GlobeNewswire Inc | Jan 27, 2022 08:30AM EST

January 27, 2022

SUFFOLK, Va., Jan. 27, 2022 (GLOBE NEWSWIRE) -- TowneBank (the "Company" or "Towne") (Nasdaq: TOWN) today reported financial results for the full year and the fourth quarter ended December31, 2021. For the year ended December31, 2021, earnings were $215.38million, or $2.97 per diluted share, compared to $145.54million, or $2.01 per diluted share for the year ended December31, 2020. Earnings in the fourth quarter of 2021 were $40.18million, or $0.55 per diluted share, compared to fourth quarter 2020 earnings of $50.08million, or $0.69 per diluted share.

"We were pleased with our performance for 2021, highlighted by our 22nd year of increased earnings. We achieved record financial results with total revenues surpassing $680million for the year, which illustrates the value of Townes diversified business model. Credit quality remained excellent and strong deposit growth across all markets was a bright spot for the year, leading the way for TowneBank to maintain the #1 market share position for our home market in Hampton Roads. These accomplishments were the result of the hard work and dedication from our nearly 2,900 team members who embrace and define our culture of caring each day," said G. Robert Aston, Jr., Executive Chairman.

Annual Highlights for 2021 Compared to 2020:

-- Total revenues were $680.33million for the year ended December 31, 2021, an increase from the prior year of $16.00million, or 2.41%. Increases in net interest income of $22.23million were partially offset by a $6.23million decline in noninterest income. The decrease in noninterest income was driven by a decline in residential mortgage banking income of $2.86million and an $8.38million decline in gain on investment securities. Property management income increased by $15.70million, year-over-year. A 2020 nonrecurring gain on the sale of Red Sky Insurance totaling $17.63million also contributed to the comparative decline. -- Pre-provision, pre-tax, net revenues (non-GAAP) were $253.41, an increase of $8.80million, or 3.60%. -- Loans held for investment declined $0.12 billion, or 1.28% from December 31, 2020. The balances at December 31, 2021 and 2020 included $0.16 billion and $0.86 billion, respectively, of loans originated under the Paycheck Protection Program ("PPP"). Excluding PPP loans, loans held for investment increased $0.58 billion, or 6.56%, compared to prior year. -- Total deposits were $13.57 billion, an increase of $2.0 billion, or 17.29% compared to prior year. -- Book value per share was $26.13, an increase of 7.47% over prior year. Tangible book value (non-GAAP) per share was $19.15, compared to $17.46 in 2020, an increase of 9.65%. -- Return on average assets was 1.40% in 2021, compared to 1.03% in the prior year. Return on average tangible assets (non-GAAP) increased 33.23% to 1.51% in 2021. -- Return on average common shareholders' equity was 11.70% and return on average tangible common shareholders' equity was 16.75% (non-GAAP). -- Taxable equivalent net interest margin of 2.86% (non-GAAP) compared to 3.18% in the prior year. -- Effective tax rate of 20.28% compared to 17.98% in 2020.

Highlights for Fourth Quarter 2021 Compared to Fourth Quarter 2020:

-- Total revenues were $160.42million, in fourth quarter 2021, a decrease from the prior year quarter of $11.42million, or 6.65%. Increases in insurance and property management income were more than offset by a $16.56million decrease in residential mortgage banking income as mortgage demand continued to normalize after the interest rate driven surge in 2020. -- Pre-provision, pre-tax, net revenues (non-GAAP) were $48.48million, a decrease of $13.62million, or 21.93%. -- Loans held for investment increased $0.21billion, or 2.24%, in fourth quarter 2021. Excluding PPP loans, loans held for investment increased $0.30 billion, or 13.26% on an annualized basis, from the linked quarter. -- Total deposits were $13.57billion, an increase of $0.56billion, or 4.30%, from September 30, 2021, or 17.06% on an annualized basis. -- Noninterest bearing deposits increased by 26.79%, to $5.55billion, compared to prior year, representing 40.86% of total deposits. Compared to the linked quarter, noninterest bearing deposits increased 11.16% on an annualized basis. -- In the quarter ended December31, 2021, annualized return on average common shareholders' equity was 8.45% and annualized return on average tangible common shareholders' equity was 12.22% (non-GAAP). For the full 12 months, return on average common shareholders' equity was 11.70% and return on average tangible common shareholders' equity was 16.75% (non-GAAP). -- Net interest margin of 2.70% and taxable equivalent net interest margin of 2.72% (non-GAAP) compared to the prior year quarter of 2.97% and 2.98%, respectively. -- Effective tax rate of 18.97% compared to 17.21% in fourth quarter 2020 and 22.73% in the linked quarter.

"From a strategic perspective, we were encouraged to see loan growth momentum build in the back half of 2021. We have several new banking locations coming fully online in 2022 and expect to continue expanding our impressive suite of noninterest income sources. We are well-positioned to deploy our excess liquidity and should benefit in a rising rate environment," said J. Morgan Davis, Chief Executive Officer.

