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TowneBank Reports Full Year and Fourth Quarter Financial Results


GlobeNewswire Inc | Jan 28, 2021 08:30AM EST

January 28, 2021

SUFFOLK, Va., Jan. 28, 2021 (GLOBE NEWSWIRE) -- TowneBank (the Company) (Nasdaq: TOWN) today reported financial results for the full year and the fourth quarter ended December31, 2020. For the year ended December31, 2020, earnings were $145.54million, or $2.01 per diluted share, compared to $138.78million, or $1.92 per diluted share for the year ended December31, 2019. Earnings in the fourth quarter of 2020 were $50.08million, or $0.69 per diluted share, compared to fourth quarter 2019 earnings of $35.08million, or $0.49 per diluted share.

We were pleased to deliver our 21St consecutive year of increased earnings during a year filled with challenges and opportunities. We achieved solid financial results while facing economic headwinds and prudently building substantial reserves to address future economic uncertainty. Our unique business model enabled our HomeTowne bankers to support our members and the communities we serve with more than $1.1billion in funds through the Paycheck Protection Program. Additionally, our diverse sources of revenue resulted in record levels of total revenues which eclipsed $664 million for the year. TowneMortgage achieved record volumes and delivered a strong performance by closing more than $5.88 billion in mortgages. These accomplishments were the result of hard work and dedication from our more than 2,800 team members who work each day defining our culture of caring, said G. Robert Aston, Jr., Executive Chairman.

Quarter Highlights:

-- Total revenues were $171.85million, in fourth quarter 2020, an increase over the prior year quarter of $32.18million, or 23.04%. -- Quarterly pre-provision, pre-tax, net revenues (non-GAAP) were $62.11 million, an increase of $15.65 million, or 33.67%. -- During fourth quarter 2020, we completed a core banking system conversion to allow the Company to provide a greater variety of financial services to our members through new technologies and enhanced digital solutions. -- Loans held for investment increased $1.21billion, or 14.37%, from December31, 2019, and decreased $141.50million, or 1.45%, from September 30, 2020. The balance at December 31, 2020 and September 30, 2020 included $0.86 billion and $1.10 billion, respectively, of loans originated under the Small Business Administration's Paycheck Protection Program ("PPP"). Excluding PPP, loans held for investment increased $353.89 million, or 4.20%, compared to prior year, and $105.75 million, or 4.85% on an annualized basis, compared to the linked quarter. -- Total deposits were $11.57billion, an increase of $2.30billion, or 24.83%, compared to prior year but a decrease, due to expected runoff and seasonality, of $131.80million, or 1.13%, from September 30, 2020. -- Noninterest bearing deposits increased by 48.23%, to $4.37billion, compared to prior year, representing 37.80% of total deposits. Compared to the linked quarter, noninterest bearing deposits decreased 2.01%. -- In the quarter ended December31, 2020, annualized return on average common shareholders' equity was 11.36% and annualized return on average tangible common shareholders' equity was 16.48% (non-GAAP). For the full 12 months, return on average common shareholders' equity was 8.52% and return on average tangible common shareholders' equity was 12.76% (non-GAAP). -- Net interest margin of 2.97% and taxable equivalent net interest margin of 2.98% (non-GAAP) compared to the prior year quarter of 3.33% and 3.35%, respectively. -- Effective tax rate of 17.21% compared to 18.17% at December31, 2019.

In addition to our financial results, we concluded a multi-year system conversion during the fourth quarter. This system will enable us to improve our digital capabilities and drive revenue growth. We opened the door to over 700 new relationships through our efforts with the Paycheck Protection Program, having onboarded 65% of those new banking relationships throughout 2020. We continue to have strong interest in nonbank acquisitions and completed an insurance agency acquisition in late December, said J. Morgan Davis, President and Chief Executive Officer.

Quarterly Net Interest Income Compared to the Fourth Quarter of 2019:

-- Net interest income was $100.61million compared to $89.96million for the quarter ended December31, 2019. Included in net interest income was PPP interest and fee income of $11.29 million and $0, respectively. -- Taxable equivalent net interest margin was 2.98%, including purchase accounting accretion of 5basispoints and PPP accretion of 5 basis points, compared to 3.35%, including purchase accounting accretion of 9basispoints, for 2019. -- Average loans held for investment, with an average yield of 4.28%, represented 72.32% of average earning assets in the fourth quarter of 2020 compared to an average yield of 4.81%, which represented 77.25% of average earning assets in the fourth quarter of 2019. -- Total cost of deposits decreased to 0.37% from 0.92% at December31, 2019. -- Average interest-earning assets totaled $13.48billion at December31, 2020 compared to $10.72billion at December31, 2019, an increase of 25.76%. -- Average interest-bearing liabilities totaled $8.03billion, an increase of $0.97billion, or 13.74%, from the prior year. -- Total interest expense decreased 42.04%, to $15.37million in fourth quarter 2020 compared to $26.52million in fourth quarter 2019, and decreased $3.40million, or 18.11%, compared to the linked quarter.

Quarterly Provision for Loan Losses:

-- Recorded a provision for loan losses of $1.21million compared to $3.60million one year ago and $28.26million in the linked quarter. A combination of modest loan growth, significantly higher provisions in the two previous quarters, and improvements in the economic forecast were the drivers in the lower fourth quarter 2020 provision. -- Net charge-offs were $0.11million compared to $0.80million one year prior. The ratio of net charge-offs (recoveries) to average loans on an annualized basis was 0.00% in fourth quarter 2020, (0.01)% in the linked quarter, and 0.04% in fourth quarter 2019. -- Recorded a provision for credit losses on off-balance sheet commitments of $0.06 million compared to $3.50 million in the linked quarter. -- The allowance for loan losses represented 1.25% of total loans compared to 1.22% at September 30, 2020 and 0.69% at December31, 2019. Excluding PPP loans, which are fully government guaranteed, the allowance for credit losses (non-GAAP) was 1.37%, at December 31, 2020 and September 30, 2020. The allowance for loan losses was 10.74 times nonperforming loans compared to 7.31 times at September 30, 2020 and 3.34 times at December31, 2019.

Quarterly Noninterest Income Compared to the Fourth Quarter of 2019:

-- Total noninterest income was $71.23million compared to $49.71million in 2019, an increase of $21.52million, or 43.29%. Residential mortgage banking income increased $21.62million, insurance commissions decreased $1.13million, and real estate brokerage and property management income increased $2.49million. -- Residential mortgage banking income was $37.50million compared to $15.88million in fourth quarter 2019. Loan volume in the current quarter was $1.69billion, with purchase activity comprising 59.76%. Loan volume in fourth quarter 2019 was $860.16million, with purchase activity of 70.32%. Loan volume in the linked quarter was $1.79billion with purchase activity of 61.21%. -- Total insurance segment revenue decreased $2.89million, or 14.51%, to $17.00million in the fourth quarter of 2020. This decrease is attributable to several factors. The prior year quarter included proceeds from life insurance policies of $1.64 million. Contingency income and benefits commissions declined, compared to the prior year quarter. Additionally, there were no commissions on travel insurance in the fourth quarter of 2020, compared to $0.79 million in the prior year quarter, due to the sale of Red Sky Insurance in the third quarter of 2020. We also acquired an insurance agency, which is expected to add approximately $2.4 million in gross revenue for 2021, at the end of December 2020. -- Property management fee revenue increased 35.30%, or $1.48million, as compared to fourth quarter 2019 due to increases in reservation levels and stronger fourth quarter 2020 advanced reservations. -- Service charges on deposit accounts declined $0.54 million, or 23.96%, compared to the prior year quarter due to fee waivers for members experiencing financial hardship and the waiving of various member service charges during our core conversion.

