TowneBank Reports Full Year and Fourth Quarter Financial Results for 2022

SUFFOLK, Va., Jan. 26, 2023 (GLOBE NEWSWIRE) -- TowneBank ("Towne") (Nasdaq: TOWN) today reported financial results for the full year and the fourth quarter ended December 31, 2022. For the year ended December 31, 2022, earnings were $188.99 million, or $2.60 per diluted share, compared to $215.38 million, or $2.97 per diluted share, for the year ended December 31, 2021. Earnings in the fourth quarter of 2022 were $46.69 million, or $0.64 per diluted share, compared to fourth quarter 2021 earnings of $40.18 million, or $0.55 per diluted share.

"We were pleased with our results for 2022, which exceeded our expectations entering the year. We achieved an increase in total revenues despite significant headwinds in our residential mortgage business and reduced fee income related to the Paycheck Protection Program. Our credit quality remains strong and we prudently built our reserve levels in this uncertain economic environment. Once again, TowneBank enjoyed a #1 market share position for our home market in Hampton Roads. Looking ahead, our strong balance sheet, diversified business model and valuable deposit franchise should position our company to outperform in a wide range of economic environments. I wish to thank all of our nearly 2,800 team members who embrace and define our culture of caring each day," said G. Robert Aston, Jr., Executive Chairman.

Annual Highlights for 2022 Compared to 2021:

• Total revenues increased $6.61 million, or 0.97%, to $686.94 million, compared to prior year. Increases in net interest income of $59.00 million were partially offset by a $52.39 million decline in noninterest income. Net interest income increased due to a combination of strong first half 2022 organic loan growth and higher interest rates. The decrease in noninterest income was driven by a decline in residential mortgage banking income of $62.15 million, partially offset by increases in insurance commissions of $8.04 million and property management income of $2.07 million.
• Pre-provision, pre-tax, net revenues (non-GAAP) were $244.17 million, a decrease of $9.23 million, or 3.64%, driven by the decline in noninterest income and an increase in noninterest expense of $24.01 million, or 5.75%.
• Loans held for investment increased $1.29 billion, or 13.55%, from December 31, 2021. The balances at December 31, 2022 and 2021 included $4.82 million and $157.72 million, respectively, of loans originated under the Paycheck Protection Program ("PPP"). Excluding PPP loans, loans held for investment increased $1.44 billion, or 15.42%, compared to prior year.
• Interest and fee income on PPP loans declined 86.91%, or $28.91 million, to $4.36 million for the year ended December 31, 2022.
• Total deposits were $13.29 billion, a decrease of $0.28 billion, or 2.06%, compared to prior year, driven by a decline in commercial deposits and escrow balances.
• Return on average common shareholders' equity was 10.15%, and return on average tangible common shareholders' equity was 14.54% (non-GAAP).
• Net interest margin of 3.08% and taxable equivalent net interest margin of 3.10% (non-GAAP) compared to prior year net interest margin of 2.84% and taxable equivalent net interest margin of 2.86% (non-GAAP).
• Effective tax rate of 19.77% compared to 20.28% in 2021.

Highlights for Fourth Quarter 2022:

• Total revenues were $175.31 million in fourth quarter 2022, an increase from the prior year quarter of $14.88 million, or 9.28%. Increases in net interest income of $27.99 million, or 27.77%, outpaced a $13.11 million, or 21.98%, decline in noninterest income in the quarterly comparison. The primary source of the decline in noninterest income was mortgage banking income.
• Pre-provision, pre-tax, net revenues (non-GAAP) were $64.36 million, an increase of $15.87 million, or 32.74%, compared to the prior year quarter.
• Loans held for investment increased $0.23 billion, or 8.83% on an annualized basis, from September 30, 2022.
• Total deposits were $13.29 billion, a decrease of $0.12 billion, or 3.49% on an annualized basis, compared to the linked quarter September 30, 2022.
• Noninterest bearing deposits decreased 5.07%, to $5.27 billion, compared to prior year, representing 39.61% of total deposits. Compared to the linked quarter, noninterest bearing deposits decreased $0.31 billion.
• In the quarter ended December 31, 2022, annualized return on average common shareholders' equity was 10.07% and annualized return on average tangible common shareholders' equity was 14.44% (non-GAAP).
• Net interest margin was 3.51% and taxable equivalent net interest margin was 3.53% (non-GAAP) compared to the prior year quarter net interest margin of 2.70% and taxable equivalent net interest margin of 2.72% (non-GAAP).
• Effective tax rate of 19.90% compared to 18.97% in fourth quarter 2021 and 20.08% in the linked quarter.

"From a strategic perspective, we were pleased to close the Farmers Bank transaction earlier this month. We also focused on building out our footprint and investing in our teams through talent acquisition across all business lines during 2022. As we look ahead to 2023, we expect to continue expanding our impressive suite of noninterest income businesses. We continue to prioritize liquidity and responsible balance sheet growth as we serve our members, shareholders and communities," said William I. Foster, III, President and Chief Executive Officer.

Quarterly Net Interest Income:

• Net interest income was $128.78 million compared to $100.79 million for the quarter ended December 31, 2021. This increase was driven by higher interest rates and increases in loan and investment securities balances, partially offset by increased deposit costs.
• Taxable equivalent net interest margin (non-GAAP) was 3.53%, including purchase accounting accretion of 1 basis point, compared to 2.72%, including purchase accounting accretion of 2 basis points and PPP interest and fees of 7 basis points, for fourth quarter 2021.
• On an average basis, loans held for investment with a yield of 4.60%, which represented 73.41% of earning assets in the fourth quarter of 2022, compared to a yield of 4.05%, which represented 63.28% of earning assets in the fourth quarter of 2021.
• Total cost of deposits increased to 0.60% from 0.30% in the linked quarter and 0.16% at December 31, 2021.
• Rising funding costs negatively impacted profitability in our residential mortgage banking business.
• Average interest-earning assets totaled $14.58 billion at December 31, 2022 compared to $14.81 billion at December 31, 2021, a decrease of 1.57%.
• Average interest-bearing liabilities totaled $8.26 billion, a decrease of $0.01 billion, or 0.08%, compared to the prior year.
  

Quarterly Provision for Credit Losses:

• The quarterly provision for credit losses for on-balance-sheet loans was an expense of $6.22 million in the current quarter and $3.29 million in the linked quarter, compared to a provision benefit of $1.18 million one year ago.
• In the linked quarter comparison, fourth quarter 2022 included an increase in the allowance for credit losses on loans of $3.32 million that was driven by loan growth and a modest weakening in the macroeconomic forecast scenarios used by management to assist in estimating credit losses.
• Net charge-offs were $2.90 million, driven primarily by a fraud-related charge-off of a single credit relationship, compared to net recoveries of $0.06 million one year prior. The ratio of net charge-offs (recoveries) to average loans on an annualized basis was 0.11% in fourth quarter 2022, zero in fourth quarter 2021, and (0.01)% in the linked quarter.
• The allowance for credit losses on loans represented 1.03% of total loans compared to 1.02% at September 30, 2022 and 1.12% at December 31, 2021. The allowance for credit losses on loans was 17.67 times nonperforming loans compared to 20.48 times at September 30, 2022 and 17.75 times at December 31, 2021.

Quarterly Noninterest Income:

• Total noninterest income was $46.52 million compared to $59.63 million in 2021, a decrease of $13.11 million, or 21.98%. Increased insurance commissions were offset by a decline in residential mortgage banking income.
• Residential mortgage banking income was $7.37 million compared to $20.95 million in fourth quarter 2021. Loan volume in the current quarter was $0.46 billion, with purchase activity comprising 95.08%. Loan volume in fourth quarter 2021 was $1.15 billion, with purchase activity of 79.36%. Loan volume in the linked quarter was $0.69 billion, with purchase activity of 93.20%. Increases in mortgage rates and limited housing inventory have contributed to a significant decline in production and refinance activity.
• Gross margins on residential mortgages declined 49 basis points from 3.42% in fourth quarter 2021 to 2.93% in the current quarter.
• Real estate commissions were negatively impacted by a combination of increased mortgage loan rates and low inventories.
• Property management fee revenue decreased 14.76%, or $1.34 million, as compared to fourth quarter 2021, which is more comparable to lower pre-pandemic reservation levels.
• Total insurance segment revenue increased $1.84 million, or 11.87%, to $17.32 million in the fourth quarter of 2022. This increase is attributable to higher property and casualty commissions compared to the prior year quarter.