Quarterly Net Interest Income Compared to the Fourth Quarter of 2020:

-- Net interest income was $100.79million compared to $100.61million for the quarter ended December31, 2020. -- Taxable equivalent net interest margin (non-GAAP) was 2.72%, including purchase accounting accretion of 2basispoints and PPP accretion of 7 basis points, compared to 2.98%, including purchase accounting accretion of 5basispoints and PPP accretion of 10 basis points, for fourth quarter 2020. -- On an average basis, loans held for investment, with a yield of 4.05%, represented 63.26% of earning assets in the fourth quarter of 2021 compared to a yield of 4.28%, which represented 72.32% of earning assets in the fourth quarter of 2020. -- Interest and fee income on PPP loans was $3.85million in fourth quarter 2021, compared to $7.77million in the linked quarter, and $11.29million in fourth quarter 2020. -- Total cost of deposits decreased to 0.16% from 0.37% at December31, 2020. -- Average interest-earning assets totaled $14.80billion at December31, 2021 compared to $13.48billion at December31, 2020, an increase of 9.78%. -- Average interest-bearing liabilities totaled $8.26billion, an increase of $0.23billion, or 2.88%, from the prior year. -- We expect to continue positioning our earning asset portfolio to positively benefit interest margin in anticipation of a rising rate environment.

Quarterly Provision for Credit Losses:

-- The quarterly provision for credit losses for on-balance-sheet loans was a benefit of $1.18million compared to a provision expense of $1.21million one year ago and a benefit of $1.60million in the linked quarter. -- The fourth quarter 2021 included a release in the allowance for credit losses of $1.12million that was driven by a combination of net recoveries and improvement in the current economic forecast, offset by core loan growth. -- Net recoveries were $0.06million compared to net charge-offs of $0.11million one year prior. The ratio of net charge-offs (recoveries) to average loans on an annualized basis was 0.00% in fourth quarter 2021 and 2020, and (0.03)% in the linked quarter. -- The allowance for credit losses on loans represented 1.12% of total loans compared to 1.15% at September 30, 2021 and 1.25% at December31, 2020. Excluding PPP loans, which are fully government guaranteed, the allowance for credit losses on loans (non-GAAP) was 1.13% at December 31, 2021, 1.18% at September 30, 2021, and 1.37% at December31, 2020. The allowance for credit losses on loans was 17.76 times nonperforming loans compared to 12.68 times at September 30, 2021 and 10.74 times at December31, 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 Fourth Quarter 2020:

-- Total noninterest income was $59.63million compared to $71.23million in 2020, a decrease of $11.60million, or 16.29%. Residential mortgage banking income decreased $16.56million, while insurance commissions increased $1.62million, and property management income increased $3.43million. -- Residential mortgage banking income was $20.95million compared to $37.50million in fourth quarter 2020. Loan volume in the current quarter was $1.15billion, with purchase activity comprising 79.36%. Loan volume in fourth quarter 2020 was $1.69billion, with purchase activity of 59.76%. Loan volume in the linked quarter was $1.31billion with purchase activity of 77.45%. Mortgage rates have increased compared to prior periods, resulting in a decline in refinance activity. -- In addition to declines in mortgage volume and margin from prior periods, the income statement impact of derivative instruments in the fourth quarter of 2021 was a net loss of $2.90million, compared to a net gain of $1.30million in the fourth quarter of 2020, and a net loss of $0.77million in the linked quarter. -- Total insurance segment revenue increased $2.26million, or 13.31%, to $19.26million in the fourth quarter of 2021. This increase is attributable to higher property and casualty commissions and contingency income, compared to the prior year quarter. We acquired an insurance agency in December 2020, which brought in $0.53 million in additional revenue in fourth quarter 2021. -- Property management fee revenue increased 60.62%, or $3.43million, as compared to fourth quarter 2020 due to strong fourth quarter 2021 reservation activity. In July 2021, the Company acquired Venture Resorts, a cabin rental company in the Smoky Mountains of Tennessee, which brought in an additional $2.02 million in property management fees in the quarter.

Quarterly Noninterest Expense Compared to Fourth Quarter 2020:

-- Total noninterest expense was $110.47million compared to $105.93million, an increase of $4.54million, or 4.28%. This reflects increases of $3.34million in salary and benefits expense, $1.16million in data processing expense, and $1.21million in advertising and marketing expenses. The Venture Resorts acquisition resulted in an additional $3.72 million of noninterest expenses during the quarter. -- Increases in salaries and benefits compared to fourth quarter 2020 were driven by second quarter 2021 annual base salary adjustments, business acquisitions, and year-end production-related bonuses. -- Higher credit card fees on vacation property reservation activities and increased costs associated with our core banking platform drove the increase in data processing expense. -- Advertising and marketing expenses increased, primarily in our Realty segment, driven by production based advertising programs in our property management companies and a consumer mortgage advertising program in our residential mortgage operations. -- We expect first quarter 2022 noninterest expenses to be slightly lower than the current quarter and average $107million to $109million on a quarterly basis throughout 2022.

Consolidated Balance Sheet Highlights:

-- Total assets were $16.36billion at December31, 2021, an increase of 11.86%, compared to $14.63billion at December31, 2020. The increase was driven by increased liquidity levels related to strong deposit growth. -- Loans held for investment decreased $0.12billion, or 1.28%, compared to year end 2020, but increased $0.21billion compared to the linked quarter. Excluding PPP loans of $0.16billion in fourth quarter 2021, $0.86billion in fourth quarter 2020, and $0.25billion in the linked quarter, loans held for investment increased $0.58million, or 6.56%, compared to prior year, and $0.30million, or 2.24%, compared to September 30, 2021, or 13.26% on an annualized basis. -- Average loans held for investment, excluding PPP loans, were $9.17billion in fourth quarter 2021, an increase of $444.58million, or 5.09%, compared to prior year. In the linked quarter comparison, average loans held for investment, excluding PPP loans, increased 3.16%, or $280.75million, 12.53% on an annualized basis. -- Unamortized fee income related to PPP loans was $4.16million at December 31, 2021 and $14.79million at December31, 2020. -- Mortgage loans held for sale decreased $0.18billion, or 33.75%, compared to prior year and $0.07billion, or 17.03%, compared to the linked quarter. -- Total deposits increased $2.0billion, or 17.29%, over December31, 2020, and increased $0.56billion, or 4.30%, compared to the linked quarter. -- Total borrowings decreased $0.47billion, or 49.59%, from prior year and $0.01billion, or 1.16%, compared to the linked quarter.

