GlobeNewswire Inc | Oct 22, 2020 08:30AM EDT

October 22, 2020

SUFFOLK, Va., Oct. 22, 2020 (GLOBE NEWSWIRE) -- TowneBank (the Company) (NASDAQ: TOWN) today reported earnings for the quarter ended September30, 2020 of $34.46million, or $0.48 per diluted share, compared to $37.66million, or $0.52 per diluted share, for the quarter ended September30, 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 $192.14million, an increase of $46.26million, 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 $1.59billion, or 19.40%, from September30, 2019, but a decrease of $0.03billion, or 0.32%, from June30, 2020. The balance at September30, 2020 and June30, 2020 included $1.10 billion and $1.09 billion, respectively, of loans originated under the Small Business Administrations Paycheck Protection Program (PPP). -- Total deposits were $11.70billion, an increase of $2.27billion, or 24.02%, compared to prior year and $0.44billion, or 3.91%, from June30, 2020. -- Noninterest bearing deposits increased by 47.31%, to $4.46billion, 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 $28.74million, or 0.19% of total assets, compared to $31.04million, or 0.26%, at September30, 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 $96.76million compared to $91.10million at September30, 2019. -- Taxable equivalent net interest margin (non-GAAP) was 2.72%, including accretion of 5basispoints, compared to 3.43%, including accretion of 11basispoints, for third quarter 2019. -- Average loans held for investment, with an average yield of 4.22%, represented 68.38% of average earning assets at September30, 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 $5.83million in the linked quarter, and zero in third quarter 2019. -- Total cost of deposits decreased to 0.46% from 1.01% at September30, 2019. -- Average interest-earning assets totaled $14.26billion at September30, 2020 compared to $10.60billion at September30, 2019, an increase of 34.49%. -- Average interest-bearing liabilities totaled $9.21billion, an increase of $2.18billion 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 $28.26million compared to $1.51million one year ago and $25.99million 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 $0.33million compared to charge-offs of $0.61million 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 $3.50million 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 June30, 2020 and 0.68% at September30, 2019. Excluding PPP loans, which are fully government guaranteed, the allowance for credit losses (non-GAAP) was 1.37%, compared to 1.04% at June30, 2020. The allowance for credit losses on loans was 7.31 times nonperforming loans compared to 5.34 times at June30, 2020 and 3.95 times at September30, 2019.

Quarterly Noninterest Income Compared to Third Quarter 2019:

-- Total noninterest income was $95.38million compared to $54.78million in 2019, an increase of $40.60million, or 74.12%. Residential mortgage banking income increased $18.68million and real estate brokerage and property management income increased $1.86million. Also included in noninterest income are net gains on investment securities of $1.70million as compared to net losses of $0.07million 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 $37.53million compared to $18.86million in third quarter 2019. Loan volume in the current quarter was $1.79billion, with purchase activity comprising 61.18% of that volume. Loan volume in third quarter 2019 was $0.96billion, 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 $38.27million 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 $17.63million was recorded in other income. After distributions to noncontrolling interests, Towne retained $6.52million 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 $1.05million, 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 $101.98million compared to $97.29million in 2019, an increase of $4.69million, or 4.82%. Increases in salary and benefits expense of $5.62million, data processing expense of $0.58million, and software expense of $0.36million, 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 $2.84million 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 $7.84million compared to $7.68million 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 $14.80billion for the quarter ended September30, 2020, a decrease of $0.78 billion, or 5.04%, compared to $15.58 billion at June 30, 2020. Total assets increased $2.77billion, or 23.08%, from $12.02billion at September30, 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 $0.03billion 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 $484.60million, or 5.92%, compared to prior year, but declined $44.47million, 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 $2.3billion, or 24.02%, compared to the prior year and $0.44 billion, or 3.91%, compared to the linked quarter. -- Total borrowings increased $0.37billion, or 54.23%, from prior year but decreased $1.29billion, or 55.39%, compared to the linked quarter. During the third quarter of 2020, the Company repaid $1.11billion 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 $1.38billion compared to $1.36billion at June30, 2020 and $1.41billion at September30, 2019. The weighted average duration of the portfolio at September30, 2020 was 4.1 years. The carrying value of the AFS debt securities portfolio included $61.43million in net unrealized gains compared to $19.73million in net unrealized gains at December31, 2019. During the third quarter of 2020, we sold $81.8million in AFS debt securities at a gain of $1.70million to reposition the portfolio.

Loans and Asset Quality:

-- Total loans held for investment were $9.77billion at September30, 2020 compared to $9.80billion at June30, 2020 and $8.18billion at September30, 2019. -- Nonperforming assets were $28.74million, or 0.19% of total assets, compared to $31.04million, or 0.26%, at September30, 2019. -- Nonperforming loans were 0.17% of period end loans, unchanged from September30, 2019. -- Foreclosed property decreased to $11.70million from $15.52 million at September30, 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 $11.70billion compared to $11.26billion at June30, 2020 and $9.44billion at September30, 2019. -- Total loans to deposits were 83.47% compared to 87.01% at June30, 2020 and 86.70% at September30, 2019. -- Non-interest bearing deposits were 38.14% of total deposits at September30, 2020 compared to 37.52% at June30, 2020 and 32.11% at September30, 2019. -- Total borrowings were $1.04billion compared to $2.33billion at June30, 2020 and $0.67billion at September30, 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 June30, 2020 and $22.38 at September30, 2019. -- Tangible book value (non-GAAP) was $17.06 compared to $16.68 at June30, 2020 and $15.44 at September30, 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 groups President and Board of Directors. With total assets of $14.80billion as of September30, 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 Companys 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 TowneBanks 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. TowneBanks 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 TowneBanks loan and securities portfolios; demand for loan products; deposit flows; competition; demand for financial services in TowneBanks 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, 757-638-6780J. Morgan Davis, President and Chief Executive Officer, 757-673-1673

