SUFFOLK, Va., April 28, 2016 (GLOBE NEWSWIRE) -- Hampton Roads based TowneBank (the “Bank”) (NASDAQ:TOWN) reported record earnings of $17.82 million for the quarter ended March 31, 2016, a 22.57% increase, or $3.28 million, over the $14.54 million reported for the comparative period in 2015.  Fully diluted earnings per share were $0.35 per share, an increase from $0.29 per share for the comparative period of 2015.

The Bank’s common dividend was $0.12 per share for the quarter with the common dividend totaling $6.20 million.  The current dividend represents an increase of 9.1% over the dividend paid during the same quarter of 2015.

“We delivered another quarter of outstanding performance and demonstrated our earning power by reporting a record quarter of earnings and revenue, as we continued to build on the momentum generated in 2015,” said G. Robert Aston, Jr., Chairman and Chief Executive Officer.  “We increased diluted earnings per share by 20.69% and revenue by 8.81%, from the first quarter of 2015 while producing a return on average assets of 1.14% and a return on average tangible equity of 11.56%."

"Our pending acquisition of Chesapeake, Virginia based Monarch Financial Holdings is proceeding as anticipated and we are looking forward to the opportunity to welcome our new members and provide them with the exquisite personal service that defines TowneBank," said Aston.

First Quarter 2016 Performance Highlights

• Record total revenues of $78.75 million, a $6.38 million, or 8.81%, increase from first quarter 2015
  • Taxable equivalent net interest margin was 3.37%, including accretion of 0.06%, compared to 3.52%, including accretion of 0.08%, for first quarter 2015
  • Insurance segment total revenue increased 24.17% from first quarter 2015,to $16.08 million
     
• Loans held for investment increased $456.57 million, or 11.15%, from March 31, 2015
   
• Total deposits were $4.96 billion, an increase of $449.51 million, or 9.98%, from first quarter 2015
  • Noninterest bearing deposits increased by 14.92%, to $1.45 billion and represent 29.26% of total deposits
  • Total cost of deposits increased to 0.43% from 0.40% at March 31, 2015 reflective of an increase in higher cost time deposits
     
• Asset quality showed continued strength
  • Nonperforming assets were $37.68 million, or 0.59% of total assets compared to $58.74 million, or 1.01%, at March 31, 2015
  • Nonperforming loans declined to 0.17% of period end loans
  • Foreclosed property decreased 42.47% to $29.74 million
     
• The Bank remained well-capitalized
  • Common equity tier 1 capital ratio of 12.66%
  • Tier 1 leverage capital ratio of 10.70%
  • Tier 1 risk-based capital ratio of 12.73%
  • Total risk-based capital ratio of 13.46%
  • Tangible book value increased to $12.38
    
    

First Quarter 2016 Earnings Compared to First Quarter 2015

Net income for the first quarter was $17.82 million, or $0.35 per diluted share, versus $14.54 million, or $0.29 per diluted share, in first quarter 2015, reflecting strong growth in net interest income and growth in our Insurance segment leading to higher noninterest income.

Net Interest Income
Net interest income increased to $46.34 million, a $2.78 million, or 6.38%, increase from the first quarter of 2015.  The primary driver was the increase in average earning assets, which increased $524.82 million, or 9.92%, from first quarter 2015.  Tax-equivalent net interest margin was 3.37% in the current quarter as compared to 3.52% in first quarter 2015.  Accretion income added $0.65 million, or 6 basis points, to margin in the current quarter as compared to $0.78 million, or 8 basis points, in first quarter 2015.

Noninterest Income
Noninterest income, excluding gains or losses on investment securities, was $32.41 million for the first quarter of 2016, an increase of $3.65 million, or 12.68%, from the first quarter of 2015.  The majority of the increase from the comparative period in 2015 is attributable to insurance commissions, which increased $2.98 million, or 27.01%, primarily due to the acquisition of five insurance agencies in 2015.  Additionally, real estate brokerage and property management income increased $0.87 million, or 22.03%, from the first quarter of 2015 primarily due to the acquisition of a resort property management company in Oak Island, North Carolina in first quarter 2016 and increased revenue in our Hilton Head, South Carolina resort property management business ("Hilton Head").  This increase was partially offset by the sale of our Corolla, North Carolina-based property management business in 2015, which generated management fee revenue of $1.80 million in first quarter 2015.  Residential mortgage banking income decreased $1.33 million, or 15.69%, from first quarter 2015 due to a reduction in pricing and slightly lower production volumes.  Mortgage production was $313.14 million in the first quarter of 2016, which was $5.29 million less than first quarter 2015.

Noninterest Expense
Noninterest expense increased by $1.72 million, or 3.41%, from the comparative quarter of 2015.  Driving the increase were increased operating expenses of $1.05 million related to insurance agencies acquired in 2015 and operating expenses of $0.96 million related to the North Carolina resort property management acquisition.  Excluding the additional noninterest expense from the insurance agencies acquired in 2015 and the resort property management company acquired in 2016, core expenses decreased by $0.29 million in first quarter 2016.

First Quarter 2016 Earnings Compared to Fourth Quarter 2015

Net income for the first quarter was $17.82 million, or $0.35 per diluted share, versus $12.47 million, or $0.24 per diluted share, in fourth quarter 2015, reflecting seasonality and growth in our Insurance and Realty segments.  The seasonal increase in noninterest revenue was augmented by a decrease in noninterest expenses as personnel costs decreased from the previous quarter.

Performance Highlights

• Total revenues were $78.75 million, a $7.34 million, or 10.28%, increase from fourth quarter 2015
  • Taxable equivalent net interest margin was 3.37%, including accretion of 0.06%, compared to 3.36%, including accretion of 0.09%, for fourth quarter 2015
  • Noninterest income increased $7.34 million due to seasonality and growth in our Insurance and Realty segments
     
• Loans held for investment increased $32.87 million from December 31, 2015, with a strong loan pipeline heading into the second quarter
   
• Noninterest bearing deposits increased by $56.40 million, or 4.05% during the quarter
  
  
• Nonperforming assets decreased 12.55% during the quarter
  
  

Net Interest Income
On a linked quarter basis, net interest income increased slightly by $0.01 million, or 0.01%, in first quarter 2016 versus fourth quarter 2015, while tax-equivalent net interest margin was 3.37%, an increase of 1 basis point from the fourth quarter of 2015.  Accretion income added $0.65 million, or 6 basis points, to margin in the current quarter, as compared to $1.22 million, or 9 basis points, in the linked quarter.