Investment Securities:

-- Total investment securities were $1.98billion compared to $1.59billion at September 30, 2021 and $1.42billion at December31, 2020. The weighted average duration of the portfolio at December31, 2021 was 3.89 years. The carrying value of the AFS debt securities portfolio included $17.54million in net unrealized gains compared to $58.32million in net unrealized gains at December31, 2020. -- We anticipate continuing to strategically deploy excess liquidity at a similar pace in the first half of 2022.

Loans and Asset Quality:

-- Total loans held for investment were $9.51billion at December31, 2021 compared to $9.30billion at September 30, 2021 and $9.63billion at December31, 2020. -- Nonperforming assets were $10.56million, or 0.06% of total assets, compared to $16.21million, or 0.11% of total assets, at December31, 2020. -- Nonperforming loans were 0.06% of period end loans compared to 0.12% at December31, 2020. -- Foreclosed property increased $0.30million from $4.28million at December31, 2020. On January14, 2022, the Company recognized a nominal gain on the sale of a foreclosed property, which had been carried on the balance sheet at $3.55 million at December 31, 2021.

Deposits and Borrowings:

-- Total deposits were $13.57billion compared to $13.01billion at September 30, 2021 and $11.57billion at December31, 2020. -- Total loans held for investment to total deposits were 70.03% compared to 71.44% at September 30, 2021 and 83.20% at December31, 2020. -- Non-interest bearing deposits were 40.86% of total deposits at December31, 2021 compared to 41.45% at September 30, 2021 and 37.80% at December31, 2020. Non-interest bearing deposits experienced typical seasonality during the fourth quarter. -- Total borrowings were $0.48billion compared to $0.49billion and $0.96billion at September 30, 2021 and December31, 2020, respectively.

Capital:

-- Common equity tier 1 capital ratio of 12.36%. -- Tier 1 leverage capital ratio of 9.12%. -- Tier 1 risk-based capital ratio of 12.50%. -- Total risk-based capital ratio of 15.56%. -- Book value per share was $26.13 compared to $25.91 at September 30, 2021 and $24.31 at December31, 2020. -- Tangible book value per share (non-GAAP) was $19.15 compared to $18.92 at September 30, 2021 and $17.46 at December31, 2020.

Annual Meeting of Shareholders:TowneBank intends to hold its 2022 Annual Meeting of Shareholders at 11:30a.m. on Wednesday, May25, 2022 at the Virginia Beach Convention Center, 1000 19thStreet in Virginia Beach, Virginia.

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 $16.36billion as of December31, 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, 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 COVID-19 pandemic and the associated efforts to limit the spread of the virus; 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 release, 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 December 31, September30, June30, March 31, December 31, 2021 2021 2021 2021 2020 Income andPerformance Ratios: Total revenue, net of $ 160,424 $ 170,076 $ 167,321 $ 182,509 $ 171,848 interest expense Net income 41,657 52,743 58,002 72,631 53,891 Net income available to 40,183 50,400 55,803 68,995 50,082 common shareholders Pre-provision, pre-tax, net 48,483 63,647 59,728 81,578 62,107 revenues ^ (non-GAAP) Net income per common share - 0.55 0.69 0.77 0.95 0.69 diluted Book value per 26.13 25.91 25.51 24.78 24.31 common share Book value per share - 19.15 18.92 18.70 17.94 17.46 tangible ^ (non-GAAP) Return on 0.99 % 1.27 % 1.48 % 1.92 % 1.35 % average assets Return on average assets 1.08 % 1.37 % 1.59 % 2.05 % 1.46 % - tangible ^ (non-GAAP) Return on 8.38 % 10.59 % 12.21 % 15.56 % 11.26 % average equity Return on average equity 12.08 % 15.09 % 17.38 % 22.19 % 16.28 % - tangible ^ (non-GAAP) Return on average common 8.45 % 10.68 % 12.31 % 15.70 % 11.36 % equity Return on average common equity - 12.22 % 15.27 % 17.57 % 22.45 % 16.48 % tangible ^ (non-GAAP) Noninterest income as a 37.17 % 40.94 % 39.55 % 45.21 % 41.45 % percentage of total revenueRegulatoryCapital Ratios (1): Common equity 12.36 % 12.53 % 12.42 % 12.15 % 11.87 % tier 1 Tier 1 12.50 % 12.69 % 12.57 % 12.30 % 12.04 % Total 15.56 % 15.85 % 15.76 % 15.59 % 15.42 % Tier 1 9.12 % 9.18 % 9.44 % 9.54 % 8.99 % leverage ratioAsset Quality: Allowance for credit losses on loans to 17.76x 12.68x 9.67x 9.09x 10.74x nonperforming loans Allowance for credit losses on loans to 1.12 % 1.15 % 1.15 % 1.19 % 1.25 % period end loans Allowance for credit losses on loans to period end 1.13 % 1.18 % 1.22 % 1.31 % 1.37 % loans excluding PPP loans^ (non-GAAP) Nonperforming loans to 0.06 % 0.09 % 0.12 % 0.13 % 0.12 % period end loans Nonperforming assets to 0.06 % 0.09 % 0.10 % 0.11 % 0.11 % period end assets Net charge-offs (recoveries) ? % (0.03 ) (0.01 ) 0.03 % ? % to average % % loans (annualized) Net charge-offs (60 ) (644 ) (137 ) 669 109 (recoveries) Nonperforming $ 5,973 $ 8,451 $ 11,178 $ 12,768 $ 11,188 loans Former bank ? ? ? 750 750 premises Foreclosed 4,583 5,409 4,041 3,748 4,276 property Total nonperforming $ 10,556 $ 13,860 $ 15,219 $ 17,266 $ 16,214 assets Loans past due 90 days and $ 372 $ 143 $ 1,584 $ 108 $ 528 still accruing interest Allowance for credit losses 106,059 107,177 108,130 116,077 120,157 on loansMortgage Banking: Loans originated, $ 851,021 $ 939,272 $ 1,050,663 $ 1,187,595 $ 1,257,963 mortgage Loans originated, 303,362 370,865 403,864 417,177 429,848 joint venture Total loans $ 1,154,383 $ 1,310,137 $ 1,454,527 $ 1,604,772 $ 1,687,811 originated Number of loans 3,408 3,917 4,514 5,164 5,481 originated Number of 213 219 222 229 228 originators Purchase % 79.36 % 77.45 % 76.95 % 53.45 % 59.76 % Loans sold $ 1,150,996 $ 1,394,166 $ 1,485,057 $ 1,601,480 $ 1,845,926 Rate lock $ 3,455 $ 6,087 $ 7,760 $ 12,522 $ 11,781 asset Gross realized gain on sales and fees as a 3.42 % 3.61 % 3.64 % 4.01 % 4.02 % % of loans originatedOther Ratios: Net interest 2.70 % 2.76 % 2.92 % 3.04 % 2.97 % margin Net interest margin-fully 2.72 % 2.78 % 2.94 % 3.06 % 2.98 % tax equivalent ^(non-GAAP) Average earning assets 92.08 % 91.89 % 91.89 % 91.46 % 91.59 % /total average assets Average loans/ average 70.68 % 71.69 % 78.22 % 82.71 % 83.42 % deposits Average noninterest deposits/total 41.42 % 40.40 % 40.21 % 38.39 % 39.61 % average deposits Period end equity/period 11.71 % ?^ 12.02 % 11.83 % 12.04 % 12.20 % end total 1 assets Efficiency ratio^ 67.03 % 59.58 % 61.46 % 52.11 % 60.02 % (non-GAAP) (1) Current reporting period regulatory capital ratios are preliminary.

