GlobeNewswire Inc | Oct 28, 2021 08:30AM EDT

October 28, 2021

SUFFOLK, Va., Oct. 28, 2021 (GLOBE NEWSWIRE) -- TowneBank (the "Company" or "Towne") (NASDAQ: TOWN) today reported earnings for the quarter ended September30, 2021 of $50.40million, or $0.69 per diluted share, compared to $34.46million, or $0.48 per diluted share, for the quarter ended September30, 2020.

"TowneBank had another successful quarter highlighted by solid organic loan growth despite headwinds from historically low levels of line utilization. Our credit quality metrics are excellent, and our Company is poised to capitalize on growth opportunities across our markets. The strong momentum in our fee-based businesses continued during the quarter as we explore additional strategies to accelerate noninterest income growth," said G. Robert Aston, Jr., Executive Chairman.

Highlights for Third Quarter 2021 Compared to Third Quarter 2020:

-- Total revenues were $170.08million, a decrease of $22.06million, or 11.48%. This year-over-year decrease was driven by a 2020 gain on the sale of Red Sky Travel Insurance ("Red Sky"), totaling $17.63million. -- Pre-provision, pre-tax, net revenues (non-GAAP), were $63.65million, an increase of $7.37million, or 13.09%, excluding the 2020 gain on sale of Red Sky. -- Loans held for investment were $9.30billion, a decrease of $0.47billion, or 4.84%, from September30, 2020, and $0.13billion, or 1.34%, from June30, 2021. Excluding the decline in loans from the Paycheck Protection Program ("PPP"), loans held for investment increased $378.69million, or 4.37%, compared to September 30, 2020, and $147.41million, or 6.57%, on an annualized basis, from the linked quarter. Total loans at September30, 2021, September30, 2020, and June30, 2021 included $0.25billion, $1.10billion, and $0.52billion, respectively, of PPP loans. -- Total deposits were $13.01billion, an increase of $1.31billion, or 11.18% compared to prior year and $0.05billion, or 1.51% on an annualized basis, from June30, 2021. -- Noninterest bearing deposits increased by 20.85%, to $5.39billion, representing 41.45% of total deposits. Compared to the linked quarter, noninterest bearing deposits increased 11.17%, on an annualized basis. -- Annualized return on common shareholders' equity was 10.68% and annualized return on average tangible common shareholders' equity was 15.27% (non-GAAP). -- Net interest margin for the quarter was 2.76% and taxable equivalent net interest margin (non-GAAP) was 2.78%. -- Nonperforming assets were $13.86million, or 0.09% of total assets, compared to $28.74million, or 0.19%, at September30, 2020, primarily due to the sale of several foreclosed properties. -- Effective tax rate of 22.73% in the quarter compared to 18.53% in third quarter 2020, and 20.03% in the linked quarter.

"While facing continued pressure from the current rate environment on net interest margins, our Company delivered another strong performance for the quarter. Our diversified revenue model has afforded us the opportunity to patiently deploy excess liquidity and the recent rise in rates should provide more attractive entry points potentially increasing security purchases over the next several quarters," stated J. Morgan Davis, Chief Executive Officer.

Quarterly Net Interest Income Compared to Third Quarter 2020:

-- Net interest income was $100.44million compared to $96.76million as of September30, 2020. -- Tax-equivalent net interest margin (non-GAAP) was 2.78%, including purchase accounting accretion of 4 basispoints and PPP interest and fees of 15basis points, compared to 2.72%, including purchase accounting accretion of 5basispoints and a 17 basis point increase in PPP interest and fees, for third quarter 2020. -- On an average basis, loans held for investment, with a yield of 4.24%, represented 64.01% of earning assets at September30, 2021 compared to a yield of 4.22% and 68.38% of earning assets in the third quarter of 2020. Excluding PPP loans, loan yields were 4.06% in third quarter 2021 compared to 4.30% in third quarter 2020. -- Interest and fee income on PPP loans was $7.77million in third quarter 2021, compared to $10.02million in the linked quarter, and $9.82million in third quarter 2020. -- Total cost of deposits decreased to 0.19% from 0.46% at September30, 2020. -- Average interest-earning assets totaled $14.43billion at September30, 2021 compared to $14.26billion at September30, 2020, an increase of 1.20%. -- Average interest-bearing liabilities totaled $8.24billion, a decrease of $0.98billion from prior year.

Quarterly Provision for Credit Losses:

-- The quarterly provision for credit losses for on-balance-sheet loans was a benefit of $1.60million compared to a provision expense of $28.26million one year ago and a benefit of $8.08million in the linked quarter. -- The third quarter 2021 included a release in the allowance for credit losses of $0.95million that was driven by a combination of net recoveries and a slight improvement in the quarterly economic forecast, offset by modest core loan growth. -- Net loan recoveries were $0.64million compared to $0.33million one year prior and $0.14million in the linked quarter. The ratio of net loan recoveries to average loans on an annualized basis was (0.03)% in third quarter 2021, (0.01)% in third quarter 2020, and (0.01)% in the linked quarter. -- The provision expense for credit losses on off-balance-sheet commitments was $0.01million compared to $3.50million in the third quarter of 2020, and a benefit of $1.89million in the linked quarter. -- The allowance for credit losses on loans represented 1.15% of total loans at September30, 2021 and June30, 2021, compared to 1.22% at September30, 2020. Excluding PPP loans, which are fully government guaranteed, the allowance for credit losses (non-GAAP) was 1.18%, compared to 1.22% at June30, 2021 and 1.37% at September30, 2020. The allowance for credit losses on loans was 12.68 times nonperforming loans compared to 9.67 times at June30, 2021 and 7.31 times at September30, 2020. -- 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.

Quarterly Noninterest Income Compared to Third Quarter 2020:

-- Total noninterest income was $69.63million compared to $95.38million in 2020, a decrease of $25.74million, or 26.99%. Residential mortgage banking income decreased $12.11million, while real estate brokerage and property management income increased $2.98million. In the third quarter of 2020, noninterest income included a gain of $17.63million on the sale of Red Sky, a travel insurance joint venture. -- Residential mortgage banking recorded income of $25.42million compared to $37.53million in third quarter 2020. Margins declined 4 basis points between quarters and loan volume decreased to $1.31billion in third quarter 2021 compared to $1.79billion in 2020. Residential purchase activity comprised 77.45% of production volume in the third quarter of 2021 compared to 61.21% in the prior year quarter. In addition to the declines related to margin and volume, the income statement impact of derivative instruments in third quarter 2021 was a net loss of $0.77million compared to a net gain on derivative instruments of $3.33million in third quarter 2020. Included in the third quarter 2021 derivative instrument loss was a loss on interest rate-locks of $1.67million, compared to a gain of $3.28million in third quarter 2020. -- Margins on residential mortgages declined 41 basis points from the peak in December 2020. Management expects margin compression to continue through the end of the year to more normalized levels. -- Total Insurance segment revenue decreased $17.24million, or 45.06%, to $21.03million in third quarter 2021 compared to 2020. This decline is attributable to the sale of Red Sky mid-third quarter 2020 and the gain on sale totaling $17.63million that was recorded in other income in that quarter. After distributions to noncontrolling interests, Towne retained $6.52million of the pre-tax gain. Partially offsetting the decline was the acquisition of a property and casualty insurance agency in December 2020, which brought in $0.73million in additional revenue in third quarter 2021. -- Property management fee revenue increased 37.95%, or $2.89million, to $10.50million compared to third quarter 2020. Demand for vacation rentals remains strong, keeping levels high. In July 2021, the Company acquired Venture Resorts, the largest cabin rental company in the Smoky Mountains of Tennessee, which brought in an additional $3.0million in management fee revenue in the quarter.