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

TOWNEBANKSelected Financial Highlights (unaudited)(dollars in thousands, except per share data) Three Months Ended September30, June30, March31, December September30, 31, 2020 2020 2020 2019 2019Income andPerformance 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 34,464 34,605 26,384 35,075 37,659 common shareholders Pre-provision, pre-tax, net 73,903 69,014 39,587 46,462 46,851 revenues ^ (non-GAAP) Net income per common share - 0.48 0.48 0.36 0.49 0.52 diluted Book value per 23.83 23.50 22.77 22.58 22.38 common share Book value per common share - 17.06 16.68 15.91 15.69 15.44 tangible ^ (non-GAAP) Return on 0.89 % 0.97 % 0.88 % 1.16 % 1.26 % average assets Return on average assets 0.97 % 1.07 % 1.00 % 1.30 % 1.40 % - tangible ^ (non-GAAP) Return on 7.85 % 8.18 % 6.37 % 8.44 % 9.22 % average equity Return on average equity 11.66 % 12.32 % 9.91 % 12.97 % 14.20 % - tangible ^ (non-GAAP) Return on average common 7.91 % 8.24 % 6.42 % 8.51 % 9.29 % equity Return on average common equity - 11.79 % 12.44 % 10.01 % 13.12 % 14.36 % tangible ^ (non-GAAP) Noninterest income as a 49.64 % 42.66 % 35.00 % 35.59 % 37.55 % percentage of total revenue RegulatoryCapital Ratios (1): Common equity 11.75 % 11.54 % 11.23 % 11.46 % 11.52 % tier 1 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 8.89 % 9.05 % 10.11 % 9.95 % 9.84 % leverage ratio Asset Quality: Allowance for credit losses on loans to 7.31x 5.34x 3.85x 3.34x 3.95x nonperforming loans Allowance for credit losses on loans to 1.22 % 0.92 % 0.73 % 0.69 % 0.68 % period end loans Allowance for credit losses on loans to period end 1.37 % 1.04 % 0.73 % 0.69 % 0.68 % loans excluding PPP loans ^ (non-GAAP) Nonperforming loans to 0.17 % 0.17 % 0.19 % 0.21 % 0.17 % period end loans Nonperforming assets to 0.19 % 0.19 % 0.24 % 0.27 % 0.26 % period end assets Net charge-offs (recoveries) (0.01 ) ? % 0.03 % 0.04 % 0.03 % to average % loans (annualized) Nonperforming $ 16,295 $ 16,935 $ 16,700 $ 17,437 $ 14,016 loans Former bank 750 ? ? 1,521 1,510 premises Foreclosed 11,695 12,315 13,053 13,839 15,517 property Total nonperforming $ 28,740 $ 29,250 $ 29,753 $ 32,797 $ 31,043 assets Loans past due 90 days and $ 19 $ 464 $ 91 $ 309 $ 636 still accruing interest Allowance for credit losses $ 119,058 $ 90,467 $ 64,372 $ 58,234 $ 55,428 on loans Mortgage Banking: Loans originated, $ 1,292,801 $ 1,116,782 $ 718,681 $ 628,279 $ 703,922 mortgage Loans originated, 498,100 357,815 204,522 231,879 259,742 joint venture Total loans $ 1,790,901 $ 1,474,597 $ 923,203 $ 860,158 $ 963,664 originated Number of loans 5,817 4,818 3,025 2,984 3,360 originated Number of 224 216 223 217 225 originators 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 3.65 % 3.17 % 1.80 % 3.38 % 3.45 % % of loans originatedOther Ratios: Net interest 2.70 % 2.85 % 3.35 % 3.33 % 3.41 % margin Net interest margin-fully 2.72 % 2.87 % 3.37 % 3.35 % 3.43 % tax equivalent ^(non-GAAP) Average earning assets 92.09 % 91.33 % 89.15 % 89.57 % 89.53 % /total average assets Average loans/ average 86.29 % 91.81 % 92.99 % 88.41 % 87.63 % deposits Average noninterest deposits/total 37.76 % 36.52 % 32.21 % 32.14 % 31.82 % average deposits Period end equity/period 11.82 % 11.05 % 13.19 % 13.84 % 13.63 % end total assets Efficiency ratio^ 53.55 % 56.99 % 73.02 % 66.11 % 66.66 % (non-GAAP) (1) Current reporting period regulatory capital ratios are preliminary

TOWNEBANKSelected Data (unaudited)(dollars in thousands)

