GlobeNewswire Inc | Jul 23, 2020 08:30AM EDT

July 23, 2020

SUFFOLK, Va., July 23, 2020 (GLOBE NEWSWIRE) -- TowneBank (the Company) (NASDAQ: TOWN) today reported earnings for the quarter ended June30, 2020 of $34.61million, or $0.48 per diluted share, compared to $34.64million, or $0.48 per diluted share, for the quarter ended June30, 2019.

Our second quarter performance demonstrated the benefits of our diverse revenue model. Despite the headwinds from economic uncertainty and increased credit provisions, we delivered a solid quarter highlighted by rebounds in noninterest income from our Realty segment. Our deposits climbed to record levels enhancing liquidity and strong capital ratios position us well to navigate the challenging environment. We will also continue to be diligent in our focus on credit risk management, said G. Robert Aston, Jr., Executive Chairman.

Highlights for Second Quarter 2020 Compared to Second Quarter 2019:

-- Total revenues were a record $162.66million, an increase of $18.12million, or 12.54%. -- Loans held for investment were $9.80 billion, an increase of $1.68billion, or 20.61%, from June30, 2019, and $1.02billion, or 11.59%, from March31, 2020. The balance at June 30, 2020 included $1.09 billion of loans originated under the Small Business Administrations Paycheck Protection Program (PPP). -- Total deposits were $11.26billion, an increase of $2.00billion, or 21.54%, compared to prior year and $1.96billion, or 21.02%, from March31, 2020. -- Noninterest bearing deposits increased by 43.23%, to $4.23billion, representing 37.52% of total deposits. Compared to the linked quarter, noninterest bearing deposits increased 38.09%. -- Annualized return on common shareholders' equity was 8.24% and annualized return on average tangible common shareholders' equity was 12.44% (non-GAAP). -- Net interest margin for the quarter was 2.85% and taxable equivalent net interest margin (non-GAAP) was 2.87%. -- Effective tax rate of 17.74% in the quarter compared to 20.47% in the second quarter of 2019.

I am especially proud of the outstanding service our teammates delivered to our members and the communities we serve. At Towne, we delivered over $1 billion in PPP funding to support businesses in our communities helping to save nearly 130,000 jobs for local families. In addition, we created more than 650 new relationships out of the PPP process, stated J. Morgan Davis, President and Chief Executive Officer.

Quarterly Net Interest Income Compared to Second Quarter 2019:

-- Net interest income was $93.27million compared to $89.82million at June30, 2019. -- Taxable equivalent net interest margin (non-GAAP) was 2.87%, including accretion of 8basispoints, compared to 3.52%, including accretion of 11basispoints, for second quarter 2019. -- Average loans held for investment, with an average yield of 4.29%, represented 73.10% of average earning assets at June30, 2020 compared to an average yield of 5.08% and 78.27% of average earning assets in the second quarter of 2019. Excluding PPP, loan yields were 4.42% in second quarter 2020. -- Total cost of deposits decreased to 0.58% from 0.99% at June 30, 2019. -- Average interest-earning assets totaled $13.16billion at June30, 2020 compared to $10.32billion at June30, 2019, an increase of 27.56%. -- Average interest-bearing liabilities totaled $8.64billion, an increase of $1.69billion from prior year.

Quarterly Provision for Credit Losses:

-- Recorded a quarterly provision for credit losses for on-balance-sheet loans of $25.99million compared to $2.82million one year ago and $5.76million in the linked quarter. This increase is primarily attributable to management's expectation of continued economic weakness driven by the impact of the COVID-19 pandemic. 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 $0.10million compared to charge-offs of $1.60million one year prior. The ratio of net loan charge-offs to average loans on an annualized basis was 0.03% in the linked quarter and 0.08% in the second quarter of 2019. -- Recorded a provision for credit losses on off-balance-sheet commitments of $1.08million compared to $1.10 million in the linked quarter. -- Recorded a recovery of credit losses on debt securities of $0.13million compared to a credit loss of $0.16 million in the linked quarter. -- The allowance for credit losses on loans represented 0.92% of total loans compared to 0.73% at March31, 2020 and 0.67% at June30, 2019. Excluding PPP loans, which are fully government guaranteed, the allowance for credit losses was 1.04%. The allowance for credit losses on loans was 5.34 times nonperforming loans compared to 3.85 times at March31, 2020 and 3.00 times at June30, 2019.

Quarterly Noninterest Income Compared to Second Quarter 2019:

-- Total noninterest income was $69.38million compared to $54.72million in 2019, an increase of $14.66million, or 26.80%. Residential mortgage banking income increased $11.15million and real estate brokerage and property management income increased $1.94million, while service charges on deposit accounts decreased $1.30million. Also included in noninterest income are net gains on investment securities of $2.93million as compared to no gains or losses in the prior year. -- Residential mortgage banking recorded income of $29.72million compared to $18.57million in second quarter 2019. Loan volume in the current quarter was $1.47billion, with purchase activity comprising 51.26% of that volume. Loan volume in second quarter 2019 was $821.13million, with purchase activity comprising 84.97%. Increased refinancing activity due to the mortgage rate environment in second quarter 2020, coupled with improved margins were the primary drivers of improvement compared to the prior year quarter. -- Total Insurance segment revenue increased 3.30% to $20.87million in the second quarter due to organic growth and additional income from a third quarter 2019 agency acquisition. -- Property management fee revenue increased 36.05%, or $2.15million, compared to second quarter 2019. Reservations were down significantly in first quarter 2020 due to travel restrictions driven by COVID-19 and the uncertainty surrounding summer travel. The lifting of local travel restrictions, in the areas of our vacation rental companies, drove increased reservation activity during the quarter. -- Service charges are down $1.30million, or 40.72%, compared to second quarter 2019 primarily due to a decrease in interchange fees related to Durbin Amendment compliance, combined with a lower transaction volumes and fees waived for members experiencing financial hardships.

Quarterly Noninterest Expense Compared to Second Quarter 2019:

-- Total noninterest expense was $91.03million compared to $96.56million in 2019, a decrease of $5.53million, or 5.73%. Declines across most expense categories were partially offset by increases in salary and benefits expense of $2.66million and software expense of $0.70million. -- Market expansion and infrastructure enhancements, 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.