Quarterly Noninterest Expense Compared to Third Quarter 2020:

-- Total noninterest expense was $104.09million compared to $101.98million in 2020, an increase of $2.11million, or 2.06%. The higher level of expenses was attributable to increases in advertising and marketing expense of $2.0million, software expense of $0.64million, and data processing expense of $0.49million. -- Advertising and marketing expense increases, related primarily to our Realty segment, were driven by production based advertising programs in our property management companies and consumer mortgage advertising in our residential mortgage operations. -- Increased costs associated with our core banking platform resulted in higher software expenses, and higher credit card fees on vacation property reservation activities drove the increase in data processing expense. -- We expect the fourth quarter 2021 noninterest expense run rate to be consistent with the current quarter.

Consolidated Balance Sheet Highlights:

-- Total assets were $15.81billion for the quarter ended September30, 2021, a marginal increase compared to $15.80billion at June30, 2021. Total assets increased $1.02billion, or 6.87%, from $14.80billion at September30, 2020. The year-over-year increase was driven by higher liquidity levels due to deposit growth. -- Loans held for investment decreased $0.47billion, or 4.84%, compared to prior year and $0.13billion, or 1.34%, compared the linked quarter. Excluding PPP loans of $0.25billion in third quarter 2021, $1.10billion in third quarter 2020, and $0.52billion in the linked quarter, loans held for investment increased $378.69million, or 4.37%, compared to prior year, and $147.41million, or 1.66%, compared to June30, 2021, or 6.57% on an annualized basis. -- Average loans held for investment, excluding PPP loans, were $8.88billion in the third quarter of 2021, an increase of $220.80million, or 2.55%, compared to prior year. In the linked quarter comparison, average loans held for investment, excluding PPP loans, increased 0.47%, or $41.38million, 1.86% on an annualized basis. -- Unamortized fee income related to PPP loans was $7.50million at September30, 2021. -- Mortgage loans held for sale decreased $237.17million, or 35.45%, compared to the prior year and $122.60million, or 22.11%, compared to the linked quarter. -- Total deposits increased $1.31billion, or 11.18%, compared to the prior year and $0.05billion, or 0.38%, compared to the linked quarter. -- Total borrowings decreased $0.55billion, or 53.05%, from prior year and $0.10billion, or 17.40%, compared to the linked quarter.

Investment Securities:

-- Total investment securities were $1.59billion compared to $1.49billion at June30, 2021 and $1.38billion at September30, 2020. The weighted average duration of the portfolio at September30, 2021 was 4.0 years. The carrying value of the available for sale debt securities portfolio included $32.06million, $61.43million, and $42.18million in net unrealized gains at September30, 2021, September30, 2020, and June30, 2021, respectively.

Loans and Asset Quality:

-- Total loans held for investment were $9.30billion at September30, 2021 compared to $9.42billion at June30, 2021 and $9.77billion at September30, 2020. -- Nonperforming assets were $13.86million, or 0.09% of total assets, compared to $28.74million, or 0.19%, at September30, 2020. -- Nonperforming loans were 0.09% of period end loans compared to 0.17% at September30, 2020. -- Foreclosed property decreased to $5.41million from $11.69million at September30, 2020. -- At September30, 2021, we had $50.95million in loan modifications made in accordance with section4013 of the CARES Act, a decline of $1.82billion, or 97.27%, from a reported peak of $1.87billion at April 30, 2020.

Deposits and Borrowings:

-- Total deposits were $13.01billion compared to $12.96billion at June30, 2021 and $11.70billion at September30, 2020. -- Total loans held for investment to deposits were 71.44% compared to 72.69% at June30, 2021 and 83.47% at September30, 2020. -- Non-interest bearing deposits were 41.45% of total deposits at September30, 2021 compared to 40.44% at June30, 2021 and 38.14% at September30, 2020. -- Total borrowings were $0.49billion compared to $0.59billion at June30, 2021 and $1.04billion at September30, 2020.

Capital:

-- Common equity tier 1 capital ratio of 12.53%. -- Tier 1 leverage capital ratio of 9.18%. -- Tier 1 risk-based capital ratio of 12.69%. -- Total risk-based capital ratio of 15.85%. -- Book value per common share was $25.91 compared to $25.51 at June30, 2021 and $23.83 at September30, 2020. -- Tangible book value per common share (non-GAAP) was $18.92 compared to $18.70 at June30, 2021 and $17.06 at September30, 2020.

About TowneBank:Founded in 1999, TowneBank is a company built on relationships, offering a full range of banking and other financial services, with a mission of serving others and enriching lives. Dedicated to a culture of caring, Towne values all employees and members by embracing their diverse talents, perspectives, and experiences.

Today, TowneBank operates over 40 banking offices throughout Hampton Roads and Central Virginia, as well as Northeastern and Central North Carolina serving as a local leader in promoting the social, cultural, and economic growth in each community. Towne offers a competitive array of business and personal banking solutions, delivered with only the highest ethical standards. Experienced local bankers providing a higher level of expertise and personal attention with local decision-making are key to the TowneBank strategy. TowneBank has grown its capabilities beyond banking to provide expertise 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. With total assets of $15.81billion as of September30, 2021, TowneBank is one of the largest banks headquartered in Virginia.

Non-GAAP Financial Measures:This press release contains certain financial measures determined by methods other than in accordance with accounting principles generally accepted in the United States of America (GAAP). Such non-GAAP financial measures include the following: fully tax-equivalent net interest margin, core operating earnings, core net income, tangible book value per common share, total risk-based capital ratio, tier one leverage ratio, tier one capital ratio, and the tangible common equity to tangible assets ratio. Management uses these non-GAAP financial measures to assess the performance of TowneBanks core business and the strength of its capital position. Management believes that these non-GAAP financial measures provide meaningful additional information about TowneBank to assist investors in evaluating operating results, financial strength, and capitalization. The non-GAAP financial measures should be considered as additional views of the way our financial measures are affected by significant charges for credit costs and other factors. These non-GAAP financial measures should not be considered as a substitute for operating results determined in accordance with GAAP and may not be comparable to other similarly titled measures of other companies. The computations of the non-GAAP financial measures used in this presentation are referenced in a footnote or in the appendix to this presentation.

Forward-Looking Statements:This press release contains certain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts, but instead represent only the beliefs, expectations, or opinions of TowneBank and its management regarding future events, many of which, by their nature, are inherently uncertain. Forward-looking statements may be identified by the use of such words as: "believe," "expect," "anticipate," "intend," "plan, "estimate," or words of similar meaning, or future or conditional terms, such as "will," "would," "should," "could," "may," "likely," "probably," or "possibly." These statements may address issues that involve significant risks, uncertainties, estimates, and assumptions made by management. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include the impacts of the ongoing the impact of the COVID-19 pandemic and the associated efforts to limit its spread; competitive pressures in the banking industry that may increase significantly; changes in the interest rate environment that may reduce margins and/or the volumes and values of loans made or held as well as the value of other financial assets held; changes in the credit worthiness of customers and the possible impairment of the collectability of loans; general economic conditions, either nationally or regionally, that may be less favorable than expected, resulting in, among other things, a deterioration in credit quality and/or a reduced demand for credit or other services; changes in the legislative or regulatory environment, including changes in accounting standards and tax laws, that may adversely affect our business; costs or difficulties related to the integration of the businesses we have acquired may be greater than expected; expected cost savings associated with pending or recently completed acquisitions may not be fully realized or realized within the expected time frame; cybersecurity threats or attacks, the implementation of new technologies, and the ability to develop and maintain reliable electronic systems; our competitors may have greater financial resources and develop products that enable them to compete more successfully; changes in business conditions; changes in the securities market; and changes in our local economy with regard to our market area. Any forward-looking statements made by us or on our behalf speak only as of the date they are made or as of the date indicated, and we do not undertake any obligation to update forward-looking statements as a result of new information, future events, or otherwise. For additional information on factors that could materially influence forward-looking statements included in this report, see the "Risk Factors" in TowneBanks Annual Report on Form 10-K for the year ended December 31, 2020 and related disclosures in other filings that have been, or will be, filed by TowneBank with the Federal Deposit Insurance Corporation.