Quarterly Noninterest Expense:

• Total noninterest expense was $111.14 million compared to $110.47 million, an increase of $0.67 million, or 0.61%. This reflects increases in software expenses of $1.10 million, occupancy expenses of $0.88 million, and professional fees of $0.88 million offset by a decrease of $3.51 million in salary and benefits expense.
• Lower salaries and benefits compared to fourth quarter 2021 were driven by reductions in incentive income and employee benefit costs, partially offset by increases in annual base salaries.
• Higher costs associated with our core banking platform drove the increase in software expense.
• The increase in occupancy expense was driven by lower tenant income in 2022 and relocation expenses related to moving our mortgage division.

Consolidated Balance Sheet Highlights:

• Total assets were $15.85 billion at December 31, 2022, a decrease of 3.15%, compared to $16.36 billion at December 31, 2021. The decrease was driven by a decline in deposits.
• Loans held for investment increased $1.29 billion, or 13.55%, compared to year end 2021 and $0.23 billion compared to the linked quarter.
• Average loans held for investment, excluding PPP loans, were $10.69 billion in fourth quarter 2022, an increase of $1.52 billion, or 16.56%, compared to prior year.
• Mortgage loans held for sale decreased $0.26 billion, or 71.44%, compared to prior year and $0.06 billion, or 37.99%, compared to the linked quarter.
• Total deposits decreased $0.28 billion, or 2.06%, compared to December 31, 2021 and $0.12 billion, or 0.88%, compared to the linked quarter.
• Total loans held for investment to total deposits were 81.20% compared to 78.73% at September 30, 2022 and 70.03% at December 31, 2021.
• Total borrowings decreased $0.16 billion, or 34.00%, from prior year.
  

Investment Securities:

• Total investment securities were $2.41 billion compared to $2.45 billion at September 30, 2022 and $1.98 billion at December 31, 2021. The weighted average duration of the portfolio at December 31, 2022 was 3.5 years. The carrying value of the AFS debt securities portfolio included $191.05 million in net unrealized losses, related to rising rates, at December 31, 2022 compared to $17.54 million in net unrealized gains at December 31, 2021.
  

Loans and Asset Quality:

• Total loans held for investment were $10.79 billion at December 31, 2022 compared to $10.56 billion at September 30, 2022 and $9.51 billion at December 31, 2021.
• Nonperforming assets were $6.83 million, or 0.04% of total assets, compared to $10.56 million, or 0.06% of total assets, at December 31, 2021.
• Nonperforming loans were 0.06% of period end loans at both December 31, 2022 and 2021.
• Foreclosed property decreased to $0.56 million from $4.58 million at December 31, 2021.

Deposits and Borrowings:

• Total deposits were $13.29 billion compared to $13.41 billion at September 30, 2022 and $13.57 billion at December 31, 2021.
• Noninterest-bearing deposits were 39.61% of total deposits at December 31, 2022 compared to 41.56% at September 30, 2022 and 40.86% at December 31, 2021. Noninterest-bearing deposits have declined the last two quarters driven by declines in noninterest-bearing escrow balances.
• Total borrowings were $0.32 billion compared to $0.48 billion at December 31, 2021.
  

Capital:

• Common equity tier 1 capital ratio of 11.92%.
• Tier 1 leverage capital ratio of 9.87%.
• Tier 1 risk-based capital ratio of 12.04%.
• Total risk-based capital ratio of 14.80%.
• Book value per share was $25.73 compared to $25.08 at September 30, 2022 and $26.13 at December 31, 2021.
• Tangible book value per share (non-GAAP) was $18.84 compared to $18.17 at September 30, 2022 and $19.15 at December 31, 2021.

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

TowneBank operates over 40 banking offices throughout Hampton Roads and Central Virginia, as well as Northeastern and Central North Carolina – serving as a local leader in promoting the social, cultural, and economic growth in each community. Towne offers a competitive array of business and personal banking solutions, delivered with only the highest ethical standards. Experienced local bankers providing a higher level of expertise and personal attention with local decision-making are key to the TowneBank strategy. TowneBank has grown its capabilities beyond banking to provide expertise through its controlled divisions and subsidiaries that include Towne Wealth Management, Towne Insurance Agency, Towne Benefits, TowneBank Mortgage, TowneBank Commercial Mortgage, Berkshire Hathaway HomeServices Towne Realty, Towne 1031 Exchange, LLC, and Towne Vacations. With total assets of $15.85 billion as of December 31, 2022, TowneBank is one of the largest banks headquartered in Virginia.

Non-GAAP Financial Measures:

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

Forward-Looking Statements:
This press release contains certain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts, but instead represent only the beliefs, expectations, or opinions of TowneBank and its management regarding future events, many of which, by their nature, are inherently uncertain. Forward-looking statements may be identified by the use of such words as: "believe," "expect," "anticipate," "intend," "plan," "estimate," or words of similar meaning, or future or conditional terms, such as "will," "would," "should," "could," "may," "likely," "probably," or "possibly." These statements may address issues that involve significant risks, uncertainties, estimates, and assumptions made by management. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include competitive pressures in the banking industry that may increase significantly; changes in the interest rate environment that may reduce margins and/or the volumes and values of loans made or held as well as the value of other financial assets held; changes in the credit worthiness of customers and the possible impairment of the collectability of loans; general economic conditions, either nationally or regionally, that may be less favorable than expected, resulting in, among other things, a deterioration in credit quality and/or a reduced demand for credit or other services; unusual and infrequently occurring events, such as weather-related disasters, terrorist acts or public health events (such as the COVID-19 pandemic); changes in the legislative or regulatory environment, including changes in accounting standards and tax laws, that may adversely affect our business; costs or difficulties related to the integration of the businesses we have acquired may be greater than expected; expected cost savings associated with pending or recently completed acquisitions may not be fully realized or realized within the expected time frame; cybersecurity threats or attacks, the implementation of new technologies, and the ability to develop and maintain reliable electronic systems; our competitors may have greater financial resources and develop products that enable them to compete more successfully; changes in business conditions; changes in the securities market; and changes in our local economy with regard to our market area. Any forward-looking statements made by us or on our behalf speak only as of the date they are made or as of the date indicated, and we do not undertake any obligation to update forward-looking statements as a result of new information, future events, or otherwise. For additional information on factors that could materially influence forward-looking statements included in this report, see the "Risk Factors" in TowneBank’s Annual Report on Form 10-K for the year ended December 31, 2021 and related disclosures in other filings that have been, or will be, filed by TowneBank with the Federal Deposit Insurance Corporation.