Investment % ChangeSecurities Q3 Q3 Q2 Q3 20 vs. Q3 20 vs.Available-for-salesecurities, at fair 2020 2019 2020 Q3 19 Q2 20valueU.S. agency $ 167,275 $ 152,581 $ 118,176 9.63 % 41.55 %securitiesU.S. Treasury notes 1,006 999 1,010 0.70 % (0.40 ) %Municipal 292,792 173,519 313,322 68.74 % (6.55 )securities %Trust preferred and ) )other corporate 24,236 52,006 59,598 (53.40 % (59.33 %securitiesMortgage-backed )securities issued 825,378 958,290 774,658 (13.87 % 6.55 %by GSE and GNMAAllowance for (4 ) n/a (140 ) n/a (97.14 )credit losses %Total $ 1,310,683 $ 1,337,395 $ 1,266,624 (2.00 ) 3.48 % % Gross unrealizedgains (losses)reflected in financialstatementsTotal gross $ 62,206 $ 28,114 $ 61,559 121.26 % 1.05 %unrealized gainsTotal gross (773 ) (2,046 ) (1,674 ) (62.22 ) (53.82 )unrealized losses % %Net unrealizedgains (losses) and $ 61,433 $ 26,068 $ 59,885 other adjustmentson AFS securities Held-to-maturitysecurities, at amortized costMunicipal $ 2,333 $ 29,166 $ 28,855 (92.00 ) (91.91 )securities % %Trust preferredcorporate 4,992 2,381 2,345 109.66 % 112.88 %securitiesMortgage-backed ) )securities issued 9,806 12,947 10,395 (24.26 % (5.67 %by GSE and GNMAAllowance for (90 ) n/a (121 ) n/a (25.62 )credit losses %Total $ 17,041 $ 44,494 $ 41,474 (61.70 ) (58.91 ) % % Gross unrealizedgains (losses) notreflected in financialstatementsTotal gross $ 1,971 $ 1,688 $ 1,980 16.77 % (0.45 )unrealized gains %Total gross ? (5 ) ? (100.00 ) ? %unrealized losses %Net unrealizedgains (losses) in $ 1,971 $ 1,683 $ 1,980 HTM securities Loans Held For % ChangeInvestment (1) Q3 Q3 Q2 Q3 20 vs. Q3 20 vs. 2020 2019 2020 Q3 19 Q2 20Real estate - )construction and $ 1,143,202 $ 1,142,225 $ 1,178,832 0.09 % (3.02 %developmentCommercial realestate - non owner 2,338,532 2,070,317 2,332,447 12.96 % 0.26 %occupiedCommercial real )estate - owner 1,378,443 1,286,137 1,383,294 7.18 % (0.35 %occupiedReal estate - 289,270 219,901 277,947 31.55 % 4.07 %multifamilyReal estate - )residential 1-4 1,660,535 1,621,175 1,670,530 2.43 % (0.60 %family and HELOCCommercial and 2,499,801 1,527,515 2,503,161 63.65 % (0.13 )industrial business %Consumer and other 460,787 315,559 455,678 46.02 % 1.12 %loansTotal $ 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 20Noninterest-bearing $ 4,464,178 $ 3,030,505 $ 4,226,208 47.31 % 5.63 %demandInterest-bearing: Demand and money 4,642,482 3,534,252 4,223,391 31.36 % 9.92 %market accountsSavings 312,444 280,552 298,673 11.37 % 4.61 %Certificates of 2,285,859 2,592,705 2,516,666 (11.83 ) (9.17 )deposits % %Total $ 11,704,963 $ 9,438,014 $ 11,264,938 24.02 % 3.91 %

TOWNEBANKAverage Balances, Yields and Rate Paid (unaudited)(dollars in thousands)

Three Months Ended Three Months Ended Three Months Ended September30, 2020 June30, 2020 September30, 2019 Interest Average Interest Average Interest Average Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/ Balance Expense Rate Balance Expense Rate Balance Expense RateAssets: Loans (net ofunearned income anddeferred costs), $ 9,752,746 $ 103,401 4.22 % $ 9,619,931 $ 102,656 4.29 % $ 8,096,908 $ 102,495 5.02 %excludingnonaccrual loans(1)Taxable investment 1,206,679 6,726 2.23 % 1,198,776 7,367 2.46 % 1,266,447 9,087 2.87 %securitiesTax-exemptinvestment 144,999 779 2.15 % 147,489 836 2.27 % 121,738 997 3.28 %securitiesTotal securities 1,351,678 7,505 2.22 % 1,346,265 8,203 2.44 % 1,388,185 10,084 2.91 %Interest-bearing 2,523,644 632 0.10 % 1,729,140 433 0.10 % 711,030 3,745 2.09 %depositsLoans held for sale 634,309 4,587 2.89 % 464,796 3,811 3.28 % 408,377 3,956 3.87 %Total earning 14,262,377 116,125 3.24 % 13,160,132 115,103 3.52 % 10,604,500 120,280 4.50 %assetsLess: allowance for (95,594 ) (69,451 ) (54,858 ) credit lossesTotal nonearning 1,320,369 1,318,787 1,295,640 assetsTotal assets $ 15,487,152 $ 14,409,468 $ 11,845,282 Liabilities and Equity:Interest-bearing depositsDemand and money $ 4,311,920 $ 2,663 0.25 % $ 3,857,757 $ 2,491 0.26 % $ 3,379,888 $ 7,223 0.85 %marketSavings 304,753 555 0.72 % 290,201 554 0.77 % 278,048 702 1.00 %Certificates of 2,417,772 9,747 1.60 % 2,503,648 12,027 1.93 % 2,641,681 15,627 2.35 %depositTotalinterest-bearing 7,034,445 12,965 0.73 % 6,651,606 15,072 0.91 % 6,299,617 23,552 1.48 %depositsBorrowings 1,931,120 2,841 0.58 % 1,741,832 3,238 0.74 % 486,644 2,020 1.62 %Subordinated debt, 248,807 2,962 4.76 % 248,660 2,962 4.76 % 248,210 2,962 4.77 %netTotalinterest-bearing 9,214,372 18,768 0.81 % 8,642,098 21,272 0.99 % 7,034,471 28,534 1.61 %liabilitiesDemand deposits 4,268,443 3,826,439 2,940,370 Othernoninterest-bearing 257,304 239,154 250,371 liabilitiesTotal liabilities 13,740,119 12,707,691 10,225,212 Shareholders? 1,747,033 1,701,777 1,620,070 equityTotal liabilities $ 15,487,152 $ 14,409,468 $ 11,845,282 and equityNet interest income(tax-equivalent $ 97,357 $ 93,831 $ 91,746 basis)Reconcilement ofNon-GAAP Financial MeasuresTax-equivalent (598 ) (557 ) (643 ) basis adjustmentNet interest income $ 96,759 $ 93,274 $ 91,103 (GAAP) Interest rate 2.43 % 2.53 % 2.89 %spread (2)(4)Interest expense asa percent of 0.52 % 0.65 % 1.07 %average earningassetsNet interest margin(tax equivalent 2.72 % 2.87 % 3.43 %basis) (3)(4)Total cost of 0.46 % 0.58 % 1.01 %deposits

(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.