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

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

TOWNEBANKSelected Financial Highlights (unaudited)(dollars in thousands, except per share data) Three Months Ended September30, June30, March31, December31, September30, 2021 2021 2021 2020 2020Income andPerformance Ratios: Total Revenue $ 170,076 $ 167,321 $ 182,509 $ 171,848 $ 192,135 Net income 52,743 58,002 72,631 53,891 50,715 Net income available to 50,400 55,803 68,995 50,082 34,464 common shareholders Pre-provision, pre-tax, net 63,647 59,728 81,577 62,107 56,278 revenues ^ (non-GAAP) Net income per common share - 0.69 0.77 0.95 0.69 0.48 diluted Book value per 25.91 25.51 24.78 24.31 23.83 common share Book value per common share - 18.92 18.70 17.94 17.46 17.06 tangible ^ (non-GAAP) Return on 1.27 % 1.48 % 1.92 % 1.35 % 0.89 % average assets Return on average assets 1.37 % 1.59 % 2.05 % 1.46 % 0.97 % - tangible ^ (non-GAAP) Return on 10.59 % 12.21 % 15.56 % 11.26 % 7.85 % average equity Return on average equity 15.09 % 17.38 % 22.19 % 16.28 % 11.66 % - tangible ^ (non-GAAP) Return on average common 10.68 % 12.31 % 15.70 % 11.36 % 7.91 % equity Return on average common equity - 15.27 % 17.57 % 22.45 % 16.48 % 11.79 % tangible ^ (non-GAAP) Noninterest income as a 40.94 % 39.55 % 45.21 % 41.45 % 49.64 % percentage of total revenueRegulatoryCapital Ratios (1): Common equity 12.53 % 12.42 % 12.15 % 11.87 % 11.75 % tier 1 Tier 1 12.69 % 12.57 % 12.30 % 12.04 % 11.91 % Total 15.85 % 15.76 % 15.59 % 15.42 % 15.35 % Tier 1 9.18 % 9.44 % 9.54 % 8.99 % 8.89 % leverage ratioAsset Quality: Allowance for credit losses on loans to 12.68x 9.67x 9.09x 10.74x 7.31x nonperforming loans Allowance for credit losses on loans to 1.15 % 1.15 % 1.19 % 1.25 % 1.22 % period end loans Allowance for credit losses on loans to period end 1.18 % 1.22 % 1.31 % 1.37 % 1.37 % loans excluding PPP loans ^ (non-GAAP) Nonperforming loans to 0.09 % 0.12 % 0.13 % 0.12 % 0.17 % period end loans Nonperforming assets to 0.09 % 0.10 % 0.11 % 0.11 % 0.19 % period end assets Net charge-offs (recoveries) (0.03 ) (0.01 ) 0.03 % ? % (0.01 ) to average % % % loans (annualized) Net charge-offs $ (644 ) $ (137 ) $ 669 $ 109 $ (328 ) (recoveries) Nonperforming $ 8,451 $ 11,178 $ 12,768 $ 11,188 $ 16,295 loans Former bank ? ? 750 750 750 premises Foreclosed 5,409 4,041 3,748 4,276 11,695 property Total nonperforming $ 13,860 $ 15,219 $ 17,266 $ 16,214 $ 28,740 assets Loans past due 90 days and $ 143 $ 1,584 $ 108 $ 528 $ 19 still accruing interest Allowance for credit losses $ 107,177 $ 108,130 $ 116,077 $ 120,157 $ 119,058 on loansMortgage Banking: Loans originated, $ 939,272 $ 1,050,663 $ 1,187,595 $ 1,257,963 $ 1,292,801 mortgage Loans originated, 370,865 403,864 417,177 429,848 498,100 joint venture Total loans $ 1,310,137 $ 1,454,527 $ 1,604,772 $ 1,687,811 $ 1,790,901 originated Number of loans 3,917 4,514 5,164 5,481 5,817 originated Number of 219 222 229 228 224 originators Purchase % 77.45 % 76.95 % 53.45 % 59.76 % 61.21 % Loans sold $ 1,394,166 $ 1,485,057 $ 1,601,480 $ 1,845,926 $ 1,833,590 Rate lock $ 6,087 $ 7,760 $ 12,522 $ 11,781 $ 10,480 asset Gross realized gain on sales and fees as a 3.61 % 3.64 % 4.01 % 4.02 % 3.65 % % of loans originatedOther Ratios: Net interest 2.76 % 2.92 % 3.04 % 2.97 % 2.70 % margin Net interest margin-fully 2.78 % 2.94 % 3.06 % 2.98 % 2.72 % tax equivalent ^(non-GAAP) Average earning assets 91.89 % 91.89 % 91.46 % 91.59 % 92.09 % /total average assets Average loans/ average 71.69 % 78.22 % 82.71 % 83.42 % 86.29 % deposits Average noninterest deposits/total 40.40 % 40.21 % 38.39 % 39.61 % 37.76 % average deposits Period end equity/period 12.02 % 11.83 % 12.04 % 12.20 % 11.82 % end total assets Efficiency ratio^ 59.58 % 61.46 % 52.11 % 60.02 % 57.36 % (non-GAAP) (1) Current reporting period regulatory capital ratios are preliminary

TOWNEBANKSelected Data (unaudited)(dollars in thousands)

