542				78,146			(9.19) %			1.73	%
Total	$	11,451,747			$	11,208,014			$	11,452,343			2.17	%		(0.01)%
													% Change
Deposits	Q2				Q2				Q1				Q2 24 vs.			Q2 24 vs.
		2024				2023				2024			Q2 23			Q1 24
Noninterest-bearing demand	$	4,303,773			$	4,774,830			$	4,194,132			(9.87)%			2.61	%
Interest-bearing:
Demand and money market accounts		6,940,086				6,529,336				6,916,701			6.29	%		0.34	%
Savings		312,881				361,891				326,179			(13.54)%			(4.08)%
Certificates of deposits		2,715,848				2,100,604				2,689,062			29.29	%		1.00	%
Total		14,272,588				13,766,661				14,126,074			3.68	%		1.04	%

TOWNEBANK
Average Balances, Yields and Rate Paid (unaudited)
(dollars in thousands)
	Three Months Ended											Three Months Ended											Three Months Ended
	June 30, 2024											March 31, 2024											June 30, 2023
					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)	$	11,471,669			$	155,374			5.45	%		$	11,379,323			$	151,811			5.37	%		$	11,209,641			$	139,814			5.00	%
Taxable investment securities		2,368,476				21,671			3.66	%			2,440,652				18,716			3.07	%			2,450,393				17,195			2.81	%
Tax-exempt investment securities		156,503				1,521			3.89	%			161,538				1,549			3.84	%			209,728				2,003			3.82	%
Total securities		2,524,979				23,192			3.67	%			2,602,190				20,265			3.12	%			2,660,121				19,198			2.89	%
Interest-bearing deposits		1,182,816				14,512			4.93	%			1,167,322				14,234			4.90	%			1,262,692				14,488			4.60	%
Mortgage loans held for sale		165,392				2,945			7.12	%			116,868				1,716			5.87	%			172,679				2,547			5.90	%
Total earning assets		15,344,856				196,023			5.14	%			15,265,703				188,026			4.95	%			15,305,133				176,047			4.61	%
Less: allowance for loan losses		(126,792	)										(127,413	)										(121,140	)
Total nonearning assets		1,764,418											1,725,945											1,642,972
Total assets	$	16,982,482										$	16,864,235										$	16,826,965
Liabilities and Equity:
Interest-bearing deposits
Demand and money market	$	6,896,176			$	48,161			2.81	%		$	6,828,053			$	47,985			2.83	%		$	6,220,394			$	32,058			2.07	%
Savings		317,774				845			1.07	%			329,036				881			1.08	%			371,455				895			0.97	%
Certificates of deposit		2,715,615				33,017			4.89	%			2,583,938				29,522			4.60	%			1,968,623				15,718			3.20	%
Total interest-bearing deposits		9,929,565				82,023			3.32	%			9,741,027				78,388			3.24	%			8,560,472				48,671			2.28	%
Borrowings		100,165				1,627			6.43	%			212,375				3,078			5.73	%			863,255				10,345			4.74	%
Subordinated debt, net		256,093				2,236			3.49	%			255,878				2,236			3.50	%			255,264				2,236			3.50	%
Total interest-bearing liabilities		10,285,823				85,886			3.36	%			10,209,280				83,702			3.30	%			9,678,991				61,252			2.54	%
Demand deposits		4,267,590											4,224,104											4,829,395
Other noninterest-bearing liabilities		383,447											390,576											339,966
Total liabilities		14,936,860											14,823,960											14,848,352
Shareholders’ equity		2,045,622											2,040,275											1,978,613
Total liabilities and equity	$	16,982,482										$	16,864,235										$	16,826,965
Net interest income (tax-equivalent basis) (4)					$	110,137										$	104,324										$	114,795
Reconciliation of Non-GAAP Financial Measures
Tax-equivalent basis adjustment						(1,089	)										(1,106	)										(1,184	)
Net interest income (GAAP)					$	109,048										$	103,218										$	113,611
Interest rate spread (2)(4)									1.78	%										1.65	%										2.07	%
Interest expense as a percent of average earning assets									2.25	%										2.21	%										1.61	%
Net interest margin (tax-equivalent basis) (3)(4)									2.89	%										2.75	%										3.01	%
Total cost of deposits									2.32	%										2.26	%										1.46	%

(1)	Yields and interest income are presented on a tax-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)
	Six Months Ended											Six Months Ended
	June 30, 2024											June 30, 2023
					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)	$	11,425,496			$	307,186			5.41	%		$	11,153,944			$	273,349			4.94	%
Taxable investment securities		2,404,564				40,385			3.36	%			2,444,474				34,011			2.78	%