Quarterly Noninterest Expense Compared to the Fourth Quarter of 2019:

-- Total noninterest expense was $105.93million compared to $92.34million, an increase of $13.60million, or 14.72%. This reflects increases of $5.46million in salary and benefits expense, $1.09million in software expense, and $0.68million in occupancy expenses. -- FDIC insurance assessments increased $1.84 million in fourth quarter 2020 compared to 2019 due to the Company's receipt of small bank assessment credits for $1.66 million in the fourth quarter of 2019. -- Increases in salaries and benefits were driven by incentives related to a strong full-year performance and conversion and production related overtime. Software increases were largely driven by core conversion costs, and the costs associated with software needed to facilitate the adoption of CECL. Occupancy expense increases were driven by a full quarter expense related to the November 2019 expansion into the Greensboro, North Carolina market. -- Recorded a loss on early extinguishment of debt of $2.63 million in the fourth quarter of 2020, associated with restructuring of certain borrowings to reduce future interest expense and deploy excess liquidity. The impact of this nonrecurring expense was a reduction to our EPS of $0.03.

Quarterly Income Taxes Compared to the Fourth Quarter of 2019:

-- Income tax expense was $10.41million compared to $7.79million one year prior. This represents an effective tax rate of 17.21% compared to 18.17% in the fourth quarter of 2019.

Consolidated Balance Sheet December 31, 2020 Compared to December 31, 2019

-- Total assets were $14.63billion at December31, 2020, an increase of 22.42%, compared to $11.95billion at December31, 2019. This increase was driven primarily by increased liquidity levels and additional loan balances attributable to PPP loans. -- Loans held for investment increased $1.21billion, or 14.37%, compared to year end 2019, but decreased $0.14billion compared to the linked quarter. -- Mortgage loans held for sale increased $121.57million, or 29.00%, compared to prior year and decreased $128.22million, or 19.17%, compared to the linked quarter. -- Total deposits increased $2.30 billion, or 24.83%, over December31, 2019, and decreased $0.13billion, or 1.13%, compared to the linked quarter.

Investment Securities:

-- Total investment securities were $1.42billion compared to $1.38billion at September 30, 2020 and $1.52billion at December31, 2019. The weighted average duration of the portfolio at December31, 2020 was 4.10 years. The carrying value of the AFS debt securities portfolio included $58.32million in net unrealized gains compared to $19.73 million in net unrealized gains at December31, 2019.

Loans and Asset Quality:

-- Total loans held for investment were $9.63billion at December31, 2020 compared to $9.77billion at September 30, 2020 and $8.42billion at December31, 2019. -- Nonperforming assets were $16.21million, or 0.11% of total assets, compared to $32.80million, or 0.27% of total assets, at December31, 2019. -- Nonperforming loans were 0.12% of period end loans compared to 0.21% at December 31, 2019. -- Foreclosed property decreased to $4.28million from $13.84million at December31, 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. -- At December 31, 2020 we had $340.81 million in loan modifications made in accordance with section 4013 of the Cares Act, 64% are currently paying interest.

Deposits and Borrowings:

-- Total deposits were $11.57billion compared to $11.70billion at September 30, 2020 and $9.27billion at December31, 2019. -- Total loans to total deposits were 83.20% compared to 83.47% at September 30, 2020 and 90.81% at December31, 2019. -- Non-interest bearing deposits were 37.80% of total deposits at December31, 2020 compared to 38.14% at September 30, 2020 and 31.83% at December31, 2019. Non-interest bearing deposits experienced typical seasonality during the fourth quarter. -- Total borrowings were $0.96billion compared to $1.04billion and $0.77billion at September 30, 2020 and December31, 2019, respectively.

Capital:

-- Common equity tier 1 capital ratio of 11.87%. -- Tier 1 leverage capital ratio of 8.99%. -- Tier 1 risk-based capital ratio of 12.04%. -- Total risk-based capital ratio of 15.42%. -- Book value was $24.31 compared to $23.83 at September 30, 2020 and $22.58 at December31, 2019. -- Tangible book value (non-GAAP) was $17.46 compared to $17.06 at September 30, 2020 and $15.69 at December31, 2019.

Annual Meeting of Shareholders:TowneBank intends to hold its 2021 Annual Meeting of Shareholders at 11:30a.m. on Wednesday, May 26, 2021 at the Virginia Beach Convention Center, 1000 19thStreet in Virginia Beach, Virginia.