Noninterest Income
In comparison to the fourth quarter of 2015, noninterest income, excluding gains or losses on investment securities, increased $7.34 million, or 29.25%.  The increase was driven by insurance commission income due to growth from prior year agency acquisitions, combined with higher contingent commission revenue, which is mostly received during the first quarter of each year.  Additionally, real estate brokerage and property management income increased due to a seasonal increase related to our resort property management business.  Residential mortgage banking income decreased by $0.14 million, or 1.89%, from the fourth quarter of 2015 as mortgage production saw a seasonally driven decrease of $40.38 million, which was partially offset by an increase in the value of rate lock commitments of $0.38 million recorded as of March 31, 2016, as compared to a decrease due to the value of rate lock commitments of $0.49 million recognized for the quarter ended December 31, 2015.

Noninterest Expense
Noninterest expense decreased by $0.58 million, or 1.10%, from the fourth quarter of 2015.  Driving the decrease were salary and benefits expenses, which decreased by $0.64 million due to lower personnel costs related to employee profit sharing and 401(k) matching expenses.

Noninterest Income													% Change
	Q1				Q1				Q4				Q1 16 vs.			Q1 16 vs.
(dollars in thousands)	2016				2015				2015				Q1 15			Q4 15
Residential mortgage banking income, net	$	7,118			$	8,443			$	7,255			(15.69	)%		(1.89	)%
Real estate brokerage and property management, net	4,827				3,955				2,438				22.05	%		97.99	%
Insurance commissions and other title fees and income, net	14,033				11,049				8,997				27.01	%		55.97	%
Service charges on deposit accounts	2,176				2,197				2,254				(0.96	)%		(3.46	)%
Credit card merchant fees, net	895				432				767				107.18	%		16.69	%
Other income	3,366				2,691				3,368				25.08	%		(0.06	)%
Subtotal before gain on investment securities	32,415				28,767				25,079				12.68	%		29.25	%
Net gain on investment securities	—				49				—				(100.00	)%		—	%
Total noninterest income	$	32,415			$	28,816			$	25,079			12.49	%		29.25	%

Noninterest Expense													% Change
	Q1				Q1				Q4				Q1 16 vs.			Q1 16 vs.
(dollars in thousands)	2016				2015				2015				Q1 15			Q4 15
Salaries and benefits	$	30,187			$	27,679			$	30,826			9.06	%		(2.07	)%
Occupancy expense	5,017				4,930				5,156				1.76	%		(2.70	)%
Furniture and equipment	2,357				2,369				2,390				(0.51	)%		(1.38	)%
Acquisition-related expenses	414				415				285				(0.24	)%		45.26	%
Other expenses	14,186				15,047				14,086				(5.72	)%		0.71	%
Total noninterest expense	$	52,161			$	50,440			$	52,743			3.41	%		(1.10	)%

Segment Results

														$ Change
(in thousands)		Q1				Q1				Q4				Q1 16 vs.				Q1 16 vs.
Segment Net Income		2016				2015				2015				Q1 15				Q4 15
Banking		$	14,133			$	11,108			$	12,219			$	3,025			$	1,914
Realty		1,033				1,647				6				(614		)		1,027
Insurance		2,653				1,783				241				870				2,412
Total net income		$	17,819			$	14,538			$	12,466			$	3,281			$	5,353

First Quarter 2016 Compared to First Quarter 2015

Banking
Net income for the three months ended March 31, 2016 for the Banking segment was $14.13 million, increasing $3.02 million, or 27.22%, from the comparative 2015 quarter.  The increase in earnings was driven by additional net interest income of $2.64 million caused by an increase in earning assets, as average loan balances increased $449.79 million.  Also contributing to the increase was a decrease in the loan loss provision driven by a reduction in historical loss ratios and an increase in noninterest income.  The increases in income were further augmented by lower noninterest expenses related to decreases in charitable contributions and foreclosed property expenses.

Realty
For the three months ended March 31, 2016, the Realty segment had net income of $1.03 million compared to $1.65 million the first quarter of 2015.  The current quarter results were driven by a decrease in residential mortgage banking income of $1.20 million, or 14.14%, due to a decline in margins combined with slightly lower production volumes.  The decrease was partially offset by an increase in property management fees of $0.73 million, or 27.00%, primarily due to increased revenue from Hilton Head and our purchase of a resort property management business based in Oak Island, North Carolina ("Oak Island") on January 14, 2016.

Insurance
The Insurance segment had net income of $2.65 million for the three months ended March 31, 2016, an increase of $0.87 million as compared to the first quarter of 2015.  Insurance agencies acquired in 2015 contributed additional revenue, net of commission expense, of $1.78 million in first quarter 2016.  Also contributing to increase was organic growth in commercial lines commissions and an increase in commissions from travel insurance. The acquired agencies resulted in additional noninterest expenses of $1.05 million of noninterest expenses, including acquisition-related expenses.

First Quarter 2016 Compared to Fourth Quarter 2015

Banking
The increase in earnings of $1.91 million, or 15.66% from the fourth quarter of 2015 was driven by a decrease in noninterest expenses of $1.40 million as personnel costs decreased along with acquisition-related expenses and advertising and marketing expenses.  Also contributing was a decrease in the loan loss provision of $1.11 million, primarily due to a reduction in historical loss ratios.  Additionally, revenue increased due to a combination of higher net interest income of $0.11 million and an increase in noninterest income of $0.13 million.

Realty
Net income in the Realty segment increased by $1.03 million from the linked quarter ended December 31, 2015.  The increase was primarily a result of a seasonal increase in resort property management fees of $2.63 million.  Partially offsetting the increase were additional operating expenses related to Oak Island operations.  Excluding Oak Island operations, expenses decreased from the linked quarter in the Realty segment.

Insurance
Net income increased $2.41 million from the fourth quarter of 2015.  The improvement from the linked quarter was driven by an increase in contingency and bonus revenue of $3.36 million.  Contingent commissions are seasonal in nature and are mostly received during the first half of each year.  Additionally, commissions from travel insurance increased by $0.83 million and a full quarter of operations from agencies acquired in the third and fourth quarters of 2015 resulted in additional revenue, net of commission expense, of $0.54 million.

Balance Sheet

At March 31, 2016, total Bank assets reached $6.37 billion, an increase of $0.54 billion, or 9.20%, over March 31, 2015.

Loans

													% Change
	Q1				Q1				Q4				Q1 16 vs.			Q1 16 vs.
(dollars in thousands)	2016				2015				2015				Q1 15			Q4 15
Construction and land development	$	635,992			$	519,390			$	598,875			22.45	%		6.20	%
Commercial real estate - investment related properties	998,082				954,826				1,004,393				4.53	%		(0.63	)%
Commercial real estate - owner occupied	764,230				770,880				780,000				(0.86	)%		(2.02	)%
Multifamily real estate	160,246				146,395				167,371				9.46	%		(4.26	)%
1-4 family residential real estate	988,432				915,205				973,331				8.00	%		1.55	%
Commercial and industrial business loans	852,005				700,252				857,036				21.67	%		(0.59	)%
Consumer loans and other	153,273				88,747				138,387				72.71	%		10.76	%
Total	$	4,552,260			$	4,095,695			$	4,519,393			11.15	%		0.73	%

The Bank’s loan portfolio ended the period at $4.55 billion representing an increase of 11.15%, or $456.57 million, from the prior year and an increase of 0.73%, or $32.87 million, from December 31, 2015.