TOWNEBANKSelected Data (unaudited)(dollars in thousands)

Investment % Change Securities Q4 Q4 Q3 Q4 21 vs. Q4 21 vs. Available-for-sale securities, at fair 2021 2020 2021 Q4 20 Q3 21 value U.S. agency $ 310,587 $ 184,657 $ 207,949 68.20 % 49.36 % securities U.S. Treasury notes 1,000 1,000 1,007 ? % (0.70 ) % Municipal 385,673 353,651 350,980 9.05 % 9.88 % securities Trust preferred and other corporate 53,950 31,499 31,591 71.28 % 70.78 % securities Mortgage-backed securities issued 1,055,183 797,765 969,017 32.27 % 8.89 % by GSE and GNMA Allowance for (210 ) (348 ) (142 ) (39.66 ) 47.89 % credit losses % Total $ 1,806,183 $ 1,368,224 $ 1,560,402 32.01 % 15.75 % Gross unrealized gains (losses) reflected in financial statements Total gross $ 32,054 $ 60,025 $ 40,906 (46.60 ) (21.64 ) unrealized gains % % Total gross (14,514 ) (1,703 ) (8,845 ) 752.26 % 64.09 % unrealized losses Net unrealized gain ) ) (loss) on AFS $ 17,540 $ 58,322 $ 32,061 (69.93 % (45.29 % securities Held-to-maturity securities, at amortized cost U.S. agency $ 73,360 $ ? $ ? 100.00 % 100.00 % securities U.S. Treasury notes 66,326 ? ? 100.00 % 100.00 % Municipal 5,095 5,012 2,285 1.66 % 122.98 % securities Trust preferred ) ) corporate 2,272 2,321 5,074 (2.11 % (55.22 % securities Mortgage-backed ) ) securities issued 7,168 9,179 7,539 (21.91 % (4.92 % by GSE and GNMA Allowance for (94 ) (97 ) (94 ) (3.09 ) ? % credit losses % Total $ 154,127 $ 16,415 $ 14,804 838.94 % 941.12 %Gross unrealized gains (losses) not reflected in financial statements Total gross $ 1,561 $ 1,957 $ 1,591 (20.24 ) (1.89 ) unrealized gains % % Total gross (106 ) ? ? n/m n/m unrealized losses Net unrealized gain ) ) (loss) on HTM $ 1,455 $ 1,957 $ 1,591 (25.65 % (8.55 % securities Loans Held For % Change Investment (1) Q4 Q4 Q3 Q4 21 vs. Q4 21 vs. 2021 2020 2021 Q4 20 Q3 21 Real estate - ) construction and $ 1,125,863 $ 1,199,772 $ 1,005,592 (6.16 % 11.96 % development Commercial real estate - owner 1,494,000 1,380,516 1,463,000 8.22 % 2.12 % occupied Commercial real ) estate - non owner 2,620,334 2,335,235 2,647,625 12.21 % (1.03 % occupied Multifamily 332,659 295,488 363,733 12.58 % (8.54 ) % Residential 1-4 1,305,915 1,216,629 1,233,125 7.34 % 5.90 % family HELOC 380,834 412,476 389,974 (7.67 ) (2.34 ) % % Commercial and ) ) industrial business 1,206,911 1,990,808 1,253,972 (39.38 % (3.75 % (C&I) Government 525,358 379,243 471,037 38.53 % 11.53 % Indirect 394,802 271,459 348,864 45.44 % 13.17 % Consumer loans and 119,576 147,442 120,643 (18.90 ) (0.88 ) other % % Total $ 9,506,252 $ 9,629,068 $ 9,297,565 (1.28 ) 2.24 % %(1) PPP loans totaling $0.16 billion, $0.86 billion and $0.25 billion,primarily in C&I, are included in Q4 2021, Q4 2020 and Q3 2021, respectively. Deposits % Change Q4 Q4 Q3 Q4 21 vs. Q4 21 vs. 2021 2020 2021 Q4 20 Q3 21 Noninterest-bearing $ 5,546,665 $ 4,374,566 $ 5,394,952 26.79 % 2.81 % demand Interest-bearing: Demand and money 6,139,714 4,819,604 5,681,181 27.39 % 8.07 % market accounts Savings 371,356 330,091 366,165 12.50 % 1.42 % Certificates of 1,515,891 2,048,905 1,571,752 (26.01 ) (3.55 ) deposits % % Total $ 13,573,626 $ 11,573,166 $ 13,014,050 17.29 % 4.30 %