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 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 $14.63billion as of December31, 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 their analysis of the Company's performance. These measures typically adjust GAAP performance measures to exclude the effects of the amortization of intangibles and include the tax benefit associated with revenue items that are tax-exempt, as well as adjust income available to common shareholders for certain significant activities or transactions that are infrequent in nature. 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 impact of the COVID-19 pandemic and the associated efforts to limit its spread, 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 areas; cybersecurity threats or attacks, the implementation of new technologies, and the ability to develop and maintain 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 December 31, September30, June30, March 31, December 31, 2020 2020 2020 2020 2019Income andPerformance Ratios: Total Revenue $ 171,848 $ 192,135 $ 162,656 $ 137,696 $ 139,671 Net income 53,891 50,715 37,222 27,605 35,948 Net income available to 50,082 34,464 34,605 26,384 35,075 common shareholders Pre-provision, pre-tax, net 62,107 73,903 69,014 39,587 46,462 revenues ^ (non-GAAP) Net income per common share - 0.69 0.48 0.48 0.36 0.49 diluted Book value per 24.31 23.83 23.50 22.77 22.58 common share Book value per share - 17.46 17.06 16.68 15.91 15.69 tangible ^ (non-GAAP) Return on 1.35 % 0.89 % 0.97 % 0.88 % 1.16 % average assets Return on average assets 1.46 % 0.97 % 1.07 % 1.00 % 1.30 % - tangible ^ (non-GAAP) Return on 11.26 % 7.85 % 8.18 % 6.37 % 8.44 % average equity Return on average equity 16.28 % 11.66 % 12.32 % 9.91 % 12.97 % - tangible ^ (non-GAAP) Return on average common 11.36 % 7.91 % 8.24 % 6.42 % 8.51 % equity Return on average common equity - 16.48 % 11.79 % 12.44 % 10.01 % 13.12 % tangible ^ (non-GAAP) Noninterest income as a 41.45 % 49.64 % 42.66 % 35.00 % 35.59 % percentage of total revenueRegulatoryCapital Ratios (1): Common equity 11.87 % 11.75 % 11.54 % 11.23 % 11.46 % tier 1 Tier 1 12.04 % 11.91 % 11.67 % 11.35 % 11.49 % Total 15.42 % 15.35 % 14.91 % 14.40 % 14.58 % Tier 1 8.99 % 8.89 % 9.05 % 10.11 % 9.95 % leverage ratioAsset Quality: Allowance for loan losses to 10.74x 7.31x 5.34x 3.85x 3.34x nonperforming loans Allowance for loan losses to 1.25 % 1.22 % 0.92 % 0.73 % 0.69 % period end loans Allowance for loan losses to period end loans 1.37 % 1.37 % 1.04 % 0.73 % 0.69 % excluding PPP loans^ (^ non-GAAP^) Nonperforming loans to 0.12 % 0.17 % 0.17 % 0.19 % 0.21 % period end loans Nonperforming assets to 0.11 % 0.19 % 0.19 % 0.24 % 0.27 % period end assets Net charge-offs (recoveries) ? % (0.01 ) ? % 0.03 % 0.04 % to average % loans (annualized) Nonperforming $ 11,188 $ 16,295 $ 16,935 $ 16,700 $ 17,437 loans Former bank 750 750 ? ? 1,521 premises Foreclosed 4,276 11,695 12,315 13,053 13,839 property Total nonperforming $ 16,214 $ 28,740 $ 29,250 $ 29,753 $ 32,797 assets Loans past due 90 days and $ 528 $ 19 $ 464 $ 91 $ 309 still accruing interest Allowance for 120,157 119,058 90,467 64,372 58,234 loan lossesMortgage Banking: Loans originated, $ 1,257,963 $ 1,292,801 $ 1,116,782 $ 718,681 $ 628,279 mortgage Loans originated, 429,848 498,100 357,815 204,522 231,879 joint venture Total loans $ 1,687,811 $ 1,790,901 $ 1,474,597 $ 923,203 $ 860,158 originated Number of loans 5,481 5,817 4,818 3,025 2,984 originated Number of 228 224 216 223 217 originators Purchase % 59.76 % 61.21 % 51.26 % 61.31 % 70.32 % Loans sold $ 1,845,926 $ 1,833,590 $ 1,398,649 $ 809,834 $ 879,910 Rate lock $ 11,781 $ 10,480 $ 7,202 $ 3,691 $ 1,525 asset Gross realized gain on sales and fees as a 4.02 % 3.65 % 3.17 % 1.80 % 3.38 % % of loans originatedOther Ratios: Net interest 2.97 % 2.70 % 2.85 % 3.35 % 3.33 % margin Net interest margin-fully 2.98 % 2.72 % 2.87 % 3.37 % 3.35 % tax equivalent ^(non-GAAP) Average earning assets 91.59 % 92.09 % 91.33 % 89.15 % 89.57 % /total average assets Average loans/ average 83.42 % 86.29 % 91.81 % 92.99 % 88.41 % deposits Average noninterest deposits/total 39.61 % 37.76 % 36.52 % 32.21 % 32.14 % average deposits Period end equity/period 12.20 % 11.82 % 11.05 % 13.19 % 13.84 % end total assets Efficiency ratio^ 60.02 % 57.36 % 55.17 % 70.79 % 63.96 % (non-GAAP) (1) Current reporting period regulatory capital ratios are preliminary.

TOWNEBANKSelected Data (unaudited)(dollars in thousands)

Investment % ChangeSecurities Q4 Q4 Q3 Q4 20 vs. Q4 20 vs.Available-for-salesecurities, at fair 2020 2019 2020 Q4 19 Q3 20valueU.S. agency $ 184,657 $ 129,038 $ 167,275 43.10 % 10.39 %securitiesU.S. Treasury notes 1,000 1,000 1,006 ? % (0.60 ) %Municipal 353,651 223,106 292,792 58.51 % 20.79 %securitiesTrust preferred and )other corporate 31,499 53,367 24,236 (40.98 % 29.97 %securitiesMortgage-backed ) )securities issued 797,765 1,034,797 825,378 (22.91 % (3.35 %by GSE and GNMAAllowance for (348 ) ? (4 ) n/m n/mcredit lossesTotal $ 1,368,224 $ 1,441,308 $ 1,310,683 (5.07 ) 4.39 % % Gross unrealizedgains (losses)reflected in financialstatementsTotal gross $ 60,025 $ 23,950 $ 62,206 150.63 % (3.51 )unrealized gains %Total gross (1,703 ) (4,215 ) (773 ) (59.60 ) 120.31 %unrealized losses %Net unrealized gain )(loss) on AFS $ 58,322 $ 19,735 $ 61,433 195.53 % (5.06 %securities Held-to-maturitysecurities, at amortized costMunicipal $ 5,012 $ 29,167 $ 2,333 (82.82 ) 114.83 %securities %Trust preferred ) )corporate 2,321 2,369 4,992 (2.03 % (53.51 %securitiesMortgage-backed ) )securities issued 9,179 12,152 9,806 (24.47 % (6.39 %by GSE and GNMAAllowance for (97 ) ? (90 ) n/a 7.78 %credit lossesTotal $ 16,415 $ 43,688 $ 17,041 (62.43 ) (3.67 ) % % Gross unrealized gains (losses)not reflected in financial statementsTotal gross $ 1,957 $ 1,520 $ 1,971 28.75 % (0.71 )unrealized gains %Total gross ? (37 ) ? (100.00 ) n/munrealized losses %Net unrealized gain )(loss) on HTM $ 1,957 $ 1,483 $ 1,971 31.96 % (0.71 %securities Loans Held For % ChangeInvestment (1) Q4 Q4 Q3 Q4 20 vs. Q4 20 vs. 2020 2019 2020 Q4 19 Q3 20Real estate -construction and $ 1,199,772 $ 1,120,533 $ 1,143,202 7.07 % 4.95 %developmentCommercial real )estate - investment 2,335,235 2,183,232 2,338,532 6.96 % (0.14 %related propertiesCommercial realestate - owner 1,380,516 1,329,144 1,378,443 3.87 % 0.15 %occupiedReal estate - 295,488 243,041 289,270 21.58 % 2.15 %multifamilyReal estate - ) )residential 1-4 1,629,105 1,653,084 1,660,535 (1.45 % (1.89 %familyCommercial and 2,370,051 1,574,275 2,499,801 50.55 % (5.19 )industrial business %Consumer and other 418,901 315,979 460,787 32.57 % (9.09 )loans %Total $ 9,629,068 $ 8,419,288 $ 9,770,570 14.37 % (1.45 ) %(1) PPP loans totaling $0.86 billion and $1.10 billion, primarily in C&I, areincluded in Q4 2020 and Q3 2020, respectively. Deposits % Change Q4 Q4 Q3 Q4 20 vs. Q4 20 vs. 2020 2019 2020 Q4 19 Q3 20Noninterest-bearing $ 4,374,566 $ 2,951,225 $ 4,464,178 48.23 % (2.01 )demand %Interest-bearing: Demand and money 4,819,604 3,586,364 4,642,482 34.39 % 3.82 %market accountsSavings 330,091 276,205 312,444 19.51 % 5.65 %Certificates of 2,048,905 2,457,123 2,285,859 (16.61 ) (10.37 )deposits % %Total $ 11,573,166 $ 9,270,917 $ 11,704,963 24.83 % (1.13 ) %