Deposits

													% Change
	Q1				Q1				Q4				Q1 16 vs.			Q1 16 vs.
(dollars in thousands)	2016				2015				2015				Q1 15			Q4 15
Noninterest-bearing demand	$	1,449,660			$	1,261,482			$	1,393,264			14.92	%		4.05	%
Interest-bearing:
Demand and money market accounts	1,769,414				1,643,534				1,824,226				7.66	%		(3.00	)%
Savings	302,373				303,936				300,408				(0.51	)%		0.65	%
Certificates of deposits	1,433,679				1,296,666				1,396,129				10.57	%		2.69	%
Total	$	4,955,126			$	4,505,618			$	4,914,027			9.98	%		0.84	%

The Bank continued to experience solid deposit growth with total deposits increasing to $4.96 billion, up $449.51 million, or 9.98%, from March 31, 2015.  The Bank saw continued growth in noninterest bearing demand deposits, which ended the quarter at $1.45 billion, a 14.92% increase from March 31, 2015.  Noninterest deposits represented 29.26% of total deposits at March 31, 2016.

Capital Ratios

		Q1			Q1			Q4
		2016			2015			2015
Common Equity Tier 1		12.66	%		13.09	%		12.59	%
Tier 1		12.73	%		13.20	%		12.70	%
Total		13.46	%		13.96	%		13.44	%
Tier 1 leverage ratio		10.70	%		10.99	%		10.67	%

The Bank’s total equity at March 31, 2016 rose to $836.00 million, an increase of $44.42 million, or 5.61%, from March 31, 2015.  Total risk-based capital remained strong as total risk-based capital, Tier 1 capital, Tier 1 leverage ratios, and common equity Tier 1 capital ratios were 13.46%, 12.73%, 10.70%, 12.66%, respectively.  All ratios exceed the current regulatory standards for well capitalized status.

Asset Quality

(in thousands)	3/31/2016				12/31/2015				9/30/2015				6/30/2015				3/31/2015
Nonperforming loans	$	7,944			$	8,670			$	8,477			$	7,455			$	7,045
Foreclosed property	29,740				34,420				39,509				46,154				51,698
Total nonperforming assets	$	37,684			$	43,090			$	47,986			$	53,609			$	58,743
Quarterly net loans charged off (recovered)	$	340			$	(156	)		$	69			$	339			$	333
Year-to-date net loans charged off	$	340			$	585			$	741			$	672			$	333

														Change
		Q1				Q1				Q4				Q1 16 vs.				Q1 16 vs.
(dollars in thousands)		2016				2015				2015				Q1 15				Q4 15
Total loans 90 days past due and still accruing		$	—			$	3			$	424			$	(3	)		$	(424	)
Total loans 30-89 days past due		$	12,055			$	19,537			$	7,477			$	(7,482	)		$	4,578
Allowance for loan losses		$	37,760			$	35,907			$	38,359			$	1,853			$	(599	)
Total performing TDRs		$	24,955			$	32,896			$	29,114			$	(7,941	)		$	(4,159	)
Nonperforming loans to period end loans		0.17		%		0.17		%		0.19		%		—		%		(0.02		)%
Nonperforming assets to period end assets		0.59		%		1.01		%		0.68		%		(0.42		)%		(0.09		)%
Allowance for loan losses to period end loans		0.83		%		0.88		%		0.85		%		(0.05		)%		(0.02		)%
Allowance for loan losses (originated) to originated period end loans		0.92		%		1.00		%		0.94		%		(0.08		)%		(0.02		)%
Net charge-offs (recoveries) to average loans (annualized)		0.03		%		0.03		%		(0.01		)%		—		%		0.04		%
Ratio of allowance for loan losses to nonperforming loans		4.75x				5.10x				4.42x				(0.35)x				0.33x

Continued strength in credit quality contributed to the Bank's financial results as net charge-offs were $0.34 million in the first quarter of 2016 compared to $0.33 million in the first quarter of 2015 and net recoveries of $0.16 million in the linked quarter.  As a result of the strength in credit quality and a reduction in historical loss ratios, a negative provision for loan losses of $0.26 million was recorded in first quarter 2016, a decrease of $0.58 million as compared to the same quarter of 2015.  Total nonperforming assets were $37.68 million, or 0.59% of Bank assets, at March 31, 2016, as compared to $58.74 million, or 1.01%, at March 31, 2015, and $43.09 million, or 0.68%, at December 31, 2015.  The allowance for loan losses was $37.76 million, increased from $35.91 million at March 31, 2015 and decreased from $38.36 million at December 31, 2015.

About TowneBank:
As one of the top community banks in Virginia and North Carolina, TowneBank operates 37 banking offices serving Chesapeake, Chesterfield County, Glen Allen, Hampton, James City County, Mechanicsville, Newport News, Norfolk, Portsmouth, Richmond, Suffolk, Virginia Beach, Williamsburg, and York County in Virginia, along with Moyock, Grandy, Camden County, Southern Shores, Corolla and Nags Head in North Carolina. Towne also offers a full range of financial services through its controlled divisions and subsidiaries that include Towne Investment Group, Towne Insurance Agency, TFA Benefits, TowneBank Mortgage, TowneBank Commercial Mortgage, Berkshire Hathaway HomeServices Towne Realty, Towne 1031 Exchange, LLC, and Beach Properties of Hilton Head. Local decision-making is a hallmark of its hometown banking strategy that is delivered through the leadership of each group’s President and Board of Directors.  With total assets of $6.37 billion as of March 31, 2016, TowneBank is one of the largest banks headquartered in Virginia.

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

Forward-Looking Statements:
Statements made in this release, other than those concerning historical financial information, may be considered forward-looking statements, which speak only as of the date of this release and are based on current expectations and involve a number of assumptions. These include statements as to the anticipated benefits of the merger with Monarch, including future financial and operating results, cost savings and enhanced revenues that may be realized from the merger as well as other statements of expectations regarding the merger and any other statements regarding future results or expectations. TowneBank intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is including this statement for purposes of these safe harbor provisions. TowneBank’s ability to predict results, or the actual effect of future plans or strategies, is inherently uncertain. Factors which could have a material effect on the operations and future prospects of TowneBank, and the resulting company after the merger with Monarch, include but are not limited to: the businesses of TowneBank and Monarch may not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; expected revenue synergies and cost savings from the merger or other pending or recently completed acquisitions may not be fully realized or realized within the expected timeframe; revenues following the merger may be lower than expected; customer and employee relationships and business operations may be disrupted by the merger; the ability to obtain required regulatory and stockholder approvals, and the ability to complete the merger on the expected timeframe may be more difficult, time-consuming or costly than expected; changes in interest rates, general economic and business conditions; legislative/regulatory changes; the monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve; the quality and composition of the loan and securities portfolios; demand for loan products; deposit flows; competition; demand for financial services in TowneBank’s  market areas; TowneBank’s implementation of new technologies and the ability to develop and maintain secure and reliable electronic systems; changes in the securities markets; and changes in accounting principles, policies and guidelines; and other risk factors detailed from time to time in filings made by TowneBank with the Federal Deposit Insurance Corporation (the “FDIC”). TowneBank undertakes no obligation to update or clarify these forward-looking statements, whether as a result of new information, future events or otherwise.

