SUFFOLK, Va., Oct. 22, 2020 (GLOBE NEWSWIRE) -- TowneBank (the “Company”) (NASDAQ: TOWN) today reported earnings for the quarter ended September 30, 2020 of $34.46 million, or $0.48 per diluted share, compared to $37.66 million, or $0.52 per diluted share, for the quarter ended September 30, 2019.

“Our third quarter results were highlighted by strong performance across our fee-based business lines.  Total revenues exceeded $192 million despite challenges from historically low interest rates.  Credit metrics remained stable reflecting our relationship-based credit culture.  Once again, strong deposit growth led to TowneBank earning the top spot in Hampton Roads market share according to recently released FDIC data,” said G. Robert Aston, Jr., Executive Chairman.

Highlights for Third Quarter 2020 Compared to Third Quarter 2019:

• Total revenues were a record $192.14 million, an increase of $46.26 million, or 31.71%.
• Pre-provision, pre-tax, net revenues (non-GAAP) were $73.90 million, an increase of $27.05 million, or 57.74%.
• Loans held for investment were $9.77 billion, an increase of $1.59 billion, or 19.40%, from September 30, 2019, but a decrease of  $0.03 billion, or 0.32%, from June 30, 2020.  The balance at September 30, 2020 and June 30, 2020 included $1.10 billion and $1.09 billion, respectively, of loans originated under the Small Business Administration’s Paycheck Protection Program (“PPP”).
• Total deposits were $11.70 billion, an increase of $2.27 billion, or 24.02%, compared to prior year and $0.44 billion, or 3.91%, from June 30, 2020.
• Noninterest bearing deposits increased by 47.31%, to $4.46 billion, representing 38.14% of total deposits.  Compared to the linked quarter, noninterest bearing deposits increased 5.63%.
• Annualized return on common shareholders' equity was 7.91% and annualized return on average tangible common shareholders' equity was 11.79% (non-GAAP).
• Net interest margin for the quarter was 2.70% and taxable equivalent net interest margin (non-GAAP) was 2.72%.
• Nonperforming assets were $28.74 million, or 0.19% of total assets, compared to $31.04 million, or 0.26%, at September 30, 2019.
• Effective tax rate of 18.53% in the quarter compared to 16.95% in the third quarter of 2019.

“Despite the many headwinds impacting the nation in 2020, our team at Towne has been working diligently behind the scenes to enhance and improve our member experience through our Towne 20.20 initiative.  In early October, as part of that initiative, we implemented a new robust banking system that sets the stage for new and innovative technology, enhanced digital solutions, and a greater variety of financial services,” stated J. Morgan Davis, President and Chief Executive Officer.

Quarterly Net Interest Income Compared to Third Quarter 2019:

• Net interest income was $96.76 million compared to $91.10 million at September 30, 2019.
• Taxable equivalent net interest margin (non-GAAP) was 2.72%, including accretion of 5 basis points, compared to 3.43%, including accretion of 11 basis points, for third quarter 2019.
• Average loans held for investment, with an average yield of 4.22%, represented 68.38% of average earning assets at September 30, 2020 compared to an average yield of 5.02% and 76.35% of average earning assets in the third quarter of 2019.  Excluding PPP, loan yields were 4.30% in third quarter 2020.
• Interest and fee income on PPP loans was $9.82 million in third quarter 2020, compared to $5.83 million in the linked quarter, and zero in third quarter 2019.
• Total cost of deposits decreased to 0.46% from 1.01% at September 30, 2019.
• Average interest-earning assets totaled $14.26 billion at September 30, 2020 compared to $10.60 billion at September 30, 2019, an increase of 34.49%.
• Average interest-bearing liabilities totaled $9.21 billion, an increase of $2.18 billion from prior year.
• Interest expense on the FRB PPP lending facility was $0.91 million in third quarter, compared to $0.54 million in the linked quarter, and zero in third quarter 2019.

Quarterly Provision for Credit Losses:

• Recorded a quarterly provision for credit losses for on-balance-sheet loans of $28.26 million compared to $1.51 million one year ago and $25.99 million in the linked quarter.  This increase is primarily attributable to a heavier weighting given to adverse economic forecasts in our credit loss models due to expectation of continued economic weakness driven by a number of uncertainties impacting the local and national economy.  These macroeconomic forecasts were impacted by the notable weakening of small businesses in the wake of the extended COVID-19 pandemic, major layoff announcements, and the deterioration in the U.S. trade relationship with China.  Expected loss estimates consider various factors including the impacts of the decreased economic activity and higher unemployment rates, customer specific credit information, and the potential mitigating benefits of government stimulus and industry wide loan modification efforts.
• Net loan recoveries were $0.33 million compared to charge-offs of $0.61 million one year prior.  The ratio of net loan charge-offs (recoveries) to average loans on an annualized basis was (0.01)% in third quarter 2020 and  0.03% in third quarter  2019.  The Company has proactively supported members by providing payment deferrals when needed, which, combined with government stimulus, has prevented a significant deterioration in asset quality metrics.  We will continue to closely monitor credit quality as the effects of government stimulus lessen and the economic impact of the pandemic becomes clearer over time.
• Recorded a provision for credit losses on off-balance-sheet commitments of $3.50 million compared to $1.08 million in the linked quarter.
• The allowance for credit losses on loans represented 1.22% of total loans compared to 0.92% at June 30, 2020 and 0.68% at September 30, 2019.  Excluding PPP loans, which are fully government guaranteed, the allowance for credit losses (non-GAAP) was 1.37%, compared to 1.04% at June 30, 2020.  The allowance for credit losses on loans was 7.31 times nonperforming loans compared to 5.34 times at June 30, 2020 and 3.95 times at September 30, 2019.

Quarterly Noninterest Income Compared to Third Quarter 2019:

• Total noninterest income was $95.38 million compared to $54.78 million in 2019, an increase of $40.60 million, or 74.12%.  Residential mortgage banking income increased $18.68 million and real estate brokerage and property management income increased $1.86 million.  Also included in noninterest income are net gains on investment securities of $1.70 million as compared to net losses of $0.07 million in the prior year and a gain of $17.63 million on the sale of Red Sky Travel Insurance ("Red Sky"), a travel insurance joint venture.
• Residential mortgage banking recorded income of $37.53 million compared to $18.86 million in third quarter 2019.  Loan volume in the current quarter was $1.79 billion, with purchase activity comprising 61.18% of that volume.  Loan volume in third quarter 2019 was $0.96 billion, with purchase activity comprising 68.83%.  Though still an increase over the prior year, refinancing activity has declined compared to the linked quarter.  Increased volume and a continued low mortgage rate environment coupled with improved margins were the drivers of improvement compared to the prior year quarter.
• Total Insurance segment revenue increased 95.11% to $38.27 million in the third quarter due to the sale of a joint venture, organic growth, and expense control measures.  The Company sold Red Sky mid-third quarter 2020.  A gain on the sale of Red Sky totaling $17.63 million was recorded in other income.  After distributions to noncontrolling interests, Towne retained $6.52 million of the pre-tax gain.  In 2019, Red Sky contributed $4.09 million to insurance revenue, with an annual net income after noncontrolling interest of $0.94 million.
• Property management fee revenue increased 16.02%, or $1.05 million, compared to third quarter 2019.  The lifting of local travel restrictions in second quarter related to COVID-19, coupled with businesses and schools continuing to operate remotely, has resulted in an extended vacation season and increased reservation activity during the quarter.