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

Three Months Ended Three Months Ended Three Months Ended December 31, 2020 September 30, 2020 December 31, 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), $ 9,752,150 $ 104,799 4.28 % $ 9,752,746 $ 103,401 4.22 % $ 8,283,388 $ 100,504 4.81 %excludingnonaccrualloans (1)Taxable investment 1,250,375 6,878 2.20 % 1,206,679 6,726 2.23 % 1,331,175 9,179 2.76 %securitiesTax-exemptinvestment 139,572 520 1.49 % 144,999 779 2.15 % 118,298 908 3.07 %securitiesTotal securities 1,389,947 7,398 2.13 % 1,351,678 7,505 2.22 % 1,449,473 10,087 2.78 %Interest-bearing 1,754,365 435 0.10 % 2,523,644 632 0.10 % 519,737 2,067 1.58 %depositsLoans held for sale 587,517 3,867 2.63 % 634,309 4,587 2.89 % 469,725 4,413 3.76 %Total earning assets 13,483,979 116,499 3.44 % 14,262,377 116,125 3.24 % 10,722,323 117,071 4.33 %Less: allowance for (121,402 ) (95,594 ) (56,766 ) loan lossesTotal nonearning 1,359,808 1,320,369 1,305,036 assetsTotal assets $ 14,722,385 $ 15,487,152 $ 11,970,593 Liabilities and Equity:Interest-bearing depositsDemand and money $ 4,582,588 $ 2,633 0.23 % $ 4,311,920 $ 2,663 0.25 % $ 3,533,912 $ 6,421 0.72 %marketSavings 317,561 552 0.69 % 304,753 555 0.72 % 278,910 638 0.91 %Certificates of 2,159,573 7,578 1.40 % 2,417,772 9,747 1.60 % 2,544,845 14,685 2.29 %depositTotalinterest-bearing 7,059,722 10,763 0.61 % 7,034,445 12,965 0.73 % 6,357,667 21,744 1.36 %depositsBorrowings 722,291 1,645 0.89 % 1,931,120 2,841 0.58 % 454,621 1,810 1.56 %Subordinated debt, 248,965 2,962 4.76 % 248,807 2,962 4.76 % 248,361 2,962 4.77 %netTotalinterest-bearing 8,030,978 15,370 0.76 % 9,214,372 18,768 0.81 % 7,060,649 26,516 1.49 %liabilitiesDemand deposits 4,630,665 4,268,443 3,011,688 Othernoninterest-bearing 291,836 257,304 250,327 liabilitiesTotal liabilities 12,953,479 13,740,119 10,322,664 Shareholders? equity 1,768,906 1,747,033 1,647,929 Total liabilities $ 14,722,385 $ 15,487,152 $ 11,970,593 and equityNet interest income(tax-equivalent $ 101,129 $ 97,357 $ 90,555 basis)Reconcilement of Non-GAAP Financial MeasuresTax-equivalent basis (515 ) (598 ) (596 ) adjustmentNet interest income $ 100,614 $ 96,759 $ 89,959 (GAAP)Interest rate spread 2.68 % 2.43 % 2.84 %(2)(3)Interest expense as a percent of 0.45 % 0.52 % 0.98 %average earning assetsNet interest margin (tax equivalent 2.98 % 2.72 % 3.35 %basis) (3)(4)Total cost of 0.37 % 0.46 % 0.92 %deposits

(1) December 31, and September 30, 2020 balances include average PPP balances of $1.04 billion and $1.10 billion, and related interest and fee income of $11.29 million and $9.82 million, respectively. There were no PPP balances at December 31, 2019.(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)

Year Ended December 31, 2020 2019 2018 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 of unearnedincome and deferred costs), $ 9,420,584 $ 411,421 4.37 % $ 8,122,210 $ 405,511 4.99 % $ 7,567,570 $ 373,057 4.93 %excludingnonaccrual loans(1)Taxable investment 1,252,926 30,181 2.41 % 1,202,107 34,141 2.84 % 1,004,080 24,729 2.46 %securitiesTax-exempt investment 140,078 2,997 2.14 % 102,731 3,426 3.34 % 79,720 2,920 3.66 %securitiesTotal securities 1,393,004 33,178 2.38 % 1,304,838 37,567 2.88 % 1,083,800 27,649 2.55 %Interest-bearing deposits 689,715 2,603 0.38 % 665,903 13,825 2.08 % 560,368 10,229 1.83 %Mortgage loans held for sale 505,502 15,252 3.02 % 335,588 13,379 3.99 % 293,017 13,124 4.48 %Total earning assets 12,008,805 462,454 3.85 % 10,428,539 470,282 4.51 % 9,504,755 424,059 4.46 %Less: allowance for loan (85,570 ) (54,476 ) (48,737 ) lossesTotal nonearning assets 2,248,971 1,264,363 1,143,167 Total assets $ 14,172,206 $ 11,638,426 $ 10,599,185 Liabilities and Equity: Interest-bearing deposits Demand and money market $ 4,070,562 $ 13,105 0.32 % $ 3,351,135 $ 26,909 0.80 % $ 2,951,038 $ 16,458 0.56 %Savings 297,441 2,254 0.76 % 280,894 3,296 1.17 % 302,435 3,824 1.26 %Certificates of deposit 2,378,281 42,502 1.79 % 2,478,663 56,050 2.26 % 2,060,587 32,859 1.59 %Total interest-bearing 6,746,284 57,861 0.86 % 6,110,692 86,255 1.41 % 5,314,060 53,141 1.00 %depositsBorrowings 1,269,064 10,306 0.80 % 609,142 11,368 1.84 % 897,574 15,542 1.71 %Subordinated debt, net 248,736 11,847 4.76 % 248,139 11,847 4.77 % 251,097 12,067 4.81 %Total interest-bearing 8,264,084 80,014 0.97 % 6,967,973 109,470 1.57 % 6,462,731 80,750 1.25 %liabilitiesDemand deposits 3,924,797 2,844,178 2,517,173 Other noninterest-bearing 262,266 228,994 164,486 liabilitiesTotal liabilities 12,451,147 10,041,145 9,144,390 Shareholders' equity 1,721,059 1,597,281 1,454,795 Total liabilities and equity $ 14,172,206 $ 11,638,426 $ 10,599,185 Net interest income (tax-equivalent basis) $ 382,440 $ 360,812 $ 343,309 Reconcilement of Non-GAAP Financial Measures Tax-equivalent basis adjustment (2,296 ) (2,457 ) (2,236 ) Net interest income (GAAP) $ 380,144 $ 358,355 $ 341,073 Interest rate spread (2)(4) 2.88 % 2.94 % 3.21 %Interest expense as a percent of average 0.67 % 1.05 % 0.85 %earning assetsNet interest margin (tax-equivalent basis) 3.18 % 3.46 % 3.61 %(3)(4)Total cost of deposits 0.54 % 0.96 % 0.68 %

(1) December 31, 2020 balances include average PPP balances of $0.74 billion and related interest and fee income of $26.94 million. There were no PPP balances at December 31, 2019 or 2018.(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.