Additional Information About the Merger and Where to Find It:
In connection with the proposed merger, TowneBank has filed with the FDIC a preliminary proxy statement/prospectus and Monarch has filed with the Securities and Exchange Commission (the “SEC”) a preliminary proxy statement.  TowneBank and Monarch will each deliver a definitive joint proxy statement/prospectus to their respective stockholders seeking approval of the merger and related matters.  In addition, each of TowneBank and Monarch may file other relevant documents concerning the proposed merger with the FDIC and SEC.

Investors and stockholders of both companies are urged to read the definitive joint proxy statement/prospectus when it becomes available and any other relevant documents to be filed with the FDIC and SEC in connection with the proposed merger because they will contain important information about TowneBank, Monarch and the proposed transaction.  Investors and stockholders may obtain free copies of certain of these documents through the website maintained by the SEC at http://www.sec.gov.  Free copies of the definitive joint proxy statement/prospectus, when available, also may be obtained by directing a request by telephone or mail to TowneBank, 6001 Harbour View Boulevard,  Suffolk, Virginia 23425, Attention: Investor Relations (telephone: (757) 638-6794), or Monarch Financial Holdings, Inc., 1435 Crossways Boulevard, Suite 301, Chesapeake, Virginia 23320, Attention: Investor Relations (telephone: (757) 389-5112), or by accessing TowneBank’s website at https://townebank.com under “Investor Relations” or Monarch’s website at https://www.monarchbank.com under “Investor Relations.”  The information on TowneBank’s and Monarch’s websites is not, and shall not be deemed to be, a part of this release or incorporated into other filings either company makes with the FDIC or SEC.

TowneBank and Monarch, and their respective directors and executive officers, may be deemed to be participants in the solicitation of proxies from the stockholders of TowneBank and/or Monarch in connection with the merger. Information about the directors and executive officers of TowneBank is set forth in the proxy statement for TowneBank’s 2016 annual meeting of stockholders filed with the FDIC on April 15, 2016.  Information about the directors and executive officers of Monarch is set forth in the proxy statement for Monarch’s 2015 annual meeting of stockholders filed with the SEC on April 2, 2015.  Additional information regarding the interests of these participants and other persons who may be deemed participants in the merger may be obtained by reading the definitive joint proxy statement/prospectus regarding the merger when it becomes available.

This release does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any offer, solicitation or sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.

Selected Financial Highlights (unaudited)
TOWNEBANK
(dollars in thousands, except per share data)
									Increase/				% Increase/
Three months ended March 31,	2016				2015				(Decrease)				(Decrease)
Results of Operations:
Net interest income	$	46,336			$	43,556			$	2,780			6.38	%
Noninterest income (1)	32,415				28,767				3,648				12.68	%
Gain (loss) on investment securities	—				49				(49		)		(100.00	)%
Total Revenue	78,751				72,372				6,379				8.81	%
Noninterest expenses	52,161				50,440				1,721				3.41	%
Provision for loan losses	(259		)		323				(582		)		(180.19	)%
Income before income tax and noncontrolling interest	26,849				21,609				5,240				24.25	%
Provision for income tax expense	8,188				6,385				1,803				28.24	%
Net income	18,661				15,224				3,437				22.58	%
Net income attributable to noncontrolling interest	(842		)		(686		)		(156		)		22.74	%
Net income attributable to TowneBank	17,819				14,538				3,281				22.57	%
Preferred stock dividends and accretion	—				13				(13		)		(100.00	)%
Net income available to common shareholders	17,819				14,525				3,294				22.68	%
Net income per common share - basic	0.35				0.29				0.06				20.69	%
Net income per common share - diluted	0.35				0.29				0.06				20.69	%
Period End Data:
Total assets	$	6,365,169			$	5,828,703			$	536,466			9.20	%
Total assets - tangible	6,178,224				5,649,097				529,127				9.37	%
Earning assets (2)	5,896,763				5,355,376				541,387				10.11	%
Loans (net of unearned income)	4,552,260				4,095,695				456,565				11.15	%
Allowance for loan losses	37,760				35,907				1,853				5.16	%
Goodwill and other intangibles	186,945				179,607				7,338				4.09	%
Nonperforming assets	37,684				58,743				(21,059		)		(35.85	)%
Noninterest bearing deposits	1,449,660				1,261,482				188,178				14.92	%
Interest bearing deposits	3,505,466				3,244,136				261,330				8.06	%
Total deposits	4,955,126				4,505,618				449,508				9.98	%
Total equity	836,003				791,580				44,423				5.61	%
Total equity - tangible	649,058				611,974				37,084				6.06	%
Common equity	826,875				783,157				43,718				5.58	%
Common equity - tangible	639,930				603,550				36,380				6.03	%
Book value per common share	16.00				15.22				0.78				5.12	%
Book value per common share - tangible	12.38				11.73				0.65				5.54	%
Daily Average Balances:
Total assets	$	6,313,238			$	5,829,533			$	483,705			8.30	%
Total assets - tangible	6,126,524				5,642,883				483,641				8.57	%
Earning assets (2)	5,815,383				5,290,562				524,821				9.92	%
Loans (net of unearned income), excluding nonaccrual loans	4,516,277				4,066,484				449,793				11.06	%
Allowance for loan losses	38,555				36,048				2,507				6.95	%
Goodwill and other intangibles	186,714				186,650				64				0.03	%
Noninterest bearing deposits	1,415,793				1,256,023				159,770				12.72	%
Interest bearing deposits	3,499,607				3,248,834				250,773				7.72	%
Total deposits	4,915,400				4,504,857				410,543				9.11	%
Total equity	830,178				781,833				48,345				6.18	%
Total equity - tangible	643,464				595,183				48,281				8.11	%
Common equity	821,268				767,980				53,288				6.94	%
Common equity - tangible	634,554				581,330				53,224				9.16	%
Key Ratios:
Return on average assets	1.14		%		1.01		%		0.13		%		12.87	%
Return on average assets - tangible	1.21		%		1.08		%		0.13		%		12.04	%
Return on average equity	8.63		%		7.54		%		1.09		%		14.46	%
Return on average equity - tangible	11.56		%		10.27		%		1.29		%		12.56	%
Return on average common equity	8.73		%		7.67		%		1.06		%		13.82	%
Return on average common equity - tangible	11.72		%		10.51		%		1.21		%		11.51	%
Net interest margin-fully tax equivalent (2)(3)	3.37		%		3.52		%		(0.15		)%		(4.26	)%
Net interest margin (2)	3.29		%		3.43		%		(0.14		)%		(4.08	)%
Average earning assets/total average assets	92.11		%		90.75		%		1.36		%		1.50	%
Average loans/average deposits	91.88		%		90.27		%		1.61		%		1.78	%
Average noninterest deposits/total average deposits	28.80		%		27.88		%		0.92		%		3.30	%
Allowance for loan losses/period end loans	0.83		%		0.88		%		(0.05		)%		(5.68	)%
Nonperforming assets to period end assets	0.59		%		1.01		%		(0.42		)%		(41.58	)%
Period end equity/period end total assets	13.13		%		13.58		%		(0.45		)%		(3.31	)%
Efficiency ratio (1)	66.24		%		69.74		%		(3.50		)%		(5.02	)%
(1) Excludes gain (loss) on investment securities
(2) Includes bank-owned life insurance
(3) Presented on a tax-equivalent basis