Quarterly Income Taxes Compared to Second Quarter 2019:

-- Income tax expense was $7.46million compared to $8.92million one year prior. This represents an effective tax rate of 17.74% compared to 20.47% in the second quarter of 2019.

Consolidated Balance Sheet Highlights:

-- Total assets were $15.58billion for the quarter ended June30, 2020, an increase of $3.63billion, or 30.40%, compared to $12.62 billion at March 31, 2020. Total assets increased $3.64billion, or 30.46%, from $11.94billion at June30, 2019. The year-to-date 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 $1.68 billion, or 20.61%, compared to prior year and $1.02billion compared the linked quarter. Excluding PPP loans of $1.09 billion, loans held for investment increased $0.59 billion, or 7.20%, compared to prior year, but declined $72.31 million, or 0.82%, compared to the linked quarter. -- Mortgage loans held for sale increased $247.60 million, or 68.25%, compared to the prior year and $157.23 million, or 34.70%, compared to the linked quarter. -- Total deposits increased $2.0billion, or 21.54%, compared to the prior year and $1.96 billion, or 21.02%, compared to the linked quarter. -- Total borrowings increased $1.49billion, or 178.23%, from prior year and $0.94billion, or 67.22%, compared to the linked quarter. These increases were driven by $1.11 billion in borrowings under the FRB PPP lending facility, which we used to facilitate funding of the PPP loans.

Investment Securities:

-- Total investment securities were $1.36billion compared to $1.35billion at March31, 2020 and $1.35billion at June30, 2019. The weighted average duration of the portfolio at June30, 2020 was 4.1 years. The carrying value of the AFS debt securities portfolio included $59.89million in net unrealized gains compared to $19.73million in net unrealized gains at December31, 2019. During the second quarter of 2020, we sold $40.0million in AFS debt securities at a gain of $2.93million to reposition the portfolio.

Loans and Asset Quality:

-- Total loans held for investment were $9.80billion at June30, 2020 compared to $8.78billion at March31, 2020 and $8.13billion at June30, 2019. -- Nonperforming assets were $29.25million, or 0.19% of total assets, compared to $34.23million, or 0.29%, at June30, 2019. -- Nonperforming loans were 0.17% of period end loans compared to 0.22% at June 30, 2019. -- Foreclosed property decreased to $12.32million from $14.52 million at June30, 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 $11.26billion compared to $9.31billion at March31, 2020 and $9.27billion at June30, 2019. -- Total loans to deposits were 87.01% compared to 94.37% at March31, 2020 and 87.68% at June30, 2019. -- Non-interest bearing deposits were 37.52% of total deposits at June30, 2020 compared to 32.88% at March31, 2020 and 31.83% at June30, 2019. -- Total borrowings were $2.33billion compared to $1.39billion at March31, 2020 and $0.84billion at June30, 2019.

Capital:

-- Common equity tier 1 capital ratio of 11.54%. -- Tier 1 leverage capital ratio of 9.05%. -- Tier 1 risk-based capital ratio of 11.67%. -- Total risk-based capital ratio of 14.91%. -- Book value was $23.50 compared to $22.77 at March31, 2020 and $21.95 at June30, 2019. -- Tangible book value (non-GAAP) was $16.68 compared to $15.91 at March31, 2020 and $15.05 at June30, 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 $15.58billion as of June30, 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 June 30, March31, December September30, June30, 31, 2020 2020 2019 2019 2019Income andPerformance Ratios: Total Revenue $ 162,656 $ 137,696 $ 139,671 $ 145,879 $ 144,537 Net income 37,222 27,605 35,948 39,400 36,242 Net income attributable 34,605 26,384 35,075 37,659 34,638 to TowneBank Net income per common 0.48 0.36 0.49 0.52 0.48 share - diluted Book value per common 23.50 22.77 22.58 22.38 21.95 share Book value per common share - 16.68 15.91 15.69 15.44 15.05 tangible ^ (non-GAAP) Return on average 0.97 % 0.88 % 1.16 % 1.26 % 1.20 % assets Return on average assets - 1.07 % 1.00 % 1.30 % 1.40 % 1.35 % tangible ^ (non-GAAP) Return on average 8.18 % 6.37 % 8.44 % 9.22 % 8.83 % equity Return on average equity - 12.32 % 9.91 % 12.97 % 14.20 % 13.90 % tangible ^ (non-GAAP) Return on average 8.24 % 6.42 % 8.51 % 9.29 % 8.89 % common equity Return on average common equity 12.44 % 10.01 % 13.12 % 14.36 % 14.05 % - tangible ^ (non-GAAP) Noninterest income as a 42.66 % 35.00 % 35.59 % 37.55 % 37.86 % percentage of total revenue RegulatoryCapital Ratios (1): Common equity 11.54 % 11.23 % 11.46 % 11.52 % 11.58 % tier 1 Tier 1 11.67 % 11.35 % 11.49 % 11.55 % 11.62 % Total 14.91 % 14.40 % 14.58 % 14.70 % 14.85 % Tier 1 leverage 9.05 % 10.11 % 9.95 % 9.84 % 9.86 % ratio Asset Quality: Allowance for credit losses on loans to 5.34x 3.85x 3.34x 3.95x 3.00x nonperforming loans Allowance for credit losses on loans to 0.92 % 0.73 % 0.69 % 0.68 % 0.67 % period end loans Allowance for credit losses on loans to period end 1.04 % 0.73 % 0.69 % 0.68 % 0.67 % loans excluding PPP loans ^ (non-GAAP) Nonperforming loans to 0.17 % 0.19 % 0.21 % 0.17 % 0.22 % period end loans Nonperforming assets to 0.19 % 0.24 % 0.27 % 0.26 % 0.29 % period end assets Net charge-offs to average ? % 0.03 % 0.04 % 0.03 % 0.08 % loans (annualized) Nonperforming $ 16,935 $ 16,700 $ 17,437 $ 14,016 $ 18,202 loans Former bank ? ? 1,521 1,510 1,510 premises Foreclosed 12,315 13,053 13,839 15,517 14,517 property Total nonperforming $ 29,250 $ 29,753 $ 32,797 $ 31,043 $ 34,229 assets Loans past due 90 days and still $ 464 $ 91 $ 309 $ 636 $ 415 accruing interest Allowance for credit losses $ 90,467 $ 64,372 $ 58,234 $ 55,428 $ 54,527 on loans Mortgage Banking: Loans originated, $ 1,116,782 $ 718,681 $ 628,279 $ 703,922 $ 574,638 mortgage Loans originated, 357,815 204,522 231,879 259,742 246,491 joint venture Total loans $ 1,474,597 $ 923,203 $ 860,158 $ 963,664 $ 821,129 originated Number of loans 4,818 3,025 2,984 3,360 3,121 originated Number of 216 223 217 225 229 originators Purchase % 51.26 % 61.31 % 70.32 % 68.83 % 84.97 % Loans sold $ 1,398,649 $ 809,834 $ 879,910 $ 925,058 $ 694,832 Gross realized gain on sales and 3.17 % 1.80 % 3.38 % 3.45 % 3.43 % fees as a % of loans originated Other Ratios: Net interest 2.85 % 3.35 % 3.33 % 3.41 % 3.49 % margin Net interest margin-fully tax 2.87 % 3.37 % 3.35 % 3.43 % 3.52 % equivalent ^ (non-GAAP) Average earning assets/total 91.33 % 89.15 % 89.57 % 89.53 % 89.46 % average assets Average loans /average 91.81 % 92.99 % 88.41 % 87.63 % 91.60 % deposits Average noninterest deposits/ 36.52 % 32.21 % 32.14 % 31.82 % 31.63 % total average deposits Period end equity/period 11.05 % 13.19 % 13.84 % 13.63 % 13.45 % end total assets Efficiency 56.99 % 73.02 % 66.11 % 66.66 % 66.80 % ratio (1) Current reporting period regulatory capital ratios are preliminary