Tax-exempt investment securities		159,021				3,071			3.86	%			198,940				3,891			3.91	%
Total securities		2,563,585				43,456			3.39	%			2,643,414				37,902			2.87	%
Interest-bearing deposits		1,175,069				28,746			4.92	%			1,154,218				25,137			4.39	%
Mortgage loans held for sale		141,130				4,661			6.61	%			139,035				4,151			5.97	%
Total earning assets		15,305,280				384,049			5.05	%			15,090,611				340,539			4.55	%
Less: allowance for loan losses		(127,102	)										(117,812	)
Total nonearning assets		1,745,180											1,616,524
Total assets	$	16,923,358										$	16,589,323
Liabilities and Equity:
Interest-bearing deposits
Demand and money market	$	6,862,115			$	96,146			2.82	%		$	6,219,081			$	55,360			1.80	%
Savings		323,405				1,726			1.07	%			386,532				1,739			0.91	%
Certificates of deposit		2,649,777				62,539			4.75	%			1,826,777				25,506			2.82	%
Total interest-bearing deposits		9,835,297				160,411			3.28	%			8,432,390				82,605			1.98	%
Borrowings		156,270				4,705			5.95	%			610,946				14,261			4.64	%
Subordinated debt, net		255,986				4,472			3.49	%			252,679				4,405			3.49	%
Total interest-bearing liabilities		10,247,553				169,588			3.33	%			9,296,015				101,271			2.20	%
Demand deposits		4,245,847											4,995,980
Other noninterest-bearing liabilities		387,010											334,930
Total liabilities		14,880,410											14,626,925
Shareholders’ equity		2,042,948											1,962,398
Total liabilities and equity	$	16,923,358										$	16,589,323
Net interest income (tax-equivalent basis)(4)					$	214,461										$	239,268
Reconciliation of Non-GAAP Financial Measures
Tax-equivalent basis adjustment						(2,195	)										(2,280	)
Net interest income (GAAP)					$	212,266										$	236,988
Interest rate spread (2)(4)									1.72	%										2.35	%
Interest expense as a percent of average earning assets									2.23	%										1.35	%
Net interest margin (tax-equivalent basis) (3)(4)									2.82	%										3.20	%
Total cost of deposits									2.29	%										1.24	%
(1) Yields and interest income are presented on a tax-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 share data)
	June 30,				December 31,
		2024				2023
	(unaudited)				(audited)
ASSETS
Cash and due from banks	$	140,028			$	85,584
Interest-bearing deposits at FRB - Richmond		1,062,115				939,356
Federal funds sold and interest-bearing deposits in financial institutions		99,303				103,417
Total Cash and Cash Equivalents		1,301,446				1,128,357
Securities available for sale, at fair value (amortized cost of $2,425,148 and $2,292,963, and allowance for credit losses of $1,541 and $1,498 at June 30, 2024 and December 31, 2023, respectively)		2,250,679				2,129,342
Securities held to maturity, at amortized cost (fair value $199,783 and $462,656 at June 30, 2024 and December 31, 2023, respectively)		212,488				477,592
Less: Allowance for credit losses		(79	)			(84	)
Securities held to maturity, net of allowance for credit losses		212,409				477,508
Other equity securities		13,566				13,792
FHLB stock		12,134				21,372
Total Securities		2,488,788				2,642,014
Mortgage loans held for sale		200,762				149,987
Loans, net of unearned income and deferred costs		11,451,747				11,329,021
Less: allowance for credit losses		(125,552	)			(126,461	)
Net Loans		11,326,195				11,202,560
Premises and equipment, net		340,348				337,598
Goodwill		457,619				456,335
Other intangible assets, net		65,460				64,634
BOLI		277,434				277,445
Other assets		610,791				576,109
TOTAL ASSETS	$	17,068,843			$	16,835,039
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand	$	4,303,773			$	4,342,701
Interest-bearing:
Demand and money market accounts		6,940,086				6,757,619
Savings		312,881				336,492
Certificates of deposit		2,715,848				2,456,394
Total Deposits		14,272,588				13,893,206
Advances from the FHLB		3,591				203,958
Subordinated debt, net		256,227				255,796
Repurchase agreements and other borrowings		35,351				32,826
Total Borrowings		295,169				492,580
Other liabilities		411,770				393,375
TOTAL LIABILITIES		14,979,527				14,779,161
Preferred stock, authorized and unissued shares - 2,000,000		—				—
Common stock, $1.667 par value: 150,000,000 shares authorized;
75,039,089 and 74,893,462 shares issued at