Selected Financial Highlights (unaudited)
TOWNEBANK
(dollars in thousands, except per share data)
	March 31,				December 31,				Increase/				% Increase/
Three Months Ended	2016				2015				(Decrease)				(Decrease)
Results of Operations:
Net interest income	$	46,336			$	46,331			$	5			0.01	%
Noninterest income (1)	32,415				25,079				7,336				29.25	%
Gain (loss) on investment securities	—				—				—				—	%
Total Revenue	78,751				71,410				7,341				10.28	%
Noninterest expenses	52,161				52,743				(582		)		(1.10	)%
Provision for loan losses	(259		)		852				(1,111		)		(130.40	)%
Income before income tax and noncontrolling interest	26,849				17,815				9,034				50.71	%
Provision for income tax expense	8,188				4,846				3,342				68.96	%
Net income	18,661				12,969				5,692				43.89	%
Net income attributable to noncontrolling interest	(842		)		(503		)		(339		)		67.40	%
Net income attributable to TowneBank	17,819				12,466				5,353				42.94	%
Preferred stock dividends and accretion	—				—				—				—	%
Net income available to common shareholders	17,819				12,466				5,353				42.94	%
Net income per common share - basic	0.35				0.24				0.11				45.83	%
Net income per common share - diluted	0.35				0.24				0.11				45.83	%
Period End Data:
Total assets	$	6,365,169			$	6,296,574			$	68,595			1.09	%
Total assets - tangible	6,178,224				6,115,579				62,645				1.02	%
Earning assets (2)	5,896,763				5,827,888				68,875				1.18	%
Loans (net of unearned income)	4,552,260				4,519,393				32,867				0.73	%
Allowance for loan losses	37,760				38,359				(599		)		(1.56	)%
Goodwill and other intangibles	186,945				180,995				5,950				3.29	%
Nonperforming assets	37,684				43,091				(5,407		)		(12.55	)%
Noninterest bearing deposits	1,449,660				1,393,264				56,396				4.05	%
Interest bearing deposits	3,505,466				3,520,763				(15,297		)		(0.43	)%
Total deposits	4,955,126				4,914,027				41,099				0.84	%
Total equity	836,003				820,194				15,809				1.93	%
Total equity - tangible	649,058				639,199				9,859				1.54	%
Common equity	826,875				810,921				15,954				1.97	%
Common equity - tangible	639,930				629,925				10,005				1.59	%
Book value per common share	16.00				15.71				0.29				1.85	%
Book value per common share - tangible	12.38				12.21				0.17				1.39	%
Daily Average Balances:
Total assets	$	6,313,238			$	6,305,571			$	7,667			0.12	%
Total assets - tangible	6,126,524				6,120,799				5,725				0.09	%
Earning assets (2)	5,815,383				5,800,907				14,476				0.25	%
Loans (net of unearned income), excluding nonaccrual loans	4,516,277				4,426,387				89,890				2.03	%
Allowance for loan losses	38,555				37,918				637				1.68	%
Goodwill and other intangibles	186,714				184,773				1,941				1.05	%
Noninterest bearing deposits	1,415,793				1,420,047				(4,254		)		(0.30	)%
Interest bearing deposits	3,499,607				3,458,597				41,010				1.19	%
Total deposits	4,915,400				4,878,644				36,756				0.75	%
Total equity	830,178				823,627				6,551				0.80	%
Total equity - tangible	643,464				638,855				4,609				0.72	%
Common equity	821,268				814,894				6,374				0.78	%
Common equity - tangible	634,554				630,121				4,433				0.70	%
Key Ratios:
Return on average assets	1.14		%		0.78		%		0.36		%		46.15	%
Return on average assets - tangible	1.21		%		0.85		%		0.36		%		42.35	%
Return on average equity	8.63		%		6.00		%		2.63		%		43.83	%
Return on average equity - tangible	11.56		%		8.11		%		3.45		%		42.54	%
Return on average common equity	8.73		%		6.07		%		2.66		%		43.82	%
Return on average common equity - tangible	11.72		%		8.22		%		3.50		%		42.58	%
Net interest margin-fully tax equivalent (2)(3)	3.37		%		3.36		%		0.01		%		0.30	%
Net interest margin (2)	3.29		%		3.27		%		0.02		%		0.61	%
Average earning assets/total average assets	92.11		%		92.00		%		0.11		%		0.12	%
Average loans/average deposits	91.88		%		90.73		%		1.15		%		1.27	%
Average noninterest deposits/total average deposits	28.80		%		29.11		%		(0.31		)%		(1.06	)%
Allowance for loan losses/period end loans	0.83		%		0.85		%		(0.02		)%		(2.35	)%
Nonperforming assets to period end assets	0.59		%		0.68		%		(0.09		)%		(13.24	)%
Period end equity/period end total assets	13.13		%		13.03		%		0.10		%		0.77	%
Efficiency ratio (1)	66.24		%		73.86		%		(7.62		)%		(10.32	)%
(1) Excludes gain (loss) on investment securities
(2) Includes bank-owned life insurance
(3) Presented on a tax-equivalent basis