TOWNEBANKSelected Data (unaudited)(dollars in thousands)

Investment % ChangeSecurities Q2 Q2 Q1 Q2 20 vs. Q2 20 vs.Available-for-salesecurities, at fair 2020 2019 2020 Q2 19 Q1 20valueU.S. agency $ 118,176 $ 261,960 $ 121,857 (54.89 ) (3.02 )securities % %U.S. Treasury notes 1,010 2,241 1,014 (54.93 ) (0.39 ) % %Municipal 313,322 167,466 266,489 87.10 % 17.57 %securitiesTrust preferred and )other corporate 59,598 43,799 59,606 36.07 % (0.01 %securitiesMortgage-backed ) )securities issued 774,658 785,355 799,713 (1.36 % (3.13 %by GSE and GNMAAllowance for (140 ) n/a (259 ) n/a (45.95 )credit losses %Total $ 1,266,624 $ 1,260,821 $ 1,248,420 0.46 % 1.46 % Gross unrealized gains (losses) reflected in financial statementsTotal gross $ 61,559 $ 22,119 $ 30,545 178.31 % 101.54 %unrealized gainsTotal gross (1,674 ) (2,456 ) (9,848 ) (31.84 ) (83.00 )unrealized losses % %Net unrealizedgains (losses) and $ 59,885 $ 19,663 $ 20,697 other adjustmentson AFS securities Held-to-maturitysecurities, at amortized costMunicipal $ 28,855 $ 34,458 $ 28,852 (16.26 ) 0.01 %securities %Trust preferred ) )corporate 2,345 2,393 2,357 (2.01 % (0.51 %securitiesMortgage-backed ) )securities issued 10,395 13,723 11,222 (24.25 % (7.37 %by GSE and GNMALess: Allowance for (121 ) n/a (133 ) n/a (9.02 )credit losses %Total $ 41,474 $ 50,574 $ 42,298 (17.99 ) (1.95 ) % % Gross unrealized gains (losses)not reflected in financial statementsTotal gross $ 1,980 $ 1,636 $ 964 21.03 % 105.39 %unrealized gainsTotal gross ? (57 ) ? (100.00 ) ? %unrealized losses %Net unrealizedgains (losses) in $ 1,980 $ 1,579 $ 964 HTM securities Loans Held For % ChangeInvestment (1) Q2 Q2 Q1 Q2 20 vs. Q2 20 vs. 2020 2019 2020 Q2 19 Q1 20Real estate -construction and $ 1,178,832 $ 1,107,762 $ 1,060,834 6.42 % 11.12 %developmentCommercial realestate - non owner 2,332,447 1,985,990 2,305,971 17.45 % 1.15 %occupiedCommercial real )estate - owner 1,383,294 1,288,478 1,398,216 7.36 % (1.07 %occupiedReal estate - 277,947 267,528 283,514 3.89 % (1.96 )multifamily %Real estate - )residential 1-4 1,670,530 1,639,547 1,693,562 1.89 % (1.36 %family and HELOCCommercial and 2,503,161 1,523,607 1,636,244 64.29 % 52.98 %industrial businessConsumer and other 455,678 313,817 405,854 45.21 % 12.28 %loansTotal $ 9,801,889 $ 8,126,729 $ 8,784,195 20.61 % 11.59 %(1) Paycheck Protection Program loans totaling $1.09 billion, primarily in C&I,are included in Q2 2020. Deposits % Change Q2 Q2 Q1 Q2 20 vs. Q2 20 vs. 2020 2019 2020 Q2 19 Q1 20Noninterest-bearing $ 4,226,208 $ 2,950,615 $ 3,060,515 43.23 % 38.09 %demandInterest-bearing: Demand and money 4,223,391 3,409,322 3,573,926 23.88 % 18.17 %market accountsSavings 298,673 277,495 280,807 7.63 % 6.36 %Certificates of 2,516,666 2,631,386 2,392,744 (4.36 ) 5.18 %deposits %Total $ 11,264,938 $ 9,268,818 $ 9,307,992 21.54 % 21.02 %