Quarterly Noninterest Expense Compared to Third Quarter 2019:

• Total noninterest expense was $101.98 million compared to $97.29 million in 2019, an increase of $4.69 million, or 4.82%.  Increases in salary and benefits expense of $5.62 million, data processing expense of $0.58 million, and software expense of $0.36 million, offset the declines across most other expense categories.
• During the first three quarters of the year, the Company has been focused on its Towne 20.20 initiative which centered around our early October core conversion.  This core conversion will allow the Company to provide a greater variety of financial services to our members through new technologies and enhanced digital solutions.  Preparation for this conversion began in 2019 and necessitated long hours and dedication from team members, which the Company chose to recognize through one-time bonuses and vacation carry-overs of approximately $2.84 million in the quarter.  Other conversion expenses in the quarter totaled $0.71 million.
• Other infrastructure enhancements and market expansion, that occurred in 2019, have resulted in generally higher levels of salary and benefits expense and software expense, while quarantines, travel restrictions, and other decreases in business activity related to COVID-19 have resulted in lower general spending.
• Write-downs related to a Company-owned building and lots in North Carolina totaled $1.06 million in the quarter.

Quarterly Income Taxes Compared to Third Quarter 2019:

• Income tax expense was $7.84 million compared to $7.68 million one year prior.  This represents an effective tax rate of 18.53% compared to 16.95% in the third quarter of 2019.

Consolidated Balance Sheet Highlights:

• Total assets were $14.80 billion for the quarter ended September 30, 2020, a decrease of $0.78 billion, or 5.04%, compared to $15.58 billion at June 30, 2020.  Total assets increased $2.77 billion, or 23.08%, from $12.02 billion at September 30, 2019.  The year-over-year increase was driven primarily by growth in cash and cash equivalents and loans held for investment tied to PPP lending activities.
• Loans held for investment increased $1.59 billion, or 19.40%, compared to prior year but decreased $0.03 billion compared the linked quarter.  Excluding PPP loans of $1.10 billion in the third quarter, and $1.09 billion in the second quarter of 2020, loans held for investment increased $484.60 million, or 5.92%, compared to prior year, but declined $44.47 million, or 0.51%, compared to the linked quarter.
• Mortgage loans held for sale increased  $212.30 million, or 46.48%, compared to the prior year and $58.65 million, or 9.61%, compared to the linked quarter.
• Total deposits increased $2.3 billion, or 24.02%, compared to the prior year and $0.44 billion, or 3.91%, compared to the linked quarter.
• Total borrowings increased $0.37 billion, or 54.23%, from prior year but decreased $1.29 billion, or 55.39%, compared to the linked quarter.  During the third quarter of 2020, the Company repaid $1.11 billion in borrowings under the FRB PPP lending facility, which had initially been used to facilitate funding of the PPP loans.  Additionally, we restructured our FHLB borrowing facilities for future reductions in borrowing costs of approximately $2.66 million over the life of those borrowings.

Investment Securities:

• Total investment securities were $1.38 billion compared to $1.36 billion at June 30, 2020 and $1.41 billion at September 30, 2019.  The weighted average duration of the portfolio at September 30, 2020 was 4.1 years.  The carrying value of the AFS debt securities portfolio included $61.43 million in net unrealized gains compared to $19.73 million in net unrealized gains at December 31, 2019.  During the third quarter of 2020, we sold $81.8 million in AFS debt securities at a gain of $1.70 million to reposition the portfolio.

Loans and Asset Quality:

• Total loans held for investment were $9.77 billion at September 30, 2020 compared to $9.80 billion at June 30, 2020 and $8.18 billion at September 30, 2019.
• Nonperforming assets were $28.74 million, or 0.19% of total assets, compared to $31.04 million, or 0.26%, at September 30, 2019.
• Nonperforming loans were 0.17% of period end loans, unchanged from September 30, 2019.
• Foreclosed property decreased to $11.70 million from $15.52 million at September 30, 2019.
• Expected loss estimates are subject to change based on continuing review of models and assumptions, portfolio performance, changes in forecasted macroeconomic conditions and loan mix which could result in material changes to the reserve in future periods.

Deposits and Borrowings:

• Total deposits were $11.70 billion compared to $11.26 billion at June 30, 2020 and $9.44 billion at September 30, 2019.
• Total loans to deposits were 83.47% compared to 87.01% at June 30, 2020 and 86.70% at September 30, 2019.
• Non-interest bearing deposits were 38.14% of total deposits at September 30, 2020 compared to 37.52% at June 30, 2020 and 32.11% at September 30, 2019.
• Total borrowings were $1.04 billion compared to $2.33 billion at June 30, 2020 and $0.67 billion at  September 30, 2019.

Capital:

• Common equity tier 1 capital ratio of 11.75%.
• Tier 1 leverage capital ratio of 8.89%.
• Tier 1 risk-based capital ratio of 11.91%.
• Total risk-based capital ratio of 15.33%.
• Book value was $23.83 compared to $23.50 at June 30, 2020 and $22.38 at September 30, 2019.
• Tangible book value (non-GAAP) was $17.06 compared to $16.68 at June 30, 2020 and $15.44 at September 30, 2019.

About TowneBank:
As one of the top community banks in Virginia and North Carolina, TowneBank operates 42 banking offices serving Chesapeake, Chesterfield County, Glen Allen, Hampton, James City County, Mechanicsville, Newport News, Norfolk, Portsmouth, Richmond, Suffolk, Virginia Beach, Williamsburg, and York County in Virginia, along with Raleigh, Cary, Charlotte, Greensboro, Greenville, Moyock, Grandy, Camden County, Southern Shores, Corolla, Duck and Nags Head in North Carolina.  TowneBank also offers a full range of financial services through its controlled divisions and subsidiaries that include Towne Investment Group, Towne Wealth Management, Towne Insurance Agency, Towne Benefits, TowneBank Mortgage, TowneBank Commercial Mortgage, Berkshire Hathaway HomeServices Towne Realty, Towne 1031 Exchange, LLC, and Towne Vacations.  Local decision-making is a hallmark of its hometown banking strategy that is delivered through the leadership of each group’s President and Board of Directors.  With total assets of $14.80 billion as of September 30, 2020, TowneBank is one of the largest banks headquartered in Virginia.

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

Forward-Looking Statements:
Certain statements contained in this release constitute forward-looking statements within the meaning of U.S. federal securities laws.  These forward-looking statements speak only as of the date of this release, are based on current expectations, and involve a number of assumptions. These include statements regarding TowneBank’s future economic performance, financial condition, prospects, growth, strategies and expectations, and objectives of management, and are generally identified by the use of words such as “believe,” “expect,” “intend,” “anticipate,” “estimate,” or “project” or similar expressions.  TowneBank intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is including this statement for purposes of these safe harbor provisions. You should not place undue reliance on forward-looking statements, which are subject to assumptions that are subject to change. TowneBank’s ability to predict results, or the actual effect of future plans or strategies, is inherently uncertain. These forward-looking statements are subject to a number of factors and uncertainties that could cause actual results to differ from those indicated or implied in the forward-looking statements and such differences may be material.  Factors which could have a material effect on the operations and future prospects of TowneBank include but are not limited to: the impacts of the ongoing coronavirus (COVID-19) pandemic, changes in interest rates, general economic and business conditions; legislative/regulatory changes; the monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System; the quality and composition of TowneBank’s loan and securities portfolios; demand for loan products; deposit flows; competition; demand for financial services in TowneBank’s market area; implementation of new technologies and the ability to develop and maintain secure and reliable electronic systems; changes in the securities markets; changes in accounting principles, policies and guidelines; and other risk factors detailed from time to time in filings made by TowneBank with the Federal Deposit Insurance Corporation.  TowneBank undertakes no obligation to update or clarify these forward-looking statements, whether as a result of new information, future events or otherwise.