Investment % ChangeSecurities Q3 Q3 Q2 Q3 21 vs. Q3 21 vs.Available-for-salesecurities, at fair 2021 2020 2021 Q3 20 Q2 21valueU.S. agency $ 207,949 $ 167,275 $ 206,151 24.32 % 0.87 %securitiesU.S. Treasury notes 1,007 1,006 1,013 0.10 % (0.59 ) %Municipal 350,980 292,792 334,633 19.87 % 4.89 %securitiesTrust preferred andother corporate 31,591 24,236 31,680 30.35 % (0.28 ) %securitiesMortgage-backedsecurities issued 969,017 825,378 881,078 17.40 % 9.98 %by GSE and GNMAAllowance for (142 ) (4 ) (134 ) 3,450.00 % 5.97 %credit lossesTotal $ 1,560,402 $ 1,310,683 $ 1,454,421 19.05 % 7.29 %Gross unrealized gains (losses) reflected in financial statementsTotal gross $ 40,906 $ 62,206 $ 65,152 (34.24 ) % (37.21 ) %unrealized gainsTotal gross (8,845 ) (773 ) (22,968 ) 1,044.24 % (61.49 ) %unrealized lossesNet unrealizedgains (losses) and $ 32,061 $ 61,433 $ 42,184 (47.81 ) % (24.00 ) %other adjustmentson AFS securitiesHeld-to-maturitysecurities, at amortized costTrust preferredcorporate $ 2,285 $ 2,333 $ 2,297 (2.06 ) % (0.52 ) %securitiesMunicipal 5,074 4,992 5,053 1.64 % 0.42 %securitiesMortgage-backedsecurities issued 7,539 9,806 8,039 (23.12 ) % (6.22 ) %by GSE and GNMAAllowance for (94 ) (90 ) (97 ) 4.44 % (3.09 ) %credit lossesTotal $ 14,804 $ 17,041 $ 15,292 (13.13 ) % (3.19 ) % Gross unrealized gains (losses) not reflected in financial statementsTotal gross $ 1,591 $ 1,971 $ 1,708 (19.28 ) % (6.85 ) %unrealized gainsTotal gross ? ? ? ? % ? %unrealized lossesNet unrealizedgains (losses) in $ 1,591 $ 1,971 $ 1,708 (19.28 ) % (6.85 ) %HTM securities Loans Held For % ChangeInvestment (1) Q3 Q3 Q2 Q3 21 vs. Q3 21 vs. 2021 2020 2021 Q3 20 Q2 21Real estate -construction and $ 1,005,592 $ 1,143,202 $ 1,029,811 (12.04 ) % (2.35 ) %developmentCommercial realestate - owner 1,463,000 1,378,443 1,445,328 6.13 % 1.22 %occupiedCommercial realestate - non owner 2,647,625 2,338,532 2,597,405 13.22 % 1.93 %occupiedReal estate - 363,733 289,270 343,764 25.74 % 5.81 %multifamilyResidential 1-4 1,233,125 1,229,732 1,166,898 0.28 % 5.68 %familyHELOC 389,974 430,803 390,726 (9.48 ) % (0.19 ) %Commercial andindustrial business 1,253,972 2,144,875 1,529,788 (41.54 ) % (18.03 ) %(C&I)Government 471,037 354,926 479,664 32.71 % (1.80 ) %Indirect 348,864 270,371 310,492 29.03 % 12.36 %Consumer loans and 120,643 190,416 129,702 (36.64 ) % (6.98 ) %otherTotal $ 9,297,565 $ 9,770,570 $ 9,423,578 (4.84 ) % (1.34 ) %(1) Paycheck Protection Program loans totaling $0.25billion, $1.10billion,and $0.52billion, primarily in C&I, are included in Q3 21, Q3 20, and Q2 21,respectively.Deposits % Change Q3 Q3 Q2 Q3 21 vs. Q3 21 vs. 2021 2020 2021 Q3 20 Q2 21Noninterest-bearing $ 5,394,952 $ 4,464,178 $ 5,243,073 20.85 % 2.90 %demandInterest-bearing: Demand and money 5,681,181 4,642,482 5,373,146 22.37 % 5.73 %market accountsSavings 366,165 312,444 349,552 17.19 % 4.75 %Certificates of 1,571,752 2,285,859 1,998,828 (31.24 ) % (21.37 ) %depositsTotal $ 13,014,050 $ 11,704,963 $ 12,964,599 11.18 % 0.38 %

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

Three Months Ended Three Months Ended Three Months Ended September30, 2021 June30, 2021 September30, 2020 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), $ 9,238,922 $ 98,732 4.24 % $ 9,604,805 $ 101,490 4.24 % $ 9,752,746 $ 103,401 4.22 %excludingnonaccrualloans (1)Taxable investment 1,421,347 6,560 1.85 % 1,351,922 6,476 1.92 % 1,206,679 6,726 2.23 %securitiesTax-exemptinvestment 125,523 487 1.55 % 128,094 434 1.36 % 144,999 779 2.15 %securitiesTotal securities 1,546,870 7,047 1.82 % 1,480,016 6,910 1.87 % 1,351,678 7,505 2.22 %Interest-bearing 3,179,010 1,182 0.15 % 2,327,310 619 0.11 % 2,523,644 632 0.10 %depositsLoans held for sale 468,323 3,406 2.91 % 503,706 3,711 2.95 % 634,309 4,587 2.89 %Total earning assets 14,433,125 110,367 3.03 % 13,915,837 112,730 3.25 % 14,262,377 116,125 3.24 %Less: allowance for (108,478 ) (116,025 ) (95,594 ) credit lossesTotal nonearning 1,382,351 1,344,076 1,320,369 assetsTotal assets $ 15,706,998 $ 15,143,888 $ 15,487,152 Liabilities and Equity:Interest-bearing depositsDemand and money $ 5,486,788 $ 2,095 0.15 % $ 5,179,907 $ 2,004 0.16 % $ 4,311,920 $ 2,663 0.25 %marketSavings 358,739 533 0.59 % 346,177 528 0.61 % 304,753 555 0.72 %Certificates of 1,842,948 3,400 0.73 % 1,816,283 4,612 1.02 % 2,417,772 9,747 1.60 %depositTotalinterest-bearing 7,688,475 6,028 0.31 % 7,342,367 7,144 0.39 % 7,034,445 12,965 0.73 %depositsBorrowings 300,505 412 0.54 % 476,122 565 0.47 % 1,931,120 2,841 0.58 %Subordinated debt, 249,405 2,962 4.75 % 249,260 2,962 4.75 % 248,807 2,962 4.76 %netTotalinterest-bearing 8,238,385 9,402 0.45 % 8,067,749 10,671 0.53 % 9,214,372 18,768 0.81 %liabilitiesDemand deposits 5,212,271 4,937,754 4,268,443 Othernoninterest-bearing 367,891 304,793 257,304 liabilitiesTotal liabilities 13,818,547 13,310,296 13,740,119 Shareholders? equity 1,888,451 1,833,592 1,747,033 Total liabilities $ 15,706,998 $ 15,143,888 $ 15,487,152 and equityNet interest income(tax-equivalent $ 100,965 $ 102,059 $ 97,357 basis)Reconciliation ofNon-GAAP Financial MeasuresTax-equivalent basis (522 ) (915 ) (598 ) adjustmentNet interest income $ 100,443 $ 101,144 $ 96,759 (GAAP) Interest rate spread 2.58 % 2.72 % 2.43 %(2)(3)Interest expense asa percent of average 0.26 % 0.31 % 0.52 %earning assetsNet interest margin(tax equivalent 2.78 % 2.94 % 2.72 %basis) (3)(4)Total cost of 0.19 % 0.23 % 0.46 %deposits

(1) September30, 2021, September30, 2020, and June30, 2021 includes average PPP balances of $0.36 billion, $1.10 billion and $0.77 billion, and related interest and fee income of $7.77 million, $9.82 million, and $10.02 million, respectively.(2) Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities. Fully tax equivalent.(3) Net interest margin is net interest income expressed as a percentage of average earning assets. Fully tax equivalent.(4) Non-GAAP.