June 30, 2024 and December 31, 2023, respectively		125,090				124,847
Capital surplus		1,115,759				1,112,761
Retained earnings		961,162				921,126
Common stock issued to deferred compensation trust, at cost
1,076,483 and 1,004,717 shares at June 30, 2024 and December 31, 2023, respectively		(22,756	)			(20,813	)
Deferred compensation trust		22,756				20,813
Accumulated other comprehensive income (loss)		(129,224	)			(118,762	)
TOTAL SHAREHOLDERS’ EQUITY		2,072,787				2,039,972
Noncontrolling interest		16,529				15,906
TOTAL EQUITY		2,089,316				2,055,878
TOTAL LIABILITIES AND EQUITY	$	17,068,843			$	16,835,039

TOWNEBANK
Consolidated Statements of Income (unaudited)
(dollars in thousands, except per share data)
	Three Months Ended								Six Months Ended
	June 30,								June 30,
		2024				2023				2024				2023
INTEREST INCOME:
Loans, including fees	$	154,549			$	138,977			$	305,523			$	271,745
Investment securities		22,928				18,851				42,924				37,226
Interest-bearing deposits in financial institutions and federal funds sold		14,512				14,488				28,746				25,137
Mortgage loans held for sale		2,945				2,547				4,661				4,151
Total interest income		194,934				174,863				381,854				338,259
INTEREST EXPENSE:
Deposits		82,023				48,671				160,411				82,605
Advances from the FHLB		942				10,407				3,380				13,399
Subordinated debt, net		2,236				2,236				4,472				4,405
Repurchase agreements and other borrowings		685				(62	)			1,325				862
Total interest expense		85,886				61,252				169,588				101,271
Net interest income		109,048				113,611				212,266				236,988
PROVISION FOR CREDIT LOSSES		(177	)			3,556				(1,054	)			15,225
Net interest income after provision for credit losses		109,225				110,055				213,320				221,763
NONINTEREST INCOME:
Residential mortgage banking income, net		13,422				11,360				23,899				20,732
Insurance commissions and related income, net		24,031				22,498				49,570				45,321
Property management income, net		14,312				12,098				31,085				27,633
Real estate brokerage income, net		—				1,834				—				3,625
Service charges on deposit accounts		3,353				3,015				6,431				5,754
Credit card merchant fees, net		1,662				1,682				3,213				3,226
Investment commission income, net		2,580				2,166				4,923				4,218
BOLI		3,238				1,710				5,080				3,383
Gain on sale of equity investment		—				8,833				—				8,833
Other income		3,324				2,761				5,531				5,998
Net gain/(loss) on investment securities		—				—				74				—
Total noninterest income		65,922				67,957				129,806				128,723
NONINTEREST EXPENSE:
Salaries and employee benefits		71,349				67,445				142,726				136,866
Occupancy		9,717				9,487				19,139				18,552
Furniture and equipment		4,634				4,389				9,112				8,633
Amortization - intangibles		3,298				3,610				6,544				7,134
Software		7,056				6,169				13,156				11,792
Data processing		4,606				4,011				8,522				7,364
Professional fees		3,788				3,166				6,968				6,178
Advertising and marketing		3,524				3,959				8,106				8,360
Other expenses		16,012				22,992				35,302				44,747
Total noninterest expense		123,984				125,228				249,575				249,626
Income before income tax expense and noncontrolling interest		51,163				52,784				93,551				100,860
Provision for income tax expense		8,124				9,416				15,385				19,014
Net income	$	43,039			$	43,368			$	78,166			$	81,846
Net income attributable to noncontrolling interest		(183	)			(1,652	)			(623	)			(1,797	)
Net income attributable to TowneBank	$	42,856			$	41,716			$	77,543			$	80,049
Per common share information
Basic earnings	$	0.57			$	0.56			$	1.04			$	1.07
Diluted earnings	$	0.57			$	0.56			$	1.03			$	1.07
Cash dividends declared	$	0.25			$	0.25			$	0.50			$	0.48

TOWNEBANK
Consolidated Balance Sheets - Five Quarter Trend
(dollars in thousands, except share data)
	June 30,				March 31,				December 31,				September 30,				June 30,
		2024				2024				2023				2023				2023
	(unaudited)				(unaudited)				(audited)				(unaudited)				(unaudited)
ASSETS
Cash and due from banks	$	140,028			$	75,802			$	85,584			$	83,949			$	106,994
Interest-bearing deposits at FRB - Richmond		1,062,115				926,635				939,356				1,029,276				1,427,044
Federal funds sold and interest-bearing deposits in financial institutions		99,303				98,673				103,417				102,527				102,231