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

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

TOWNEBANK
Selected Financial Highlights (unaudited)
(dollars in thousands, except per share data)
		Three Months Ended
		September 30,				June 30,				March 31,				December 31,				September 30,
		2020				2020				2020				2019				2019
Income and Performance Ratios:
	Total Revenue	$	192,135			$	162,656			$	137,696			$	139,671			$	145,879
	Net income	50,715				37,222				27,605				35,948				39,400
	Net income available to common shareholders	34,464				34,605				26,384				35,075				37,659
	Pre-provision, pre-tax, net revenues (non-GAAP)	73,903				69,014				39,587				46,462				46,851
	Net income per common share - diluted	0.48				0.48				0.36				0.49				0.52
	Book value per common share	23.83				23.50				22.77				22.58				22.38
	Book value per common share - tangible (non-GAAP)	17.06				16.68				15.91				15.69				15.44
	Return on average assets	0.89		%		0.97		%		0.88		%		1.16		%		1.26		%
	Return on average assets - tangible (non-GAAP)	0.97		%		1.07		%		1.00		%		1.30		%		1.40		%
	Return on average equity	7.85		%		8.18		%		6.37		%		8.44		%		9.22		%
	Return on average equity - tangible (non-GAAP)	11.66		%		12.32		%		9.91		%		12.97		%		14.20		%
	Return on average common equity	7.91		%		8.24		%		6.42		%		8.51		%		9.29		%
	Return on average common equity - tangible (non-GAAP)	11.79		%		12.44		%		10.01		%		13.12		%		14.36		%
	Noninterest income as a percentage of total revenue	49.64		%		42.66		%		35.00		%		35.59		%		37.55		%
Regulatory Capital Ratios (1):
	Common equity tier 1	11.75		%		11.54		%		11.23		%		11.46		%		11.52		%
	Tier 1	11.91		%		11.67		%		11.35		%		11.49		%		11.55		%
	Total	15.33		%		14.91		%		14.40		%		14.58		%		14.70		%
	Tier 1 leverage ratio	8.89		%		9.05		%		10.11		%		9.95		%		9.84		%
Asset Quality:
	Allowance for credit losses on loans to nonperforming loans	7.31x				5.34x				3.85x				3.34x				3.95x
	Allowance for credit losses on loans to period end loans	1.22		%		0.92		%		0.73		%		0.69		%		0.68		%
	Allowance for credit losses on loans to period end loans excluding PPP loans (non-GAAP)	1.37		%		1.04		%		0.73		%		0.69		%		0.68		%
	Nonperforming loans to period end loans	0.17		%		0.17		%		0.19		%		0.21		%		0.17		%
	Nonperforming assets to period end assets	0.19		%		0.19		%		0.24		%		0.27		%		0.26		%
	Net charge-offs (recoveries) to average loans (annualized)	(0.01		)%		—		%		0.03		%		0.04		%		0.03		%
	Nonperforming loans	$	16,295			$	16,935			$	16,700			$	17,437			$	14,016
	Former bank premises	750				—				—				1,521				1,510
	Foreclosed property	11,695				12,315				13,053				13,839				15,517
	Total nonperforming assets	$	28,740			$	29,250			$	29,753			$	32,797			$	31,043
	Loans past due 90 days and still accruing interest	$	19			$	464			$	91			$	309			$	636
	Allowance for credit losses on loans	$	119,058			$	90,467			$	64,372			$	58,234			$	55,428
Mortgage Banking:
	Loans originated, mortgage	$	1,292,801			$	1,116,782			$	718,681			$	628,279			$	703,922
	Loans originated, joint venture	498,100				357,815				204,522				231,879				259,742
	Total loans originated	$	1,790,901			$	1,474,597			$	923,203			$	860,158			$	963,664
	Number of loans originated	5,817				4,818				3,025				2,984				3,360
	Number of originators	224				216				223				217				225
	Purchase %	61.21		%		51.26		%		61.31		%		70.32		%		68.83		%
	Loans sold	$	1,833,590			$	1,398,649			$	809,834			$	879,910			$	925,058
	Gross realized gain on sales and fees as a % of loans originated	3.65		%		3.17		%		1.80		%		3.38		%		3.45		%
Other Ratios:
	Net interest margin	2.70		%		2.85		%		3.35		%		3.33		%		3.41		%
	Net interest margin-fully tax equivalent (non-GAAP)	2.72		%		2.87		%		3.37		%		3.35		%		3.43		%
	Average earning assets/total average assets	92.09		%		91.33		%		89.15		%		89.57		%		89.53		%
	Average loans/average deposits	86.29		%		91.81		%		92.99		%		88.41		%		87.63		%
	Average noninterest deposits/total average deposits	37.76		%		36.52		%		32.21		%		32.14		%		31.82		%
	Period end equity/period end total assets	11.82		%		11.05		%		13.19		%		13.84		%		13.63		%
	Efficiency ratio (non-GAAP)	53.55		%		56.99		%		73.02		%		66.11		%		66.66		%
	(1) Current reporting period regulatory capital ratios are preliminary