Media contact:
G. Robert Aston, Jr., Executive Chairman, 757-638-6780
William I. Foster, III, President and Chief Executive Officer, 757-417-6482

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

TOWNEBANK
Selected Financial Highlights (unaudited)
(dollars in thousands, except per share data)
		Three Months Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
			2022				2022				2022				2022				2021
Income and Performance Ratios:
	Total revenue, net of interest expense	$	175,307			$	179,236			$	166,980			$	165,412			$	160,424
	Net income		46,494				50,671				47,054				46,250				41,657
	Net income available to common shareholders		46,685				50,169				46,547				45,586				40,183
	Pre-provision, pre-tax, net revenues (non-GAAP)		64,357				66,700				57,748				55,369				48,483
	Net income per common share - diluted		0.64				0.69				0.64				0.63				0.55
	Book value per common share		25.73				25.08				25.48				25.61				26.13
	Book value per share - tangible (non-GAAP)		18.84				18.17				18.58				18.67				19.15
	Return on average assets		1.16	%			1.22	%			1.13	%			1.13	%			0.99	%
	Return on average assets - tangible (non-GAAP)		1.25	%			1.31	%			1.22	%			1.23	%			1.08	%
	Return on average equity		9.98	%			10.60	%			9.94	%			9.73	%			8.38	%
	Return on average equity - tangible (non-GAAP)		14.26	%			15.08	%			14.20	%			13.91	%			12.08	%
	Return on average common equity		10.07	%			10.69	%			10.03	%			9.81	%			8.45	%
	Return on average common equity - tangible (non-GAAP)		14.44	%			15.27	%			14.37	%			14.08	%			12.22	%
	Noninterest income as a percentage of total revenue		26.54	%			30.80	%			34.52	%			40.03	%			37.17	%
Regulatory Capital Ratios (1):
	Common equity tier 1		11.92	%			11.92	%			11.83	%			12.16	%			12.36	%
	Tier 1		12.04	%			12.05	%			11.97	%			12.31	%			12.51	%
	Total		14.80	%			14.80	%			16.76	%			17.34	%			15.56	%
	Tier 1 leverage ratio		9.87	%			9.52	%			9.19	%			9.16	%			9.11	%
Asset Quality:
	Allowance for credit losses on loans to nonperforming loans	17.67x				20.48x				18.94x				21.52x				17.75x
	Allowance for credit losses on loans to period end loans		1.03	%			1.02	%			1.00	%			1.05	%			1.12	%
	Allowance for credit losses on loans to period end loans excluding PPP loans (non-GAAP)		1.03	%			1.02	%			1.00	%			1.06	%			1.13	%
	Nonperforming loans to period end loans		0.06	%			0.05	%			0.05	%			0.05	%			0.06	%
	Nonperforming assets to period end assets		0.04	%			0.03	%			0.04	%			0.03	%			0.06	%
	Net charge-offs (recoveries) to average loans (annualized)		0.11	%		(0.01)%					—	%			0.01	%			—	%
	Net charge-offs (recoveries)		2,904				(187)				(80)				126				(60)
	Nonperforming loans	$	6,273			$	5,250			$	5,493			$	4,825			$	5,973
	Foreclosed property		560				186				563				560				4,583
	Total nonperforming assets	$	6,833			$	5,436			$	6,056			$	5,385			$	10,556
	Loans past due 90 days and still accruing interest	$	324			$	725			$	232			$	40			$	372
	Allowance for credit losses on loans		110,816				107,497				104,019				103,833				106,059
Mortgage Banking:
	Loans originated, mortgage	$	299,298			$	458,254			$	588,529			$	583,008			$	851,021
	Loans originated, joint venture		157,511				234,443				249,279				236,980				303,362
	Total loans originated	$	456,809			$	692,697			$	837,808			$	819,988			$	1,154,383
	Number of loans originated		1,355				1,983				2,282				2,237				3,408
	Number of originators		186				194				201				207				213
	Purchase %		95.08	%			93.20	%			92.27	%			77.93	%			79.36	%
	Loans sold	$	483,254			$	701,908			$	759,073			$	853,808			$	1,150,996
	Rate lock asset	$	482			$	859			$	1,935			$	3,009			$	3,455
	Gross realized gain on sales and fees as a % of loans originated		2.93	%			3.02	%			2.92	%			3.01	%			3.42	%
Other Ratios:
	Net interest margin		3.51	%			3.28	%			2.88	%			2.67	%			2.70	%
	Net interest margin-fully tax equivalent (non-GAAP)		3.53	%			3.31	%			2.89	%			2.69	%			2.72	%
	Average earning assets/total average assets		91.51	%			91.92	%			92.22	%			92.24	%			92.13	%
	Average loans/average deposits		80.14	%			76.82	%			74.57	%			71.61	%			70.68	%
	Average noninterest deposits/total average deposits		41.07	%			41.77	%			40.56	%			40.49	%			41.42	%
	Period end equity/period end total assets		11.92	%	1		11.56	%			11.09	%			11.28	%			11.71	%
	Efficiency ratio (non-GAAP)		61.99	%			61.03	%			63.51	%			64.42	%			67.03	%
	(1) Current reporting period regulatory capital ratios are preliminary.

TOWNEBANK
Selected Data (unaudited)
(dollars in thousands)
Investment Securities													% Change
	Q4				Q4				Q3				Q4 22 vs.			Q4 22 vs.
Available-for-sale securities, at fair value		2022				2021				2022			Q4 21			Q3 22
U.S. agency securities	$	293,894			$	310,587			$	331,297			(5.37)%			(11.29)%
U.S. Treasury notes		26,693				1,000				26,399			2,569.30	%		1.11	%
Municipal securities		431,299				385,673				426,720			11.83	%		1.07	%
Trust preferred and other corporate securities		78,436				53,950				79,501			45.39	%		(1.34)%
Mortgage-backed securities issued by GSE and GNMA		1,011,666				1,055,183				1,027,331			(4.12)%			(1.52)%
Allowance for credit losses		(1,086	)			(210	)			(1,112	)		417.14	%		(2.34)%
Total	$	1,840,902			$	1,806,183			$	1,890,136			1.92	%		(2.60)%
Gross unrealized gains (losses) reflected in financial statements
Total gross unrealized gains	$	1,111			$	32,054			$	1,292			(96.53)%			(14.01)%
Total gross unrealized losses		(192,163	)			(14,514	)			(201,127	)		1,223.98	%		(4.46)%
Net unrealized gain (loss) on AFS securities	$	(191,052	)		$	17,540			$	(199,835	)		(1,189.24)%			(4.40)%
Held-to-maturity securities, at amortized cost
U.S. agency securities	$	101,092			$	73,360			$	100,905			37.80	%		0.19	%
U.S. Treasury notes		433,866				66,326				434,148			554.14	%		(0.06)%
Municipal securities		5,181				5,095				5,159			1.69	%		0.43	%
Trust preferred and other corporate securities		2,223				2,272				2,235			(2.16)%			(0.54)%
Mortgage-backed securities issued by GSE and GNMA		6,113				7,168				6,298			(14.72)%			(2.94)%
Allowance for credit losses		(83	)			(94	)			(83	)		(11.70)%			—	%
Total	$	548,392			$	154,127			$	548,662			255.81	%		(0.05)%
Gross unrealized gains (losses) not reflected in financial statements
Total gross unrealized gains	$	320			$	1,561			$	153			(79.50)%			109.15	%
Total gross unrealized losses		(29,802	)			(106	)			(31,116	)		N/M			(4.22)%
Net unrealized gain (loss) on HTM securities	$	(29,482	)		$	1,455			$	(30,963	)		(2,126.25)%			(4.78)%
Loans Held For Investment (1)													% Change
	Q4				Q4				Q3				Q4 22 vs.			Q4 22 vs.
		2022				2021				2022			Q4 21			Q3 22
Real estate - construction and development	$	1,428,376			$	1,125,863			$	1,324,831			26.87	%		7.82	%
Commercial real estate - owner occupied		1,580,099				1,494,000				1,590,371			5.76	%		(0.65)%
Commercial real estate - non owner occupied		2,830,620				2,620,334				2,799,363			8.03	%		1.12	%
Multifamily		496,190				332,659				458,803			49.16	%		8.15	%
Residential 1-4 family		1,634,062				1,305,915				1,567,024			25.13	%		4.28	%
HELOC		395,526				380,834				388,305			3.86	%		1.86	%
Commercial and industrial business (C&I)		1,256,697				1,206,911				1,251,350			4.13	%		0.43	%
Government		512,265				525,358				520,198			(2.49)%			(1.52)%
Indirect		568,190				394,802				572,710			43.92	%		(0.79)%
Consumer loans and other		92,577				119,576				86,656			(22.58)%			6.83	%
Total	$	10,794,602			$	9,506,252			$	10,559,611			13.55	%		2.23	%
(1) PPP loans totaling $4.82 million, $157.72 million and $12.65 million, primarily in C&I, are included in Q4 2022, Q4 2021 and Q3 2022, respectively.
Deposits													% Change
	Q4				Q4				Q3				Q4 22 vs.			Q4 22 vs.
		2022				2021				2022			Q4 21			Q3 22
Noninterest-bearing demand	$	5,265,186			$	5,546,665			$	5,574,528			(5.07)%			(5.55)%
Interest-bearing:
Demand and money market accounts		6,185,075				6,139,714				6,042,417			0.74	%		2.36	%
Savings		374,987				371,356				387,622			0.98	%		(3.26)%
Certificates of deposits		1,468,975				1,515,891				1,407,495			(3.09)%			4.37	%
Total	$	13,294,223			$	13,573,626			$	13,412,062			(2.06)%			(0.88)%