TOWNEBANKAverage Balances, Yields and Rate Paid (unaudited)(dollars in thousands)

Nine Months Ended Nine Months Ended Nine Months Ended September30, September30, 2020 September30, 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 VolumeAssets: Loans (net ofunearned income anddeferred costs), $ 9,309,256 $ 306,622 4.40 % $ 8,067,894 $ 305,007 5.05 % $ 1,615 $ (42,206 ) $ 43,822 excludingnonaccrual loans(1)Taxable investment 1,253,783 23,304 2.48 % 1,158,611 24,962 2.87 % (1,658 ) (3,603 ) 1,945 securitiesTax-exemptinvestment 140,248 2,476 2.35 % 97,485 2,519 3.45 % (43 ) (944 ) 902 securitiesTotal securities 1,394,031 25,780 2.47 % 1,256,096 27,481 2.92 % (1,701 ) (4,547 ) 2,847 Interest-bearing 615,466 2,168 0.47 % 700,840 11,758 2.24 % (9,590 ) (8,309 ) (1,281 ) depositsLoans held for sale 477,964 11,386 3.18 % 290,384 8,966 4.12 % 2,420 (2,394 ) 4,814 Total earning 11,796,717 345,956 3.92 % 10,315,214 353,212 4.58 % (7,256 ) (57,456 ) 50,202 assetsLess: allowance for (73,538 ) (53,703 ) loan lossesTotal nonearning 2,264,295 1,264,976 assetsTotal assets $ 13,987,474 $ 11,526,487 Liabilities and Equity:Interest-bearing depositsDemand and money $ 3,898,642 $ 10,472 0.36 % $ 3,289,539 $ 20,488 0.83 % $ (10,016 ) $ (13,287 ) $ 3,271 marketSavings 290,684 1,702 0.78 % 281,562 2,658 1.26 % (956 ) (1,040 ) 84 Certificates of 2,451,715 34,925 1.90 % 2,456,360 41,364 2.25 % (6,439 ) (6,362 ) (78 ) depositTotalinterest-bearing 6,641,041 47,099 0.95 % 6,027,461 64,510 1.43 % (17,411 ) (20,689 ) 3,277 depositsBorrowings 1,452,652 8,661 0.78 % 661,216 9,559 1.91 % (898 ) (7,871 ) 6,973 Subordinated debt, 248,660 8,885 4.76 % 248,064 8,885 4.78 % ? (22 ) 21 netTotalinterest-bearing 8,342,353 64,645 1.04 % 6,936,741 82,954 1.60 % (18,309 ) (28,582 ) 10,271 liabilitiesDemand deposits 3,687,791 2,787,727 Othernoninterest-bearing 252,337 221,806 liabilitiesTotal liabilities 12,282,481 9,946,274 Shareholders? 1,704,993 1,580,213 equityTotal liabilities $ 13,987,474 $ 11,526,487 and equityNet interest income(tax-equivalent $ 281,311 $ 270,258 $ 11,053 $ (28,874 ) $ 39,931 basis)Reconcilement ofNon-GAAP Financial MeasuresTax-equivalent (1,781 ) (1,862 ) 81 basis adjustmentNet interest income $ 279,530 $ 268,396 $ 11,134 (GAAP) Interest rate 2.88 % 2.98 % spread (2)(4)Interest expense asa percent of 0.73 % 1.08 % average earningassetsNet interest margin(tax equivalent 3.19 % 3.50 % basis) (3)(4)Total cost of 0.61 % 0.98 % deposits (1) Includes average PPP balances of $0.64 billion and related interestincome of $15.65 million(2) Interest spread is the average yield earned on earning assets less theaverage rate paid on interest-bearing liabilities. Fully tax equivalent.(3) Net interest margin is net interest income expressed as a percentage ofaverage earning assets. Fully tax equivalent.(4) Non-GAAP.

TOWNEBANKConsolidated Balance Sheets(dollars in thousands, except share data) September30, 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 24,890 22,518 institutionsTotal Cash and Cash Equivalents 1,809,680 442,616 Securities available for sale, at fairvalue (amortized cost $1,249,254, allowance 1,310,683 1,441,308 for credit losses of $4) (1)Securities held to maturity, at amortized 17,131 43,688 cost (fair value $19,102 )(1)Less: allowance for credit losses (90 ) ? Securities held to maturity, net of 17,041 43,688 allowance for credit lossesOther 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 9,770,570 8,419,288 costsLess: 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: 150,000,000shares authorized 72,656,729 and 72,649,682 121,115 121,107 shares issued at September 30, 2020 andDecember 31, 2019, respectivelyCapital surplus 1,045,170 1,041,160 Retained earnings 520,888 467,186 Common stock issued to deferredcompensation trust, at cost 872,498 and (16,951 ) (15,555 ) 818,578 shares at September 30, 2020 andDecember 31, 2019, respectivelyDeferred compensation trust 16,951 15,555 Accumulated other comprehensive income 44,569 11,302 (loss)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.