Total Cash and Cash Equivalents		1,301,446				1,101,110				1,128,357				1,215,752				1,636,269
Securities available for sale		2,250,679				2,204,101				2,129,342				1,963,453				2,005,851
Securities held to maturity		212,488				312,510				477,592				547,854				548,017
Less: allowance for credit losses		(79	)			(82	)			(84	)			(85	)			(87	)
Securities held to maturity, net of allowance for credit losses		212,409				312,428				477,508				547,769				547,930
Other equity securities		13,566				13,661				13,792				14,062				13,798
FHLB stock		12,134				12,139				21,372				16,634				40,454
Total Securities		2,488,788				2,542,329				2,642,014				2,541,918				2,608,033
Mortgage loans held for sale		200,762				150,727				149,987				188,048				229,502
Loans, net of unearned income and deferred costs		11,451,747				11,452,343				11,329,021				11,172,971				11,208,014
Less: Allowance for credit losses		(125,552	)			(125,835	)			(126,461	)			(125,159	)			(123,513	)
Net Loans		11,326,195				11,326,508				11,202,560				11,047,812				11,084,501
Premises and equipment, net		340,348				342,569				337,598				335,522				326,686
Goodwill		457,619				457,619				456,335				456,684				456,695
Other intangible assets, net		65,460				68,758				64,634				67,496				71,106
BOLI		277,434				279,293				277,445				275,240				273,435
Other assets		610,791				615,324				576,109				551,884				538,848
TOTAL ASSETS	$	17,068,843			$	16,884,237			$	16,835,039			$	16,680,356			$	17,225,075
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand	$	4,303,773			$	4,194,132			$	4,342,701			$	4,444,861			$	4,774,830
Interest-bearing:
Demand and money market accounts		6,940,086				6,916,701				6,757,619				6,764,415				6,529,336
Savings		312,881				326,179				336,492				350,031				361,891
Certificates of deposit		2,715,848				2,689,062				2,456,394				2,321,498				2,100,604
Total Deposits		14,272,588				14,126,074				13,893,206				13,880,805				13,766,661
Advances from the FHLB		3,591				3,775				203,958				104,139				754,319
Subordinated debt, net		256,227				256,011				255,796				255,580				255,365
Repurchase agreements and other borrowings		35,351				31,198				32,826				47,315				49,898
Total Borrowings		295,169				290,984				492,580				407,034				1,059,582
Other liabilities		411,770				401,307				393,375				408,305				408,333
TOTAL LIABILITIES		14,979,527				14,818,365				14,779,161				14,696,144				15,234,576
Preferred stock		—				—				—				—				—
Common stock, $1.667 par value		125,090				125,009				124,847				124,837				124,805
Capital surplus		1,115,759				1,114,038				1,112,761				1,111,152				1,109,526
Retained earnings		961,162				937,065				921,126				911,042				884,901
Common stock issued to deferred compensation
trust, at cost		(22,756	)			(20,915	)			(20,813	)			(20,740	)			(20,134	)
Deferred compensation trust		22,756				20,915				20,813				20,740				20,134
Accumulated other comprehensive income (loss)		(129,224	)			(126,586	)			(118,762	)			(179,043	)			(145,392	)
TOTAL SHAREHOLDERS’ EQUITY		2,072,787				2,049,526				2,039,972				1,967,988				1,973,840
Noncontrolling interest		16,529				16,346				15,906				16,224				16,659
TOTAL EQUITY		2,089,316				2,065,872				2,055,878				1,984,212				1,990,499
TOTAL LIABILITIES AND EQUITY	$	17,068,843			$	16,884,237			$	16,835,039			$	16,680,356			$	17,225,075

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,
		2024				2024				2023				2023				2023
INTEREST INCOME:
Loans, including fees	$	154,549			$	150,974			$	146,810			$	143,605			$	138,977
Investment securities		22,928				19,996				20,464				20,292				18,851
Interest-bearing deposits in financial institutions and federal funds sold		14,512				14,234				13,967				15,031				14,488
Mortgage loans held for sale		2,945				1,716				2,886				3,928				2,547
Total interest income		194,934				186,920				184,127				182,856				174,863
INTEREST EXPENSE:
Deposits		82,023				78,388				73,200				64,171				48,671
Advances from the FHLB		942				2,438				917				3,438				10,407
Subordinated debt, net		2,236				2,236				2,236				2,245				2,236
Repurchase agreements and other borrowings		685				640				41				(56	)			(62	)