TOWNEBANKConsolidated Balance Sheets(dollars in thousands, except per share data) 2020 2019 (unaudited) (audited)ASSETS Cash and due from banks $ 41,514 $ 97,593 Interest-bearing deposits at FRB - Richmond 1,795,241 322,505 Interest-bearing deposits in financial 27,532 22,518 institutionsTotal Cash and Cash Equivalents 1,864,287 442,616 Securities available for sale, at fair value(amortized cost $1,310,250, allowance for 1,368,224 1,441,308 credit losses of $348)(1)Securities held to maturity, at amortized cost 16,512 43,688 (fair value $18,469)(1)Less: allowance for credit losses (97 ) ? Securities held to maturity, net of allowance 16,415 43,688 for credit lossesOther equity securities 6,492 6,462 FHLB stock 30,135 30,094 Total Securities 1,421,266 1,521,552 Mortgage loans held for sale 540,798 419,233 Loans, net of unearned income and deferred 9,629,068 8,419,288 costsLess: allowance for credit losses (120,157 ) (58,234 )Net Loans 9,508,911 8,361,054 Premises and equipment, net 260,242 231,806 Goodwill 452,328 446,816 Other intangible assets, net 45,533 54,399 BOLI 246,109 243,062 Other assets 286,970 227,125 TOTAL ASSETS $ 14,626,444 $ 11,947,663 LIABILITIES AND EQUITY Deposits: Noninterest-bearing demand $ 4,374,566 $ 2,951,225 Interest-bearing: Demand and money market accounts 4,819,604 3,586,364 Savings 330,091 276,205 Certificates of deposit 2,048,905 2,457,123 Total Deposits 11,573,166 9,270,917 Advances from the FHLB 456,038 471,687 Subordinated debt, net 249,055 248,458 FRB PPP Lending Facility 182,852 ? Repurchase agreements and other borrowings 67,786 52,391 Total Borrowings 955,731 772,536 Other liabilities 313,719 250,516 TOTAL LIABILITIES 12,842,616 10,293,969 Preferred stock Authorized and unissued shares - 2,000,000 ? ? Common stock, $1.667 par: Authorized shares - 150,000,000Issued and outstanding shares 72,667,541 in 121,132 121,107 2020 and 72,649,682 in 2019Capital surplus 1,046,642 1,041,160 Retained earnings 557,889 467,186 Common stock issued to deferred compensation trust, at cost873,486 shares in 2020 and 818,578 shares in (16,969 ) (15,555 )2019Deferred compensation trust 16,969 15,555 Accumulated other comprehensive income (loss) 41,184 11,302 TOTAL SHAREHOLDERS? EQUITY 1,766,847 1,640,755 Noncontrolling interest 16,981 12,939 TOTAL EQUITY 1,783,828 1,653,694 TOTAL LIABILITIES AND EQUITY $ 14,626,444 $ 11,947,663

(1) For 2020, disclosures are presented in compliance with ASC 326.

TOWNEBANKConsolidated Statements of Income(dollars in thousands, except per share data) Three Months Ended Twelve Months Ended December 31, December 31, 2020 2019 2020 2019 (unaudited) (unaudited) (unaudited) (audited)INTEREST INCOME: Loans, including fees $ 104,182 $ 100,059 $ 409,252 $ 403,675 Investment securities 7,499 9,936 33,052 36,946 Interest-bearing depositsin financial institutions 435 2,067 2,603 13,825 and federal funds soldMortgage loans held for 3,867 4,413 15,252 13,379 saleTotal interest income 115,983 116,475 460,159 467,825 INTEREST EXPENSE: Deposits 10,762 21,744 57,862 86,255 Advances from the FHLB 1,404 1,730 8,393 11,018 Subordinated debt, net 2,962 2,962 11,847 11,847 Repurchase agreements and 241 80 1,913 350 other borrowingsTotal interest expense 15,369 26,516 80,015 109,470 Net interest income 100,614 89,959 380,144 358,355 PROVISION FOR CREDIT 1,617 3,601 67,177 9,371 LOSSESNet interest income afterprovision for credit 98,997 86,358 312,967 348,984 lossesNONINTEREST INCOME: Residential mortgage 37,504 15,884 112,166 66,812 banking income, netInsurance commissions andother title fees and 13,868 15,001 65,840 64,478 income, netReal estate brokerage andproperty management 9,229 6,737 38,249 34,292 income, netService charges on 1,707 2,245 8,021 10,544 deposit accountsCredit card merchant 1,377 1,389 5,170 4,746 fees, netBOLI 1,990 3,865 8,285 9,215 Other income 5,559 4,591 36,826 16,346 Net gain/(loss) on ? ? 9,634 (845 )investment securitiesTotal noninterest income 71,234 49,712 284,191 205,588 NONINTEREST EXPENSE: Salaries and employee 61,475 56,013 235,676 218,920 benefitsOccupancy expense 8,193 7,516 31,317 31,381 Furniture and equipment 3,462 3,598 13,914 14,351 Amortization - 2,797 3,005 11,498 12,370 intangiblesSoftware expense 4,066 2,976 14,622 11,717 Data processing 2,363 2,510 10,985 11,825 Professional fees 2,591 2,990 11,268 12,943 Advertising and marketing 2,204 2,839 9,643 12,279 Other expenses 18,781 10,889 56,902 52,516 Total noninterest expense 105,932 92,336 395,825 378,302 Income before income taxexpense and 64,299 43,734 201,333 176,270 noncontrolling interestProvision for income tax 10,408 7,786 31,900 32,596 expenseNet income $ 53,891 $ 35,948 $ 169,433 $ 143,674 Net income attributableto noncontrolling (3,809 ) (873 ) (23,898 ) (4,891 )interestNet income attributable $ 50,082 $ 35,075 $ 145,535 $ 138,783 to TowneBank Per common share informationBasic earnings $ 0.69 $ 0.49 $ 2.01 $ 1.93 Diluted earnings $ 0.69 $ 0.49 $ 2.01 $ 1.92 Cash dividends declared $ 0.18 $ 0.18 $ 0.72 $ 0.70