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

Three Months Ended Three Months Ended Three Months Ended December 31, 2021 September 30, 2021 December 31, 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 incomeand deferred $ 9,364,498 $ 95,696 4.05 % $ 9,238,922 $ 98,732 4.24 % $ 9,752,150 $ 104,799 4.28 %costs), excludingnonaccrual loans(1)Taxable investment 1,625,683 10,217 2.51 % 1,421,347 6,560 1.85 % 1,250,375 6,878 2.20 %securitiesTax-exemptinvestment 157,855 292 0.74 % 125,523 487 1.55 % 139,572 520 1.49 %securitiesTotal securities 1,783,538 10,509 2.36 % 1,546,870 7,047 1.82 % 1,389,947 7,398 2.13 %Interest-bearing 3,274,392 1,215 0.15 % 3,179,010 1,182 0.15 % 1,754,365 435 0.10 %depositsLoans held for sale 379,808 2,750 2.90 % 468,323 3,406 2.91 % 587,517 3,867 2.63 %Total earning 14,802,236 110,170 2.95 % 14,433,125 110,367 3.03 % 13,483,979 116,499 3.44 %assetsLess: allowance for (107,215 ) (108,478 ) (121,402 ) credit lossesTotal nonearning 1,380,488 1,382,351 1,359,808 assetsTotal assets $ 16,075,509 $ 15,706,998 $ 14,722,385 Liabilities and Equity:Interest-bearing depositsDemand and money $ 5,853,873 $ 2,148 0.15 % $ 5,486,788 $ 2,095 0.15 % $ 4,582,588 $ 2,633 0.23 %marketSavings 371,901 534 0.57 % 358,739 533 0.59 % 317,561 552 0.69 %Certificates of 1,541,483 2,707 0.70 % 1,842,948 3,400 0.73 % 2,159,573 7,578 1.40 %depositTotalinterest-bearing 7,767,257 5,389 0.28 % 7,688,475 6,028 0.31 % 7,059,722 10,763 0.61 %depositsBorrowings 245,622 360 0.58 % 300,505 412 0.54 % 722,291 1,645 0.89 %Subordinated debt, 249,555 2,962 4.75 % 249,405 2,962 4.75 % 248,965 2,962 4.76 %netTotalinterest-bearing 8,262,434 8,711 0.42 % 8,238,385 9,402 0.45 % 8,030,978 15,370 0.76 %liabilitiesDemand deposits 5,492,894 5,212,271 4,630,665 Othernoninterest-bearing 417,707 367,891 291,836 liabilitiesTotal liabilities 14,173,035 13,818,547 12,953,479 Shareholders? 1,902,474 1,888,451 1,768,906 equityTotal liabilities $ 16,075,509 $ 15,706,998 $ 14,722,385 and equityNet interest income(tax-equivalent $ 101,459 $ 100,965 $ 101,129 basis) (4)Reconciliation of Non-GAAP Financial MeasuresTax-equivalent (667 ) (522 ) (515 ) basis adjustmentNet interest income $ 100,792 $ 100,443 $ 100,614 (GAAP)Interest rate 2.53 % 2.58 % 2.68 %spread (2)(3)Interest expense as a percent of 0.23 % 0.26 % 0.45 %average earning assetsNet interest margin (tax 2.72 % 2.78 % 2.98 %equivalent basis) (3)(4)Total cost of 0.16 % 0.19 % 0.37 %deposits