TOWNEBANK
Average Balances, Yields and Rate Paid (unaudited)
(dollars in thousands)
	Three Months Ended											Three Months Ended											Three Months Ended
	December 31, 2022											September 30, 2022											December 31, 2021
					Interest				Average							Interest				Average							Interest				Average
	Average				Income/				Yield/			Average				Income/				Yield/			Average				Income/				Yield/
	Balance				Expense				Rate (1)			Balance				Expense				Rate (1)			Balance				Expense				Rate (1)
Assets:
Loans (net of unearned income and deferred costs), (2)(3)	$	10,701,612			$	124,064			4.60	%		$	10,465,441			$	112,225			4.25	%		$	9,372,187			$	95,696			4.05	%
Taxable investment securities		2,288,344				14,251			2.49	%			2,385,218				12,943			2.17	%			1,625,683				10,217			2.51	%
Tax-exempt investment securities		140,108				1,262			3.60	%			147,184				1,054			2.86	%			157,855				292			0.74	%
Total securities		2,428,452				15,513			2.56	%			2,532,402				13,997			2.21	%			1,783,538				10,509			2.36	%
Interest-bearing deposits		1,321,964				11,387			3.42	%			1,800,798				9,509			2.09	%			3,274,392				1,215			0.15	%
Mortgage loans held for sale		124,949				1,842			5.90	%			188,737				2,446			5.18	%			379,808				2,750			2.90	%
Total earning assets		14,576,977				152,806			4.16	%			14,987,378				138,177			3.66	%			14,809,925				110,170			2.95	%
Less: allowance for credit losses		(108,288	)										(104,178	)										(107,215	)
Total nonearning assets		1,461,067											1,421,094											1,372,799
Total assets	$	15,929,756										$	16,304,294										$	16,075,509
Liabilities and Equity:
Interest-bearing deposits
Demand and money market	$	6,022,582			$	13,903			0.92	%		$	6,084,753			$	6,542			0.43	%		$	5,853,873			$	2,148			0.15	%
Savings		378,816				763			0.80	%			391,437				628			0.64	%			371,901				534			0.57	%
Certificates of deposit		1,468,589				5,452			1.47	%			1,456,746				3,060			0.83	%			1,541,483				2,707			0.70	%
Total interest-bearing deposits		7,869,987				20,118			1.01	%			7,932,936				10,230			0.51	%			7,767,257				5,389			0.28	%
Borrowings		138,510				909			2.57	%			94,411				139			0.58	%			245,622				360			0.58	%
Subordinated debt, net		247,319				2,108			3.41	%			320,518				3,117			3.89	%			249,555				2,962			4.75	%
Total interest-bearing liabilities		8,255,816				23,135			1.11	%			8,347,865				13,486			0.64	%			8,262,434				8,711			0.42	%
Demand deposits		5,484,477											5,690,020											5,492,894
Other noninterest-bearing liabilities		334,033											387,835											417,707
Total liabilities		14,074,326											14,425,720											14,173,035
Shareholders’ equity		1,855,430											1,878,574											1,902,474
Total liabilities and equity	$	15,929,756										$	16,304,294										$	16,075,509
Net interest income (tax-equivalent basis) (6)					$	129,671										$	124,691										$	101,459
Reconciliation of Non-GAAP Financial Measures
Tax-equivalent basis adjustment						(888	)										(653	)										(667	)
Net interest income (GAAP)					$	128,783										$	124,038										$	100,792
Interest rate spread (4)(6)									3.05	%										3.02	%										2.53	%
Interest expense as a percent of average earning assets									0.63	%										0.36	%										0.23	%
Net interest margin (tax equivalent basis) (5)(6)									3.53	%										3.30	%										2.72	%
Total cost of deposits									0.60	%										0.30	%										0.16	%

(1) Yields and interest income are presented on a taxable-equivalent basis using the federal statutory tax rate of 21%.
(2) December 31, 2022, December 31, 2021, and September 30, 2022 balances include average PPP balances of $10.60 million, $199.74 million, and $18.68 million and related interest and fee income of $0.12 million, $3.85 million, and $0.62 million, respectively.
(3) December 31, 2021 loan balance includes previously excluded average nonaccrual loans of $7.69 million.
(4) Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities. Fully tax equivalent.
(5) Net interest margin is net interest income expressed as a percentage of average earning assets. Fully tax equivalent.
(6) Non-GAAP.

TOWNEBANK
Average Balances, Yields and Rate Paid (unaudited)
(dollars in thousands)
	Year Ended December 31,
		2022											2021											2020
					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
Assets:
Loans (net of unearned income and deferred costs)(2)(3)	$	10,262,095			$	433,350			4.22	%		$	9,473,081			$	397,877			4.20	%		$	9,436,628			$	411,421			4.36	%
Taxable investment securities		2,267,099				47,594			2.10	%			1,426,493				29,857			2.09	%			1,252,926				30,181			2.41	%
Tax-exempt investment securities		132,694				4,351			3.28	%			137,848				1,755			1.27	%			140,078				2,997			2.14	%
Total securities		2,399,793				51,945			2.16	%			1,564,341				31,612			2.02	%			1,393,004				33,178			2.38	%
Interest-bearing deposits		2,099,970				26,859			1.28	%			2,640,191				3,432			0.13	%			689,715				2,603			0.38	%
Mortgage loans held for sale		200,363				8,880			4.43	%			471,767				13,227			2.80	%			505,502				15,252			3.02	%
Total earning assets		14,962,221				521,034			3.48	%			14,149,380				446,148			3.15	%			12,024,849				462,454			3.85	%
Less: allowance for credit losses		(105,629	)										(113,113	)										(85,570	)
Total nonearning assets		1,411,422											1,348,395											2,232,927
Total assets	$	16,268,014										$	15,384,662										$	14,172,206
Liabilities and Equity:
Interest-bearing deposits
Demand and money market	$	6,158,190			$	25,802			0.42	%		$	5,359,321			$	8,323			0.16	%		$	4,070,562			$	13,105			0.32	%
Savings		385,154				2,427			0.63	%			352,333				2,117			0.60	%			297,441				2,254			0.76	%
Certificates of deposit		1,447,701				12,586			0.87	%			1,788,985				16,669			0.93	%			2,378,281				42,502			1.79	%
Total interest-bearing deposits		7,991,045				40,815			0.51	%			7,500,639				27,109			0.36	%			6,746,284				57,861			0.86	%
Borrowings		124,168				1,320			1.05	%			395,045				2,159			0.54	%			1,269,064				10,306			0.80	%
Subordinated debt, net		362,410				14,436			3.98	%			249,335				11,816			4.74	%			248,736				11,847			4.76	%
Total interest-bearing liabilities		8,477,623				56,571			0.67	%			8,145,019				41,084			0.50	%			8,264,084				80,014			0.97	%
Demand deposits		5,547,835											5,034,851											3,924,797
Other noninterest-bearing liabilities		364,520											348,844											262,266
Total liabilities		14,389,978											13,528,714											12,451,147
Shareholders' equity		1,878,036											1,855,948											1,721,059
Total liabilities and equity	$	16,268,014										$	15,384,662										$	14,172,206
Net interest income (tax-equivalent basis) (6)					$	464,463										$	405,064										$	382,440
Reconciliation of Non-GAAP Financial Measures
Tax-equivalent basis adjustment						(3,098	)										(2,695	)										(2,296	)
Net interest income (GAAP)					$	461,365										$	402,369										$	380,144
Interest rate spread (4)(6)									2.81	%										2.65	%										2.88	%
Interest expense as a percent of average earning assets									0.38	%										0.29	%										0.67	%
Net interest margin (tax-equivalent basis) (5)(6)									3.10	%										2.86	%										3.18	%
Total cost of deposits									0.30	%										0.22	%										0.54	%