TOWNEBANK
Selected Data (unaudited)
(dollars in thousands)
Investment Securities																% Change
	Q3					Q3					Q2					Q3 20 vs.			Q3 20 vs.
Available-for-sale securities, at fair value	2020					2019					2020					Q3 19			Q2 20
U.S. agency securities	$	167,275				$	152,581				$	118,176				9.63	%		41.55	%
U.S. Treasury notes	1,006					999					1,010					0.70	%		(0.40	)%
Municipal securities	292,792					173,519					313,322					68.74	%		(6.55	)%
Trust preferred and other corporate securities	24,236					52,006					59,598					(53.40	)%		(59.33	)%
Mortgage-backed securities issued by GSE and GNMA	825,378					958,290					774,658					(13.87	)%		6.55	%
Allowance for credit losses	(4		)			n/a					(140		)			n/a			(97.14	)%
Total	$	1,310,683				$	1,337,395				$	1,266,624				(2.00	)%		3.48	%
Gross unrealized gains (losses) reflected in financial statements
Total gross unrealized gains	$	62,206				$	28,114				$	61,559				121.26	%		1.05	%
Total gross unrealized losses	(773		)			(2,046		)			(1,674		)			(62.22	)%		(53.82	)%
Net unrealized gains (losses) and other adjustments on AFS securities	$	61,433				$	26,068				$	59,885
Held-to-maturity securities, at amortized cost
Municipal securities	$	2,333				$	29,166				$	28,855				(92.00	)%		(91.91	)%
Trust preferred corporate securities	4,992					2,381					2,345					109.66	%		112.88	%
Mortgage-backed securities issued by GSE and GNMA	9,806					12,947					10,395					(24.26	)%		(5.67	)%
Allowance for credit losses	(90		)			n/a					(121		)			n/a			(25.62	)%
Total	$	17,041				$	44,494				$	41,474				(61.70	)%		(58.91	)%
Gross unrealized gains (losses) not reflected in financial statements
Total gross unrealized gains	$	1,971				$	1,688				$	1,980				16.77	%		(0.45	)%
Total gross unrealized losses	—					(5		)			—					(100.00	)%		—	%
Net unrealized gains (losses) in HTM securities	$	1,971				$	1,683				$	1,980
Loans Held For Investment (1)																% Change
	Q3					Q3					Q2					Q3 20 vs.			Q3 20 vs.
	2020					2019					2020					Q3 19			Q2 20
Real estate - construction and development	$	1,143,202				$	1,142,225				$	1,178,832				0.09	%		(3.02	)%
Commercial real estate - non owner occupied	2,338,532					2,070,317					2,332,447					12.96	%		0.26	%
Commercial real estate - owner occupied	1,378,443					1,286,137					1,383,294					7.18	%		(0.35	)%
Real estate - multifamily	289,270					219,901					277,947					31.55	%		4.07	%
Real estate - residential 1-4 family and HELOC	1,660,535					1,621,175					1,670,530					2.43	%		(0.60	)%
Commercial and industrial business	2,499,801					1,527,515					2,503,161					63.65	%		(0.13	)%
Consumer and other loans	460,787					315,559					455,678					46.02	%		1.12	%
Total	$	9,770,570				$	8,182,829				$	9,801,889				19.40	%		(0.32	)%
(1) Paycheck Protection Program loans totaling $1.10 billion and $1.09 billion, primarily in C&I, are included in Q3 2020 and Q2 2020, respectively.
Deposits																% Change
	Q3					Q3					Q2					Q3 20 vs.			Q3 20 vs.
	2020					2019					2020					Q3 19			Q2 20
Noninterest-bearing demand	$	4,464,178				$	3,030,505				$	4,226,208				47.31	%		5.63	%
Interest-bearing:
Demand and money market accounts	4,642,482					3,534,252					4,223,391					31.36	%		9.92	%
Savings	312,444					280,552					298,673					11.37	%		4.61	%
Certificates of deposits	2,285,859					2,592,705					2,516,666					(11.83	)%		(9.17	)%
Total	$	11,704,963				$	9,438,014				$	11,264,938				24.02	%		3.91	%

TOWNEBANK
Average Balances, Yields and Rate Paid (unaudited)
(dollars in thousands)
	Three Months Ended													Three Months Ended													Three Months Ended
	September 30, 2020													June 30, 2020													September 30, 2019
						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 (1)	$	9,752,746				$	103,401				4.22	%		$	9,619,931				$	102,656				4.29	%		$	8,096,908				$	102,495				5.02	%
Taxable investment securities	1,206,679					6,726					2.23	%		1,198,776					7,367					2.46	%		1,266,447					9,087					2.87	%
Tax-exempt investment securities	144,999					779					2.15	%		147,489					836					2.27	%		121,738					997					3.28	%
Total securities	1,351,678					7,505					2.22	%		1,346,265					8,203					2.44	%		1,388,185					10,084					2.91	%
Interest-bearing deposits	2,523,644					632					0.10	%		1,729,140					433					0.10	%		711,030					3,745					2.09	%
Loans held for sale	634,309					4,587					2.89	%		464,796					3,811					3.28	%		408,377					3,956					3.87	%
Total earning assets	14,262,377					116,125					3.24	%		13,160,132					115,103					3.52	%		10,604,500					120,280					4.50	%
Less: allowance for credit losses	(95,594		)											(69,451		)											(54,858		)
Total nonearning assets	1,320,369													1,318,787													1,295,640
Total assets	$	15,487,152												$	14,409,468												$	11,845,282
Liabilities and Equity:
Interest-bearing deposits
Demand and money market	$	4,311,920				$	2,663				0.25	%		$	3,857,757				$	2,491				0.26	%		$	3,379,888				$	7,223				0.85	%
Savings	304,753					555					0.72	%		290,201					554					0.77	%		278,048					702					1.00	%
Certificates of deposit	2,417,772					9,747					1.60	%		2,503,648					12,027					1.93	%		2,641,681					15,627					2.35	%
Total interest-bearing deposits	7,034,445					12,965					0.73	%		6,651,606					15,072					0.91	%		6,299,617					23,552					1.48	%
Borrowings	1,931,120					2,841					0.58	%		1,741,832					3,238					0.74	%		486,644					2,020					1.62	%
Subordinated debt, net	248,807					2,962					4.76	%		248,660					2,962					4.76	%		248,210					2,962					4.77	%
Total interest-bearing liabilities	9,214,372					18,768					0.81	%		8,642,098					21,272					0.99	%		7,034,471					28,534					1.61	%
Demand deposits	4,268,443													3,826,439													2,940,370
Other noninterest-bearing liabilities	257,304													239,154													250,371
Total liabilities	13,740,119													12,707,691													10,225,212
Shareholders’ equity	1,747,033													1,701,777													1,620,070
Total liabilities and equity	$	15,487,152												$	14,409,468												$	11,845,282
Net interest income (tax-equivalent basis)						$	97,357												$	93,831												$	91,746
Reconcilement of Non-GAAP Financial Measures
Tax-equivalent basis adjustment						(598		)											(557		)											(643		)
Net interest income (GAAP)						$	96,759												$	93,274												$	91,103
Interest rate spread (2)(4)											2.43	%												2.53	%												2.89	%
Interest expense as a percent of average earning assets											0.52	%												0.65	%												1.07	%
Net interest margin (tax equivalent basis) (3)(4)											2.72	%												2.87	%												3.43	%
Total cost of deposits											0.46	%												0.58	%												1.01	%

(1) Includes average PPP balances of $1.10 billion and related interest and fee income of $9.82 million.
(2) Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities.  Fully tax equivalent.
(3) Net interest margin is net interest income expressed as a percentage of average earning assets.  Fully tax equivalent.
(4) Non-GAAP.