TOWNEBANKConsolidated Statements of Income (unaudited)(dollars in thousands, except per share data) Three Months Ended Nine Months Ended September30, September30, 2020 2019 2020 2019INTEREST INCOME: Loans, including $ 102,869 $ 102,047 $ 305,070 $ 303,616 feesInvestment 7,440 9,889 25,553 27,010 securitiesInterest-bearingdeposits infinancial 632 3,745 2,168 11,758 institutions andfederal fundssoldMortgage loans 4,587 3,956 11,385 8,966 held for saleTotal interest 115,528 119,637 344,176 351,350 incomeINTEREST EXPENSE:Deposits 12,966 23,552 47,099 64,510 Advances from 1,901 1,935 6,990 9,288 the FHLBSubordinated 2,962 2,962 8,885 8,885 debt, netRepurchaseagreements and 940 85 1,672 271 other borrowingsTotal interest 18,769 28,534 64,646 82,954 expenseNet interest 96,759 91,103 279,530 268,396 income PROVISION FOR 31,598 1,508 65,559 5,770 CREDIT LOSSESNet interestincome after 65,161 89,595 213,971 262,626 provision forcredit lossesNONINTEREST INCOME:Residentialmortgage banking 37,531 18,855 74,662 50,929 income, netInsurancecommissions and 17,468 16,681 51,973 49,477 other title feesand income, netReal estatebrokerage andproperty 11,301 9,444 29,020 27,555 managementincome, netService chargeson deposit 1,986 2,253 6,314 8,299 accountsCredit cardmerchant fees, 1,506 1,514 3,793 3,357 netBOLI 1,605 2,117 6,295 5,350 Other income 22,278 3,981 31,268 11,754 Net gain/(loss)on investment 1,701 (69 ) 9,632 (845 ) securitiesTotalnoninterest 95,376 54,776 212,957 155,876 incomeNONINTEREST EXPENSE:Salaries andemployee 61,408 55,784 174,201 162,907 benefitsOccupancy 8,396 7,953 23,124 23,866 expenseFurniture and 3,247 3,805 10,451 10,753 equipmentAmortization - 2,851 3,059 8,702 9,364 intangiblesSoftware expense 3,572 3,208 10,556 8,742 Data processing 3,113 2,533 8,622 9,316 Professional 2,637 3,566 8,677 9,952 feesAdvertising and 1,870 3,429 7,440 9,440 marketingOther expenses 14,887 13,950 38,121 41,627 Totalnoninterest 101,981 97,287 289,894 285,967 expenseIncome beforeincome taxexpense and 58,556 47,084 137,034 132,535 noncontrollinginterestProvision forincome tax 7,841 7,684 21,492 24,810 expenseNet income $ 50,715 $ 39,400 $ 115,542 $ 107,725 Net incomeattributable to (16,251 ) (1,741 ) (20,089 ) (4,018 ) noncontrollinginterestNet incomeattributable to $ 34,464 $ 37,659 $ 95,453 $ 103,707 TowneBankPer common share informationBasic earnings $ 0.48 $ 0.52 $ 1.32 $ 1.44 Diluted earnings $ 0.48 $ 0.52 $ 1.32 $ 1.44 Cash dividends $ 0.18 $ 0.18 $ 0.54 $ 0.52 declared

TOWNEBANKConsolidated Balance Sheets - Five Quarter Trend(dollars in thousands, except share data)

September30, June 30, March31, December 31, September30, 2020 2020 2020 2019 2019 (unaudited) (unaudited) (unaudited) (audited) (unaudited)ASSETS Cash and due from $ 114,604 $ 115,724 $ 108,929 $ 97,593 $ 124,439 banksInterest-bearingdeposits at FRB - 1,670,186 2,511,152 753,643 322,505 675,288 RichmondInterest-bearingdeposits in 24,890 24,374 23,564 22,518 21,663 financialinstitutionsTotal Cash and Cash 1,809,680 2,651,250 886,136 442,616 821,390 EquivalentsSecurities 1,310,683 1,266,624 1,248,420 1,441,308 1,337,395 available for saleSecurities held to 17,131 41,595 42,431 43,688 44,494 maturityLess: allowance (90 ) (121 ) (133 ) ? ? for credit lossesSecurities held tomaturity, net of 17,041 41,474 42,298 43,688 44,494 allowance forcredit lossesOther equity 6,497 6,497 6,462 6,462 5,697 securitiesFHLB 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 669,020 610,369 453,143 419,233 456,719 for saleLoans, net ofunearned income and 9,770,570 9,801,889 8,784,195 8,419,288 8,182,829 deferred costsLess: allowance for (119,058 ) (90,467 ) (64,372 ) (58,234 ) (55,428 ) credit lossesNet Loans 9,651,512 9,711,422 8,719,823 8,361,054 8,127,401 Premises and 256,909 257,533 236,735 231,806 231,060 equipment, netGoodwill 446,725 446,725 446,725 446,816 446,423 Other intangible 45,781 48,632 51,448 54,399 57,404 assets, netBOLI 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 EQUITYDeposits: Noninterest-bearing $ 4,464,178 $ 4,226,208 $ 3,060,515 $ 2,951,225 $ 3,030,505 demandInterest-bearing: Demand and money 4,642,482 4,223,391 3,573,926 3,586,364 3,534,252 market accountsSavings 312,444 298,673 280,807 276,205 280,552 Certificates of 2,285,859 2,516,666 2,392,744 2,457,123 2,592,705 depositTotal Deposits 11,704,963 11,264,938 9,307,992 9,270,917 9,438,014 Advances from the 731,202 906,365 971,527 471,687 381,846 FHLBSubordinated debt, 248,906 248,756 248,607 248,458 248,309 netFRB PPP lending ? 1,111,429 ? ? ? facilityRepurchaseagreements and 58,061 60,913 171,762 52,391 42,971 other borrowingsTotal 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 - ? ? ? ? ? 2,000,000Common stock, 121,115 121,101 121,057 121,107 121,080 $1.667 par valueCapital 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 issuedto deferred (16,951 ) (16,776 ) (15,562 ) (15,555 ) (15,317 ) compensation trust,at costDeferred 16,951 16,776 15,562 15,555 15,317 compensation trustAccumulated othercomprehensive 44,569 43,218 12,301 11,302 19,958 income (loss)TOTAL SHAREHOLDERS? 1,731,742 1,707,595 1,653,200 1,640,755 1,625,380 EQUITYNoncontrolling 16,961 13,948 12,432 12,939 13,154 interestTOTAL EQUITY 1,748,703 1,721,543 1,665,632 1,653,694 1,638,534 TOTAL LIABILITIES $ 14,795,417 $ 15,580,258 $ 12,623,826 $ 11,947,663 $ 12,021,291 AND EQUITY