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

Nine Months Ended Nine Months Ended Nine Months Ended September30, September30, 2021 September30, 2020 2021 Compared with 2020 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), $ 9,495,456 $ 302,182 4.25 % $ 9,309,256 $ 306,622 4.40 % $ (4,440 ) $ (10,384 ) $ 5,944 excludingnonaccrual loans (1)Taxable investment securities 1,359,366 19,640 1.93 % 1,253,783 23,304 2.48 % (3,664 ) (5,507 ) 1,843 Tax-exempt investment 131,106 1,462 1.49 % 140,248 2,476 2.35 % (1,014 ) (862 ) (152 )securitiesTotal securities 1,490,472 21,102 1.89 % 1,394,031 25,780 2.47 % (4,678 ) (6,369 ) 1,691 Interest-bearing deposits 2,426,468 2,218 0.12 % 615,466 2,168 0.47 % 50 (2,552 ) 2,602 Loans held for sale 502,758 10,477 2.78 % 477,964 11,386 3.18 % (909 ) (1,478 ) 569 Total earning assets 13,915,154 335,979 3.23 % 11,796,717 345,956 3.92 % (9,977 ) (20,783 ) 10,806 Less: allowance for credit (115,100 ) (73,538 ) lossesTotal nonearning assets 1,351,796 2,264,295 Total assets $ 15,151,850 $ 13,987,474 Liabilities and Equity: Interest-bearing deposits Demand and money market $ 5,192,658 $ 6,175 0.16 % $ 3,898,642 $ 10,472 0.36 % $ (4,297 ) $ (7,044 ) $ 2,747 Savings 345,739 1,583 0.61 % 290,684 1,702 0.78 % (119 ) (408 ) 289 Certificates of deposit 1,872,393 13,963 1.00 % 2,451,715 34,925 1.90 % (20,962 ) (14,008 ) (6,954 )Total interest-bearing deposits 7,410,790 21,721 0.39 % 6,641,041 47,099 0.95 % (25,378 ) (21,460 ) (3,918 )Borrowings 445,399 1,798 0.53 % 1,452,652 8,661 0.78 % (6,863 ) (2,169 ) (4,694 )Subordinated debt, net 249,261 8,854 4.74 % 248,660 8,885 4.76 % (31 ) (52 ) 21 Total interest-bearing 8,105,450 32,373 0.53 % 8,342,353 64,645 1.04 % (32,272 ) (23,681 ) (8,591 )liabilitiesDemand deposits 4,880,493 3,687,791 Other 325,639 252,337 noninterest-bearingliabilitiesTotal liabilities 13,311,582 12,282,481 Shareholders? equity 1,840,268 1,704,993 Total liabilities and equity $ 15,151,850 $ 13,987,474 Net interest income $ 303,606 $ 281,311 $ 22,295 $ 2,898 $ 19,397 (tax-equivalent basis)Reconciliation of Non-GAAP Financial MeasuresTax-equivalent basis adjustment (2,029 ) (1,781 ) (248 ) Net interest income (GAAP) $ 301,577 $ 279,530 $ 22,047 Interest rate spread (2)(4) 2.69 % 2.88 % Interest expense as a percent 0.31 % 0.73 % of average earning assetsNet interest margin (tax equivalent basis) (3) 2.92 % 3.19 % (4)Total cost of deposits 0.24 % 0.61 % (1) September30, 2021 and September30, 2020 includes average PPP balances of$0.48 billion and $0.64 billion and related interest income of $29.42millionand $15.65 million.(2) Interest spread is the average yield earned on earning assets less theaverage rate paid on interest-bearing liabilities. Fully tax equivalent.(3) Net interest margin is net interest income expressed as a percentage ofaverage earning assets. Fully tax equivalent.(4) Non-GAAP.

TOWNEBANKConsolidated Balance Sheets(dollars in thousands, except share data) September30, December 31, 2021 2020 (unaudited) (audited)ASSETS Cash and due from banks $ 75,370 $ 41,514 Interest-bearing deposits at FRB - Richmond 3,155,039 1,795,241 Interest-bearing deposits in financial 33,506 27,532 institutionsTotal Cash and Cash Equivalents 3,263,915 1,864,287 Securities available for sale, at fair value(amortized cost of $1,528,483 and $1,310,250,and allowance for credit losses of $142 and 1,560,402 1,368,224 $348 at September30, 2021 and December31,2020, respectively.)Securities held to maturity, at amortized cost(fair value $16,489 and $18,469 at 14,898 16,512 September30, 2021 and December31, 2020,respectively.)Less: allowance for credit losses (94 ) (97 )Securities held to maturity, net of allowance 14,804 16,415 for credit lossesOther equity securities 6,621 6,492 FHLB stock 13,146 30,135 Total Securities 1,594,973 1,421,266 Mortgage loans held for sale 431,846 540,798 Loans, net of unearned income and deferred 9,297,565 9,629,068 costsLess: allowance for credit losses (107,177 ) (120,157 )Net Loans 9,190,388 9,508,911 Premises and equipment, net 270,810 260,242 Goodwill 457,187 452,328 Other intangible assets, net 50,839 45,533 BOLI 249,862 246,109 Other assets 301,552 286,970 TOTAL ASSETS $ 15,811,372 $ 14,626,444 LIABILITIES AND EQUITY Deposits: Noninterest-bearing demand $ 5,394,952 $ 4,374,566 Interest-bearing: Demand and money market accounts 5,681,181 4,819,604 Savings 366,165 330,091 Certificates of deposit 1,571,752 2,048,905 Total Deposits 13,014,050 11,573,166 Advances from the FHLB 155,537 456,038 Subordinated debt, net 249,503 249,055 FRB PPP lending facility ? 182,852 Repurchase agreements and other borrowings 82,413 67,786 Total Borrowings 487,453 955,731 Other liabilities 409,435 313,719 TOTAL LIABILITIES 13,910,938 12,842,616 Preferred stock, authorized and unissued shares ? ? - 2,000,000Common stock, $1.667 par: 150,000,000 shares authorized72,683,529 and 72,667,541 shares issued at September30, 2021 and December31, 2020, 121,163 121,132 respectivelyCapital surplus 1,049,367 1,046,642 Retained earnings 690,960 557,889 Common stock issued to deferred compensation trust, at cost905,484 and 873,486 shares at September30, (18,076 ) (16,969 )2021 and December31, 2020, respectivelyDeferred compensation trust 18,076 16,969 Accumulated other comprehensive income (loss) 21,597 41,184 TOTAL SHAREHOLDERS? EQUITY 1,883,087 1,766,847 Noncontrolling interest 17,347 16,981 TOTAL EQUITY 1,900,434 1,783,828 TOTAL LIABILITIES AND EQUITY $ 15,811,372 $ 14,626,444

TOWNEBANKConsolidated Statements of Income (unaudited)(dollars in thousands, except per share data) Three Months Ended Nine Months Ended September30, September30, 2021 2020 2021 2020INTEREST INCOME: Loans, including fees $ 98,258 $ 102,869 $ 300,268 $ 305,070 Investment securities 7,000 7,440 20,987 25,553 Interest-bearing depositsin financial institutions 1,182 632 2,218 2,168 and federal funds soldMortgage loans held for 3,405 4,587 10,477 11,385 saleTotal interest income 109,845 115,528 333,950 344,176 INTEREST EXPENSE: Deposits 6,028 12,966 21,721 47,099 Advances from the FHLB 247 1,901 1,017 6,990 Subordinated debt, net 2,962 2,962 8,854 8,885 Repurchase agreements and 165 940 781 1,672 other borrowingsTotal interest expense 9,402 18,769 32,373 64,646 Net interest income 100,443 96,759 301,577 279,530 PROVISION FOR CREDIT (1,582 ) 31,598 (15,665 ) 65,559 LOSSESNet interest income afterprovision for credit 102,025 65,161 317,242 213,971 lossesNONINTEREST INCOME: Residential mortgage 25,422 37,531 88,359 74,662 banking income, netInsurance commissions andother title fees and 17,398 17,468 52,055 51,973 income, netReal estate brokerage andproperty management 14,283 11,301 43,201 29,020 income, netService charges on deposit 2,524 1,986 7,104 6,314 accountsCredit card merchant fees, 1,660 1,506 4,630 3,793 netBOLI 2,301 1,605 5,361 6,295 Other income 6,045 22,278 16,367 31,268 Net gain/(loss) on ? 1,701 1,252 9,632 investment securitiesTotal noninterest income 69,633 95,376 218,329 212,957 NONINTEREST EXPENSE: Salaries and employee 61,230 61,408 181,030 174,201 benefitsOccupancy expense 7,656 8,396 23,286 23,124 Furniture and equipment 3,513 3,247 10,647 10,451 Amortization - intangibles 2,750 2,851 8,192 8,702 Software expense 4,209 3,572 12,896 10,556 Data processing 3,603 3,113 10,255 8,622 Professional fees 2,227 2,637 6,826 8,677 Advertising and marketing 3,865 1,870 10,090 7,440 Other expenses 15,033 14,887 43,583 38,121 Total noninterest expense 104,086 101,981 306,805 289,894 Income before income taxexpense and noncontrolling 67,572 58,556 228,766 137,034 interestProvision for income tax 14,829 7,841 45,388 21,492 expenseNet income $ 52,743 $ 50,715 $ 183,378 $ 115,542 Net income attributable to (2,343 ) (16,251 ) (8,177 ) (20,089 )noncontrolling interestNet income attributable to $ 50,400 $ 34,464 $ 175,201 $ 95,453 TowneBankPer common share informationBasic earnings $ 0.70 $ 0.48 $ 2.42 $ 1.32 Diluted earnings $ 0.69 $ 0.48 $ 2.41 $ 1.32 Cash dividends declared $ 0.20 $ 0.18 $ 0.38 $ 0.54