(1) Yields and interest income are presented on a taxable-equivalent basis using the federal statutory rate of 21%.
(2) Includes, previously excluded average nonaccrual loans of $10.63 million in 2021, and $16.04 million in 2020.
(3) December 31, 2022, December 31, 2021 and December 31, 2020 balances include average PPP balances of $51.04 million, $530.39 million and $737.16 million and related interest and fee income of $4.36 million, $33.27 million and $26.94 million, respectively.
(4) Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities. Fully tax equivalent.
(5) Net interest margin is net interest income expressed as a percentage of average earning assets. Fully tax equivalent.
(6) Non-GAAP.

TOWNEBANK
Consolidated Balance Sheets
(dollars in thousands, except per share data)
		2022				2021
	(unaudited)				(audited)
ASSETS
Cash and due from banks	$	55,381			$	17,373
Interest-bearing deposits at FRB - Richmond		1,000,205				3,244,484
Interest-bearing deposits in financial institutions		97,244				34,779
Total Cash and Cash Equivalents		1,152,830				3,296,636
Securities available for sale, at fair value (amortized cost of $2,033,040 and $1,788,853, and allowance for credit losses of $1,085 and $210 at December 31, 2022 and December 31, 2021, respectively.		1,840,902				1,806,183
Securities held to maturity, at amortized cost (fair value $518,993 and $155,676 at December 31, 2022 and December 31, 2021, respectively.		548,475				154,221
Less: allowance for credit losses		(83	)			(94	)
Securities held to maturity, net of allowance for credit losses		548,392				154,127
Other equity securities		6,424				6,759
FHLB stock		9,617				13,146
Total Securities		2,405,335				1,980,215
Mortgage loans held for sale		102,339				358,303
Loans, net of unearned income and deferred costs		10,794,602				9,506,252
Less: allowance for credit losses		(110,816	)			(106,059	)
Net Loans		10,683,786				9,400,193
Premises and equipment, net		304,802				270,772
Goodwill		458,482				457,187
Other intangible assets, net		43,163				50,379
BOLI		258,069				251,805
Other assets		436,461				295,897
TOTAL ASSETS	$	15,845,267			$	16,361,387
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand	$	5,265,186			$	5,546,665
Interest-bearing:
Demand and money market accounts		6,185,075				6,139,714
Savings		374,987				371,356
Certificates of deposit		1,468,975				1,515,891
Total Deposits		13,294,223				13,573,626
Advances from the FHLB		29,674				155,367
Subordinated debt, net		247,420				249,652
FRB PPP Lending Facility		—				—
Repurchase agreements and other borrowings		40,918				76,797
Total Borrowings		318,012				481,816
Other liabilities		344,275				389,771
TOTAL LIABILITIES		13,956,510				14,445,213
Preferred stock
Authorized and unissued shares - 2,000,000		—				—
Common stock, $1.667 par: Authorized shares - 150,000,000
Issued and outstanding shares 72,841,379 in 2022 and 72,683,985 in 2021		121,426				121,164
Capital surplus		1,052,262				1,050,948
Retained earnings		840,777				716,605
Common stock issued to deferred compensation trust, at cost
931,030 shares in 2022 and 911,458 shares in 2021		18,974				18,257
Deferred compensation trust		(18,974	)			(18,257	)
Accumulated other comprehensive income (loss)		(140,505	)			10,597
TOTAL SHAREHOLDERS’ EQUITY		1,873,960				1,899,314
Noncontrolling interest		14,797				16,860
TOTAL EQUITY		1,888,757				1,916,174
TOTAL LIABILITIES AND EQUITY	$	15,845,267			$	16,361,387

     

TOWNEBANK
Consolidated Statements of Income
(dollars in thousands, except per share data)
	Three Months Ended							Twelve Months Ended
	December 31,							December 31,
		2022			2021				2022				2021
	(unaudited)			(unaudited)				(unaudited)				(audited)
INTEREST INCOME:
Loans, including fees	$	123,395		$	95,054			$	430,990			$	395,322
Investment securities		15,294			10,484				51,207				31,472
Interest-bearing deposits in financial institutions and federal funds sold		11,387			1,215				26,859				3,432
Mortgage loans held for sale		1,842			2,750				8,880				13,227
Total interest income		151,918			109,503				517,936				443,453
INTEREST EXPENSE:
Deposits		20,118			5,389				40,815				27,109
Advances from the FHLB		665			206				926				1,224
Subordinated debt, net		2,108			2,962				14,436				11,816
Repurchase agreements and other borrowings		244			154				394				935
Total interest expense		23,135			8,711				56,571				41,084
Net interest income		128,783			100,792				461,365				402,369
PROVISION FOR CREDIT LOSSES		6,074			(1,110	)			8,606				(16,774	)
Net interest income after provision for credit losses		122,709			101,902				452,759				419,143
NONINTEREST INCOME:
Residential mortgage banking income, net		7,368			20,945				47,150				109,304
Insurance commissions and other title fees and income, net		17,324			15,486				75,579				67,541
Property management income, net		7,756			9,099				44,246				42,175
Real estate commission income, net		2,355			3,165				11,253				13,290
Service charges on deposit accounts		2,655			2,479				10,130				9,584
Credit card merchant fees, net		1,653			1,412				6,592				6,042
BOLI		1,985			1,904				7,140				7,265
Other income		5,428			5,142				23,480				21,508
Net gain/(loss) on investment securities		—			—				—				1,252
Total noninterest income		46,524			59,632				225,570				277,961
NONINTEREST EXPENSE:
Salaries and employee benefits		61,307			64,814				255,625				245,844
Occupancy expense		9,252			8,371				34,669				31,657
Furniture and equipment		3,983			3,528				15,080				14,175
Amortization - intangibles		2,475			2,935				10,620				11,127
Software expense		5,111			4,014				18,959				16,911
Data processing		3,096			3,524				13,874				13,779
Professional fees		3,605			2,723				10,020				9,548
Advertising and marketing		3,489			3,414				15,997				13,504
Other expenses		18,823			17,144				66,435				60,727
Total noninterest expense		111,141			110,467				441,279				417,272
Income before income tax expense and noncontrolling interest		58,092			51,067				237,050				279,832
Provision for income tax expense		11,598			9,410				46,581				54,798
Net income	$	46,494		$	41,657			$	190,469			$	225,034
Net income attributable to noncontrolling interest		191			(1,474	)			(1,482	)			(9,651	)
Net income attributable to TowneBank	$	46,685		$	40,183			$	188,987			$	215,383
Per common share information
Basic earnings	$	0.64		$	0.55			$	2.60			$	2.97
Diluted earnings	$	0.64		$	0.55			$	2.60			$	2.97
Cash dividends declared	$	0.23		$	0.20			$	0.89			$	0.78