TOWNEBANKConsolidated Statements of Income - Five Quarter Trend (unaudited)(dollars in thousands, except share data) Three Months Ended September30, June30, March31, December 31, September30, 2020 2020 2020 2019 2019INTEREST INCOME: Loans, including $ 102,869 $ 102,139 $ 100,062 $ 100,059 $ 102,047 feesInvestment 7,440 8,163 9,949 9,936 9,889 securitiesInterest-bearingdeposits infinancial 632 433 1,102 2,067 3,745 institutions andfederal fundssoldMortgage loans 4,587 3,811 2,988 4,413 3,956 held for saleTotal interest 115,528 114,546 114,101 116,475 119,637 incomeINTEREST EXPENSE:Deposits 12,966 15,072 19,062 21,744 23,552 Advances from 1,901 2,595 2,492 1,730 1,935 the FHLBSubordinated 2,962 2,962 2,962 2,962 2,962 debtRepurchaseagreements and 940 643 89 80 85 other borrowingsTotal interest 18,769 21,272 24,605 26,516 28,534 expenseNet interest 96,759 93,274 89,496 89,959 91,103 income PROVISION FOR 31,598 26,945 7,016 3,601 1,508 CREDIT LOSSESNet interestincome after 65,161 66,329 82,480 86,358 89,595 provision forcredit lossesNONINTEREST INCOME:Residentialmortgage banking 37,531 29,715 7,416 15,884 18,855 income, netInsurancecommissions and 17,468 17,612 16,893 15,001 16,681 other title feesand income, netReal estatebrokerage andproperty 11,301 10,781 6,938 6,737 9,444 managementincome, netService chargeson deposit 1,986 1,888 2,440 2,245 2,253 accountsCredit cardmerchant fees, 1,506 1,109 1,179 1,389 1,514 netBOLI 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 1,701 2,930 5,002 ? (69 ) securitiesTotalnoninterest 95,376 69,382 48,200 49,712 54,776 incomeNONINTEREST EXPENSE:Salaries andemployee 61,408 56,926 55,867 56,013 55,784 benefitsOccupancy 8,396 7,227 7,502 7,516 7,953 expenseFurniture and 3,247 3,564 3,640 3,598 3,805 equipmentAmortization - 2,851 2,901 2,950 3,005 3,059 intangiblesSoftware expense 3,572 3,492 3,492 2,976 3,208 Data processing 3,113 2,718 2,791 2,510 2,533 Professional 2,637 2,972 3,067 2,990 3,566 feesAdvertising and 1,870 1,986 3,584 2,839 3,429 marketingOther expenses 14,887 9,239 13,995 10,889 13,950 Totalnoninterest 101,981 91,025 96,888 92,336 97,287 expenseIncome beforeincome taxexpense and 58,556 44,686 33,792 43,734 47,084 noncontrollinginterestProvision forincome tax 7,841 7,464 6,187 7,786 7,684 expenseNet income 50,715 37,222 27,605 35,948 39,400 Net incomeattributable to (16,251 ) (2,617 ) (1,221 ) (873 ) (1,741 ) noncontrollinginterestNet incomeattributable to $ 34,464 $ 34,605 $ 26,384 $ 35,075 $ 37,659 TowneBankPer common share informationBasic earnings $ 0.48 $ 0.48 $ 0.37 $ 0.49 $ 0.52 Diluted earnings $ 0.48 $ 0.48 $ 0.36 $ 0.49 $ 0.52 Basic weightedaverage shares 72,307,961 72,280,555 72,206,228 72,122,476 72,091,221 outstandingDiluted weightedaverage shares 72,344,284 72,317,988 72,299,721 72,302,414 72,222,934 outstandingCash dividends $ 0.18 $ 0.18 $ 0.18 $ 0.18 $ 0.18 declared

TOWNEBANKBanking Segment Financial Information (unaudited)(dollars in thousands)

Three Months Ended Nine Months Ended Increase/(Decrease) September30, June30, September30, 2020 over 2019 2020 2019 2020 2020 2019 Amount PercentRevenue Net interest $ 92,869 $ 89,490 $ 89,665 $ 269,941 $ 264,332 $ 5,609 2.12 %incomeServicecharges on 1,986 2,253 1,888 6,315 8,299 (1,984 ) (23.91 )deposit %accountsCredit card 1,506 1,514 1,109 3,793 3,357 436 12.99 %merchant feesOther 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 1,701 (69 ) 2,930 9,632 (845 ) 10,477 1,239.88 %investmentsecuritiesTotalnoninterest 10,069 8,850 9,815 35,566 25,161 10,405 41.35 %incomeTotal revenue 102,938 98,340 99,480 305,507 289,493 16,014 5.53 % Provision for 31,070 1,508 26,059 64,170 5,770 58,400 1,012.13 %credit losses Expenses Salaries andemployee 36,535 33,526 35,209 104,970 96,966 8,004 8.25 %benefitsOccupancy 5,829 5,209 4,812 15,557 15,460 97 0.63 %expenseFurniture and 2,424 2,779 2,715 7,800 7,662 138 1.80 %equipmentAmortization 1,063 1,265 1,114 3,341 3,946 (605 ) (15.33 )of intangibles %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 beforeincome tax,corporate 10,224 36,955 18,853 64,455 107,471 (43,016 ) (40.03 )allocation and %noncontrollinginterestCorporate 595 384 627 1,891 1,383 508 36.73 %allocationIncome beforeincome tax )provision and 10,819 37,339 19,480 66,346 108,854 (42,508 ) (39.05 %noncontrollinginterestProvision for )income tax 474 5,495 2,167 9,304 19,337 (10,033 ) (51.88 %expenseNet income 10,345 31,844 17,313 57,042 89,517 (32,475 ) (36.28 ) %Noncontrolling (2 ) ? 5 2 4 (2 ) (50.00 )interest %Net income )attributable $ 10,343 $ 31,844 $ 17,318 $ 57,044 $ 89,521 $ (32,477 ) (36.28 %to TowneBank Efficiency 60.89 % 60.85 % 56.52 % 59.78 % 60.71 % (0.93 ) (1.53 )ratio % %