Total interest expense		85,886				83,702				76,394				69,798				61,252
Net interest income		109,048				103,218				107,733				113,058				113,611
PROVISION FOR CREDIT LOSSES		(177	)			(877	)			2,446				1,007				3,556
Net interest income after provision for credit losses		109,225				104,095				105,287				112,051				110,055
NONINTEREST INCOME:
Residential mortgage banking income, net		13,422				10,477				8,035				10,648				11,360
Insurance commissions and related income, net		24,031				25,539				21,207				23,777				22,498
Property management income, net		14,312				16,773				7,358				12,800				12,098
Real estate brokerage income, net		—				—				(32	)			(63	)			1,834
Service charges on deposit accounts		3,353				3,079				3,056				2,823				3,015
Credit card merchant fees, net		1,662				1,551				1,476				2,006				1,682
Investment commission income, net		2,580				2,343				2,380				2,363				2,166
BOLI		3,238				1,842				2,206				1,814				1,710
Other income		3,324				2,206				2,127				3,638				11,594
Net gain/(loss) on investment securities		—				74				—				—				—
Total noninterest income		65,922				63,884				47,813				59,806				67,957
NONINTEREST EXPENSE:
Salaries and employee benefits		71,349				71,377				66,035				67,258				67,445
Occupancy		9,717				9,422				9,308				9,027				9,487
Furniture and equipment		4,634				4,478				4,445				4,100				4,389
Amortization - intangibles		3,298				3,246				3,411				3,610				3,610
Software		7,056				6,100				6,743				6,130				6,169
Data processing		4,606				3,916				3,529				4,140				4,011
Professional fees		3,788				3,180				3,339				2,770				3,166
Advertising and marketing		3,524				4,582				3,377				3,653				3,959
Other expenses		16,012				19,290				21,708				17,014				22,992
Total noninterest expense		123,984				125,591				121,895				117,702				125,228
Income before income tax expense and noncontrolling interest		51,163				42,388				31,205				54,155				52,784
Provision for income tax expense		8,124				7,261				2,660				9,410				9,416
Net income		43,039				35,127				28,545				44,745				43,368
Net income attributable to noncontrolling interest		(183	)			(440	)			259				117				(1,652	)
Net income attributable to TowneBank	$	42,856			$	34,687			$	28,804			$	44,862			$	41,716
Per common share information
Basic earnings	$	0.57			$	0.46			$	0.39			$	0.60			$	0.56
Diluted earnings	$	0.57			$	0.46			$	0.39			$	0.60			$	0.56
Basic weighted average shares outstanding		74,925,877				74,816,420				74,773,335				74,750,294				74,691,121
Diluted weighted average shares outstanding		75,037,955				74,979,501				74,793,557				74,765,515				74,699,810
Cash dividends declared	$	0.25			$	0.25			$	0.25			$	0.25			$	0.25

TOWNEBANK
Banking Segment Financial Information (unaudited)
(dollars in thousands)
	Three Months Ended												Six Months Ended								Increase/(Decrease)
	June 30,								March 31,				June 30,								YTD 2024 over 2023
		2024				2023				2024				2024				2023			Amount				Percent
Revenue
Net interest income	$	108,029			$	113,327			$	102,682			$	210,711			$	236,976			$	(26,265	)		(11.08)%
Service charges on deposit accounts		3,352				3,015				3,079				6,431				5,754				677			11.77	%
Credit card merchant fees		1,662				1,682				1,551				3,213				3,226				(13	)		(0.40)%
Investment commission income, net		2,580				2,166				2,343				4,923				4,218				705			16.71	%
Other income		4,840				3,990				3,429				8,268				7,790				478			6.14	%
Subtotal		12,434				10,853				10,402				22,835				20,988				1,847			8.80	%
Net gain/(loss) on investment securities		—				—				74				74				—				74			N/M
Total noninterest income		12,434				10,853				10,476				22,909				20,988				1,921			9.15	%
Total revenue		120,463				124,180				113,158				233,620				257,964				(24,344	)		(9.44)%
Provision for credit losses		(170	)			3,482				(976	)			(1,146	)			15,235				(16,381	)		(107.52)%
Expenses
Salaries and employee benefits		46,640				42,240				46,474				93,113				85,433				7,680			8.99	%
Occupancy		7,194				6,846				7,061				14,254				13,080				1,174			8.98	%
Furniture and equipment		3,810				3,544				3,648				7,458				6,877				581			8.45	%
Amortization of intangible assets		1,117				1,341				1,162				2,280				2,622				(342	)		(13.04)%
Other expenses		23,587				29,178				26,953				50,541				57,621				(7,080	)		(12.29)%