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

September30, June30, March31, December31, September30, 2021 2021 2021 2020 2020 (unaudited) (unaudited) (unaudited) (audited) (unaudited)ASSETS Cash and due from $ 75,370 $ 117,797 $ 141,545 $ 41,514 $ 114,604 banksInterest-bearingdeposits at FRB - 3,155,039 2,970,490 1,936,458 1,795,241 1,670,186 RichmondInterest-bearingdeposits in 33,506 31,971 30,031 27,532 24,890 financialinstitutionsTotal Cash and Cash 3,263,915 3,120,258 2,108,034 1,864,287 1,809,680 EquivalentsSecurities 1,560,402 1,454,421 1,418,006 1,368,224 1,310,683 available for saleSecurities held to 14,898 15,389 15,980 16,512 17,131 maturityLess: allowance for (94 ) (97 ) (97 ) (97 ) (90 )credit lossesSecurities held tomaturity, net of 14,804 15,292 15,883 16,415 17,041 allowance forcredit lossesOther equity 6,621 6,395 6,355 6,492 6,497 securitiesFHLB stock 13,146 16,909 16,909 30,135 41,829 Total Securities 1,594,973 1,493,017 1,457,153 1,421,266 1,376,050 Mortgage loans held 431,846 554,447 582,905 540,798 669,020 for saleLoans, net ofunearned income and 9,297,565 9,423,578 9,734,583 9,629,068 9,770,570 deferred costsLess: allowance for (107,177 ) (108,130 ) (116,077 ) (120,157 ) (119,058 )credit lossesNet Loans 9,190,388 9,315,448 9,618,506 9,508,911 9,651,512 Premises and 270,810 265,644 261,831 260,242 256,909 equipment, netGoodwill 457,187 452,328 452,328 452,328 446,725 Other intangible 50,839 42,271 44,808 45,533 45,781 assets, netBOLI 249,862 249,213 247,655 246,109 244,103 Other assets 301,552 311,209 306,176 286,970 295,637 TOTAL ASSETS $ 15,811,372 $ 15,803,835 $ 15,079,396 $ 14,626,444 $ 14,795,417 LIABILITIES AND EQUITYDeposits: Noninterest-bearing $ 5,394,952 $ 5,243,074 $ 4,840,678 $ 4,374,566 $ 4,464,178 demandInterest-bearing: Demand and money 5,681,181 5,373,146 5,062,461 4,819,604 4,642,482 market accountsSavings 366,165 349,552 342,554 330,091 312,444 Certificates of 1,571,752 1,998,828 1,893,951 2,048,905 2,285,859 depositTotal Deposits 13,014,050 12,964,600 12,139,644 11,573,166 11,704,963 Advances from the 155,537 255,706 255,872 456,038 731,202 FHLBSubordinated debt, 249,503 249,353 249,204 249,055 248,906 netFRB PPP lending ? ? 183,164 182,852 ? facilityRepurchaseagreements and 82,413 85,042 68,509 67,786 58,061 other borrowingsTotal Borrowings 487,453 590,101 756,749 955,731 1,038,169 Other liabilities 409,435 379,278 366,697 313,719 303,582 TOTAL LIABILITIES 13,910,938 13,933,979 13,263,090 12,842,616 13,046,714 Preferred stock Authorized shares - ? ? ? ? ? 2,000,000Common stock, 121,163 121,144 121,108 121,132 121,115 $1.667 par valueCapital surplus 1,049,367 1,048,332 1,047,312 1,046,642 1,045,170 Retained earnings 690,960 655,095 613,826 557,889 520,888 Common stock issuedto deferred compensationtrust, at cost (18,076 ) (18,076 ) (17,063 ) (16,969 ) (16,951 )Deferred 18,076 18,076 17,063 16,969 16,951 compensation trustAccumulated othercomprehensive 21,597 29,273 17,969 41,184 44,569 income (loss)TOTAL SHAREHOLDERS? 1,883,087 1,853,844 1,800,215 1,766,847 1,731,742 EQUITYNoncontrolling 17,347 16,012 16,091 16,981 16,961 interestTOTAL EQUITY 1,900,434 1,869,856 1,816,306 1,783,828 1,748,703 TOTAL LIABILITIES $ 15,811,372 $ 15,803,835 $ 15,079,396 $ 14,626,444 $ 14,795,417 AND EQUITY

TOWNEBANKConsolidated Statements of Income - Five Quarter Trend (unaudited)(dollars in thousands, except share data) Three Months Ended September30, June30, March31, December31, September30, 2021 2021 2021 2020 2020INTEREST INCOME: Loans, including $ 98,258 $ 100,614 $ 101,396 $ 104,182 $ 102,869 feesInvestment 7,000 6,871 7,117 7,499 7,440 securitiesInterest-bearingdeposits infinancial 1,182 619 416 435 632 institutions andfederal fundssoldMortgage loans 3,405 3,711 3,361 3,867 4,587 held for saleTotal interest 109,845 111,815 112,290 115,983 115,528 incomeINTEREST EXPENSE:Deposits 6,028 7,144 8,548 10,762 12,966 Advances from 247 274 497 1,404 1,901 the FHLBSubordinated 2,962 2,962 2,930 2,962 2,962 debtRepurchaseagreements and 165 291 325 241 940 other borrowingsTotal interest 9,402 10,671 12,300 15,369 18,769 expenseNet interest 100,443 101,144 99,990 100,614 96,759 incomePROVISION FOR (1,582 ) (10,055 ) (4,027 ) 1,617 31,598 CREDIT LOSSESNet interestincome after 102,025 111,199 104,017 98,997 65,161 provision forcredit lossesNONINTEREST INCOME:Residentialmortgage banking 25,422 25,524 37,412 37,504 37,531 income, netInsurancecommissions and 17,398 18,331 16,325 13,868 17,468 other title feesand income, netReal estatebrokerage andproperty 14,283 10,984 17,934 9,229 11,301 managementincome, netService chargeson deposit 2,524 2,391 2,190 1,707 1,986 accountsCredit cardmerchant fees, 1,660 1,667 1,302 1,377 1,506 netBOLI 2,301 1,541 1,519 1,990 1,605 Other income 6,045 5,487 4,837 5,559 22,278 Net gain/(loss)on investment ? 252 1,000 ? 1,701 securitiesTotalnoninterest 69,633 66,177 82,519 71,234 95,376 incomeNONINTEREST EXPENSE:Salaries andemployee 61,230 61,365 58,435 61,475 61,408 benefitsOccupancy 7,656 7,559 8,072 8,193 8,396 expenseFurniture and 3,513 3,622 3,512 3,462 3,247 equipmentAmortization - 2,750 2,719 2,723 2,797 2,851 intangiblesSoftware expense 4,209 4,494 4,194 4,066 3,572 Data processing 3,603 3,414 3,239 2,363 3,113 Professional 2,227 2,259 2,339 2,591 2,637 feesAdvertising and 3,865 3,257 2,968 2,204 1,870 marketingOther expenses 15,033 16,705 11,844 18,781 14,887 Totalnoninterest 104,086 105,394 97,326 105,932 101,981 expenseIncome beforeincome taxexpense and 67,572 71,982 89,210 64,299 58,556 noncontrollinginterestProvision forincome tax 14,829 13,980 16,579 10,408 7,841 expenseNet income 52,743 58,002 72,631 53,891 50,715 Net incomeattributable to (2,343 ) (2,199 ) (3,636 ) (3,809 ) (16,251 )noncontrollinginterestNet incomeattributable to $ 50,400 $ 55,803 $ 68,995 $ 50,082 $ 34,464 TowneBankPer common share informationBasic earnings $ 0.70 $ 0.77 $ 0.95 $ 0.69 $ 0.48 Diluted earnings $ 0.69 $ 0.77 $ 0.95 $ 0.69 $ 0.48 Basic weightedaverage shares 72,506,877 72,468,094 72,414,953 72,357,177 72,339,413 outstandingDiluted weightedaverage shares 72,591,281 72,560,234 72,517,008 72,455,096 72,375,736 outstandingCash dividends $ 0.20 $ 0.20 $ 0.18 $ 0.18 $ 0.18 declared