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

December 31, September 30, June 30, March 31, December 31, 2020 2020 2020 2020 2019 (unaudited) (unaudited) (unaudited) (unaudited) (audited)ASSETS Cash and due from $ 41,514 $ 114,604 $ 115,724 $ 108,929 $ 97,593 banksInterest-bearingdeposits at FRB - 1,795,241 1,670,186 2,511,152 753,643 322,505 RichmondInterest-bearingdeposits in 27,532 24,890 24,374 23,564 22,518 financialinstitutionsTotal Cash and Cash 1,864,287 1,809,680 2,651,250 886,136 442,616 EquivalentsSecuritiesavailable for sale, 1,368,224 1,310,683 1,266,624 1,248,420 1,441,308 at fair valueSecurities held to 16,512 17,131 41,595 42,431 43,688 maturityLess: allowance for (97 ) (90 ) (121 ) (133 ) ? credit lossesSecurities held tomaturity, net of 16,415 17,041 41,474 42,298 43,688 allowance forcredit lossesOther equity 6,492 6,497 6,497 6,462 6,462 securitiesFederal Home Loan 30,135 41,829 49,277 52,042 30,094 Bank stockTotal Securities 1,421,266 1,376,050 1,363,872 1,349,222 1,521,552 Mortgage loans held 540,798 669,020 610,369 453,143 419,233 for saleLoans, net ofunearned income and 9,629,068 9,770,570 9,801,889 8,784,195 8,419,288 deferred costsLess: allowance for (120,157 ) (119,058 ) (90,467 ) (64,372 ) (58,234 )credit lossesNet Loans 9,508,911 9,651,512 9,711,422 8,719,823 8,361,054 Premises and 260,242 256,909 257,533 236,735 231,806 equipment, netGoodwill 452,328 446,725 446,725 446,725 446,816 Other intangible 45,533 45,781 48,632 51,448 54,399 assets, netBOLI 246,109 244,103 242,493 240,924 243,062 Other assets 286,970 295,637 247,962 239,670 227,125 TOTAL ASSETS $ 14,626,444 $ 14,795,417 $ 15,580,258 $ 12,623,826 $ 11,947,663 LIABILITIES AND EQUITYDeposits: Noninterest-bearing $ 4,374,566 $ 4,464,178 $ 4,226,208 $ 3,060,515 $ 2,951,225 demandInterest-bearing: Demand and money 4,819,604 4,642,482 4,223,391 3,573,926 3,586,364 market accountsSavings 330,091 312,444 298,673 280,807 276,205 Certificates of 2,048,905 2,285,859 2,516,666 2,392,744 2,457,123 depositTotal Deposits 11,573,166 11,704,963 11,264,938 9,307,992 9,270,917 Advances from the 456,038 731,202 906,365 971,527 471,687 FHLBSubordinated debt, 249,055 248,906 248,756 248,607 248,458 netFRB PPP Lending 182,852 ? 1,111,429 ? ? FacilityRepurchaseagreements and 67,786 58,061 60,913 171,762 52,391 other borrowingsTotal Borrowings 955,731 1,038,169 2,327,463 1,391,896 772,536 Other liabilities 313,719 303,582 266,314 258,306 250,516 TOTAL LIABILITIES 12,842,616 13,046,714 13,858,715 10,958,194 10,293,969 Preferred stock Authorized shares - ? ? ? ? ? 2,000,000Common stock, 121,132 121,115 121,101 121,057 121,107 $1.667 par valueCapital surplus 1,046,642 1,045,170 1,043,774 1,041,870 1,041,160 Retained earnings 557,889 520,888 499,502 477,972 467,186 Common stock issuedto deferred (16,969 ) (16,951 ) (16,776 ) (15,562 ) (15,555 )compensation trust,at costDeferred 16,969 16,951 16,776 15,562 15,555 compensation trustAccumulated othercomprehensive 41,184 44,569 43,218 12,301 11,302 income (loss)TOTAL SHAREHOLDERS? 1,766,847 1,731,742 1,707,595 1,653,200 1,640,755 EQUITYNoncontrolling 16,981 16,961 13,948 12,432 12,939 interestTOTAL EQUITY 1,783,828 1,748,703 1,721,543 1,665,632 1,653,694 TOTAL LIABILITIES $ 14,626,444 $ 14,795,417 $ 15,580,258 $ 12,623,826 $ 11,947,663 AND EQUITY

TOWNEBANKConsolidated Statements of Income - Five Quarter Trend (unaudited)(dollars in thousands, except per share data) Three Months Ended December 31, September30, June30, March 31, December 31, 2020 2020 2020 2020 2019INTEREST INCOME: Loans, including $ 104,182 $ 102,869 $ 102,139 $ 100,062 $ 100,059 feesInvestment 7,499 7,440 8,163 9,949 9,936 securitiesInterest-bearingdeposits infinancial 435 632 433 1,102 2,067 institutionsandfederalfunds soldMortgage loans 3,867 4,587 3,811 2,988 4,413 held for saleTotal interest 115,983 115,528 114,546 114,101 116,475 incomeINTEREST EXPENSE:Deposits 10,762 12,966 15,072 19,062 21,744 Advances from 1,404 1,901 2,595 2,492 1,730 the FHLBSubordinated 2,962 2,962 2,962 2,962 2,962 debtRepurchaseagreements and 241 940 643 89 80 other borrowingsTotal interest 15,369 18,769 21,272 24,605 26,516 expenseNet interest 100,614 96,759 93,274 89,496 89,959 incomePROVISION FOR 1,617 31,598 26,945 7,016 3,601 CREDIT LOSSESNet interestincome after 98,997 65,161 66,329 82,480 86,358 provision forcredit lossesNONINTEREST INCOME:Residentialmortgage banking 37,504 37,531 29,715 7,416 15,884 income, netInsurancecommissions and 13,868 17,468 17,612 16,893 15,001 other title feesand income, netReal estatebrokerage andproperty 9,229 11,301 10,781 6,938 6,737 managementincome, netService chargeson deposit 1,707 1,986 1,888 2,440 2,245 accountsCredit cardmerchant fees, 1,377 1,506 1,109 1,179 1,389 netBOLI 1,990 1,605 1,584 3,105 3,865 Other income 5,559 22,278 3,763 5,227 4,591 Net gain/(loss)on investment ? 1,701 2,930 5,002 ? securitiesTotalnoninterest 71,234 95,376 69,382 48,200 49,712 incomeNONINTEREST EXPENSE:Salaries andemployee 61,475 61,408 56,926 55,867 56,013 benefitsOccupancy 8,193 8,396 7,227 7,502 7,516 expenseFurniture and 3,462 3,247 3,564 3,640 3,598 equipmentAmortization - 2,797 2,851 2,901 2,950 3,005 intangiblesSoftware expense 4,066 3,572 3,492 3,492 2,976 Data processing 2,363 3,113 2,718 2,791 2,510 Professional 2,591 2,637 2,972 3,067 2,990 feesAdvertising and 2,204 1,870 1,986 3,584 2,839 marketingOther expenses 18,781 14,887 9,239 13,995 10,889 Totalnoninterest 105,932 101,981 91,025 96,888 92,336 expenseIncome beforeincome taxexpense and 64,299 58,556 44,686 33,792 43,734 noncontrollinginterestProvision forincome tax 10,408 7,841 7,464 6,187 7,786 expenseNet income 53,891 50,715 37,222 27,605 35,948 Net incomeattributable to (3,809 ) (16,251 ) (2,617 ) (1,221 ) (873 )noncontrollinginterestNet incomeattributable to $ 50,082 $ 34,464 $ 34,605 $ 26,384 $ 35,075 TowneBankPer common share informationBasic earnings $ 0.69 $ 0.48 $ 0.48 $ 0.37 $ 0.49 Diluted earnings $ 0.69 $ 0.48 $ 0.48 $ 0.36 $ 0.49 (1)Basic weightedaverage shares 72,357,177 72,307,961 72,280,555 72,206,228 72,122,476 outstandingDiluted weightedaverage shares 72,455,096 72,344,284 72,317,988 72,299,721 72,302,414 outstandingCash dividends $ 0.18 $ 0.18 $ 0.18 $ 0.18 $ 0.18 declared

(1) The quarterly diluted EPS do not sum to the total year diluted EPS due to rounding.