TOWNEBANKRealty Segment Financial Information (unaudited)(dollars in thousands)

Three Months Ended Nine Months Ended Increase/(Decrease) September30, June30, September30, 2020 over 2019 2020 2019 2020 2020 2019 Amount PercentRevenue Residentialmortgage $ 38,074 $ 19,171 $ 30,468 $ 76,549 $ 51,826 $ 24,723 47.70 %brokerageincome, netReal estatebrokerage 3,688 2,882 2,659 8,212 7,315 897 12.26 %income, netTitleinsurance and 654 617 639 1,728 1,581 147 9.30 %settlementfeesPropertymanagement 7,613 6,562 8,122 20,808 20,240 568 2.81 %fees, netIncome fromunconsolidated 451 185 301 938 441 497 112.70 %subsidiaryNet interestand other 4,101 1,885 3,765 10,262 4,937 5,325 107.86 %incomeTotal revenue 54,581 31,302 45,954 118,497 86,340 32,157 37.24 % Provision for 528 ? 886 1,389 ? 1,389 n/m credit losses Expenses Salaries andemployee 15,744 13,474 13,059 42,095 39,678 2,417 6.09 %benefitsOccupancy 1,906 2,055 1,763 5,595 6,428 (833 ) (12.96 )%expenseFurniture and 620 754 626 2,007 2,326 (319 ) (13.71 )%equipmentAmortizationof intangible 658 666 658 1,973 2,086 (113 ) (5.42 )%assetsOther 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 incometax, corporate 25,899 6,875 20,692 41,072 14,869 26,203 176.23 %allocation andnoncontrollinginterestCorporate (356 ) (208 ) (370 ) (1,119 ) (800 ) (319 ) 39.88 %allocation(Loss) incomebefore incometax provision 25,543 6,667 20,322 39,953 14,069 25,884 183.98 %andnoncontrollinginterestProvision forincome tax 4,780 1,454 4,127 7,614 3,292 4,322 131.29 %(benefit)expenseNet (loss) 20,763 5,213 16,195 32,339 10,777 21,562 200.07 %incomeNoncontrolling (4,790 ) (1,496 ) (2,415 ) (7,996 ) (2,997 ) (4,999 ) 166.80 %interestNet (loss)income $ 15,973 $ 3,717 $ 13,780 $ 24,343 $ 7,780 $ 16,563 212.89 %attributableto TowneBank Efficiency 51.58 % 78.04 % 53.04 % 64.17 % 82.78 % (18.61 ) (22.48 )%ratio %

TOWNEBANKInsurance Segment Financial Information (unaudited)(dollars in thousands)

Three Months Ended Nine Months Ended Increase/(Decrease) September30, June30, September30, 2020 over 2019 2020 2019 2020 2020 2019 Amount PercentCommission and fee incomeProperty and $ 14,072 $ 13,481 $ 13,926 $ 40,784 $ 38,421 $ 2,363 6.15 %casualtyEmployee 3,825 3,629 3,791 11,534 10,968 566 5.16 %benefitsTravel 1,399 834 861 3,526 3,292 234 7.11 %insuranceSpecialized )benefit 165 166 157 489 499 (10 ) (2.00 %servicesTotalcommissions 19,461 18,110 18,735 56,333 53,180 3,153 5.93 %and fees Contingencyand bonus 1,112 1,431 2,009 5,144 4,910 234 4.77 %revenueOther 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 % Employeecommission 3,654 3,378 3,649 10,900 9,878 1,022 10.35 %expenseRevenue, netof commission 34,616 16,237 17,222 68,483 48,439 20,044 41.38 %expense Salaries andemployee 9,129 8,784 8,658 27,136 26,263 873 3.32 %benefitsOccupancy 661 689 652 1,972 1,978 (6 ) (0.30 )expense %Furniture and 203 272 223 644 765 (121 ) (15.82 )equipment %Amortizationof intangible 1,130 1,128 1,129 3,388 3,332 56 1.68 %assetsOther expenses 1,060 2,110 1,419 3,836 5,906 (2,070 ) (35.05 ) %Total )operating 12,183 12,983 12,081 36,976 38,244 (1,268 ) (3.32 %expensesIncome beforeincome tax,corporate 22,433 3,254 5,141 31,507 10,195 21,312 209.04 %allocation andnoncontrollinginterestCorporate (239 ) (176 ) (257 ) (772 ) (583 ) (189 ) 32.42 %allocationIncome beforeincome taxprovision and 22,194 3,078 4,884 30,735 9,612 21,123 219.76 %noncontrollinginterestProvision forincome tax 2,587 735 1,170 4,574 2,181 2,393 109.72 %expenseNet income 19,607 2,343 3,714 26,161 7,431 18,730 252.05 %Noncontrolling (11,459 ) (245 ) (207 ) (12,095 ) (1,025 ) (11,070 ) 1,080.00 %interestNet incomeattributable $ 8,148 $ 2,098 $ 3,507 $ 14,066 $ 6,406 $ 7,660 119.58 %to TowneBank Provision for 2,587 735 1,170 4,574 2,181 2,393 109.72 %income taxesDepreciation,amortization 1,285 1,325 1,291 3,875 3,943 (68 ) (1.72 )and interest %expenseEBITDA $ 12,020 $ 4,158 $ 5,968 $ 22,515 $ 12,530 $ 9,985 79.69 %(non-GAAP) Efficiency 35.19 % 79.96 % 70.15 % 53.99 % 78.95 % $ (0.25 ) (31.67 )ratio %*Included inother incomeis the gross $ 17,626 ? % n/m $ 17,626 ? % n/m gain on thesale of RedSkyEfficiency )ratio 71.71 % 79.96 % 70.15 % 72.71 % 78.95 % $ (0.06 ) (7.60 %excluding gain