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

Three Months Ended Nine Months Ended Increase/(Decrease) September30, June30, September30, 2021 over 2020 2021 2020 2021 2021 2020 Amount PercentRevenue Net interest $ 97,668 $ 92,869 $ 98,134 $ 293,407 $ 269,941 $ 23,466 8.69 %incomeServicecharges on 2,524 1,986 2,391 7,104 6,315 789 12.49 %depositaccountsCredit card 1,660 1,506 1,667 4,630 3,793 837 22.07 %merchant feesOther income 6,334 4,876 5,404 16,706 15,826 880 5.56 %Subtotal 10,518 8,368 9,462 28,440 25,934 2,506 9.66 %Net gain/(loss) on ? 1,701 252 1,252 9,632 (8,380 ) (87.00 ) %investmentsecuritiesTotalnoninterest 10,518 10,069 9,714 29,692 35,566 (5,874 ) (16.52 ) %incomeTotal revenue 108,186 102,938 107,848 323,099 305,507 17,592 5.76 % Provision for (1,728 ) 31,070 (9,532 ) (14,661 ) 64,170 (78,831 ) (122.85 ) %credit losses Expenses Salaries andemployee 34,791 36,535 35,776 102,427 104,970 (2,543 ) (2.42 ) %benefitsOccupancy 5,098 5,829 5,012 15,657 15,557 100 0.64 %expenseFurniture and 2,602 2,424 2,816 8,086 7,800 286 3.67 %equipmentAmortization 862 1,063 912 2,737 3,341 (604 ) (18.08 ) %of intangiblesOther expenses 16,580 15,793 18,392 49,020 45,214 3,806 8.42 %Total expenses 59,933 61,644 62,908 177,927 176,882 1,045 0.59 %Income beforeincome tax,corporate 49,981 10,224 54,472 159,833 64,455 95,378 147.98 %allocation andnoncontrollinginterestCorporate 1,241 595 1,249 3,782 1,891 1,891 100.00 %allocationIncome beforeincome taxprovision and 51,222 10,819 55,721 163,615 66,346 97,269 146.61 %noncontrollinginterestProvision forincome tax 10,225 474 10,535 30,461 9,304 21,157 227.40 %expenseNet income 40,997 10,345 45,186 133,154 57,042 76,112 133.43 %Noncontrolling 2 (2 ) 1 (1 ) 2 (3 ) (150.00 ) %interestNet incomeattributable $ 40,999 $ 10,343 $ 45,187 $ 133,153 $ 57,044 $ 76,109 133.42 %to TowneBank Efficiencyratio^ 54.60 % 59.84 % 57.62 % 54.43 % 58.65 % (4.22 ) % (7.20 ) %(non-GAAP)

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

Three Months Ended Nine Months Ended Increase/(Decrease) September30, June30, September30, 2021 over 2020 2021 2020 2021 2021 2020 Amount PercentRevenue Residential mortgage $ 26,637 $ 38,074 $ 26,383 $ 90,898 $ 76,549 $ 14,349 18.74 %brokerageincome, netReal estate brokerage 3,781 3,688 3,893 10,125 8,212 1,913 23.30 %income, netTitle insurance and 706 654 684 1,917 1,728 189 10.94 %settlement feesProperty management fees, 10,502 7,613 7,091 33,076 20,808 12,268 58.96 %netIncome from 269 451 289 964 938 26 2.77 %unconsolidatedsubsidiaryNet interest and other 3,154 4,101 3,336 9,223 10,262 (1,039 ) (10.12 ) %incomeTotal revenue 45,049 54,581 41,676 146,203 118,497 27,706 23.38 % Provision for credit 146 528 (523 ) (1,004 ) 1,389 (2,393 ) (172.28 ) %losses Expenses Salaries and employee 17,375 15,744 16,018 50,240 42,095 8,145 19.35 %benefitsOccupancy expense 1,926 1,906 1,935 5,732 5,595 137 2.45 %Furniture and equipment 693 620 592 1,934 2,007 (73 ) (3.64 ) %Amortization of intangible 702 658 590 1,882 1,973 (91 ) (4.61 ) %assetsOther expenses 11,103 9,226 10,442 30,774 24,366 6,408 26.30 %Total expenses 31,799 28,154 29,577 90,562 76,036 14,526 19.10 % Income before income tax,corporate allocation and 13,104 25,899 12,622 56,645 41,072 15,573 37.92 %noncontrolling interestCorporate allocation (1,000 ) (356 ) (1,000 ) (3,000 ) (1,119 ) (1,881 ) 168.10 %Income before income taxprovision and 12,104 25,543 11,622 53,645 39,953 13,692 34.27 %noncontrolling interestProvision for income tax 3,546 4,780 2,255 12,017 7,614 4,403 57.83 %expenseNet income 8,558 20,763 9,367 41,628 32,339 9,289 28.72 %Noncontrolling interest (2,345 ) (4,790 ) (2,200 ) (8,176 ) (7,996 ) (180 ) 2.25 %Net income attributable to $ 6,213 $ 15,973 $ 7,167 $ 33,452 $ 24,343 $ 9,109 37.42 %TowneBank Efficiency ratio ^ 69.03 % 50.38 % 69.55 % 60.66 % 62.50 % (1.84 ) % (2.94 ) %(non-GAAP)