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

Three Months Ended Three Months Ended Three Months Ended June 30, 2020 March 31, 2020 June 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 RateAssets: Loans (net ofunearned incomeanddeferred costs), $ 9,619,931 $ 102,656 4.29 % $ 8,550,216 $ 100,566 4.73 % $ 8,075,054 $ 102,366 5.08 %excludingnonaccrualloans (1)Taxable investment 1,198,776 7,367 2.46 % 1,356,411 9,211 2.72 % 1,170,215 8,346 2.85 %securitiesTax-exemptinvestment 147,489 836 2.27 % 128,204 861 2.69 % 90,942 756 3.33 %securitiesTotal securities 1,346,265 8,203 2.44 % 1,484,615 10,072 2.71 % 1,261,157 9,102 2.89 %Interest-bearing 1,729,140 433 0.10 % 373,984 1,102 1.19 % 698,649 4,016 2.31 %depositsLoans held for sale 464,796 3,811 3.28 % 333,070 2,988 3.59 % 281,775 3,007 4.27 %Total earning assets 13,160,132 115,103 3.52 % 10,741,885 114,728 4.30 % 10,316,635 118,491 4.61 %Less: allowance for (69,451 ) (55,331 ) (53,386 ) credit lossesTotal nonearning 1,318,787 1,362,769 1,269,029 assetsTotal assets $ 14,409,468 $ 12,049,323 $ 11,532,278 Liabilities and Equity:Interest-bearing depositsDemand and money $ 3,857,757 $ 2,491 0.26 % $ 3,521,707 $ 5,319 0.61 % $ 3,312,313 $ 7,025 0.85 %marketSavings 290,201 554 0.77 % 276,947 593 0.86 % 281,221 929 1.33 %Certificates of 2,503,648 12,027 1.93 % 2,434,098 13,150 2.17 % 2,433,479 13,830 2.28 %depositTotalinterest-bearing 6,651,606 15,072 0.91 % 6,232,752 19,062 1.23 % 6,027,013 21,784 1.45 %depositsBorrowings 1,741,832 3,238 0.74 % 679,745 2,581 1.50 % 678,799 3,318 1.93 %Subordinated debt, 248,660 2,962 4.76 % 248,510 2,962 4.77 % 248,064 2,962 4.78 %netTotalinterest-bearing 8,642,098 21,272 0.99 % 7,161,007 24,605 1.38 % 6,953,876 28,064 1.62 %liabilitiesDemand deposits 3,826,439 2,962,110 2,788,596 Othernoninterest-bearing 239,154 260,500 215,951 liabilitiesTotal liabilities 12,707,691 10,383,617 9,958,423 Shareholders? equity 1,701,777 1,665,706 1,573,855 Total liabilities $ 14,409,468 $ 12,049,323 $ 11,532,278 and equityNet interest income(tax-equivalent $ 93,831 $ 90,123 $ 90,427 basis)Reconcilement of Non-GAAP Financial MeasuresTax-equivalent basis (557 ) (627 ) (608 ) adjustmentNet interest income $ 93,274 $ 89,496 $ 89,819 (GAAP) Interest rate spread 2.53 % 2.92 % 2.99 %(2)(4)Interest expense as a percent of 0.65 % 0.92 % 1.09 %average earning assetsNet interest margin (tax equivalent 2.87 % 3.37 % 3.52 %basis) (3)(4)Total cost of 0.58 % 0.83 % 0.99 %deposits

(1) Includes average PPP balances of $0.81 billion and related interest and fee income of $5.8 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)