Total expenses		82,348				83,149				85,298				167,646				165,633				2,013			1.22	%
Income before income tax, corporate allocation and noncontrolling interest		38,285				37,549				28,836				67,120				77,096				(9,976	)		(12.94)%
Corporate allocation		1,232				1,271				1,069				2,301				2,472				(171	)		(6.92)%
Income before income tax provision and noncontrolling interest		39,517				38,820				29,905				69,421				79,568				(10,147	)		(12.75)%
Provision for income tax expense		5,130				6,114				4,105				9,235				13,765				(4,530	)		(32.91)%
Net income		34,387				32,706				25,800				60,186				65,803				(5,617	)		(8.54)%
Noncontrolling interest		(58	)			—				120				62				—				62			N/M
Net income attributable to TowneBank	$	34,329			$	32,706			$	25,920			$	60,248			$	65,803			$	(5,555	)		(8.44)%
Efficiency ratio(non-GAAP)		67.43	%			65.88	%			74.40	%			70.81	%			63.19	%			7.62	%		12.06	%

TOWNEBANK
Realty Segment Financial Information (unaudited)
(dollars in thousands)
	Three Months Ended												Six Months Ended								Increase/(Decrease)
	June 30,								March 31,				June 30,								YTD 2024 over 2023
		2024				2023				2024				2024				2023			Amount				Percent
Revenue
Residential mortgage brokerage income, net	$	13,996			$	12,215			$	10,798			$	24,795			$	22,009			$	2,786			12.66	%
Real estate brokerage income, net		—				1,834				—				—				3,625				(3,625	)		(100.00)%
Title insurance and settlement fees		—				152				—				—				443				(443	)		(100.00)%
Property management fees, net		14,312				12,098				16,773				31,085				27,633				3,452			12.49	%
Income (loss) from unconsolidated subsidiary		67				(886	)			30				97				(821	)			918			111.81	%
Gain on equity investment		—				8,833				—				—				8,833				(8,833	)		(100.00)%
Net interest and other income		1,317				635				784				2,101				820				1,281			156.22	%
Total revenue		29,692				34,881				28,385				58,078				62,542				(4,464	)		(7.14)%
Provision for credit losses		(7	)			74				99				92				(10	)			102			1,020.00	%
Expenses
Salaries and employee benefits		12,370				13,949				12,188				24,558				28,789				(4,231	)		(14.70)%
Occupancy		1,811				1,869				1,569				3,381				3,890				(509	)		(13.08)%
Furniture and equipment		596				640				594				1,190				1,333				(143	)		(10.73)%
Amortization of intangible assets		781				741				677				1,457				1,424				33			2.32	%
Other expenses		9,136				9,337				8,199				17,335				17,775				(440	)		(2.48)%
Total expenses		24,694				26,536				23,227				47,921				53,211				(5,290	)		(9.94)%
Income before income tax, corporate allocation and noncontrolling interest		5,005				8,271				5,059				10,065				9,341				724			7.75	%
Corporate allocation		(490	)			(600	)			(348	)			(838	)			(1,200	)			362			(30.17)%
Income before income tax provision and noncontrolling interest		4,515				7,671				4,711				9,227				8,141				1,086			13.34	%
Provision for income tax expense		1,163				1,686				1,156				2,319				1,867				452			24.21	%
Net income		3,352				5,985				3,555				6,908				6,274				634			10.11	%
Noncontrolling interest		(125	)			(1,652	)			(560	)			(685	)			(1,797	)			1,112			(61.88)%
Net income attributable to TowneBank	$	3,227			$	4,333			$	2,995			$	6,223			$	4,477			$	1,746			39.00	%
Efficiency ratio excluding gain on equity investment(non-GAAP)		80.54	%			99.03	%			79.44	%			80.00	%			96.42	%		(16.42)        %				(17.03)%

TOWNEBANK
Insurance Segment Financial Information (unaudited)
(dollars in thousands)
	Three Months Ended												Six Months Ended								Increase/(Decrease)
	June 30,								March 31,				June 30,								YTD 2024 over 2023
		2024				2023				2024				2024				2023			Amount				Percent
Commission and fee income
Property and casualty	$	22,225			$	20,028			$	20,722			$	42,947			$	38,156			$	4,791			12.56	%
Employee benefits		4,404				4,561				4,826				9,230				9,148				82			0.90	%
Specialized benefit services		—				153				9				9				312				(303	)		(97.12)%
Total commissions and fees		26,629				24,742				25,557				52,186				47,616				4,570			9.60	%
Contingency and bonus revenue		2,951				2,638				4,503				7,454				7,008				446			6.36	%
Other income		6				8				11				17				15				2			13.33	%
Total revenue		29,586				27,388				30,071				59,657				54,639				5,018			9.18	%