TOWNEBANKReconcilement of Non-GAAP Financial Measures(dollars in thousands) Three Months Ended Nine Months Ended September30, September30, June30, September30, September30, 2020 2019 2020 2020 2019 Return onaverage assets 0.89 % 1.26 % 0.97 % 0.91 % 1.17 %(GAAP)Impact ofexcludingaveragegoodwill and 0.08 % 0.14 % 0.10 % 0.10 % 0.15 %otherintangiblesandamortizationReturn onaveragetangible 0.97 % 1.40 % 1.07 % 1.01 % 1.32 %assets(non-GAAP) Return onaverage equity 7.85 % 9.22 % 8.18 % 7.48 % 8.54 %(GAAP)Impact ofexcludingaveragegoodwill and 3.81 % 4.98 % 4.14 % 3.84 % 5.03 %otherintangiblesandamortizationReturn onaveragetangible 11.66 % 14.20 % 12.32 % 11.32 % 13.57 %equity(non-GAAP) Return onaverage common 7.91 % 9.29 % 8.24 % 7.53 % 8.60 %equity (GAAP)Impact ofexcludingaveragegoodwill and 3.88 % 5.07 % 4.20 % 3.91 % 5.13 %otherintangiblesandamortizationReturn onaveragetangible 11.79 % 14.36 % 12.44 % 11.44 % 13.73 %common equity(non-GAAP) Book value $ 23.83 $ 22.38 $ 23.50 $ 23.83 $ 21.95 (GAAP)Impact ofexcludingaveragegoodwill and (6.77 ) (6.94 ) (6.82 ) (6.77 ) (6.90 ) otherintangiblesandamortizationTangible bookvalue $ 17.06 $ 15.44 $ 16.68 $ 17.06 $ 15.05 (non-GAAP) Efficiency 53.08 % 55.96 % 66.69 % 58.86 % 67.40 %ratio (GAAP)Impact ofexcluding gain (0.47 )% (1.03 )% 0.03 % (1.18 )% 0.13 %/loss oninvestmentsEfficiencyratio 53.55 % 56.99 % 66.66 % 60.04 % 67.27 %(non-GAAP) Average assets $ 15,487,152 $ 11,845,282 $ 14,409,468 $ 13,987,474 $ 11,526,487 (GAAP)Less: average 446,725 442,919 446,725 446,762 442,890 goodwillLess: averageintangible 47,513 57,327 50,352 50,373 60,333 assetsAveragetangible $ 14,992,914 $ 11,345,036 $ 13,912,391 $ 13,490,339 $ 11,023,264 assets(non-GAAP) Average equity $ 1,747,033 $ 1,620,070 $ 1,701,777 $ 1,704,993 $ 1,580,213 (GAAP)Less: average 446,725 442,919 446,725 446,762 442,890 goodwillLess: averageintangible 47,513 57,327 50,352 50,373 60,333 assetsAveragetangible $ 1,252,795 $ 1,119,824 $ 1,204,700 $ 1,207,858 $ 1,076,990 equity(non-GAAP) Average common $ 1,732,881 $ 1,607,853 $ 1,689,603 $ 1,692,202 1,568,336 equity (GAAP)Less: average 446,725 442,919 446,725 446,762 442,890 goodwillLess: averageintangible 47,513 57,327 50,352 50,373 60,333 assetsAveragetangible $ 1,238,643 $ 1,107,607 $ 1,192,526 $ 1,195,067 $ 1,065,113 common equity(non-GAAP) Net Income $ 34,464 $ 37,659 34,605 95,453 103,707 (GAAP)Amortizationof 2,252 2,417 2,292 6,875 7,398 Intangibles,net of taxTangible NetIncome $ 36,716 $ 40,076 $ 36,897 $ 102,328 $ 111,105 (non-GAAP) Net Income $ 34,464 $ 37,659 $ 34,605 $ 95,453 $ 103,707 (GAAP)Provision for 31,598 1,508 26,945 65,559 5,770 credit lossesProvision for 7,841 7,684 7,464 21,492 24,810 income taxPre-provision,pre-tax net $ 73,903 $ 46,851 $ 69,014 $ 182,504 $ 134,287 revenues(non-GAAP) Total Revenue $ 192,135 $ 162,656 $ 145,879 $ 492,487 $ 424,272 (GAAP)Net (gain)/loss on (1,701 ) (2,930 ) 69 (9,632 ) 845 investmentsecuritiesTotal Revenuefor Efficiency $ 190,434 $ 159,726 $ 145,948 $ 482,855 $ 425,117 calculation(non-GAAP)