TOWNEBANK
Average Balances, Yields and Rate Paid (unaudited)
(dollars in thousands)
	Three Months Ended									Three Months Ended									Three Months Ended
	March 31, 2016									December 31, 2015									March 31, 2015
				Interest			Average						Interest			Average						Interest			Average
	Average			Income/			Yield/			Average			Income/			Yield/			Average			Income/			Yield/
	Balance			Expense			Rate			Balance			Expense			Rate			Balance			Expense			Rate
Assets:
Loans (net of unearned income and deferred costs), excluding nonaccrual loans	$	4,516,277		$	50,781		4.52	%		$	4,426,387		$	50,850		4.56	%		$	4,066,484		$	47,890		4.78	%
Taxable investment securities	754,514			3,055			1.62	%		782,998			2,987			1.53	%		749,414			2,801			1.49	%
Tax-exempt investment securities	52,979			410			3.09	%		54,974			428			3.11	%		66,812			536			3.20	%
Interest-bearing deposits	265,256			330			0.50	%		292,085			211			0.29	%		202,852			125			0.25	%
Loans held for sale	76,503			693			3.62	%		95,932			865			3.61	%		64,512			565			3.50	%
Bank-owned life insurance	149,854			1,802			4.84	%		148,531			2,311			6.17	%		140,488			1,753			5.06	%
Total earning assets	5,815,383			57,071			3.95	%		5,800,907			57,652			3.94	%		5,290,562			53,670			4.11	%
Less: allowance for loan losses	(38,555		)							(37,918		)							(36,048		)
Total nonearning assets	536,410									542,582									575,019
Total assets	$	6,313,238								$	6,305,571								$	5,829,533
Liabilities and Equity:
Interest-bearing deposits
Demand and money market	$	1,782,908		$	1,328		0.30	%		$	1,780,151		$	1,265		0.28	%		$	1,635,454		$	1,111		0.28	%
Savings	300,070			700			0.94	%		299,503			684			0.91	%		305,016			683			0.91	%
Certificates of deposit	1,416,629			3,185			0.90	%		1,378,943			3,170			0.91	%		1,308,364			2,630			0.82	%
Total interest-bearing deposits	3,499,607			5,213			0.60	%		3,458,597			5,119			0.59	%		3,248,834			4,424			0.55	%
Borrowings	468,798			3,185			2.69	%		471,929			3,360			2.79	%		447,198			3,388			3.03	%
Total interest-bearing liabilities	3,968,405			8,398			0.85	%		3,930,526			8,479			0.86	%		3,696,032			7,812			0.86	%
Demand deposits	1,415,793									1,420,047									1,256,025
Other noninterest-bearing liabilities	98,862									131,371									95,643
Total liabilities	5,483,060									5,481,944									5,047,700
Shareholders’ equity	830,178									823,627									781,833
Total liabilities and equity	$	6,313,238								$	6,305,571								$	5,829,533
Net interest income (tax-equivalent basis)				$	48,673								$	49,173								$	45,858
Reconcilement of Non-GAAP Financial Measures
Bank-owned life insurance				(1,802		)							(2,311		)							(1,753		)
Tax-equivalent basis adjustment				(535		)							(531		)							(549		)
Net interest income (GAAP)				$	46,336								$	46,331								$	43,556
Interest rate spread (1)							3.10	%								3.09	%								3.26	%
Interest expense as a percent of average earning assets							0.58	%								0.58	%								0.60	%
Net interest margin (tax equivalent basis) (2)							3.37	%								3.36	%								3.52	%
Total cost of deposits							0.43	%								0.42	%								0.40	%
(1) Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities.  Fully tax equivalent.
(2) Net interest margin is net interest income expressed as a percentage of average earning assets.  Fully tax equivalent.

TOWNEBANK
Consolidated Balance Sheets
(dollars in thousands, except share data)
	March 31,								December 31,
	2016				2015				2015
	(unaudited)								(audited)
ASSETS
Cash and due from banks	$	195,161			$	144,215			$	250,836
Interest-bearing deposits in financial institutions	1,006				1,000				1,001
Total Cash and Cash Equivalents	196,167				145,215				251,837
Securities available for sale, at fair value	821,551				771,208				723,489
Securities held to maturity, at amortized cost	66,921				83,752				69,045
Federal Home Loan Bank stock, at amortized cost	23,903				22,366				23,691
Total Securities	912,375				877,326				816,225
Mortgage loans held for sale	97,491				102,850				102,346
Loans, net of unearned income and deferred costs:
Real estate - residential 1-4 family	988,432				915,205				973,331
Real estate - commercial	1,762,312				1,725,706				1,784,393
Real estate - construction and land development	635,992				519,390				598,875
Real estate - multifamily	160,246				146,395				167,371
Commercial and industrial business	852,005				700,252				857,036
Consumer and other loans	153,273				88,747				138,387
Loans, net of unearned income and deferred costs	4,552,260				4,095,695				4,519,393
Less:  Allowance for loan losses	(37,760		)		(35,907		)		(38,359		)
Net Loans	4,514,500				4,059,788				4,481,034
Premises and equipment, net	178,154				166,164				173,695
Goodwill	157,659				156,516				154,842
Other intangible assets, net	29,286				23,090				26,153
Bank-owned life insurance policies	150,623				145,401				149,452
Other assets	128,914				152,353				140,990
TOTAL ASSETS	$	6,365,169			$	5,828,703			$	6,296,574
LIABILITIES AND EQUITY
Liabilities
Deposits:
Noninterest-bearing demand	$	1,449,660			$	1,261,482			$	1,393,264
Interest-bearing:
Demand and money market accounts	1,769,414				1,643,534				1,824,226
Savings	302,373				303,936				300,408
Certificates of deposit	1,433,679				1,296,666				1,396,129
Total Deposits	4,955,126				4,505,618				4,914,027
Advances from the Federal Home Loan Bank	428,940				397,884				429,080
Repurchase agreements and other borrowings	39,442				37,202				37,434
Total Borrowings	468,382				435,086				466,514
Other liabilities	105,658				96,419				95,839
TOTAL LIABILITIES	5,529,166				5,037,123				5,476,380
Shareholders’ Equity
Preferred stock:
Authorized and unissued shares - 2,000,000	—				—				—
Common stock, $1.667 par: 90,000,000 shares authorized 51,680,059; 51,466,606; and 51,605,521 shares issued at March 31, 2016 and 2015 and December 31, 2015, respectively	86,151				85,795				86,026
Capital surplus	536,294				531,483				535,094
Retained earnings	204,413				163,519				192,795
Common stock issued to deferred compensation trust, at cost 651,379; 637,935; and 648,350 shares at March 31, 2016 and 2015 and December 31, 2015, respectively	(10,288		)		(9,816		)		(10,172		)
Deferred compensation trust	10,288				9,816				10,172
Accumulated other comprehensive income (loss)	17				2,359				(2,994		)
TOTAL SHAREHOLDERS’ EQUITY	826,875				783,156				810,921
Noncontrolling interests	9,128				8,424				9,273
TOTAL EQUITY	836,003				791,580				820,194
TOTAL LIABILITIES AND EQUITY	$	6,365,169			$	5,828,703			$	6,296,574