Employee commission expense		4,771				4,881				4,512				9,283				9,434				(151	)		(1.60)%
Revenue, net of commission expense		24,815				22,507				25,559				50,374				45,205				5,169			11.43	%
Salaries and employee benefits		12,339				11,256				12,715				25,055				22,644				2,411			10.65	%
Occupancy		712				772				792				1,504				1,582				(78	)		(4.93)%
Furniture and equipment		228				205				236				464				423				41			9.69	%
Amortization of intangible assets		1,400				1,528				1,407				2,807				3,088				(281	)		(9.10)%
Other expenses		2,263				1,782				1,916				4,178				3,045				1,133			37.21	%
Total operating expenses		16,942				15,543				17,066				34,008				30,782				3,226			10.48	%
Income before income tax, corporate allocation and noncontrolling interest		7,873				6,964				8,493				16,366				14,423				1,943			13.47	%
Corporate allocation		(742	)			(671	)			(721	)			(1,463	)			(1,272	)			(191	)		15.02	%
Income before income tax provision and noncontrolling interest		7,131				6,293				7,772				14,903				13,151				1,752			13.32	%
Provision for income tax expense		1,831				1,616				2,000				3,831				3,382				449			13.28	%
Net income		5,300				4,677				5,772				11,072				9,769				1,303			13.34	%
Noncontrolling interest		—				—				—				—				—				—			—	%
Net income attributable to TowneBank	$	5,300			$	4,677			$	5,772			$	11,072			$	9,769			$	1,303			13.34	%
Provision for income taxes		1,831				1,616				2,000				3,831				3,382				449			13.28	%
Depreciation, amortization and interest expense		1,529				1,683				1,553				3,083				3,389				(306	)		(9.03)%
EBITDA(non-GAAP)	$	8,660			$	7,976			$	9,325			$	17,986			$	16,540			$	1,446			8.74	%
Efficiency ratio(non-GAAP)		62.63	%			62.27	%			61.27	%			61.94	%			61.26	%			0.68	%		1.11	%

TOWNEBANK
Reconciliation of Non-GAAP Financial Measures
(dollars in thousands)
	Three Months Ended												Six Months Ended
	June 30,				June 30,				March 31,				June 30,				June 30,
		2024				2023				2024				2024				2023
Return on average assets (GAAP)		1.01	%			0.99	%			0.83	%			0.92	%			0.97	%
Impact of excluding average goodwill and other intangibles and amortization		0.10	%			0.11	%			0.09	%			0.09	%			0.11	%
Return on average tangible assets (non-GAAP)		1.11	%			1.10	%			0.92	%			1.01	%			1.08	%
Return on average equity (GAAP)		8.43	%			8.46	%			6.84	%			7.63	%			8.23	%
Impact of excluding average goodwill and other intangibles and amortization		3.60	%			3.89	%			3.03	%			3.32	%			3.80	%
Return on average tangible equity (non-GAAP)		12.03	%			12.35	%			9.87	%			10.95	%			12.03	%
Return on average common equity (GAAP)		8.49	%			8.52	%			6.89	%			7.69	%			8.29	%
Impact of excluding average goodwill and other intangibles and amortization		3.67	%			3.96	%			3.09	%			3.38	%			3.87	%
Return on average tangible common equity (non-GAAP)		12.16	%			12.48	%			9.98	%			11.07	%			12.16	%
Book value (GAAP)	$	27.62			$	26.36			$	27.33			$	27.62			$	26.36
Impact of excluding average goodwill and other intangibles and amortization		(6.97	)			(7.05	)			(7.02	)			(6.97	)			(7.05	)
Tangible book value (non-GAAP)	$	20.65			$	19.31			$	20.31			$	20.65			$	19.31
Efficiency ratio (GAAP)		70.86	%			68.97	%			75.16	%			72.96	%			68.26	%
Impact of exclusions	(1.88)%					1.44	%		(1.91)%				(1.90)%				(0.31)%
Efficiency ratio (non-GAAP)		68.98	%			70.41	%			73.25	%			71.06	%			67.95	%
Average assets (GAAP)	$	16,982,482			$	16,826,965			$	16,864,235			$	16,923,358			$	16,589,323
Less: average goodwill and intangible assets		525,122				530,658				522,675				523,899				526,339
Average tangible assets (non-GAAP)	$	16,457,360			$	16,296,307			$	16,341,560			$	16,399,459			$	16,062,984
Average equity (GAAP)	$	2,045,622			$	1,978,613			$	2,040,275			$	2,042,948			$	1,962,398
Less: average goodwill and intangible assets		525,122				530,658				522,675				523,899				526,339
Average tangible equity (non-GAAP)	$	1,520,500			$	1,447,955			$	1,517,600			$	1,519,049			$	1,436,059
Average common equity (GAAP)	$	2,029,150			$	1,963,164			$	2,024,169			$	2,026,659			$	1,947,202
Less: average goodwill and intangible assets		525,122				530,658				522,675				523,899				526,339
Average tangible common equity (non-GAAP)	$	1,504,028			$	1,432,506			$	1,501,494			$	1,502,760			$	1,420,863