TOWNEBANK
Average Balances, Yields and Rate Paid (unaudited)
(dollars in thousands)
		Nine Months Ended													Nine Months Ended													Nine Months Ended September 30,
		September 30, 2020													September 30, 2019													2020 Compared with 2019
							Interest					Average								Interest					Average
		Average					Income/					Yield/			Average					Income/					Yield/			Increase					Change Due to
		Balance					Expense					Rate			Balance					Expense					Rate			(Decrease)					Rate					Volume
Assets:
Loans (net of unearned income and deferred costs), excluding nonaccrual loans (1)		$	9,309,256				$	306,622				4.40	%		$	8,067,894				$	305,007				5.05	%		$	1,615				$	(42,206	)			$	43,822
Taxable investment securities		1,253,783					23,304					2.48	%		1,158,611					24,962					2.87	%		(1,658		)			(3,603		)			1,945
Tax-exempt investment securities		140,248					2,476					2.35	%		97,485					2,519					3.45	%		(43		)			(944		)			902
Total securities		1,394,031					25,780					2.47	%		1,256,096					27,481					2.92	%		(1,701		)			(4,547		)			2,847
Interest-bearing deposits		615,466					2,168					0.47	%		700,840					11,758					2.24	%		(9,590		)			(8,309		)			(1,281		)
Loans held for sale		477,964					11,386					3.18	%		290,384					8,966					4.12	%		2,420					(2,394		)			4,814
Total earning assets		11,796,717					345,956					3.92	%		10,315,214					353,212					4.58	%		(7,256		)			(57,456		)			50,202
Less: allowance for loan losses		(73,538		)											(53,703		)
Total nonearning assets		2,264,295													1,264,976
Total assets		$	13,987,474												$	11,526,487
Liabilities and Equity:
Interest-bearing deposits
Demand and money market		$	3,898,642				$	10,472				0.36	%		$	3,289,539				$	20,488				0.83	%		$	(10,016	)			$	(13,287	)			$	3,271
Savings		290,684					1,702					0.78	%		281,562					2,658					1.26	%		(956		)			(1,040		)			84
Certificates of deposit		2,451,715					34,925					1.90	%		2,456,360					41,364					2.25	%		(6,439		)			(6,362		)			(78		)
Total interest-bearing deposits		6,641,041					47,099					0.95	%		6,027,461					64,510					1.43	%		(17,411		)			(20,689		)			3,277
Borrowings		1,452,652					8,661					0.78	%		661,216					9,559					1.91	%		(898		)			(7,871		)			6,973
Subordinated debt, net		248,660					8,885					4.76	%		248,064					8,885					4.78	%		—					(22		)			21
Total interest-bearing liabilities		8,342,353					64,645					1.04	%		6,936,741					82,954					1.60	%		(18,309		)			(28,582		)			10,271
Demand deposits		3,687,791													2,787,727
Other noninterest-bearing liabilities		252,337													221,806
Total liabilities		12,282,481													9,946,274
Shareholders’ equity		1,704,993													1,580,213
Total liabilities and equity		$	13,987,474												$	11,526,487
Net interest income (tax-equivalent basis)							$	281,311												$	270,258							$	11,053				$	(28,874	)			$	39,931
Reconcilement of Non-GAAP Financial Measures
Tax-equivalent basis adjustment							(1,781		)											(1,862		)						81
Net interest income (GAAP)							$	279,530												$	268,396							$	11,134
Interest rate spread (2)(4)												2.88	%												2.98	%
Interest expense as a percent of average earning assets												0.73	%												1.08	%
Net interest margin (tax equivalent basis) (3)(4)												3.19	%												3.50	%
Total cost of deposits												0.61	%												0.98	%
(1)  Includes average PPP balances of  $0.64 billion and related interest income of $15.65 million
(2)  Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities.  Fully tax equivalent.
(3)  Net interest margin is net interest income expressed as a percentage of average earning assets.  Fully tax equivalent.
(4) Non-GAAP.

TOWNEBANK
Consolidated Balance Sheets
(dollars in thousands, except share data)
	September 30,					December 31,
	2020					2019
	(unaudited)					(audited)
ASSETS
Cash and due from banks	$	114,604				$	97,593
Interest-bearing deposits at FRB - Richmond	1,670,186					322,505
Interest-bearing deposits in financial institutions	24,890					22,518
Total Cash and Cash Equivalents	1,809,680					442,616
Securities available for sale, at fair value (amortized cost $1,249,254, allowance for credit losses of $4) (1)	1,310,683					1,441,308
Securities held to maturity, at amortized cost (fair value $19,102 )(1)	17,131					43,688
Less:  allowance for credit losses	(90		)			—
Securities held to maturity, net of allowance for credit losses	17,041					43,688
Other equity securities	6,497					6,462
FHLB stock	41,829					30,094
Total Securities	1,376,050					1,521,552
Mortgage loans held for sale	669,020					419,233
Loans, net of unearned income and deferred costs	9,770,570					8,419,288
Less: allowance for credit losses	(119,058		)			(58,234		)
Net Loans	9,651,512					8,361,054
Premises and equipment, net	256,909					231,806
Goodwill	446,725					446,816
Other intangible assets, net	45,781					54,399
BOLI	244,103					243,062
Other assets	295,637					227,125
TOTAL ASSETS	$	14,795,417				$	11,947,663
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand	$	4,464,178				$	2,951,225
Interest-bearing:
Demand and money market accounts	4,642,482					3,586,364
Savings	312,444					276,205
Certificates of deposit	2,285,859					2,457,123
Total Deposits	11,704,963					9,270,917
Advances from the FHLB	731,202					471,687
Subordinated debt, net	248,906					248,458
Repurchase agreements and other borrowings	58,061					52,391
Total Borrowings	1,038,169					772,536
Other liabilities	303,582					250,516
TOTAL LIABILITIES	13,046,714					10,293,969
Preferred stock
Authorized and unissued shares - 2,000,000	—					—
Common stock, $1.667 par: 150,000,000 shares authorized 72,656,729 and 72,649,682 shares issued at September 30, 2020 and December 31, 2019, respectively	121,115					121,107
Capital surplus	1,045,170					1,041,160
Retained earnings	520,888					467,186
Common stock issued to deferred compensation trust, at cost 872,498 and 818,578 shares at September 30, 2020 and December 31, 2019, respectively	(16,951		)			(15,555		)
Deferred compensation trust	16,951					15,555
Accumulated other comprehensive income (loss)	44,569					11,302
TOTAL SHAREHOLDERS’ EQUITY	1,731,742					1,640,755
Noncontrolling interest	16,961					12,939
TOTAL EQUITY	1,748,703					1,653,694
TOTAL LIABILITIES AND EQUITY	$	14,795,417				$	11,947,663
(1) For 2020, disclosures are presented in compliance with ASC 326.

TOWNEBANK
Consolidated Statements of Income (unaudited)
(dollars in thousands, except per share data)
	Three Months Ended										Nine Months Ended
	September 30,										September 30,
	2020					2019					2020					2019
INTEREST INCOME:
Loans, including fees	$	102,869				$	102,047				$	305,070				$	303,616
Investment securities	7,440					9,889					25,553					27,010
Interest-bearing deposits in financial institutions and federal funds sold	632					3,745					2,168					11,758
Mortgage loans held for sale	4,587					3,956					11,385					8,966
Total interest income	115,528					119,637					344,176					351,350
INTEREST EXPENSE:
Deposits	12,966					23,552					47,099					64,510
Advances from the FHLB	1,901					1,935					6,990					9,288
Subordinated debt, net	2,962					2,962					8,885					8,885
Repurchase agreements and other borrowings	940					85					1,672					271
Total interest expense	18,769					28,534					64,646					82,954
Net interest income	96,759					91,103					279,530					268,396
PROVISION FOR CREDIT LOSSES	31,598					1,508					65,559					5,770
Net interest income after provision for credit losses	65,161					89,595					213,971					262,626
NONINTEREST INCOME:
Residential mortgage banking income, net	37,531					18,855					74,662					50,929
Insurance commissions and other title fees and income, net	17,468					16,681					51,973					49,477
Real estate brokerage and property management income, net	11,301					9,444					29,020					27,555
Service charges on deposit accounts	1,986					2,253					6,314					8,299
Credit card merchant fees, net	1,506					1,514					3,793					3,357
BOLI	1,605					2,117					6,295					5,350
Other income	22,278					3,981					31,268					11,754
Net gain/(loss) on investment securities	1,701					(69		)			9,632					(845		)
Total noninterest income	95,376					54,776					212,957					155,876
NONINTEREST EXPENSE:
Salaries and employee benefits	61,408					55,784					174,201					162,907
Occupancy expense	8,396					7,953					23,124					23,866
Furniture and equipment	3,247					3,805					10,451					10,753
Amortization - intangibles	2,851					3,059					8,702					9,364
Software expense	3,572					3,208					10,556					8,742
Data processing	3,113					2,533					8,622					9,316
Professional fees	2,637					3,566					8,677					9,952
Advertising and marketing	1,870					3,429					7,440					9,440
Other expenses	14,887					13,950					38,121					41,627
Total noninterest expense	101,981					97,287					289,894					285,967
Income before income tax expense and noncontrolling interest	58,556					47,084					137,034					132,535
Provision for income tax expense	7,841					7,684					21,492					24,810
Net income	$	50,715				$	39,400				$	115,542				$	107,725
Net income attributable to noncontrolling interest	(16,251		)			(1,741		)			(20,089		)			(4,018		)
Net income attributable to TowneBank	$	34,464				$	37,659				$	95,453				$	103,707
Per common share information
Basic earnings	$	0.48				$	0.52				$	1.32				$	1.44
Diluted earnings	$	0.48				$	0.52				$	1.32				$	1.44
Cash dividends declared	$	0.18				$	0.18				$	0.54				$	0.52