Six Months Ended Six Months Ended Six Months Ended June 30, June 30, 2020 June 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 VolumeAssets: Loans (net of unearnedincomeand deferred costs), $ 9,085,074 $ 203,221 4.50 % $ 8,053,146 $ 202,512 5.07 % $ 709 $ (24,050 ) $ 24,759 excludingnonaccrual loans (1)Taxable investment securities 1,277,593 16,578 2.60 % 1,103,799 15,875 2.88 % 703 (1,646 ) 2,349 Tax-exempt investment 137,846 1,698 2.46 % 85,158 1,522 3.57 % 176 (571 ) 747 securitiesTotal securities 1,415,439 18,276 2.58 % 1,188,957 17,397 2.93 % 879 (2,217 ) 3,096 Interest-bearing deposits 472,589 1,535 0.65 % 695,999 8,013 2.32 % (6,478 ) (4,478 ) (2,000 )Loans held for sale 398,933 6,799 3.41 % 230,411 5,010 4.35 % 1,789 (1,264 ) 3,053 Total earning assets 11,372,035 229,831 4.06 % 10,168,513 232,932 4.62 % (3,101 ) (32,009 ) 28,908 Less: allowance for loan losses (62,390 ) (53,117 ) Total nonearning assets 1,919,751 1,249,052 Total assets $ 13,229,396 $ 11,364,448 Liabilities and Equity: Interest-bearing deposits Demand and money market $ 3,689,732 $ 7,809 0.43 % $ 3,243,616 $ 13,264 0.82 % $ (5,455 ) $ (7,097 ) $ 1,642 Savings 283,574 1,147 0.81 % 283,348 1,956 1.39 % (809 ) (811 ) 2 Certificates of deposit 2,468,873 25,177 2.05 % 2,362,165 25,738 2.20 % (561 ) (1,724 ) 1,163 Total interest-bearing deposits 6,442,179 34,133 1.07 % 5,889,129 40,958 1.40 % (6,825 ) (9,632 ) 2,807 Borrowings 1,210,789 5,820 0.95 % 749,948 7,540 2.00 % (1,720 ) (5,083 ) 3,363 Subordinated debt, net 248,585 5,923 4.77 % 247,989 5,923 4.78 % ? (14 ) 14 Total interest-bearing 7,901,553 45,876 1.17 % 6,887,066 54,421 1.59 % (8,545 ) (14,729 ) 6,184 liabilitiesDemand deposits 3,394,275 2,710,141 Other 249,827 207,287 noninterest-bearingliabilitiesTotal liabilities 11,545,655 9,804,494 Shareholders? equity 1,683,741 1,559,954 Total liabilities and equity $ 13,229,396 $ 11,364,448 Net interest income $ 183,955 $ 178,511 $ 5,444 $ (17,280 ) $ 22,724 (tax-equivalent basis)Reconcilement of Non-GAAP Financial Measures Tax-equivalent basis adjustment (1,185 ) (1,219 ) 34 Net interest income (GAAP) $ 182,770 $ 177,292 $ 5,478 Interest rate spread (2)(4) 2.90 % 3.03 % Interest expense as a percent of average 0.81 % 1.08 % earning assetsNet interest margin (tax equivalent basis) (3) 3.25 % 3.54 % (4)Total cost of deposits 0.70 % 0.96 % (1) Includes average PPP balances of $0.40 billion and related interest incomeof $5.8 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) June 30, December 31, 2020 2019 (unaudited) (audited)ASSETS Cash and due from banks $ 115,724 $ 97,593 Interest-bearing deposits at FRB - Richmond 2,511,152 322,505 Interest-bearing deposits in financial 24,374 22,518 institutionsTotal Cash and Cash Equivalents 2,651,250 442,616 Securities available for sale, at fair value(amortized cost $1,206,878, allowance for 1,266,624 1,441,308 credit losses of $140) (1)Securities held to maturity, at amortized cost 41,595 43,688 (fair value $43,575 )(1)Less: allowance for credit losses (121 ) ? Securities held to maturity, net of allowance 41,474 43,688 for credit lossesOther equity securities 6,497 6,462 FHLB stock 49,277 30,094 Total Securities 1,363,872 1,521,552 Mortgage loans held for sale 610,369 419,233 Loans, net of unearned income and deferred 9,801,889 8,419,288 costsLess: allowance for credit losses (90,467 ) (58,234 )Net Loans 9,711,422 8,361,054 Premises and equipment, net 257,533 231,806 Goodwill 446,725 446,816 Other intangible assets, net 48,632 54,399 BOLI 242,493 243,062 Other assets 247,962 227,125 TOTAL ASSETS $ 15,580,258 $ 11,947,663 LIABILITIES AND EQUITY Deposits: Noninterest-bearing demand $ 4,226,208 $ 2,951,225 Interest-bearing: Demand and money market accounts 4,223,391 3,586,364 Savings 298,673 276,205 Certificates of deposit 2,516,666 2,457,123 Total Deposits 11,264,938 9,270,917 Advances from the FHLB 906,365 471,687 Subordinated debt, net 248,756 248,458 FRB PPP lending facility 1,111,429 ? Repurchase agreements and other borrowings 60,913 52,391 Total Borrowings 2,327,463 772,536 Other liabilities 266,314 250,516 TOTAL LIABILITIES 13,858,715 10,293,969 Preferred stock Authorized and unissued shares - 2,000,000 ? ? Common stock, $1.667 par: 150,000,000 shares authorized72,645,987 and 72,649,682 shares issued at June 121,101 121,107 30, 2020 and December 31, 2019, respectivelyCapital surplus 1,043,774 1,041,160 Retained earnings 499,502 467,186 Common stock issued to deferred compensation trust, at cost871,634 and 818,578 shares at June 30, 2020 and (16,776 ) (15,555 )December 31, 2019, respectivelyDeferred compensation trust 16,776 15,555 Accumulated other comprehensive income (loss) 43,218 11,302 TOTAL SHAREHOLDERS? EQUITY 1,707,595 1,640,755 Noncontrolling interest 13,948 12,939 TOTAL EQUITY 1,721,543 1,653,694 TOTAL LIABILITIES AND EQUITY $ 15,580,258 $ 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 Six Months Ended June 30, June 30, 2020 2019 2020 2019INTEREST INCOME: Loans, including fees $ 102,139 $ 101,874 $ 202,201 $ 201,569 Investment securities 8,163 8,987 18,112 17,121 Interest-bearing depositsin financial institutions 433 4,015 1,535 8,013 and federal funds soldMortgage loans held for 3,811 3,007 6,799 5,010 saleTotal interest income 114,546 117,883 228,647 231,713 INTEREST EXPENSE: Deposits 15,072 21,784 34,134 40,958 Advances from the FHLB 2,595 3,201 5,088 7,354 Subordinated debt, net 2,962 2,962 5,923 5,924 Repurchase agreements and 643 117 732 185 other borrowingsTotal interest expense 21,272 28,064 45,877 54,421 Net interest income 93,274 89,819 182,770 177,292 PROVISION FOR CREDIT 26,945 2,824 33,961 4,262 LOSSESNet interest income afterprovision for credit 66,329 86,995 148,809 173,030 lossesNONINTEREST INCOME: Residential mortgage 29,715 18,565 37,131 32,073 banking income, netInsurance commissions andother title fees and 17,612 17,213 34,505 32,795 income, netReal estate brokerage andproperty management 10,781 8,843 17,719 18,111 income, netService charges on 1,888 3,185 4,328 6,046 deposit accountsCredit card merchant 1,109 660 2,287 1,843 fees, netBOLI 1,584 1,635 4,690 3,233 Other income 3,763 4,617 8,990 7,774 Net gain/(loss) on 2,930 ? 7,932 (776 )investment securitiesTotal noninterest income 69,382 54,718 117,582 101,099 NONINTEREST EXPENSE: Salaries and employee 56,926 54,263 112,793 107,123 benefitsOccupancy expense 7,227 7,662 14,728 15,913 Furniture and equipment 3,564 3,578 7,205 6,949 Amortization - 2,901 3,113 5,851 6,305 intangiblesSoftware expense 3,492 2,788 6,984 5,533 Data processing 2,718 3,616 5,509 6,782 Professional fees 2,972 3,707 6,040 6,386 Advertising and marketing 1,986 3,182 5,570 6,011 Other expenses 9,239 14,647 23,233 27,677 Total noninterest expense 91,025 96,556 187,913 188,679 Income before income taxexpense and 44,686 45,157 78,478 85,450 noncontrolling interestProvision for income tax 7,464 8,915 13,651 17,126 expenseNet income $ 37,222 $ 36,242 $ 64,827 $ 68,324 Net income attributableto noncontrolling (2,617 ) (1,604 ) (3,838 ) (2,277 )interestNet income attributable $ 34,605 $ 34,638 $ 60,989 $ 66,047 to TowneBankPer common share informationBasic earnings $ 0.48 $ 0.48 $ 0.84 $ 0.92 Diluted earnings $ 0.48 $ 0.48 $ 0.84 $ 0.92 Cash dividends declared $ 0.18 $ 0.18 $ 0.36 $ 0.34