Net income (GAAP)	$	42,856			$	41,716			$	34,687			$	77,543			$	80,049
Amortization of intangibles, net of tax		2,605				2,852				2,564				5,170				5,636
Tangible net income (non-GAAP)	$	45,461			$	44,568			$	37,251			$	82,713			$	85,685
Total revenue (GAAP)	$	174,970			$	181,568			$	167,102			$	342,072			$	365,711
Net (gain)/loss on investment securities		—				—				(74	)			(74	)			—
Other nonrecurring (income) loss		—				(8,833	)			—				—				(8,833	)
Total Revenue for efficiency calculation (non-GAAP)	$	174,970			$	172,735			$	167,028			$	341,998			$	356,878
Noninterest expense (GAAP)	$	123,984			$	125,228			$	125,591			$	249,575			$	249,626
Less: amortization of intangibles		3,298				3,610				3,246				6,544				7,134
Noninterest expense net of amortization (non-GAAP)	$	120,686			$	121,618			$	122,345			$	243,031			$	242,492

TOWNEBANK
Reconciliation of Non-GAAP Financial Measures
(dollars in thousands, except per share data)
Reconciliation of GAAP Earnings to Operating Earnings Excluding Certain Items Affecting Comparability		Three Months Ended
		June 30,				March 31,				December 31,				September 30,				June 30,
			2024				2024				2023				2023				2023
Net income (GAAP)		$	42,856			$	34,687			$	28,804			$	44,862			$	41,716
Adjustments
Plus: Acquisition-related expenses, net of tax			18				564				56				458				2,457
Plus: FDIC special assessment, net of tax			(310	)			1,021				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)		$	42,564			$	36,272			$	31,097			$	44,882			$	38,660
Weighted average diluted shares			75,037,955				74,979,501				74,793,557				74,765,515				74,699,810
Diluted EPS (GAAP)		$	0.57			$	0.46			$	0.39			$	0.60			$	0.56
Diluted EPS, excluding certain items affecting comparability (non-GAAP)		$	0.57			$	0.48			$	0.42			$	0.60			$	0.52
Average assets		$	16,982,482			$	16,864,235			$	16,683,041			$	16,762,859			$	16,826,965
Average tangible equity		$	1,520,500			$	1,517,600				1,465,216			$	1,460,024			$	1,447,955
Average common tangible equity		$	1,504,028			$	1,501,494			$	1,449,052			$	1,443,453			$	1,432,506
Return on average assets, excluding certain items affecting comparability (non-GAAP)			1.01	%			0.87	%			0.74	%			1.06	%			0.92	%
Return on average tangible equity, excluding certain items affecting comparability (non-GAAP)			11.95	%			10.29	%			9.15	%			12.97	%			11.50	%
Return on average common tangible equity, excluding certain items affecting comparability (non-GAAP)			12.08	%			10.40	%			9.25	%			13.13	%			11.62	%
Efficiency ratio, excluding certain items affecting comparability (non-GAAP)			70.85	%			74.84	%			78.33	%			67.76	%			67.32	%

TOWNEBANK
Reconciliation of Non-GAAP Financial Measures
(dollars in thousands, except per share data)
Reconciliation of GAAP Earnings to Operating Earnings Excluding Certain Items Affecting Comparability		Six Months Ended
		June 30,				June 30,
			2024				2023
Net income (GAAP)		$	77,543			$	80,049
Adjustments
Plus: Acquisition-related expenses, net of tax			582				7,260
Plus: FDIC special assessment, net of tax			711				—
Plus: Initial provision for acquired loans, net of tax			—				3,166
Less: Gain on sale of equity investments, net of noncontrolling interest and tax			—				(5,513	)
Total charges, net of taxes			1,293				4,913
Core operating earnings, excluding certain items affecting comparability (non-GAAP)		$	78,836			$	84,962
Weighted average diluted shares			75,002,469				74,545,389
Diluted EPS (GAAP)		$	1.03			$	1.07
Diluted EPS, excluding certain items affecting comparability (non-GAAP)		$	1.05			$	1.14
Average assets		$	16,923,358			$	16,589,323
Average tangible equity		$	1,519,049			$	1,436,059
Average tangible common equity		$	1,502,760			$	1,420,863
Return on average assets, excluding certain items affecting comparability (non-GAAP)			0.94	%			1.03	%
Return on average tangible equity, excluding certain items affecting comparability (non-GAAP)			11.12	%			12.72	%
Return on average common tangible equity, excluding certain items affecting comparability (non-GAAP)			11.24	%			12.86	%
Efficiency ratio, excluding certain items affecting comparability (non-GAAP)			72.80	%			67.44	%

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