TOWNEBANKBanking Segment Financial Information(dollars in thousands) Three Months Ended Year Ended Increase/(Decrease) December 31, September December 31, 2020 over 2019 30, 2020 2019 2020 2020 2019 Amount PercentRevenue Net interest $ 97,412 $ 87,637 $ 92,869 $ 367,353 $ 351,969 $ 15,384 4.37 %incomeNoninterest incomeServicecharges on 1,707 2,245 1,986 8,021 10,544 (2,523 ) (23.93 )deposit %accountsCredit card 1,377 1,389 1,506 5,169 4,746 423 8.91 %merchant feesOther income 5,983 5,271 4,876 21,809 19,620 2,189 11.16 %Subtotal 9,067 8,905 8,368 34,999 34,910 89 0.25 %Gain (loss) oninvestment ? ? 1,701 9,634 (845 ) 10,479 n/msecuritiesTotalnoninterest 9,067 8,905 10,069 44,633 34,065 10,568 31.02 %incomeTotal revenue 106,479 96,542 102,938 411,986 386,034 25,952 6.72 % Provision for 1,628 3,601 31,070 65,799 9,371 56,428 602.16 %credit losses Expenses Salaries andemployee 37,358 34,183 36,535 142,328 131,149 11,179 8.52 %benefitsOccupancy 5,681 4,959 5,829 21,237 20,419 818 4.01 %expenseFurniture and 2,625 2,577 2,424 10,425 10,240 185 1.81 %equipmentAmortization )of intangible 1,013 1,214 1,063 4,354 5,160 (806 ) (15.62 %assetsOther expenses 19,892 14,078 15,793 65,107 66,295 (1,188 ) (1.79 ) %Total expenses 66,569 57,011 61,644 243,451 233,263 10,188 4.37 %Income beforeincome tax,corporate 38,282 35,930 10,224 102,736 143,400 (40,664 ) (28.36 )allocation and %noncontrollinginterestCorporate 643 627 595 2,534 2,011 523 26.01 %allocationIncome beforeincome tax )provision and 38,925 36,557 10,819 105,270 145,411 (40,141 ) (27.61 %noncontrollinginterestProvision for )income tax 5,163 6,368 474 14,467 25,706 (11,239 ) (43.72 %expenseNet income 33,762 30,189 10,345 90,803 119,705 (28,902 ) (24.14 ) %Noncontrolling 4 (1 ) (2 ) 6 2 4 n/minterestNet income )attributable $ 33,766 $ 30,188 $ 10,343 $ 90,809 $ 119,707 $ (28,898 ) (24.14 %to TowneBank Efficiencyratio^ 61.57 % 57.80 % 59.84 % 59.42 % 58.96 % (non-GAAP)

TOWNEBANKRealty Segment Financial Information(dollars in thousands)

Three Months Ended Year Ended Increase/(Decrease) December 31, September December 31, 2020 over 2019 30, 2020 2019 2020 2020 2019 Amount PercentRevenue Residential mortgage $ 38,040 $ 16,617 $ 38,074 $ 114,589 $ 68,443 $ 46,146 67.42 %brokerageincome, netReal estate brokerage 3,564 2,550 3,688 11,776 9,865 1,911 19.37 %income, netTitle insurance and 669 531 654 2,397 2,111 286 13.55 %settlement feesProperty management fees, 5,665 4,187 7,613 26,473 24,427 2,046 8.38 %netIncome from 398 75 451 1,336 516 820 158.91 %unconsolidatedsubsidiaryNet interest and other 3,627 2,787 4,101 13,889 7,724 6,165 79.82 %incomeTotal revenue 51,963 26,747 54,581 170,460 113,086 57,374 50.73 % Provision for (recovery (11 ) ? 528 1,378 ? $ 1,378 n/mof) credit losses Expenses Salaries and employee $ 16,168 $ 12,941 $ 15,744 $ 58,263 $ 52,619 $ 5,644 10.73 %benefitsOccupancy expense 1,869 1,857 1,906 7,465 8,285 (820 ) (9.90 ) %Furniture and equipment 614 773 620 2,622 3,099 (477 ) (15.39 ) %Amortization of 658 655 658 2,630 2,741 (111 ) (4.05 )intangible assets %Other expenses 8,779 7,030 9,226 33,143 27,982 5,161 18.44 %Total expenses 28,088 23,256 28,154 104,123 94,726 9,397 9.92 % Income (loss) beforeincome tax, corporate 23,886 3,491 25,899 64,959 18,360 46,599 253.81 %allocation, andnoncontrolling interestCorporate allocation (403 ) (362 ) (356 ) (1,522 ) (1,163 ) (359 ) 30.87 %Income (loss) beforeincome tax provision and 23,483 3,129 25,543 63,437 17,197 46,240 268.88 %noncontrolling interestProvision for income tax 4,421 416 4,780 12,035 3,707 8,328 224.66 %Net income (loss) 19,062 2,713 20,763 51,402 13,490 37,912 281.04 %Noncontrolling interest (3,813 ) (715 ) (4,790 ) (11,809 ) (3,711 ) (8,098 ) 218.22 %Net income (loss) $ 15,249 $ 1,998 $ 15,973 $ 39,593 $ 9,779 $ 29,814 304.88 %attributable to TowneBank Efficiency ratio^ (^ 52.79 % 84.50 % 50.38 % 59.54 % 81.34 % non-GAAP^)

TOWNEBANKInsurance Segment Financial Information(dollars in thousands)