TOWNEBANK
Consolidated Balance Sheets - Five Quarter Trend
(dollars in thousands, except per share data)
	December 31,				September 30,				June 30,				March 31,				December 31,
		2022				2022				2022				2022				2021
	(unaudited)				(unaudited)				(unaudited)				(unaudited)				(audited)
ASSETS
Cash and due from banks	$	55,381			$	97,290			$	72,592			$	74,991			$	17,373
Interest-bearing deposits at FRB - Richmond		1,000,205				1,245,067				2,341,942				2,857,327				3,244,484
Interest-bearing deposits in financial institutions		97,244				96,862				35,087				34,684				34,779
Total Cash and Cash Equivalents		1,152,830				1,439,219				2,449,621				2,967,002				3,296,636
Securities available for sale, at fair value		1,840,902				1,890,136				1,914,011				1,846,540				1,806,183
Securities held to maturity		548,475				548,745				549,083				433,384				154,221
Less: allowance for credit losses		(83	)			(83	)			(85	)			(92	)			(94	)
Securities held to maturity, net of allowance for credit losses		548,392				548,662				548,998				433,292				154,127
Other equity securities		6,424				6,360				6,679				6,789				6,759
FHLB stock		9,617				9,475				10,432				10,432				13,146
Total Securities		2,405,335				2,454,633				2,480,120				2,297,053				1,980,215
Mortgage loans held for sale		102,339				165,023				211,716				234,620				358,303
Loans, net of unearned income and deferred costs		10,794,602				10,559,611				10,425,760				9,909,308				9,506,252
Less: allowance for credit losses		(110,816	)			(107,497	)			(104,019	)			(103,833	)			(106,059	)
Net Loans		10,683,786				10,452,114				10,321,741				9,805,475				9,400,193
Premises and equipment, net		304,802				295,345				289,753				277,764				270,772
Goodwill		458,482				458,482				457,162				457,162				457,187
Other intangible assets, net		43,163				44,854				44,878				47,562				50,379
BOLI		258,069				256,074				254,478				253,112				251,805
Other assets		436,461				386,053				354,570				326,838				295,897
TOTAL ASSETS	$	15,845,267			$	15,951,797			$	16,864,039			$	16,666,588			$	16,361,387
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand	$	5,265,186			$	5,574,528			$	5,723,415			$	5,532,337			$	5,546,665
Interest-bearing:
Demand and money market accounts		6,185,075				6,042,417				6,384,818				6,432,005				6,139,714
Savings		374,987				387,622				388,364				393,119				371,356
Certificates of deposit		1,468,975				1,407,495				1,499,514				1,414,339				1,515,891
Total Deposits		13,294,223				13,412,062				13,996,111				13,771,800				13,573,626
Advances from the FHLB		29,674				29,850				55,024				55,196				155,367
Subordinated debt, net		247,420				247,265				497,061				496,757				249,652
FRB PPP Lending Facility		—				—				—				—				—
Repurchase agreements and other borrowings		40,918				43,165				47,922				75,988				76,797
Total Borrowings		318,012				320,280				600,007				627,941				481,816
Other liabilities		344,275				375,869				397,388				387,087				389,771
TOTAL LIABILITIES		13,956,510				14,108,211				14,993,506				14,786,828				14,445,213
Preferred stock
Authorized shares - 2,000,000		—				—				—				—				—
Common stock, $1.667 par value		121,426				121,423				121,265				121,231				121,164
Capital surplus		1,052,262				1,052,374				1,051,384				1,050,387				1,050,948
Retained earnings		840,777				810,845				777,430				747,614				716,605
Common stock issued to deferred compensation trust, at cost		(18,974	)			(18,862	)			(19,349	)			(18,323	)			(18,257	)
Deferred compensation trust		18,974				18,862				19,349				18,323				18,257
Accumulated other comprehensive income (loss)		(140,505	)			(157,980	)			(96,358	)			(56,712	)			10,597
TOTAL SHAREHOLDERS’ EQUITY		1,873,960				1,826,662				1,853,721				1,862,520				1,899,314
Noncontrolling interest		14,797				16,924				16,812				17,240				16,860
TOTAL EQUITY		1,888,757				1,843,586				1,870,533				1,879,760				1,916,174
TOTAL LIABILITIES AND EQUITY	$	15,845,267			$	15,951,797			$	16,864,039			$	16,666,588			$	16,361,387

TOWNEBANK
Consolidated Statements of Income - Five Quarter Trend (unaudited)
(dollars in thousands, except per share data)
	Three Months Ended
	December 31,			September 30,				June 30,				March 31,				December 31,
		2022			2022				2022				2022				2021
INTEREST INCOME:
Loans, including fees	$	123,395		$	111,590			$	101,043			$	94,962			$	95,054
Investment securities		15,294			13,979				12,263				9,671				10,484
Interest-bearing deposits in financial institutions and federal funds sold		11,387			9,509				4,616				1,347				1,215
Mortgage loans held for sale		1,842			2,446				2,217				2,375				2,750
Total interest income		151,918			137,524				120,139				108,355				109,503
INTEREST EXPENSE:
Deposits		20,118			10,230				5,573				4,894				5,389
Advances from the FHLB		665			83				86				92				206
Subordinated debt, net		2,108			3,117				5,091				4,120				2,962
Repurchase agreements and other borrowings		244			56				49				45				154
Total interest expense		23,135			13,486				10,799				9,151				8,711
Net interest income		128,783			124,038				109,340				99,204				100,792
PROVISION FOR CREDIT LOSSES		6,074			3,925				56				(1,449	)			(1,110	)
Net interest income after provision for credit losses		122,709			120,113				109,284				100,653				101,902
NONINTEREST INCOME:
Residential mortgage banking income, net		7,368			11,968				13,176				14,638				20,945
Insurance commissions and other title fees and income, net		17,324			19,435				19,746				19,074				15,486
Property management income, net		7,756			9,891				9,452				17,147				9,099
Real estate commission income, net		2,355			2,932				3,412				2,554				3,165
Service charges on deposit accounts		2,655			2,455				2,446				2,574				2,479
Credit card merchant fees, net		1,653			1,658				1,906				1,375				1,412
BOLI		1,985			1,585				1,853				1,717				1,904
Other income		5,428			5,274				5,649				7,129				5,142
Net gain/(loss) on investment securities		—			—				—				—				—
Total noninterest income		46,524			55,198				57,640				66,208				59,632
NONINTEREST EXPENSE:
Salaries and employee benefits		61,307			65,463				64,892				63,963				64,814
Occupancy expense		9,252			8,748				8,342				8,327				8,371
Furniture and equipment		3,983			3,764				3,643				3,690				3,528
Amortization - intangibles		2,475			2,644				2,684				2,817				2,935
Software expense		5,111			4,594				4,762				4,492				4,014
Data processing		3,096			3,628				3,556				3,594				3,524
Professional fees		3,605			2,627				1,761				2,027				2,723
Advertising and marketing		3,489			4,290				4,091				4,127				3,414
Other expenses		18,823			16,276				14,994				16,342				17,144
Total noninterest expense		111,141			112,034				108,725				109,379				110,467
Income before income tax expense and noncontrolling interest		58,092			63,277				58,199				57,482				51,067
Provision for income tax expense		11,598			12,606				11,145				11,232				9,410
Net income		46,494			50,671				47,054				46,250				41,657
Net income attributable to noncontrolling interest		191			(502	)			(507	)			(664	)			(1,474	)
Net income attributable to TowneBank	$	46,685		$	50,169			$	46,547			$	45,586			$	40,183
Per common share information
Basic earnings	$	0.64		$	0.69			$	0.64			$	0.63			$	0.55
Diluted earnings	$	0.64		$	0.69			$	0.64			$	0.63			$	0.55
Basic weighted average shares outstanding		72,686,303			72,578,736				72,559,537				72,498,075				72,525,504
Diluted weighted average shares outstanding		72,724,189			72,594,474				72,568,886				72,562,122				72,624,610
Cash dividends declared	$	0.23		$	0.23			$	0.23			$	0.20			$	0.20