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

June 30, March31, December 31, September30, June30, 2020 2020 2019 2019 2019 (unaudited) (unaudited) (audited) (unaudited) (unaudited)ASSETS Cash and due from $ 115,724 $ 108,929 $ 97,593 $ 124,439 $ 110,580 banksInterest-bearingdeposits at FRB - 2,511,152 753,643 322,505 675,288 834,505 RichmondInterest-bearingdeposits in 24,374 23,564 22,518 21,663 21,527 financialinstitutionsTotal Cash and Cash 2,651,250 886,136 442,616 821,390 966,612 EquivalentsSecurities 1,266,624 1,248,420 1,441,308 1,337,395 1,260,821 available for saleSecurities held to 41,595 42,431 43,688 44,494 50,574 maturityLess: allowance (121 ) (133 ) ? ? ? for credit lossesSecurities held tomaturity, net of 41,474 42,298 43,688 44,494 50,574 allowance forcredit lossesOther equity 6,497 6,462 6,462 5,697 5,396 securitiesFHLB stock 49,277 52,042 30,094 26,282 32,657 Total Securities 1,363,872 1,349,222 1,521,552 1,413,868 1,349,448 Mortgage loans held 610,369 453,143 419,233 456,719 362,773 for saleLoans, net ofunearned income and 9,801,889 8,784,195 8,419,288 8,182,829 8,126,729 deferred costsLess: allowance for (90,467 ) (64,372 ) (58,234 ) (55,428 ) (54,527 )credit lossesNet Loans 9,711,422 8,719,823 8,361,054 8,127,401 8,072,202 Premises and 257,533 236,735 231,806 231,060 230,177 equipment, netGoodwill 446,725 446,725 446,816 446,423 442,881 Other intangible 48,632 51,448 54,399 57,404 58,391 assets, netBOLI 242,493 240,924 243,062 241,652 240,621 Other assets 247,962 239,670 227,125 225,374 219,375 TOTAL ASSETS $ 15,580,258 $ 12,623,826 $ 11,947,663 $ 12,021,291 $ 11,942,480 LIABILITIES AND EQUITYDeposits: Noninterest-bearing $ 4,226,208 $ 3,060,515 $ 2,951,225 $ 3,030,505 $ 2,950,615 demandInterest-bearing: Demand and money 4,223,391 3,573,926 3,586,364 3,534,252 3,409,322 market accountsSavings 298,673 280,807 276,205 280,552 277,495 Certificates of 2,516,666 2,392,744 2,457,123 2,592,705 2,631,386 depositTotal Deposits 11,264,938 9,307,992 9,270,917 9,438,014 9,268,818 Advances from the 906,365 971,527 471,687 381,846 532,004 FHLBSubordinated debt, 248,756 248,607 248,458 248,309 248,160 netFRB PPP lending 1,111,429 ? ? ? ? facilityRepurchaseagreements and 60,913 171,762 52,391 42,971 56,355 other borrowingsTotal Borrowings 2,327,463 1,391,896 772,536 673,126 836,519 Other liabilities 266,314 258,306 250,516 271,617 230,691 TOTAL LIABILITIES 13,858,715 10,958,194 10,293,969 10,382,757 10,336,028 Preferred stock Authorized shares - ? ? ? ? ? 2,000,000Common stock, 121,101 121,057 121,107 121,080 121,038 $1.667 par valueCapital surplus 1,043,774 1,041,870 1,041,160 1,039,156 1,036,982 Retained earnings 499,502 477,972 467,186 445,186 420,600 Common stock issuedto deferred (16,776 ) (15,562 ) (15,555 ) (15,317 ) (15,160 )compensation trust,at costDeferred 16,776 15,562 15,555 15,317 15,160 compensation trustAccumulated othercomprehensive 43,218 12,301 11,302 19,958 15,143 income (loss)TOTAL SHAREHOLDERS? 1,707,595 1,653,200 1,640,755 1,625,380 1,593,763 EQUITYNoncontrolling 13,948 12,432 12,939 13,154 12,689 interestTOTAL EQUITY 1,721,543 1,665,632 1,653,694 1,638,534 1,606,452 TOTAL LIABILITIES $ 15,580,258 $ 12,623,826 $ 11,947,663 $ 12,021,291 $ 11,942,480 AND EQUITY

TOWNEBANKConsolidated Statements of Income - Five Quarter Trend (unaudited)(dollars in thousands, except share data) Three Months Ended June 30, March31, December 31, September30, June30, 2020 2020 2019 2019 2019INTEREST INCOME: Loans, including $ 102,139 $ 100,062 $ 100,059 $ 102,047 $ 101,874 feesInvestment 8,163 9,949 9,936 9,889 8,987 securitiesInterest-bearingdeposits infinancial 433 1,102 2,067 3,745 4,015 institutions andfederal fundssoldMortgage loans 3,811 2,988 4,413 3,956 3,007 held for saleTotal interest 114,546 114,101 116,475 119,637 117,883 incomeINTEREST EXPENSE:Deposits 15,072 19,062 21,744 23,552 21,784 Advances from 2,595 2,492 1,730 1,935 3,201 the FHLBSubordinated 2,962 2,962 2,962 2,962 2,962 debtRepurchaseagreements and 643 89 80 85 117 other borrowingsTotal interest 21,272 24,605 26,516 28,534 28,064 expenseNet interest 93,274 89,496 89,959 91,103 89,819 income PROVISION FOR 26,945 7,016 3,601 1,508 2,824 CREDIT LOSSESNet interestincome after 66,329 82,480 86,358 89,595 86,995 provision forcredit lossesNONINTEREST INCOME:Residentialmortgage banking 29,715 7,416 15,884 18,855 18,565 income, netInsurancecommissions and 17,612 16,893 15,001 16,681 17,213 other title feesand income, netReal estatebrokerage andproperty 10,781 6,938 6,737 9,444 8,843 managementincome, netService chargeson deposit 1,888 2,440 2,245 2,253 3,185 accountsCredit cardmerchant fees, 1,109 1,179 1,389 1,514 660 netBOLI 1,584 3,105 3,865 2,117 1,635 Other income 3,763 5,227 4,591 3,981 4,617 Net gain/(loss)on investment 2,930 5,002 ? (69 ) ? securitiesTotalnoninterest 69,382 48,200 49,712 54,776 54,718 incomeNONINTEREST EXPENSE:Salaries andemployee 56,926 55,867 56,013 55,784 54,263 benefitsOccupancy 7,227 7,502 7,516 7,953 7,662 expenseFurniture and 3,564 3,640 3,598 3,805 3,578 equipmentAmortization - 2,901 2,950 3,005 3,059 3,113 intangiblesSoftware expense 3,492 3,492 2,976 3,208 2,788 Data processing 2,718 2,791 2,510 2,533 3,616 Professional 2,972 3,067 2,990 3,566 3,707 feesAdvertising and 1,986 3,584 2,839 3,429 3,182 marketingOther expenses 9,239 13,995 10,889 13,950 14,647 Totalnoninterest 91,025 96,888 92,336 97,287 96,556 expenseIncome beforeincome taxexpense and 44,686 33,792 43,734 47,084 45,157 noncontrollinginterestProvision forincome tax 7,464 6,187 7,786 7,684 8,915 expenseNet income 37,222 27,605 35,948 39,400 36,242 Net incomeattributable to (2,617 ) (1,221 ) (873 ) (1,741 ) (1,604 )noncontrollinginterestNet incomeattributable to $ 34,605 $ 26,384 $ 35,075 $ 37,659 $ 34,638 TowneBankPer common share informationBasic earnings $ 0.48 $ 0.37 $ 0.49 $ 0.52 $ 0.48 Diluted earnings $ 0.48 $ 0.36 $ 0.49 $ 0.52 $ 0.48 Basic weightedaverage shares 72,280,555 72,206,228 72,122,476 72,091,221 72,044,817 outstandingDiluted weightedaverage shares 72,317,988 $ 72,299,721 72,302,414 72,222,934 72,145,600 outstandingCash dividends $ 0.18 $ 0.18 $ 0.18 $ 0.18 $ 0.18 declared