TOWNEBANK
Consolidated Balance Sheets - Five Quarter Trend
(dollars in thousands, except share data)
	September 30,					June 30,					March 31,					December 31,					September 30,
	2020					2020					2020					2019					2019
	(unaudited)					(unaudited)					(unaudited)					(audited)					(unaudited)
ASSETS
Cash and due from banks	$	114,604				$	115,724				$	108,929				$	97,593				$	124,439
Interest-bearing deposits at FRB - Richmond	1,670,186					2,511,152					753,643					322,505					675,288
Interest-bearing deposits in financial institutions	24,890					24,374					23,564					22,518					21,663
Total Cash and Cash Equivalents	1,809,680					2,651,250					886,136					442,616					821,390
Securities available for sale	1,310,683					1,266,624					1,248,420					1,441,308					1,337,395
Securities held to maturity	17,131					41,595					42,431					43,688					44,494
Less:  allowance for credit losses	(90		)			(121		)			(133		)			—					—
Securities held to maturity, net of allowance for credit losses	17,041					41,474					42,298					43,688					44,494
Other equity securities	6,497					6,497					6,462					6,462					5,697
FHLB stock	41,829					49,277					52,042					30,094					26,282
Total Securities	1,376,050					1,363,872					1,349,222					1,521,552					1,413,868
Mortgage loans held for sale	669,020					610,369					453,143					419,233					456,719
Loans, net of unearned income and deferred costs	9,770,570					9,801,889					8,784,195					8,419,288					8,182,829
Less: allowance for credit losses	(119,058		)			(90,467		)			(64,372		)			(58,234		)			(55,428		)
Net Loans	9,651,512					9,711,422					8,719,823					8,361,054					8,127,401
Premises and equipment, net	256,909					257,533					236,735					231,806					231,060
Goodwill	446,725					446,725					446,725					446,816					446,423
Other intangible assets, net	45,781					48,632					51,448					54,399					57,404
BOLI	244,103					242,493					240,924					243,062					241,652
Other assets	295,637					247,962					239,670					227,125					225,374
TOTAL ASSETS	$	14,795,417				$	15,580,258				$	12,623,826				$	11,947,663				$	12,021,291
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand	$	4,464,178				$	4,226,208				$	3,060,515				$	2,951,225				$	3,030,505
Interest-bearing:
Demand and money market accounts	4,642,482					4,223,391					3,573,926					3,586,364					3,534,252
Savings	312,444					298,673					280,807					276,205					280,552
Certificates of deposit	2,285,859					2,516,666					2,392,744					2,457,123					2,592,705
Total Deposits	11,704,963					11,264,938					9,307,992					9,270,917					9,438,014
Advances from the FHLB	731,202					906,365					971,527					471,687					381,846
Subordinated debt, net	248,906					248,756					248,607					248,458					248,309
FRB PPP lending facility	—					1,111,429					—					—					—
Repurchase agreements and other borrowings	58,061					60,913					171,762					52,391					42,971
Total Borrowings	1,038,169					2,327,463					1,391,896					772,536					673,126
Other liabilities	303,582					266,314					258,306					250,516					271,617
TOTAL LIABILITIES	13,046,714					13,858,715					10,958,194					10,293,969					10,382,757
Preferred stock
Authorized shares - 2,000,000	—					—					—					—					—
Common stock, $1.667 par value	121,115					121,101					121,057					121,107					121,080
Capital surplus	1,045,170					1,043,774					1,041,870					1,041,160					1,039,156
Retained earnings	520,888					499,502					477,972					467,186					445,186
Common stock issued to deferred compensation trust, at cost	(16,951		)			(16,776		)			(15,562		)			(15,555		)			(15,317		)
Deferred compensation trust	16,951					16,776					15,562					15,555					15,317
Accumulated other comprehensive income (loss)	44,569					43,218					12,301					11,302					19,958
TOTAL SHAREHOLDERS’ EQUITY	1,731,742					1,707,595					1,653,200					1,640,755					1,625,380
Noncontrolling interest	16,961					13,948					12,432					12,939					13,154
TOTAL EQUITY	1,748,703					1,721,543					1,665,632					1,653,694					1,638,534
TOTAL LIABILITIES AND EQUITY	$	14,795,417				$	15,580,258				$	12,623,826				$	11,947,663				$	12,021,291

TOWNEBANK
Consolidated Statements of Income - Five Quarter Trend (unaudited)
(dollars in thousands, except share data)
	Three Months Ended
	September 30,					June 30,					March 31,					December 31,					September 30,
	2020					2020					2020					2019					2019
INTEREST INCOME:
Loans, including fees	$	102,869				$	102,139				$	100,062				$	100,059				$	102,047
Investment securities	7,440					8,163					9,949					9,936					9,889
Interest-bearing deposits in financial institutions and federal funds sold	632					433					1,102					2,067					3,745
Mortgage loans held for sale	4,587					3,811					2,988					4,413					3,956
Total interest income	115,528					114,546					114,101					116,475					119,637
INTEREST EXPENSE:
Deposits	12,966					15,072					19,062					21,744					23,552
Advances from the FHLB	1,901					2,595					2,492					1,730					1,935
Subordinated debt	2,962					2,962					2,962					2,962					2,962
Repurchase agreements and other borrowings	940					643					89					80					85
Total interest expense	18,769					21,272					24,605					26,516					28,534
Net interest income	96,759					93,274					89,496					89,959					91,103
PROVISION FOR CREDIT LOSSES	31,598					26,945					7,016					3,601					1,508
Net interest income after provision for credit losses	65,161					66,329					82,480					86,358					89,595
NONINTEREST INCOME:
Residential mortgage banking income, net	37,531					29,715					7,416					15,884					18,855
Insurance commissions and other title fees and income, net	17,468					17,612					16,893					15,001					16,681
Real estate brokerage and property management income, net	11,301					10,781					6,938					6,737					9,444
Service charges on deposit accounts	1,986					1,888					2,440					2,245					2,253
Credit card merchant fees, net	1,506					1,109					1,179					1,389					1,514
BOLI	1,605					1,584					3,105					3,865					2,117
Other income	22,278					3,763					5,227					4,591					3,981
Net gain/(loss) on investment securities	1,701					2,930					5,002					—					(69		)
Total noninterest income	95,376					69,382					48,200					49,712					54,776
NONINTEREST EXPENSE:
Salaries and employee benefits	61,408					56,926					55,867					56,013					55,784
Occupancy expense	8,396					7,227					7,502					7,516					7,953
Furniture and equipment	3,247					3,564					3,640					3,598					3,805
Amortization - intangibles	2,851					2,901					2,950					3,005					3,059
Software expense	3,572					3,492					3,492					2,976					3,208
Data processing	3,113					2,718					2,791					2,510					2,533
Professional fees	2,637					2,972					3,067					2,990					3,566
Advertising and marketing	1,870					1,986					3,584					2,839					3,429
Other expenses	14,887					9,239					13,995					10,889					13,950
Total noninterest expense	101,981					91,025					96,888					92,336					97,287
Income before income tax expense and noncontrolling interest	58,556					44,686					33,792					43,734					47,084
Provision for income tax expense	7,841					7,464					6,187					7,786					7,684
Net income	50,715					37,222					27,605					35,948					39,400
Net income attributable to noncontrolling interest	(16,251		)			(2,617		)			(1,221		)			(873		)			(1,741		)
Net income attributable to TowneBank	$	34,464				$	34,605				$	26,384				$	35,075				$	37,659
Per common share information
Basic earnings	$	0.48				$	0.48				$	0.37				$	0.49				$	0.52
Diluted earnings	$	0.48				$	0.48				$	0.36				$	0.49				$	0.52
Basic weighted average shares outstanding	72,307,961					72,280,555					72,206,228					72,122,476					72,091,221
Diluted weighted average shares outstanding	72,344,284					72,317,988					72,299,721					72,302,414					72,222,934
Cash dividends declared	$	0.18				$	0.18				$	0.18				$	0.18				$	0.18