TOWNEBANK
Consolidated Statements of Income (unaudited)
(dollars in thousands, except per share data)
	Three Months Ended
	March 31,
	2016				2015
INTEREST INCOME:
Loans, including fees	$	50,247			$	47,341
Investment securities	3,464				3,337
Interest-bearing deposits in financial institutions and federal funds sold	330				125
Mortgage loans held for sale	693				565
Total Interest Income	54,734				51,368
INTEREST EXPENSE:
Deposits	5,213				4,424
Advances from the Federal Home Loan Bank	3,163				3,374
Repurchase agreements and other borrowings	22				14
Total Interest Expense	8,398				7,812
Net Interest Income	46,336				43,556
PROVISION FOR LOAN LOSSES	(259		)		323
Net Interest Income after Provision for Loan Losses	46,595				43,233
NONINTEREST INCOME:
Residential mortgage banking income, net	7,118				8,443
Real estate brokerage and property management income, net	4,827				3,955
Insurance commissions and other title fees and income, net	14,033				11,049
Service charges on deposit accounts	2,176				2,197
Credit card merchant fees, net	895				432
Other income	3,366				2,691
Net gain on investment securities	—				49
Total Noninterest Income	32,415				28,816
NONINTEREST EXPENSE:
Salaries and employee benefits	30,187				27,679
Occupancy expense	5,017				4,930
Furniture and equipment	2,357				2,369
Other expenses	14,600				15,462
Total Noninterest Expense	52,161				50,440
Income before income tax expense and noncontrolling interest	26,849				21,609
Provision for income tax expense	8,188				6,385
Net income	18,661				15,224
Net income attributable to noncontrolling interest	(842		)		(686		)
Net income attributable to TowneBank	$	17,819			$	14,538
Preferred stock dividends	—				13
Net income available to common shareholders	$	17,819			$	14,525
Per common share information
Basic earnings	$	0.35			$	0.29
Diluted earnings	$	0.35			$	0.29
Cash dividends declared	$	0.12			$	0.11

TOWNEBANK
Consolidated Statements of Comprehensive Income (unaudited)
(dollars in thousands)
	Three Months Ended
	March 31,
	2016				2015
Net income	$	18,661			$	15,224
Other comprehensive income
Unrealized gains on securities
Unrealized holding gains arising during the period	4,480				2,914
Deferred tax expense	(1,568		)		(1,020		)
Realized gains reclassified into earnings	—				(49		)
Deferred tax benefit	—				17
Net unrealized gains	2,912				1,862
Pension and postretirement benefit plans
Actuarial gains	109				—
Deferred tax expense	(38		)		—
Amortization of prior service costs	38				—
Deferred tax expense	(13		)		—
Amortization of net actuarial loss	5				60
Deferred tax expense	(2		)		(21		)
Change in defined benefit retirement plan, net of tax	99				39
Other comprehensive income, net of tax	3,011				1,901
Comprehensive income	$	21,672			$	17,125

TOWNEBANK
Consolidated Balance Sheets - Five Quarter Trend
(dollars in thousands, except share data)
	March 31,				December 31,				September 30,				June 30,				March 31,
	2016				2015				2015				2015				2015
	(unaudited)				(audited)				(unaudited)				(unaudited)				(unaudited)
ASSETS
Cash and due from banks	$	195,161			$	250,836			$	284,625			$	184,099			$	144,215
Interest-bearing deposits in financial institutions	1,006				1,001				1,000				1,011				1,000
Total Cash and Cash Equivalents	196,167				251,837				285,625				185,110				145,215
Securities available for sale, at fair value	821,551				723,489				542,634				759,425				771,208
Securities held to maturity, at amortized cost	66,921				69,045				75,154				80,195				83,752
Federal Home Loan Bank stock, at amortized cost	23,903				23,691				24,058				24,058				22,366
Total Securities	912,375				816,225				641,846				863,678				877,326
Mortgage loans held for sale	97,491				102,346				99,330				165,994				102,850
Loans, net of unearned income and deferred costs:	4,552,260				4,519,393				4,367,039				4,228,127				4,095,695
Less: allowance for loan losses	(37,760		)		(38,359		)		(37,351		)		(37,290		)		(35,907		)
Net Loans	4,514,500				4,481,034				4,329,688				4,190,837				4,059,788
Premises and equipment, net	178,154				173,695				172,940				172,492				166,164
Goodwill	157,659				154,842				152,438				153,191				156,516
Other intangible assets, net	29,286				26,153				23,080				22,016				23,090
Bank-owned life insurance policies	150,623				149,452				147,949				146,729				145,401
Other assets	128,914				140,990				320,995				155,134				152,353
TOTAL ASSETS	$	6,365,169			$	6,296,574			$	6,173,891			$	6,055,181			$	5,828,703
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand	$	1,449,660			$	1,393,264			$	1,445,978			$	1,363,551			$	1,261,482
Interest-bearing:
Demand and money market accounts	1,769,414				1,824,226				1,676,623				1,680,038				1,643,534
Savings	302,373				300,408				295,952				300,203				303,936
Certificates of deposit	1,433,679				1,396,129				1,369,325				1,342,860				1,296,666
Total Deposits	4,955,126				4,914,027				4,787,878				4,686,652				4,505,618
Advances from the Federal Home Loan Bank	428,940				429,080				437,282				437,584				397,884
Repurchase agreements and other borrowings	39,442				37,434				33,784				35,737				37,202
Total Borrowings	468,382				466,514				471,066				473,321				435,086
Other liabilities	105,658				95,839				98,878				92,317				96,419
TOTAL LIABILITIES	5,529,166				5,476,380				5,357,822				5,252,290				5,037,123
Preferred stock
Authorized and unissued shares - 2,000,000	—				—				—				—				—
Common stock, $1.667 par value	86,151				86,026				85,985				85,936				85,795
Capital surplus	536,294				535,094				533,609				532,646				531,483
Retained earnings	204,413				192,795				186,522				175,145				163,519
Common stock issued to deferred compensation trust, at cost	(10,288		)		(10,172		)		(10,151		)		(10,110		)		(9,816		)
Deferred compensation trust	10,288				10,172				10,151				10,110				9,816
Accumulated other comprehensive income (loss)	17				(2,994		)		1,036				291				2,359
TOTAL SHAREHOLDERS’ EQUITY	826,875				810,921				807,152				794,018				783,156
Noncontrolling interest	9,128				9,273				8,917				8,873				8,424
TOTAL EQUITY	836,003				820,194				816,069				802,891				791,580
TOTAL LIABILITIES AND EQUITY	$	6,365,169			$	6,296,574			$	6,173,891			$	6,055,181			$	5,828,703