TOWNEBANK
Banking Segment Financial Information
(dollars in thousands)
	Three Months Ended												Year Ended								Increase/(Decrease)
	December 31,								September 30, 2022				December 31,								2022 over 2021
		2022				2021								2022				2021			Amount				Percent
Revenue
Net interest income	$	128,655			$	98,345			$	123,039			$	455,881			$	391,751			$	64,130			16.37	%
Noninterest income
Service charges on deposit accounts		2,656				2,479				2,455				10,130				9,584				546			5.70	%
Credit card merchant fees		1,653				1,412				1,658				6,592				6,042				550			9.10	%
Other income		5,799				4,876		3		5,332				22,883				21,584				1,299			6.02	%
Subtotal		10,108				8,767				9,445				39,605				37,210				2,395			6.44	%
Gain (loss) on investment securities		—				—				—				—				1,252				(1,252	)		n/m
Total noninterest income		10,108				8,767				9,445				39,605				38,462				1,143			2.97	%
Total revenue		138,763				107,112				132,484				495,486				430,213				65,273			15.17	%
Provision for credit losses		6,312				(1,199	)			4,240				8,559				(15,859	)			24,418			(153.97)%
Expenses
Salaries and employee benefits		37,788				37,678				39,349				152,870				140,105				12,765			9.11	%
Occupancy expense		6,500				5,541				6,109				23,901				21,198				2,703			12.75	%
Furniture and equipment		3,061				2,570				2,803				11,320				10,657				663			6.22	%
Amortization of intangible assets		676				812				726				3,006				3,549				(543	)		(15.30)%
Other expenses		24,141				19,484				21,075				81,299				68,504				12,795			18.68	%
Total expenses		72,166				66,085				70,062				272,396				244,013				28,383			11.63	%
Income before income tax, corporate allocation and noncontrolling interest		60,285				42,226				58,182				214,531				202,059				12,472			6.17	%
Corporate allocation		861				1,260				902				4,381				5,041				(660	)		(13.09)%
Income before income tax provision and noncontrolling interest		61,146				43,486				59,084				218,912				207,100				11,812			5.70	%
Provision for income tax expense		12,162				7,123				11,507				41,944				37,584				4,360			11.60	%
Net income		48,984				36,363				47,577				176,968				169,516				7,452			4.40	%
Noncontrolling interest		—				(3	)			—				—				(4	)			4			n/m
Net income attributable to TowneBank	$	48,984			$	36,360			$	47,577			$	176,968			$	169,512			$	7,456			4.40	%
Efficiency ratio (non-GAAP)		51.52	%			60.94	%			52.34	%			54.37	%			56.06	%

TOWNEBANK
Realty Segment Financial Information
(dollars in thousands)
	Three Months Ended												Year Ended								Increase/(Decrease)
	December 31,								September 30,				December 31,								2022 over 2021
		2022				2021				2022				2022				2021			Amount				Percent
Revenue
Residential mortgage brokerage income, net	$	8,292			$	22,257			$	12,726			$	51,783			$	113,155			$	(61,372	)		(54.24)%
Real estate brokerage income, net		2,354				3,165				2,932				11,253				13,290				(2,037	)		(15.33)%
Title insurance and settlement fees		391				610				525				1,981				2,527				(546	)		(21.61)%
Property management fees, net		7,757				9,099				9,891				44,246				42,175				2,071			4.91	%
Income from unconsolidated subsidiary		10				113				77				368				1,077				(709	)		(65.83)%
Net interest and other income		626				3,010				1,508				7,478				12,232				(4,754	)		(38.87)%
Total revenue		19,430				38,254				27,659				117,109				184,456				(67,347	)		(36.51)%
Provision for credit losses		(238	)			89				(315	)			47				(915	)		$	962			n/m
Expenses
Salaries and employee benefits	$	13,617			$	17,682			$	15,854			$	63,263			$	67,922			$	(4,659	)		(6.86)%
Occupancy expense		1,970				1,957				1,919				7,784				7,689				95			1.24	%
Furniture and equipment		738				727				765				2,970				2,661				309			11.61	%
Amortization of intangible assets		653				931				817				3,102				2,813				289			10.27	%
Other expenses		8,056				9,805				8,687				37,527				40,579				(3,052	)		(7.52)%
Total expenses		25,034				31,102				28,042				114,646				121,664				(7,018	)		(5.77)%
Income (loss) before income tax, corporate allocation, and noncontrolling interest		(5,366	)			7,063				(68	)			2,416				63,707				(61,291	)		(96.21)%
Corporate allocation		(600	)			(1,000	)			(602	)			(3,202	)			(4,000	)			798			(19.95)%
Income (loss) before income tax provision and noncontrolling interest		(5,966	)			6,063				(670	)			(786	)			59,707				(60,493	)		(101.32)%
Provision for income tax		(1,296	)			1,894				(120	)			(186	)			13,911				(14,097	)		(101.34) %
Net income (loss)		(4,670	)			4,169				(550	)			(600	)			45,796				(46,396	)		(101.31)%
Noncontrolling interest		191				(1,471	)			(502	)			(1,482	)			(9,647	)			8,165			(84.64)%
Net income (loss) attributable to TowneBank	$	(4,479	)		$	2,698			$	(1,052	)		$	(2,082	)		$	36,149			$	(38,231	)		(105.76)%
Efficiency ratio (non-GAAP)		125.48	%			78.87	%			98.43	%			95.25	%			64.43	%

TOWNEBANK
Insurance Segment Financial Information
(dollars in thousands)
	Three Months Ended												Year Ended								Increase/(Decrease)
	December 31,								September 30,				December 31,								2022 over 2021
		2022				2021				2022				2022				2021			Amount				Percent
Commission and fee income
Property and casualty	$	15,221			$	13,135			$	17,567			$	64,672			$	57,603			$	7,069			12.27	%
Employee benefits		3,949				3,682				4,020				16,054				14,817				1,237			8.35	%
Specialized benefit services		169				172				160				658				666				(8	)		(1.20)%
Total commissions and fees		19,339				16,989				21,747				81,384				73,086				8,298			11.35	%
Contingency and bonus revenue		2,033				2,231				1,654				10,085				8,977				1,108			12.34	%
Other income		12				40				23				84				196				(112	)		(57.14)%
Total revenue		21,384				19,260				23,424				91,553				82,259				9,294			11.30	%
Employee commission expense		4,270				4,202				4,331				17,213				16,598				615			3.71	%
Revenue, net of commission expense		17,114				15,058				19,093				74,340				65,661				8,679			13.22	%
Expenses
Salaries and employee benefits	$	9,902			$	9,454			$	10,260			$	39,492			$	37,817			$	1,675			4.43	%
Occupancy expense		782				873				720				2,984				2,770				214			7.73	%
Furniture and equipment		184				231				196				790				857				(67	)		(7.82)%
Amortization of intangible assets		1,146				1,192				1,101				4,512				4,765				(253	)		(5.31)%
Other expenses		1,927				1,530				1,653				6,459				5,386				1,073			19.92	%
Total operating expenses		13,941				13,280				13,930				54,237				51,595				2,642			5.12	%
Income before income tax and noncontrolling interest		3,173				1,778				5,163				20,103				14,066				6,037			42.92	%
Corporate allocation		(261	)			(260	)			(300	)			(1,179	)			(1,041	)			(138	)		13.26	%
Income before income tax provision and noncontrolling interest		2,912				1,518				4,863				18,924				13,025				5,899			45.29	%
Provision for income tax expense		732				393				1,219				4,823				3,303				1,520			46.02	%
Net income		2,180				1,125				3,644				14,101				9,722				4,379			45.04	%
Noncontrolling interest		—				—				—				—				—				—			N/M
Net income attributable to TowneBank	$	2,180			$	1,125			$	3,644			$	14,101			$	9,722			$	4,379			45.04	%
Provision for income taxes		732				393				1,219				4,823				3,303				1,520			46.02	%
Depreciation, amortization and interest expense		1,285				1,342				1,228				5,052				5,341				(289	)		(5.41)%
EBITDA (non-GAAP)	$	4,197			$	2,860			$	6,091			$	23,976			$	18,366			$	5,610			30.55	%
Efficiency ratio (non-GAAP)		74.76	%			80.28	%			67.19	%			66.89	%			71.32	%