TOWNEBANK
Banking Segment Financial Information (unaudited)
(dollars in thousands)
	Three Months Ended														Nine Months Ended									Increase/(Decrease)
	September 30,										June 30,				September 30,									2020 over 2019
	2020					2019					2020				2020				2019					Amount					Percent
Revenue
Net interest income	$	92,869				$	89,490				$	89,665			$	269,941			$	264,332				$	5,609				2.12	%
Service charges on deposit accounts	1,986					2,253					1,888				6,315				8,299					(1,984		)			(23.91	)%
Credit card merchant fees	1,506					1,514					1,109				3,793				3,357					436					12.99	%
Other income	4,876					5,152					3,888				15,826				14,350					1,476					10.29	%
Subtotal	8,368					8,919					6,885				25,934				26,006					(72		)			(0.28	)%
Net gain/(loss) on investment securities	1,701					(69		)			2,930				9,632				(845		)			10,477					1,239.88	%
Total noninterest income	10,069					8,850					9,815				35,566				25,161					10,405					41.35	%
Total revenue	102,938					98,340					99,480				305,507				289,493					16,014					5.53	%
Provision for credit losses	31,070					1,508					26,059				64,170				5,770					58,400					1,012.13	%
Expenses
Salaries and employee benefits	36,535					33,526					35,209				104,970				96,966					8,004					8.25	%
Occupancy expense	5,829					5,209					4,812				15,557				15,460					97					0.63	%
Furniture and equipment	2,424					2,779					2,715				7,800				7,662					138					1.80	%
Amortization of intangibles	1,063					1,265					1,114				3,341				3,946					(605		)			(15.33	)%
Other expenses	15,793					17,098					10,718				45,214				52,218					(7,004		)			(13.41	)%
Total expenses	61,644					59,877					54,568				176,882				176,252					630					0.36	%
Income before income tax, corporate allocation and noncontrolling interest	10,224					36,955					18,853				64,455				107,471					(43,016		)			(40.03	)%
Corporate allocation	595					384					627				1,891				1,383					508					36.73	%
Income before income tax provision and noncontrolling interest	10,819					37,339					19,480				66,346				108,854					(42,508		)			(39.05	)%
Provision for income tax expense	474					5,495					2,167				9,304				19,337					(10,033		)			(51.88	)%
Net income	10,345					31,844					17,313				57,042				89,517					(32,475		)			(36.28	)%
Noncontrolling interest	(2		)			—					5				2				4					(2		)			(50.00	)%
Net income attributable to TowneBank	$	10,343				$	31,844				$	17,318			$	57,044			$	89,521				$	(32,477	)			(36.28	)%
Efficiency ratio	60.89		%			60.85		%			56.52		%		59.78		%		60.71		%			(0.93		)%			(1.53	)%

TOWNEBANK
Realty Segment Financial Information (unaudited)
(dollars in thousands)
	Three Months Ended															Nine Months Ended										Increase/(Decrease)
	September 30,										June 30,					September 30,										2020 over 2019
	2020					2019					2020					2020					2019					Amount					Percent
Revenue
Residential mortgage brokerage income, net	$	38,074				$	19,171				$	30,468				$	76,549				$	51,826				$	24,723				47.70	%
Real estate brokerage income, net	3,688					2,882					2,659					8,212					7,315					897					12.26	%
Title insurance and settlement fees	654					617					639					1,728					1,581					147					9.30	%
Property management fees, net	7,613					6,562					8,122					20,808					20,240					568					2.81	%
Income from unconsolidated subsidiary	451					185					301					938					441					497					112.70	%
Net interest and other income	4,101					1,885					3,765					10,262					4,937					5,325					107.86	%
Total revenue	54,581					31,302					45,954					118,497					86,340					32,157					37.24	%
Provision for credit losses	528					—					886					1,389					—					1,389					n/m
Expenses
Salaries and employee benefits	15,744					13,474					13,059					42,095					39,678					2,417					6.09	%
Occupancy expense	1,906					2,055					1,763					5,595					6,428					(833		)			(12.96	)%
Furniture and equipment	620					754					626					2,007					2,326					(319		)			(13.71	)%
Amortization of intangible assets	658					666					658					1,973					2,086					(113		)			(5.42	)%
Other expenses	9,226					7,478					8,270					24,366					20,953					3,413					16.29	%
Total expenses	28,154					24,427					24,376					76,036					71,471					4,565					6.39	%
Income (loss) before income tax, corporate allocation and noncontrolling interest	25,899					6,875					20,692					41,072					14,869					26,203					176.23	%
Corporate allocation	(356		)			(208		)			(370		)			(1,119		)			(800		)			(319		)			39.88	%
(Loss) income before income tax provision and noncontrolling interest	25,543					6,667					20,322					39,953					14,069					25,884					183.98	%
Provision for income tax (benefit) expense	4,780					1,454					4,127					7,614					3,292					4,322					131.29	%
Net (loss) income	20,763					5,213					16,195					32,339					10,777					21,562					200.07	%
Noncontrolling interest	(4,790		)			(1,496		)			(2,415		)			(7,996		)			(2,997		)			(4,999		)			166.80	%
Net (loss) income attributable to TowneBank	$	15,973				$	3,717				$	13,780				$	24,343				$	7,780				$	16,563				212.89	%
Efficiency ratio	51.58		%			78.04		%			53.04		%			64.17		%			82.78		%			(18.61		)%			(22.48	)%