(1) December 31, 2021, December 31, 2020, and September 30, 2021 balances include average PPP balances of $0.20 billion, $1.04 billion, and $0.36billion, and related interest and fee income of $3.85 million, $11.29 million, and $7.77 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, 2021 2020 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 of unearnedincomeand deferred costs), $ 9,462,448 $ 397,877 4.20 % $ 9,420,584 $ 411,421 4.37 % $ 8,122,210 $ 405,511 4.99 %excludingnonaccrual loans (1)Taxable investment 1,426,493 29,857 2.09 % 1,252,926 30,181 2.41 % 1,202,107 34,141 2.84 %securitiesTax-exempt investment 137,848 1,755 1.27 % 140,078 2,997 2.14 % 102,731 3,426 3.34 %securitiesTotal securities 1,564,341 31,612 2.02 % 1,393,004 33,178 2.38 % 1,304,838 37,567 2.88 %Interest-bearing deposits 2,640,191 3,432 0.13 % 689,715 2,603 0.38 % 665,903 13,825 2.08 %Mortgage loans held for 471,767 13,227 2.80 % 505,502 15,252 3.02 % 335,588 13,379 3.99 %saleTotal earning assets 14,138,747 446,148 3.16 % 12,008,805 462,454 3.85 % 10,428,539 470,282 4.51 %Less: allowance for credit (113,113 ) (85,570 ) (54,476 ) lossesTotal nonearning assets 1,359,028 2,248,971 1,264,363 Total assets $ 15,384,662 $ 14,172,206 $ 11,638,426 Liabilities and Equity: Interest-bearing deposits Demand and money market $ 5,359,321 $ 8,323 0.16 % $ 4,070,562 $ 13,105 0.32 % $ 3,351,135 $ 26,909 0.80 %Savings 352,333 2,117 0.60 % 297,441 2,254 0.76 % 280,894 3,296 1.17 %Certificates of deposit 1,788,985 16,669 0.93 % 2,378,281 42,502 1.79 % 2,478,663 56,050 2.26 %Total interest-bearing 7,500,639 27,109 0.36 % 6,746,284 57,861 0.86 % 6,110,692 86,255 1.41 %depositsBorrowings 395,045 2,159 0.54 % 1,269,064 10,306 0.80 % 609,142 11,368 1.84 %Subordinated debt, net 249,335 11,816 4.74 % 248,736 11,847 4.76 % 248,139 11,847 4.77 %Total interest-bearing 8,145,019 41,084 0.50 % 8,264,084 80,014 0.97 % 6,967,973 109,470 1.57 %liabilitiesDemand deposits 5,034,851 3,924,797 2,844,178 Other noninterest-bearing 348,844 262,266 228,994 liabilitiesTotal liabilities 13,528,714 12,451,147 10,041,145 Shareholders' equity 1,855,948 1,721,059 1,597,281 Total liabilities and $ 15,384,662 $ 14,172,206 $ 11,638,426 equityNet interest income (tax-equivalent basis) $ 405,064 $ 382,440 $ 360,812 (4)Reconciliation of Non-GAAP Financial MeasuresTax-equivalent basis adjustment (2,695 ) (2,296 ) (2,457 ) Net interest income (GAAP) $ 402,369 $ 380,144 $ 358,355 Interest rate spread (2)(4) 2.65 % 2.88 % 2.94 %Interest expense as a percent of average 0.29 % 0.67 % 1.05 %earning assetsNet interest margin (tax-equivalent basis) 2.86 % 3.18 % 3.46 %(3)(4)Total cost of deposits 0.22 % 0.54 % 0.96 %

(1) December 31, 2021 and December 31, 2020 balances include average PPP balances of $0.53 billion and $0.74 billion and related interest and fee income of $33.27 million and $26.94 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.

TOWNEBANKConsolidated Balance Sheets(dollars in thousands, except per share data) 2021 2020 (unaudited) (audited)ASSETS Cash and due from banks $ 17,373 $ 41,514 Interest-bearing deposits at FRB - Richmond 3,244,484 1,795,241 Interest-bearing deposits in financial 34,779 27,532 institutionsTotal Cash and Cash Equivalents 3,296,636 1,864,287 Securities available for sale, at fair value(amortized cost of $1,788,853 and $1,310,250,and allowance for credit losses of $210 and 1,806,183 1,368,224 $348 at December 31, 2021 and December 31,2020, respectively.Securities held to maturity, at amortized cost(fair value $155,676 and $18,469 at December 154,221 16,512 31, 2021 and December 31, 2020, respectively.Less: allowance for credit losses (94 ) (97 )Securities held to maturity, net of allowance 154,127 16,415 for credit lossesOther equity securities 6,759 6,492 FHLB stock 13,146 30,135 Total Securities 1,980,215 1,421,266 Mortgage loans held for sale 358,303 540,798 Loans, net of unearned income and deferred 9,506,252 9,629,068 costsLess: allowance for credit losses (106,059 ) (120,157 )Net Loans 9,400,193 9,508,911 Premises and equipment, net 270,772 260,242 Goodwill 457,187 452,328 Other intangible assets, net 50,379 45,533 BOLI 251,805 246,109 Other assets 295,897 286,970 TOTAL ASSETS $ 16,361,387 $ 14,626,444 LIABILITIES AND EQUITY Deposits: Noninterest-bearing demand $ 5,546,665 $ 4,374,566 Interest-bearing: Demand and money market accounts 6,139,714 4,819,604 Savings 371,356 330,091 Certificates of deposit 1,515,891 2,048,905 Total Deposits 13,573,626 11,573,166 Advances from the FHLB 155,367 456,038 Subordinated debt, net 249,652 249,055 FRB PPP Lending Facility ? 182,852 Repurchase agreements and other borrowings 76,797 67,786 Total Borrowings 481,816 955,731 Other liabilities 389,771 313,719 TOTAL LIABILITIES 14,445,213 12,842,616 Preferred stock Authorized and unissued shares - 2,000,000 ? ? Common stock, $1.667 par: Authorized shares - 150,000,000Issued and outstanding shares 72,683,985 in 121,164 121,132 2021 and 72,667,541 in 2020Capital surplus 1,050,948 1,046,642 Retained earnings 716,605 557,889 Common stock issued to deferred compensation trust, at cost911,458 shares in 2021 and 873,486 shares in (18,257 ) (16,969 )2020Deferred compensation trust 18,257 16,969 Accumulated other comprehensive income (loss) 10,597 41,184 TOTAL SHAREHOLDERS? EQUITY 1,899,314 1,766,847 Noncontrolling interest 16,860 16,981 TOTAL EQUITY 1,916,174 1,783,828 TOTAL LIABILITIES AND EQUITY $ 16,361,387 $ 14,626,444