TOWNEBANK
Consolidated Statements of Income - Five Quarter Trend (unaudited)
(dollars in thousands, except per share data)
	Three Months Ended
	March 31,				December 31,				September 30,				June 30,				March 31,
	2016				2015				2015				2015				2015
INTEREST INCOME:
Loans, including fees	$	50,247			$	50,319			$	48,906			$	48,170			$	47,341
Investment securities	3,464				3,415				3,728				3,321				3,337
Interest-bearing deposits in financial institutions and federal funds sold	330				212				107				56				125
Mortgage loans held for sale	693				865				1,246				1,161				565
Total Interest Income	54,734				54,811				53,987				52,708				51,368
INTEREST EXPENSE:
Deposits	5,213				5,119				4,881				4,442				4,424
Advances from the Federal Home Loan Bank	3,163				3,326				3,422				3,365				3,374
Repurchase agreements and other borrowings	22				35				14				17				14
Total Interest Expense	8,398				8,480				8,317				7,824				7,812
Net Interest Income	46,336				46,331				45,670				44,884				43,556
PROVISION FOR LOAN LOSSES	(259		)		852				130				1,723				323
Net Interest Income after Provision for Loan Losses	46,595				45,479				45,540				43,161				43,233
NONINTEREST INCOME:
Residential mortgage banking income, net	7,118				7,255				8,262				10,251				8,443
Real estate brokerage and property management income, net	4,827				2,438				5,349				4,584				3,955
Insurance commissions and other title fees and income, net	14,033				8,997				9,710				9,885				11,049
Service charges on deposit accounts	2,176				2,254				2,388				2,326				2,197
Credit card merchant fees, net	895				767				823				566				432
Other income	3,366				3,368				3,036				5,354				2,691
Net gain on investment securities	—				—				736				119				49
Total Noninterest Income	32,415				25,079				30,304				33,085				28,816
NONINTEREST EXPENSE:
Salaries and employee benefits	30,187				30,826				28,910				26,544				27,679
Occupancy expense	5,017				5,156				4,703				4,856				4,930
Furniture and equipment	2,357				2,390				2,211				2,369				2,369
Other expenses	14,600				14,371				14,082				15,298				15,462
Total Noninterest Expense	52,161				52,743				49,906				49,067				50,440
Income before income tax expense and noncontrolling interest	26,849				17,815				25,938				27,179				21,609
Provision for income tax expense	8,188				4,846				7,444				8,201				6,385
Net income	18,661				12,969				18,494				18,978				15,224
Net income attributable to noncontrolling interest	(842		)		(503		)		(928		)		(1,166		)		(686		)
Net income attributable to TowneBank	$	17,819			$	12,466			$	17,566			$	17,812			$	14,538
Preferred stock dividends	—				—				—				—				13
Net income available to common shareholders	$	17,819			$	12,466			$	17,566			$	17,812			$	14,525
Per common share information
Basic earnings	$	0.35			$	0.24			$	0.34			$	0.35			$	0.29
Diluted earnings	$	0.35			$	0.24			$	0.34			$	0.35			$	0.29
Basic weighted average shares outstanding	51,290,010				51,267,447				51,153,205				51,089,051				50,652,963
Diluted weighted average shares outstanding	51,392,857				51,440,440				51,263,382				51,151,512				50,724,588
Cash dividends declared	$	0.12			$	0.12			$	0.12			$	0.12			$	0.11

TOWNEBANK
Insurance Segment Financial Information
(dollars in thousands)
													Increase/(Decrease)
	Three Months Ended												March 31, 2016							March 31, 2016
	March 31,								December 31,				March 31, 2015							December 31, 2015
	2016				2015				2015				Amount				Percent			Amount				Percent
Commission and fee income
Property and casualty	$	8,263			$	6,446			$	7,371			$	1,817			28.19	%		$	892			12.10	%
Employee benefits	2,721				2,670				2,588				51				1.91	%		133				5.14	%
Travel insurance	1,456				1,131				630				325				28.74	%		826				131.11	%
Specialized benefit services	153				133				144				20				15.04	%		9				6.25	%
Total commissions and fees	12,593				10,380				10,733				2,213				21.32	%		1,860				17.33	%
Contingency and bonus revenue	3,411				2,523				53				888				35.20	%		3,358				N/M
Other income	77				48				58				29				60.42	%		19				32.76	%
Total revenue	$	16,081			$	12,951			$	10,844			$	3,130			24.17	%		$	5,237			48.29	%
Employee commission expense	2,168				2,022				2,008				146				7.22	%		160				7.97	%
Revenue, net of commission expense	$	13,913			$	10,929			$	8,836			$	2,984			27.30	%		$	5,077			57.46	%
Salaries and employee benefits	5,968				4,794				5,863				1,174				24.49	%		105				1.79	%
Occupancy expense	529				456				537				73				16.01	%		(8		)		(1.49	)%
Furniture and equipment	224				242				235				(18		)		(7.44	)%		(11		)		(4.68	)%
Amortization of intangible assets	685				526				676				159				30.23	%		9				1.33	%
Other expenses	1,390				1,242				892				148				11.92	%		498				55.83	%
Total operating expenses	8,796				7,260				8,203				1,536				21.16	%		593				7.23	%
Income before income tax provision and noncontrolling interest	$	5,117			$	3,669			$	633			$	1,448			39.47	%		$	4,484			708.37	%
Plus: Acquisition related expenses	76				180				(334		)		(104		)		(57.78	)%		410				(122.75	)%
Plus: Amortization of intangible assets	685				526				676				159				30.23	%		9				1.33	%
Operating earnings before income taxes (non-GAAP)	$	5,878			$	4,375			$	975			$	1,503			34.35	%		$	4,903			502.87	%

TOWNEBANK
March 31, 2016
Reconcilement of Non-GAAP Financial Measures:
(dollars in thousands)
		Three Months Ended
		March 31,				March 31,				December 31,
		2016				2015				2015
Return on average assets (GAAP basis)		1.14		%		1.01		%		0.78		%
Impact of excluding average goodwill and other intangibles and amortization		0.07		%		0.07		%		0.07		%
Return on average tangible assets (Non-GAAP)		1.21		%		1.08		%		0.85		%
Return on average equity (GAAP basis)		8.63		%		7.54		%		6.00		%
Impact of excluding average goodwill and other intangibles and amortization		2.93		%		2.73		%		2.11		%
Return on average tangible equity (Non-GAAP)		11.56		%		10.27		%		8.11		%
Return on average common equity (GAAP basis)		8.73		%		7.67		%		6.07		%
Impact of excluding average goodwill and other intangibles and amortization		2.99		%		2.84		%		2.15		%
Return on average tangible common equity (Non-GAAP)		11.72		%		10.51		%		8.22		%
Book value (GAAP basis)		$	16.00			15.22				$	15.71
Impact of excluding average goodwill and other intangibles and amortization		(3.62		)		(3.49		)		(3.50		)
Tangible book value		$	12.38			$	11.73			$	12.21

For more information contact:
G. Robert Aston, Jr., Chairman and CEO, 757-638-6780
Clyde E. McFarland, Jr., Senior Executive Vice President and CFO, 757-638-6801
William B. Littreal, Chief Investment Relations Officer and COO, 757-638-6813

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