TOWNEBANK
Insurance Segment Financial Information (unaudited)
(dollars in thousands)
	Three Months Ended															Nine Months Ended											Increase/(Decrease)
	September 30,										June 30,					September 30,											2020 over 2019
	2020					2019					2020					2020					2019						Amount					Percent
Commission and fee income
Property and casualty	$	14,072				$	13,481				$	13,926				$	40,784				$	38,421					$	2,363				6.15	%
Employee benefits	3,825					3,629					3,791					11,534					10,968						566					5.16	%
Travel insurance	1,399					834					861					3,526					3,292						234					7.11	%
Specialized benefit services	165					166					157					489					499						(10		)			(2.00	)%
Total commissions and fees	19,461					18,110					18,735					56,333					53,180						3,153					5.93	%
Contingency and bonus revenue	1,112					1,431					2,009					5,144					4,910						234					4.77	%
Other income *	17,697					74					127					17,906					227						17,679					7,788.11	%
Total revenue	38,270					19,615					20,871					79,383					58,317						21,066					36.12	%
Employee commission expense	3,654					3,378					3,649					10,900					9,878						1,022					10.35	%
Revenue, net of commission expense	34,616					16,237					17,222					68,483					48,439						20,044					41.38	%
Salaries and employee benefits	9,129					8,784					8,658					27,136					26,263						873					3.32	%
Occupancy expense	661					689					652					1,972					1,978						(6		)			(0.30	)%
Furniture and equipment	203					272					223					644					765						(121		)			(15.82	)%
Amortization of intangible assets	1,130					1,128					1,129					3,388					3,332						56					1.68	%
Other expenses	1,060					2,110					1,419					3,836					5,906						(2,070		)			(35.05	)%
Total operating expenses	12,183					12,983					12,081					36,976					38,244						(1,268		)			(3.32	)%
Income before income tax, corporate allocation and noncontrolling interest	22,433					3,254					5,141					31,507					10,195						21,312					209.04	%
Corporate allocation	(239		)			(176		)			(257		)			(772		)			(583		)				(189		)			32.42	%
Income before income tax provision and noncontrolling interest	22,194					3,078					4,884					30,735					9,612						21,123					219.76	%
Provision for income tax expense	2,587					735					1,170					4,574					2,181						2,393					109.72	%
Net income	19,607					2,343					3,714					26,161					7,431						18,730					252.05	%
Noncontrolling interest	(11,459		)			(245		)			(207		)			(12,095		)			(1,025		)				(11,070		)			1,080.00	%
Net income attributable to TowneBank	$	8,148				$	2,098				$	3,507				$	14,066				$	6,406					$	7,660				119.58	%
Provision for income taxes	2,587					735					1,170					4,574					2,181						2,393					109.72	%
Depreciation, amortization and interest expense	1,285					1,325					1,291					3,875					3,943						(68		)			(1.72	)%
EBITDA (non-GAAP)	$	12,020				$	4,158				$	5,968				$	22,515				$	12,530					$	9,985				79.69	%
Efficiency ratio	35.19		%			79.96		%			70.15		%			53.99		%			78.95		%				$	(0.25	)			(31.67	)%
*Included in other income is the gross gain on the sale of Red Sky	$	17,626				—		%			n/m					$	17,626				—		%				n/m
Efficiency ratio excluding gain	71.71		%			79.96		%			70.15		%			72.71		%			78.95		%				$	(0.06	)			(7.60	)%

TOWNEBANK
Reconcilement of Non-GAAP Financial Measures
(dollars in thousands)
	Three Months Ended															Nine Months Ended
	September 30,					September 30,					June 30,					September 30,					September 30,
	2020					2019					2020					2020					2019
Return on average assets (GAAP)	0.89		%			1.26		%			0.97		%			0.91		%			1.17		%
Impact of excluding average goodwill and other intangibles and amortization	0.08		%			0.14		%			0.10		%			0.10		%			0.15		%
Return on average tangible assets (non-GAAP)	0.97		%			1.40		%			1.07		%			1.01		%			1.32		%
Return on average equity (GAAP)	7.85		%			9.22		%			8.18		%			7.48		%			8.54		%
Impact of excluding average goodwill and other intangibles and amortization	3.81		%			4.98		%			4.14		%			3.84		%			5.03		%
Return on average tangible equity (non-GAAP)	11.66		%			14.20		%			12.32		%			11.32		%			13.57		%
Return on average common equity (GAAP)	7.91		%			9.29		%			8.24		%			7.53		%			8.60		%
Impact of excluding average goodwill and other intangibles and amortization	3.88		%			5.07		%			4.20		%			3.91		%			5.13		%
Return on average tangible common equity (non-GAAP)	11.79		%			14.36		%			12.44		%			11.44		%			13.73		%
Book value (GAAP)	$	23.83				$	22.38				$	23.50				$	23.83				$	21.95
Impact of excluding average goodwill and other intangibles and amortization	(6.77		)			(6.94		)			(6.82		)			(6.77		)			(6.90		)
Tangible book value (non-GAAP)	$	17.06				$	15.44				$	16.68				$	17.06				$	15.05
Efficiency ratio (GAAP)	53.08		%			55.96		%			66.69		%			58.86		%			67.40		%
Impact of excluding gain/loss on investments	(0.47		)%			(1.03		)%			0.03		%			(1.18		)%			0.13		%
Efficiency ratio (non-GAAP)	53.55		%			56.99		%			66.66		%			60.04		%			67.27		%
Average assets (GAAP)	$	15,487,152				$	11,845,282				$	14,409,468				$	13,987,474				$	11,526,487
Less: average goodwill	446,725					442,919					446,725					446,762					442,890
Less: average intangible assets	47,513					57,327					50,352					50,373					60,333
Average tangible assets (non-GAAP)	$	14,992,914				$	11,345,036				$	13,912,391				$	13,490,339				$	11,023,264
Average equity (GAAP)	$	1,747,033				$	1,620,070				$	1,701,777				$	1,704,993				$	1,580,213
Less: average goodwill	446,725					442,919					446,725					446,762					442,890
Less: average intangible assets	47,513					57,327					50,352					50,373					60,333
Average tangible equity (non-GAAP)	$	1,252,795				$	1,119,824				$	1,204,700				$	1,207,858				$	1,076,990
Average common equity (GAAP)	$	1,732,881				$	1,607,853				$	1,689,603				$	1,692,202				1,568,336
Less: average goodwill	446,725					442,919					446,725					446,762					442,890
Less: average intangible assets	47,513					57,327					50,352					50,373					60,333
Average tangible common equity (non-GAAP)	$	1,238,643				$	1,107,607				$	1,192,526				$	1,195,067				$	1,065,113
Net Income (GAAP)	$	34,464				$	37,659				34,605					95,453					103,707
Amortization of Intangibles, net of tax	2,252					2,417					2,292					6,875					7,398
Tangible Net Income (non-GAAP)	$	36,716				$	40,076				$	36,897				$	102,328				$	111,105
Net Income (GAAP)	$	34,464				$	37,659				$	34,605				$	95,453				$	103,707
Provision for credit losses	31,598					1,508					26,945					65,559					5,770
Provision for income tax	7,841					7,684					7,464					21,492					24,810
Pre-provision, pre-tax net revenues (non-GAAP)	$	73,903				$	46,851				$	69,014				$	182,504				$	134,287
Total Revenue (GAAP)	$	192,135				$	162,656				$	145,879				$	492,487				$	424,272
Net (gain)/loss on investment securities	(1,701		)			(2,930		)			69					(9,632		)			845
Total Revenue for Efficiency calculation (non-GAAP)	$	190,434				$	159,726				$	145,948				$	482,855				$	425,117