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

Three Months Ended Nine Months Ended Increase/(Decrease) September30, June30, September30, 2021 over 2020 2021 2020 2021 2021 2020 Amount PercentCommission and fee incomeProperty and $ 15,338 $ 14,072 $ 14,941 $ 44,467 $ 40,784 $ 3,683 9.03 %casualtyEmployee 3,820 3,825 3,430 11,135 11,534 (399 ) (3.46 ) %benefitsTravel ? 1,399 ? ? 3,526 (3,526 ) (100.00 ) %insuranceSpecializedbenefit 164 165 163 494 489 5 1.02 %servicesTotalcommissions 19,322 19,461 18,534 56,096 56,333 (237 ) (0.42 ) %and fees Contingencyand bonus 1,664 1,112 3,323 6,746 5,144 1,602 31.14 %revenueOther income 40 17,697 43 157 17,906 (17,749 ) (99.12 ) %Total revenue 21,026 38,270 21,900 62,999 79,383 (16,384 ) (20.64 ) % Employeecommission 4,185 3,654 4,103 12,395 10,900 1,495 13.72 %expenseRevenue, netof commission 16,841 34,616 17,797 50,604 68,483 (17,879 ) (26.11 ) %expense Salaries andemployee 9,064 9,129 9,571 28,363 27,136 1,227 4.52 %benefitsOccupancy 632 661 612 1,897 1,972 (75 ) (3.80 ) %expenseFurniture and 218 203 214 626 644 (18 ) (2.80 ) %equipmentAmortizationof intangible 1,186 1,130 1,217 3,573 3,388 185 5.46 %assetsOther expenses 1,254 1,060 1,295 3,857 3,836 21 0.55 %Totaloperating 12,354 12,183 12,909 38,316 36,976 1,340 3.62 %expensesIncome beforeincome tax,corporate 4,487 22,433 4,888 12,288 31,507 (19,219 ) (61.00 ) %allocation andnoncontrollinginterestCorporate (241 ) (239 ) (249 ) (782 ) (772 ) (10 ) 1.30 %allocationIncome beforeincome taxprovision and 4,246 22,194 4,639 11,506 30,735 (19,229 ) (62.56 ) %noncontrollinginterestProvision forincome tax 1,058 2,587 1,190 2,910 4,574 (1,664 ) (36.38 ) %expenseNet income 3,188 19,607 3,449 8,596 26,161 (17,565 ) (67.14 ) %Noncontrolling ? (11,459 ) ? ? (12,095 ) 12,095 (100.00 ) %interestNet incomeattributable $ 3,188 $ 8,148 $ 3,449 $ 8,596 $ 14,066 (5,470 ) (38.89 ) %to TowneBank Provision for 1,058 2,587 1,190 2,910 4,574 (1,664 ) (36.38 ) %income taxesDepreciation,amortization 1,330 1,285 1,361 3,999 3,875 124 3.20 %and interestexpenseEBITDA^ $ 5,576 $ 12,020 $ 6,000 $ 15,505 $ 22,515 $ (7,010 ) (31.13 ) %(non-GAAP) Efficiencyratio^ 66.31 % 31.93 % 65.70 % 68.66 % 49.05 % 19.61 % 39.98 %(non-GAAP)*Included inother incomeis the gross $ 17,626 $ 17,626 gain on thesale of RedSkyEfficiencyratio 31.95 % 49.06 % excluding gain

TOWNEBANKReconciliation of Non-GAAP Financial Measures(dollars in thousands) Three Months Ended Nine Months Ended September30, September30, June30, September30, September30, 2021 2020 2021 2021 2020 Return on average 1.27 % 0.89 % 1.48 % 1.55 % 0.91 %assets (GAAP)Impact ofexcluding averagegoodwill and 0.10 % 0.08 % 0.11 % 0.11 % 0.10 %otherintangiblesand amortizationReturn on averagetangible assets 1.37 % 0.97 % 1.59 % 1.66 % 1.01 %(non-GAAP) Return on average 10.59 % 7.85 % 12.21 % 12.73 % 7.48 %equity (GAAP)Impact ofexcluding averagegoodwill and 4.50 % 3.81 % 5.17 % 5.39 % 3.84 %otherintangiblesand amortizationReturn on averagetangible equity 15.09 % 11.66 % 17.38 % 18.12 % 11.32 %(non-GAAP) Return on averagecommon equity 10.68 % 7.91 % 12.31 % 12.84 % 7.53 %(GAAP)Impact ofexcluding averagegoodwill and 4.59 % 3.88 % 5.26 % 5.49 % 3.91 %otherintangiblesand amortizationReturn on averagetangible common 15.27 % 11.79 % 17.57 % 18.33 % 11.44 %equity(non-GAAP) Book value (GAAP) $ 25.91 $ 23.83 $ 25.51 $ 25.91 $ 23.83 Impact ofexcluding averagegoodwill and (6.99 ) (6.77 ) (6.81 ) (6.99 ) (6.77 ) otherintangiblesand amortizationTangible book $ 18.92 $ 17.06 $ 18.70 $ 18.92 $ 17.06 value (non-GAAP) Efficiency ratio 61.20 % 53.08 % 62.99 % 59.01 % 58.86 %(GAAP)Impact of (1.62 ) % 4.28 % (1.53 ) % (1.44 ) % 1.58 %exclusionsEfficiency ratio 59.58 % 57.36 % 61.46 % 57.57 % 60.44 %(non-GAAP) Average assets $ 15,706,998 $ 15,487,152 $ 15,143,888 $ 15,151,850 $ 13,987,474 (GAAP)Less: averagegoodwill and 506,231 494,238 496,059 499,944 497,135 intangible assetsAverage tangible $ 15,200,767 $ 14,992,914 $ 14,647,829 $ 14,651,906 $ 13,490,339 assets (non-GAAP) Average equity $ 1,888,451 $ 1,747,033 $ 1,833,592 $ 1,840,268 $ 1,704,993 (GAAP)Less: averagegoodwill and 506,231 494,238 496,059 499,944 497,135 intangible assetsAverage tangible $ 1,382,220 $ 1,252,795 $ 1,337,533 $ 1,340,324 $ 1,207,858 equity (non-GAAP) Average common $ 1,871,820 $ 1,732,881 $ 1,818,664 $ 1,824,753 $ 1,692,202 equity (GAAP)Less: averagegoodwill and 506,231 494,238 496,059 499,944 497,135 intangible assetsAverage tangiblecommon equity $ 1,365,589 $ 1,238,643 $ 1,322,605 $ 1,324,809 $ 1,195,067 (non-GAAP) Net Income (GAAP) $ 50,400 $ 34,464 $ 55,803 $ 175,201 $ 95,453 Amortization ofIntangibles, net 2,172 2,252 2,148 6,472 6,875 of taxTangible net $ 52,572 $ 36,716 $ 57,951 $ 181,673 $ 102,328 income (non-GAAP) Net Income (GAAP) $ 50,400 $ 34,464 $ 55,803 $ 175,201 $ 95,453 Provision for (1,582 ) 31,599 (10,055 ) (15,665 ) 65,559 credit lossesProvision for 14,829 7,841 13,980 45,388 21,492 income taxOthernonrecurring ? (17,626 ) ? 30 (17,626 ) (income) lossPre-provision,pre-tax net $ 63,647 $ 56,278 $ 59,728 $ 204,955 $ 164,879 revenues(non-GAAP) Total Revenue $ 170,076 $ 192,136 $ 167,321 $ 519,906 $ 492,487 (GAAP)Net (gain)/losson investment ? (1,701 ) (252 ) (1,252 ) (9,633 ) securitiesOthernonrecurring ? (17,626 ) ? 30 (17,626 ) (income) lossTotal Revenue forefficiency $ 170,076 $ 172,809 $ 167,069 $ 518,684 $ 465,228 calculation(non-GAAP) Noninterest $ 104,086 $ 101,981 $ 105,394 $ 306,805 $ 289,894 expense (GAAP)Less:Amortization of 2,750 2,851 2,719 8,192 8,702 intangiblesNoninterestexpense net of $ 101,336 $ 99,130 $ 102,675 $ 298,613 $ 281,192 amortization(non-GAAP)