TOWNEBANK
Reconciliation of Non-GAAP Financial Measures:
	Three Months Ended												Twelve Months Ended
	December 31,				September 30,				December 31,				December 31,
		2022				2022				2021				2022				2021
Return on average assets (GAAP)		1.16	%			1.22	%			0.99	%			1.16	%			1.40	%
Impact of excluding average goodwill and other intangibles and amortization		0.09	%			0.09	%			0.09	%			0.09	%			0.11	%
Return on average tangible assets (non-GAAP)		1.25	%			1.31	%			1.08	%			1.25	%			1.51	%
Return on average equity (GAAP)		9.98	%			10.60	%			8.38	%			10.06	%			11.61	%
Impact of excluding average goodwill and other intangibles and amortization		4.28	%			4.48	%			3.70	%			4.31	%			4.94	%
Return on average tangible equity (non-GAAP)		14.26	%			15.08	%			12.08	%			14.37	%			16.55	%
Return on average common equity (GAAP)		10.07	%			10.69	%			8.45	%			10.15	%			11.70	%
Impact of excluding average goodwill and other intangibles and amortization		4.37	%			4.58	%			3.77	%			4.39	%			5.05	%
Return on average tangible common equity (non-GAAP)		14.44	%			15.27	%			12.22	%			14.54	%			16.75	%
Book value (GAAP)	$	25.73			$	25.08			$	26.13			$	25.73			$	26.13
Impact of excluding average goodwill and other intangibles and amortization		(6.89	)			(6.91	)			(6.98	)			(6.89	)			(6.98	)
Tangible book value (non-GAAP)	$	18.84			$	18.17			$	19.15			$	18.84			$	19.15
Efficiency ratio (GAAP)		63.40	%			62.51	%			68.86	%			64.24	%			61.33	%
Impact of excluding gain/(loss) on investments and amortization expense	(1.41)%				(1.48)%				(1.83)%				(1.55)%				(1.52)%
Efficiency ratio (non-GAAP)		61.99	%			61.03	%			67.03	%			62.69	%			59.81	%
Average assets (GAAP)	$	15,929,756			$	16,304,294			$	16,075,509			$	16,268,014			$	15,384,662
Less: average goodwill and intangible assets		502,539				504,000				506,867				504,167				501,689
Average tangible assets (non-GAAP)	$	15,427,217			$	15,800,294			$	15,568,642			$	15,763,847			$	14,882,973
Average equity (GAAP)	$	1,855,430			$	1,878,574			$	1,902,474			$	1,878,036			$	1,855,948
Less: average goodwill and intangible assets		502,539				504,000				506,867				504,167				501,689
Average tangible equity (non-GAAP)	$	1,352,891			$	1,374,574			$	1,395,607			$	1,373,869			$	1,354,259
Average common equity (GAAP)	$	1,838,895			$	1,861,845			$	1,886,279			$	1,861,496			$	1,840,261
Less: average goodwill and intangible assets		502,539				504,000				506,867				504,167				501,689
Average tangible common equity (non-GAAP)	$	1,336,356			$	1,357,845			$	1,379,412			$	1,357,329			$	1,338,572
Net income (GAAP)	$	46,685			$	50,169			$	40,183			$	188,987			$	215,383
Amortization of intangibles, net of tax		1,955				2,089				2,318				8,390				8,790
Tangible net income (non-GAAP)	$	48,640			$	52,258			$	42,501			$	197,377			$	224,173
Net income (GAAP)	$	46,685			$	50,169			$	40,183			$	188,987			$	215,383
Provision for credit losses		6,074				3,925				(1,110	)			8,606				(16,774	)
Provision for income taxes		11,598				12,606				9,410				46,581				54,798
(Gain)/loss on equity investment net of noncontrolling interest		—				—			$	—				—				30
Pre-provision, pre-tax net revenues (non-GAAP)	$	64,357			$	66,700			$	48,483			$	244,174			$	253,437
Total revenue (GAAP)	$	175,307			$	179,236			$	160,424			$	686,935			$	680,330
Net (gain) loss on investment securities		—				—				—				—				(1,252	)
Net (gain) loss on equity investment		—				—				—				—				30
Total revenue for efficiency calculation (non-GAAP)	$	175,307			$	179,236			$	160,424			$	686,935			$	679,108
Noninterest expense (GAAP)	$	111,141			$	112,034			$	110,467			$	441,279			$	417,272
Less: Amortization of intangibles		2,475				2,644				2,935				10,620				11,127
Noninterest expense net of amortization (non-GAAP)	$	108,666			$	109,390			$	107,532			$	430,659			$	406,145

TOWNEBANK
Reconciliation of Non-GAAP Financial Measures
(dollars in thousands, except per share data)
Reconcilement of GAAP Earnings to Operating Earnings Excluding Certain Items Affecting Comparability		Three Months Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
			2022				2022				2022				2022				2021
Net income (GAAP)		$	46,685			$	50,169			$	46,547			$	45,586			$	40,183
Acquisition-related expenses			339				616				51				59				50
Income tax expense (benefit)			(19	)			(6	)			(1	)			(12	)			(7	)
Total charges, net of taxes			320				610				50				47				43
Operating earnings, excluding certain items affecting comparability (non-GAAP)		$	47,005			$	50,779			$	46,597			$	45,633			$	40,226
Weighted average diluted shares			72,724,189				72,594,474				72,568,886				72,562,122				72,624,610
Diluted EPS (GAAP)		$	0.64			$	0.69			$	0.64			$	0.63			$	0.55
Diluted EPS, excluding certain items affecting comparability (non-GAAP)		$	0.65			$	0.70			$	0.64			$	0.63			$	0.55
Average assets		$	15,929,756			$	16,304,294			$	16,529,810			$	16,311,998			$	16,075,509
Average tangible equity		$	1,352,891			$	1,374,574			$	1,374,683			$	1,393,771			$	1,395,607
Average common tangible equity		$	1,336,356			$	1,357,845			$	1,357,957			$	1,377,605			$	1,379,412
Return on average assets, excluding certain items affecting comparability (non-GAAP)			1.17	%			1.24	%			1.13	%			1.13	%			0.99	%
Return on average tangible equity, excluding certain items affecting comparability (non-GAAP)			14.36	%			15.26	%			14.21	%			13.93	%			12.09	%
Return on average common tangible equity, excluding certain items affecting comparability (non-GAAP)			14.54	%			15.45	%			14.39	%			14.09	%			12.24	%
Efficiency ratio, excluding certain items affecting comparability (non-GAAP)			63.20	%			62.16	%			65.08	%			66.09	%			68.83	%

TOWNEBANK
Reconciliation of Non-GAAP Financial Measures
(dollars in thousands, except per share data)
Reconcilement of GAAP Earnings to Operating Earnings Excluding Certain Items Affecting Comparability		Year Ended
		December 31,				December 31,
			2022				2021
Net income (GAAP)		$	188,987			$	215,383
Acquisition-related expenses			1,065				1,022
Income tax expense (benefit)			(40	)			(111	)
Total charges, net of taxes			1,025				911
Operating earnings, excluding certain items affecting comparability (non-GAAP)		$	190,012			$	216,294
Weighted average diluted shares			72,577,943				72,563,077
Diluted EPS (GAAP)		$	2.60			$	2.97
Diluted EPS, excluding certain items affecting comparability (non-GAAP)		$	2.62			$	2.98
Average assets		$	16,268,014			$	15,384,662
Average tangible equity		$	1,373,869			$	1,354,259
Average tangible common equity		$	1,357,329			$	1,338,572
Return on average assets, excluding certain items affecting comparability (non-GAAP)			1.17	%			1.41	%
Return on average tangible equity, excluding certain items affecting comparability (non-GAAP)			14.44	%			16.62	%
Return on average common tangible equity, excluding certain items affecting comparability (non-GAAP)			14.62	%			16.82	%
Efficiency ratio, excluding certain items affecting comparability (non-GAAP)			64.08	%			61.29	%