Three Months Ended Year Ended Increase/(Decrease) December31, September30, December31, 2020 over 2019 2020 2019 2020 2020 2019 Amount PercentCommission and fee incomeProperty and $ 11,942 $ 11,957 $ 14,072 $ 52,726 $ 50,380 $ 2,346 4.66 %casualtyEmployee 3,725 3,758 3,825 15,259 14,726 533 3.62 %benefitsTravel ? 794 1,399 3,526 4,085 (559 ) (13.68 )insurance (1) %Specialized )benefit 175 173 165 664 672 (8 ) (1.19 %servicesTotalcommissions 15,842 16,682 19,461 72,175 69,863 2,312 3.31 %and feesContingency )and bonus 1,087 1,396 1,112 6,230 6,307 (77 ) (1.22 %revenueOther income 69 1,805 17,697 17,976 2,032 15,944 784.65 %(1)Total revenue 16,998 19,883 38,270 96,381 78,202 18,179 23.25 %Employeecommission 3,592 3,501 3,654 14,492 13,379 1,113 8.32 %expenseRevenue, netof commission 13,406 16,382 34,616 81,889 64,823 17,066 26.33 %expense Expenses Salaries and )employee $ 7,949 $ 8,889 $ 9,129 $ 35,085 $ 35,152 $ (67 ) (0.19 %benefitsOccupancy 643 700 661 2,615 2,677 (62 ) (2.32 )expense %Furniture and 223 248 203 867 1,012 (145 ) (14.33 )equipment %Amortizationof intangible 1,126 1,136 1,130 4,514 4,469 45 1.01 %assetsOther expenses 1,334 1,096 1,060 5,170 7,003 (1,833 ) (26.17 ) %Total )operating 11,275 12,069 12,183 48,251 50,313 (2,062 ) (4.10 %expensesIncome beforeincome tax and 2,131 4,313 22,433 33,638 14,510 19,128 131.83 %noncontrollinginterestCorporate (240 ) (265 ) (239 ) (1,012 ) (848 ) (164 ) 19.34 %allocationIncome beforeincome taxprovision and 1,891 4,048 22,194 32,626 13,662 18,964 138.81 %noncontrollinginterestProvision forincome tax 824 1,002 2,587 5,398 3,183 2,215 69.59 %expenseNet income 1,067 3,046 19,607 27,228 10,479 16,749 159.83 %Noncontrolling ? (157 ) (11,459 ) (12,095 ) (1,182 ) (10,913 ) 923.27 %interest (1)Net incomeattributable $ 1,067 $ 2,889 $ 8,148 $ 15,133 $ 9,297 $ 5,836 62.77 %to TowneBank Provision for 824 1,002 2,587 5,398 3,183 2,215 69.59 %income taxesDepreciation,amortization 1,274 1,333 1,285 5,151 5,312 (161 ) (3.03 )and interest %expenseEBITDA ^ $ 3,165 $ 5,224 $ 12,020 $ 25,682 $ 17,792 $ 7,890 44.35 %(non-GAAP) Efficiencyratio ^(^ 75.70 % 66.74 % 65.06 % 68.06 % 70.72 % non-GAAP^)(1) In third quarter 2020 we sold Red Sky Insurance, our travel insurance jointventure. We recorded a gross gain on sale in other income of $17,626. Ourre-tax net gain, after distributions to noncontrolling interest was $6,521.

TOWNEBANKReconciliation of Non-GAAP Financial Measures: Three Months Ended Twelve Months Ended December 31, September 30, December 31, December 31, 2020 2020 2019 2020 2019 Return onaverage assets 1.35 % 0.89 % 1.16 % 1.03 % 1.19 %(GAAP)Impact ofexcludingaveragegoodwill and 0.11 % 0.08 % 0.14 % 0.10 % 0.15 %otherintangiblesandamortizationReturn onaveragetangible 1.46 % 0.97 % 1.30 % 1.13 % 1.33 %assets(non-GAAP) Return onaverage equity 11.26 % 7.85 % 8.44 % 8.46 % 8.69 %(GAAP)Impact ofexcludingaveragegoodwill and 5.02 % 3.81 % 4.53 % 4.16 % 4.89 %otherintangiblesandamortizationReturn onaveragetangible 16.28 % 11.66 % 12.97 % 12.62 % 13.58 %equity(non-GAAP) Return onaverage common 11.36 % 7.91 % 8.51 % 8.52 % 8.75 %equity (GAAP)Impact ofexcludingaveragegoodwill and 5.12 % 3.88 % 4.61 % 4.24 % 4.98 %otherintangiblesandamortizationReturn onaveragetangible 16.48 % 11.79 % 13.12 % 12.76 % 13.73 %common equity(non-GAAP) Book value $ 24.31 $ 23.83 $ 22.58 $ 24.31 $ 22.58 (GAAP)Impact ofexcludingaveragegoodwill and (6.85 ) (6.77 ) (6.89 ) (6.85 ) (6.89 )otherintangiblesandamortizationTangible bookvalue $ 17.46 $ 17.06 $ 15.69 $ 17.46 15.69 (non-GAAP) Efficiency 61.64 % 53.08 % 66.11 % 59.58 % 67.08 %ratio (GAAP)Impact ofexcluding g/lon investments (1.62 ) 4.28 % (2.15 ) (0.88 ) (2.29 )and % % % %amortizationexpenseEfficiencyratio 60.02 % 57.36 % 63.96 % 58.70 % 64.79 %(non-GAAP) Average assets $ 14,722,385 $ 15,487,152 $ 11,970,593 $ 14,172,206 $ 11,638,426 (GAAP)Less: averagegoodwill and 491,453 494,238 502,767 495,707 503,108 intangibleassetsAveragetangible $ 14,230,932 $ 14,992,914 $ 11,467,826 $ 13,676,499 $ 11,135,318 assets(non-GAAP) Average equity $ 1,768,906 $ 1,747,033 $ 1,647,929 $ 1,721,059 $ 1,597,281 (GAAP)Less: averagegoodwill and 491,453 494,238 502,767 495,707 503,108 intangibleassetsAveragetangible $ 1,277,453 $ 1,252,795 $ 1,145,162 $ 1,225,352 $ 1,094,173 equity(non-GAAP) Average common $ 1,753,596 $ 1,732,881 $ 1,635,394 $ 1,707,635 $ 1,585,238 equity (GAAP)Less: averagegoodwill and 491,453 494,238 502,767 495,707 503,108 intangibleassetsAveragetangible $ 1,262,143 $ 1,238,643 $ 1,132,627 $ 1,211,928 $ 1,082,130 common equity(non-GAAP) Net income $ 50,082 $ 34,464 $ 35,075 $ 145,535 $ 138,783 (GAAP)Amortizationof 2,210 2,252 2,374 9,086 9,772 intangibles,net of taxTangible netincome $ 52,292 $ 36,716 $ 37,449 $ 154,621 $ 148,555 (non-GAAP) Net income $ 50,082 $ 34,464 $ 35,075 $ 145,535 $ 138,783 (GAAP)Provision for 1,617 31,598 3,601 67,177 9,371 credit lossesProvision for 10,408 7,841 7,786 31,900 32,596 income taxesPre-provision,pre-tax net $ 62,107 $ 73,903 $ 46,462 $ 244,612 $ 180,750 revenues(non-GAAP) Total revenue $ 171,848 $ 192,135 $ 139,671 $ 664,335 $ 563,943 (GAAP)Net (gain)loss on equity ? (17,625 ) ? ? ? investmentNet (gain)/loss on ? (1,701 ) ? (9,634 ) 845 investmentsecuritiesTotal revenuefor efficiency $ 171,848 $ 172,809 $ 139,671 $ 654,701 $ 564,788 calculation(non-GAAP) Noninterest $ 105,932 $ 101,981 $ 92,336 $ 395,825 $ 378,302 expense (GAAP)Less:Amortization 2,797 2,851 3,005 11,498 12,370 of intangiblesNoninterestexpense net of $ 103,135 $ 99,130 $ 89,331 $ 384,327 $ 365,932 amortization(non-GAAP)







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