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

Three Months Ended Six Months Ended Increase/(Decrease) June 30, March 31, June 30, 2020 over 2019 2020 2019 2020 2020 2019 Amount PercentRevenue Net interest $ 89,665 $ 88,442 $ 87,406 $ 177,071 $ 174,842 $ 2,229 1.27 %incomeServicecharges on 1,888 3,185 2,440 4,328 6,046 (1,718 ) (28.42 )deposit %accountsCredit card 1,109 660 1,179 2,287 1,843 444 24.09 %merchant feesOther income 3,888 5,273 7,061 10,950 9,200 1,750 19.02 %Subtotal 6,885 9,118 10,680 17,565 17,089 476 2.79 %Net gain/(loss) on 2,930 ? 5,002 7,932 (776 ) 8,708 1,122.16 %investmentsecuritiesTotalnoninterest 9,815 9,118 15,682 25,497 16,313 9,184 56.30 %incomeTotal revenue 99,480 97,560 103,088 202,568 191,155 11,413 5.97 % Provision for 26,059 2,824 7,041 33,100 4,262 28,838 676.63 %credit losses Expenses Salaries andemployee 35,209 32,353 33,225 68,434 63,440 4,994 7.87 %benefitsOccupancy 4,812 5,007 4,916 9,728 10,251 (523 ) (5.10 )expense %Furniture and 2,715 2,517 2,660 5,375 4,884 491 10.05 %equipmentAmortization 1,114 1,315 1,164 2,278 2,681 (403 ) (15.03 )of intangibles %Other expenses 10,718 18,938 18,705 29,423 35,119 (5,696 ) (16.22 ) %Total expenses 54,568 60,130 60,670 115,238 116,375 (1,137 ) (0.98 ) %Income beforeincome tax,corporate 18,853 34,606 35,377 54,230 70,518 (16,288 ) (23.10 )allocation and %noncontrollinginterestCorporate 627 546 670 1,297 998 299 29.96 %allocationIncome beforeincome tax )provision and 19,480 35,152 36,047 55,527 71,516 (15,989 ) (22.36 %noncontrollinginterestProvision for )income tax 2,167 6,650 6,663 8,830 13,842 (5,012 ) (36.21 %expenseNet income 17,313 28,502 29,384 46,697 57,674 (10,977 ) (19.03 ) %Noncontrolling 5 1 (1 ) 4 3 1 33.33 %interestNet income )attributable $ 17,318 $ 28,503 $ 29,383 $ 46,701 $ 57,677 (10,976 ) (19.03 %to TowneBank Efficiency 56.52 % 61.63 % 61.85 % 59.21 % 60.63 % (1.42 ) (2.34 )ratio % %

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

Three Months Ended Six Months Ended Increase/(Decrease) June 30, March 31, June 30, 2020 over 2019 2020 2019 2020 2020 2019 Amount PercentRevenue Residential mortgage $ 30,468 $ 18,898 $ 8,007 $ 38,475 $ 32,654 $ 5,821 17.83 %brokerageincome, netReal estate brokerage 2,659 2,873 1,865 4,524 4,434 90 2.03 %income, netTitle insurance and 639 594 436 1,075 962 113 11.75 %settlement feesProperty management fees, 8,122 5,970 5,073 13,195 13,678 (483 ) (3.53 )net %Income from 301 162 186 487 256 231 90.23 %unconsolidatedsubsidiaryNet interest and other 3,765 1,677 2,396 6,161 3,049 3,112 102.07 %incomeTotal revenue 45,954 30,174 17,963 63,917 55,033 8,884 16.14 % Provision for credit 886 ? (25 ) 861 ? 861 n/m losses Expenses Salaries and employee 13,059 13,309 13,293 26,352 26,204 148 0.56 %benefitsOccupancy expense 1,763 2,028 1,927 3,690 4,373 (683 ) (15.62 ) %Furniture and equipment 626 803 762 1,388 1,571 (183 ) (11.65 ) %Amortization of 658 695 657 1,315 1,420 (105 ) (7.39 )intangible assets %Other expenses 8,270 7,234 6,867 15,137 13,475 1,662 12.33 %Total expenses 24,376 24,069 23,506 47,882 47,043 839 1.78 % Income (loss) beforeincome tax, corporate 20,692 6,105 (5,518 ) 15,174 7,990 7,184 89.91 %allocation andnoncontrolling interestCorporate allocation (370 ) (328 ) (393 ) (763 ) (591 ) (172 ) 29.10 %(Loss) income beforeincome tax provision and 20,322 5,777 (5,911 ) 14,411 7,399 7,012 94.77 %noncontrolling interestProvision for income tax 4,127 1,287 (1,292 ) 2,835 1,838 997 54.24 %(benefit) expenseNet (loss) income 16,195 4,490 (4,619 ) 11,576 5,561 6,015 108.16 %Noncontrolling interest (2,415 ) (1,248 ) (791 ) (3,206 ) (1,500 ) (1,706 ) 113.73 %Net (loss) income $ 13,780 $ 3,242 $ (5,410 ) $ 8,370 $ 4,061 4,309 106.11 %attributable to TowneBank Efficiency ratio 53.04 % 79.77 % 130.86 % 74.91 % 85.48 % (10.57 ) (12.37 ) % %