TOWNEBANKConsolidated Statements of Income(dollars in thousands, except per share data) Three Months Ended Twelve Months Ended December 31, December 31, 2021 2020 2021 2020 (unaudited) (unaudited) (unaudited) (audited)INTEREST INCOME: Loans, including fees $ 95,054 $ 104,182 $ 395,322 $ 409,252 Investment securities 10,484 7,499 31,472 33,052 Interest-bearing depositsin financial institutions 1,215 435 3,432 2,603 and federal funds soldMortgage loans held for 2,750 3,867 13,227 15,252 saleTotal interest income 109,503 115,983 443,453 460,159 INTEREST EXPENSE: Deposits 5,389 10,762 27,109 57,862 Advances from the FHLB 206 1,404 1,224 8,393 Subordinated debt, net 2,962 2,962 11,816 11,847 Repurchase agreements and 154 241 935 1,913 other borrowingsTotal interest expense 8,711 15,369 41,084 80,015 Net interest income 100,792 100,614 402,369 380,144 PROVISION FOR CREDIT (1,110 ) 1,617 (16,774 ) 67,177 LOSSES Net interest incomeafter provision for 101,902 98,997 419,143 312,967 credit lossesNONINTEREST INCOME: Residential mortgage 20,945 37,504 109,304 112,166 banking income, netInsurance commissions andother title fees and 15,486 13,868 67,541 65,840 income, netProperty management 9,099 5,665 42,175 26,473 income, netReal estate commission 3,165 3,564 13,290 11,776 income, netService charges on 2,479 1,707 9,584 8,021 deposit accountsCredit card merchant 1,412 1,377 6,042 5,170 fees, netBOLI 1,904 1,990 7,265 8,285 Other income 5,142 5,559 21,508 36,826 Net gain/(loss) on ? ? 1,252 9,634 investment securitiesTotal noninterest income 59,632 71,234 277,961 284,191 NONINTEREST EXPENSE: Salaries and employee 64,814 61,475 245,844 235,676 benefitsOccupancy expense 8,371 8,193 31,657 31,317 Furniture and equipment 3,528 3,462 14,175 13,914 Amortization - 2,935 2,797 11,127 11,498 intangiblesSoftware expense 4,014 4,066 16,911 14,622 Data processing 3,524 2,363 13,779 10,985 Professional fees 2,723 2,591 9,548 11,268 Advertising and marketing 3,414 2,204 13,504 9,643 Other expenses 17,144 18,781 60,727 56,902 Total noninterest 110,467 105,932 417,272 395,825 expenseIncome before income taxexpense and 51,067 64,299 279,832 201,333 noncontrolling interestProvision for income tax 9,410 10,408 54,798 31,900 expenseNet income $ 41,657 $ 53,891 $ 225,034 $ 169,433 Net income attributableto noncontrolling (1,474 ) (3,809 ) (9,651 ) (23,898 )interestNet income attributable $ 40,183 $ 50,082 $ 215,383 $ 145,535 to TowneBank Per common share informationBasic earnings $ 0.55 $ 0.69 $ 2.97 $ 2.01 Diluted earnings $ 0.55 $ 0.69 $ 2.97 $ 2.01 Cash dividends declared $ 0.20 $ 0.18 $ 0.78 $ 0.72