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

Three Months Ended Six Months Ended Increase/(Decrease) June 30, March 31, June 30, 2020 over 2019 2020 2019 2020 2020 2019 Amount PercentCommission and fee incomeProperty and $ 13,926 $ 13,067 $ 12,786 $ 26,712 $ 24,940 $ 1,772 7.11 %casualtyEmployee 3,791 3,833 3,918 7,709 7,339 370 5.04 %benefitsTravel 861 1,169 1,266 2,127 2,458 (331 ) (13.47 )%insuranceSpecializedbenefit 157 163 168 325 333 (8 ) (2.40 )%servicesTotalcommissions 18,735 18,232 18,138 36,873 35,070 1,803 5.14 %and fees Contingencyand bonus 2,009 1,893 2,022 4,031 3,479 552 15.87 %revenueOther income 127 79 81 208 154 54 35.06 %Total revenue 20,871 20,204 20,241 41,112 38,703 2,409 6.22 % Employeecommission 3,649 3,401 3,596 7,245 6,500 745 11.46 %expenseRevenue, netof commission 17,222 16,803 16,645 33,867 32,203 1,664 5.17 %expense Salaries andemployee 8,658 8,601 9,349 18,007 17,479 528 3.02 %benefitsOccupancy 652 627 659 1,311 1,289 22 1.71 %expenseFurniture and 223 258 218 441 494 (53 ) (10.73 )%equipmentAmortizationof intangible 1,129 1,103 1,129 2,258 2,204 54 2.45 %assetsOther expenses 1,419 1,768 1,357 2,776 3,795 (1,019 ) (26.85 )%Totaloperating 12,081 12,357 12,712 24,793 25,261 (468 ) (1.85 )%expensesIncome beforeincome tax,corporate 5,141 4,446 3,933 9,074 6,942 2,132 30.71 %allocation andnoncontrollinginterestCorporate (257 ) (218 ) (277 ) (533 ) (407 ) (126 ) 30.96 %allocationIncome beforeincome taxprovision and 4,884 4,228 3,656 8,541 6,535 2,006 30.70 %noncontrollinginterestProvision forincome tax 1,170 978 816 1,987 1,446 541 37.41 %expenseNet income 3,714 3,250 2,840 6,554 5,089 1,465 28.79 %Noncontrolling (207 ) (357 ) (429 ) (636 ) (780 ) 144 (18.46 )%interestNet incomeattributable $ 3,507 $ 2,893 $ 2,411 $ 5,918 $ 4,309 $ 1,609 37.34 %to TowneBank Provision for 1,170 978 816 1,987 1,446 541 37.41 %income taxesDepreciation,amortization 1,291 1,309 1,300 2,591 2,982 (391 ) (13.11 )%and interestexpenseEBITDA $ 5,968 $ 5,180 $ 4,527 $ 10,496 $ 8,737 $ 1,759 20.13 %(non-GAAP) Efficiency 70.15 % 73.54 % 76.37 % 73.21 % 78.44 % (5.23 )% (6.67 )%ratio

TOWNEBANKReconcilement of Non-GAAP Financial Measures(dollars in thousands) Three Months Ended Six Months Ended June 30, June 30, March 31, June 30, June 30, 2020 2019 2020 2020 2019 Return on average 0.97 % 1.20 % 0.88 % 0.93 % 1.17 %assets (GAAP)Impact ofexcluding averagegoodwill and other 0.10 % 0.15 % 0.12 % 0.11 % 0.15 %intangibles andamortizationReturn on averagetangible assets 1.07 % 1.35 % 1.00 % 1.04 % 1.32 %(non-GAAP) Return on average 8.18 % 8.83 % 6.37 % 7.28 % 8.54 %equity (GAAP)Impact ofexcluding averagegoodwill and 4.14 % 5.07 % 3.54 % 3.85 % 5.03 %otherintangiblesand amortizationReturn on averagetangible equity 12.32 % 13.90 % 9.91 % 11.13 % 13.57 %(non-GAAP) Return on averagecommon equity 8.24 % 8.89 % 6.42 % 7.34 % 8.60 %(GAAP)Impact ofexcluding averagegoodwill and 4.20 % 5.16 % 3.59 % 3.91 % 5.13 %otherintangiblesand amortizationReturn on averagetangible common 12.44 % 14.05 % 10.01 % 11.25 % 13.73 %equity (non-GAAP) Book value (GAAP) $ 23.50 $ 21.95 $ 22.77 $ 23.50 $ 21.95 Impact ofexcluding averagegoodwill and (6.82 ) (6.90 ) (6.86 ) (6.82 ) (6.90 )otherintangiblesand amortizationTangible book $ 16.68 $ 15.05 $ 15.91 $ 16.68 $ 15.05 value (non-GAAP) Average assets $ 14,409,468 $ 11,532,278 $ 12,049,323 $ 13,229,396 $ 11,364,448 (GAAP)Less: average 446,725 442,881 446,838 446,781 442,875 goodwillLess: average 50,352 60,339 53,285 51,819 61,861 intangible assetsAverage tangible $ 13,912,391 $ 11,029,058 $ 11,549,200 $ 12,730,796 $ 10,859,712 assets (non-GAAP) Average equity $ 1,701,777 $ 1,573,855 $ 1,665,706 $ 1,683,742 $ 1,559,954 (GAAP)Less: average 446,725 442,881 446,838 446,781 442,875 goodwillLess: average 50,352 60,339 53,285 51,819 61,861 intangible assetsAverage tangible $ 1,204,700 $ 1,070,635 $ 1,165,583 $ 1,185,142 $ 1,055,218 equity (non-GAAP) Average common $ 1,689,603 $ 1,562,214 $ 1,653,676 $ 1,671,640 1,548,250 equity (GAAP)Less: average 446,725 442,881 446,838 446,781 442,875 goodwillLess: average 50,352 60,339 53,285 51,819 61,861 intangible assetsAverage tangiblecommon equity $ 1,192,526 $ 1,058,994 $ 1,153,553 $ 1,173,040 $ 1,043,514 (non-GAAP) Net Income (GAAP) $ 34,605 $ 34,638 26,384 60,989 66,047 Amortization ofIntangibles, net 2,292 2,460 2,331 4,622 4,981 of taxTangible Net $ 36,897 $ 37,098 $ 28,715 $ 65,611 $ 71,028 Income (non-GAAP)