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

December 31, September 30, June 30, March 31, December 31, 2021 2021 2021 2021 2020 (unaudited) (unaudited) (unaudited) (unaudited) (audited)ASSETS Cash and due from $ 17,373 $ 75,370 $ 117,797 $ 141,545 $ 41,514 banksInterest-bearingdeposits at FRB - 3,244,484 3,155,039 2,970,490 1,936,458 1,795,241 RichmondInterest-bearingdeposits in 34,779 33,506 31,971 30,031 27,532 financialinstitutionsTotal Cash and Cash 3,296,636 3,263,915 3,120,258 2,108,034 1,864,287 EquivalentsSecuritiesavailable for sale, 1,806,183 1,560,402 1,454,421 1,418,006 1,368,224 at fair valueSecurities held to 154,221 14,898 15,389 15,980 16,512 maturityLess: allowance for (94 ) (94 ) (97 ) (97 ) (97 )credit lossesSecurities held tomaturity, net of 154,127 14,804 15,292 15,883 16,415 allowance forcredit lossesOther equity 6,759 6,621 6,395 6,355 6,492 securitiesFederal Home Loan 13,146 13,146 16,909 16,909 30,135 Bank stockTotal Securities 1,980,215 1,594,973 1,493,017 1,457,153 1,421,266 Mortgage loans held 358,303 431,846 554,447 582,905 540,798 for saleLoans, net ofunearned income and 9,506,252 9,297,565 9,423,578 9,734,583 9,629,068 deferred costsLess: allowance for (106,059 ) (107,177 ) (108,130 ) (116,077 ) (120,157 )credit lossesNet Loans 9,400,193 9,190,388 9,315,448 9,618,506 9,508,911 Premises and 270,772 270,810 265,644 261,831 260,242 equipment, netGoodwill 457,187 457,187 452,328 452,328 452,328 Other intangible 50,379 50,839 42,271 44,808 45,533 assets, netBOLI 251,805 249,862 249,213 247,655 246,109 Other assets 295,897 301,552 311,209 306,176 286,970 TOTAL ASSETS $ 16,361,387 $ 15,811,372 $ 15,803,835 $ 15,079,396 $ 14,626,444 LIABILITIES AND EQUITYDeposits: Noninterest-bearing $ 5,546,665 $ 5,394,952 $ 5,243,074 $ 4,840,678 $ 4,374,566 demandInterest-bearing: Demand and money 6,139,714 5,681,181 5,373,146 5,062,461 4,819,604 market accountsSavings 371,356 366,165 349,552 342,554 330,091 Certificates of 1,515,891 1,571,752 1,998,828 1,893,951 2,048,905 depositTotal Deposits 13,573,626 13,014,050 12,964,600 12,139,644 11,573,166 Advances from the 155,367 155,537 255,706 255,872 456,038 FHLBSubordinated debt, 249,652 249,503 249,353 249,204 249,055 netFRB PPP Lending ? ? ? 183,164 182,852 FacilityRepurchaseagreements and 76,797 82,413 85,042 68,509 67,786 other borrowingsTotal Borrowings 481,816 487,453 590,101 756,749 955,731 Other liabilities 389,771 409,435 379,278 366,697 313,719 TOTAL LIABILITIES 14,445,213 13,910,938 13,933,979 13,263,090 12,842,616 Preferred stock Authorized shares - ? ? ? ? ? 2,000,000Common stock, 121,164 121,163 121,144 121,108 121,132 $1.667 par valueCapital surplus 1,050,948 1,049,367 1,048,332 1,047,312 1,046,642 Retained earnings 716,605 690,960 655,095 613,826 557,889 Common stock issuedto deferred (18,257 ) (18,076 ) (18,076 ) (17,063 ) (16,969 )compensation trust,at costDeferred 18,257 18,076 18,076 17,063 16,969 compensation trustAccumulated othercomprehensive 10,597 21,597 29,273 17,969 41,184 income (loss)TOTAL SHAREHOLDERS? 1,899,314 1,883,087 1,853,844 1,800,215 1,766,847 EQUITYNoncontrolling 16,860 17,347 16,012 16,091 16,981 interestTOTAL EQUITY 1,916,174 1,900,434 1,869,856 1,816,306 1,783,828 TOTAL LIABILITIES $ 16,361,387 $ 15,811,372 $ 15,803,835 $ 15,079,396 $ 14,626,444 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, 2021 2021 2021 2021 2020 INTEREST INCOME: Loans, including $ 95,054 $ 98,258 $ 100,614 $ 101,396 $ 104,182 feesInvestment 10,484 7,000 6,871 7,117 7,499 securitiesInterest-bearingdeposits infinancial 1,215 1,182 619 416 435 institutions andfederal fundssoldMortgage loans 2,750 3,405 3,711 3,361 3,867 held for saleTotal interest 109,503 109,845 111,815 112,290 115,983 incomeINTEREST EXPENSE:Deposits 5,389 6,028 7,144 8,548 10,762 Advances from 206 247 274 497 1,404 the FHLBSubordinated 2,962 2,962 2,962 2,930 2,962 debtRepurchaseagreements and 154 165 291 325 241 other borrowingsTotal interest 8,711 9,402 10,671 12,300 15,369 expenseNet interest 100,792 100,443 101,144 99,990 100,614 incomePROVISION FOR (1,110 ) (1,582 ) (10,055 ) (4,027 ) 1,617 CREDIT LOSSESNet interestincome after 101,902 102,025 111,199 104,017 98,997 provision forcredit lossesNONINTEREST INCOME:Residentialmortgage banking 20,945 25,422 25,524 37,412 37,504 income, netInsurancecommissions and 15,486 17,398 18,331 16,325 13,868 other title feesand income, netPropertymanagement 9,099 10,502 7,091 15,483 5,665 income, netReal estatecommission 3,165 3,781 3,893 2,451 3,564 income, netService chargeson deposit 2,479 2,524 2,391 2,190 1,707 accountsCredit cardmerchant fees, 1,412 1,660 1,667 1,302 1,377 netBOLI 1,904 2,301 1,541 1,519 1,990 Other income 5,142 6,045 5,487 4,837 5,559 Net gain/(loss)on investment ? ? 252 1,000 ? securities Totalnoninterest 59,632 69,633 66,177 82,519 71,234 incomeNONINTEREST EXPENSE:Salaries andemployee 64,814 61,230 61,365 58,435 61,475 benefitsOccupancy 8,371 7,656 7,559 8,072 8,193 expenseFurniture and 3,528 3,513 3,622 3,512 3,462 equipmentAmortization - 2,935 2,750 2,719 2,723 2,797 intangiblesSoftware expense 4,014 4,209 4,494 4,194 4,066 Data processing 3,524 3,603 3,414 3,239 2,363 Professional 2,723 2,227 2,259 2,339 2,591 feesAdvertising and 3,414 3,865 3,257 2,968 2,204 marketingOther expenses 17,144 15,033 16,705 11,844 18,781 Totalnoninterest 110,467 104,086 105,394 97,326 105,932 expenseIncome beforeincome taxexpense and 51,067 67,572 71,982 89,210 64,299 noncontrollinginterestProvision forincome tax 9,410 14,829 13,980 16,579 10,408 expenseNet income 41,657 52,743 58,002 72,631 53,891 Net incomeattributable to (1,474 ) (2,343 ) (2,199 ) (3,636 ) (3,809 )noncontrollinginterestNet incomeattributable to $ 40,183 $ 50,400 $ 55,803 $ 68,995 $ 50,082 TowneBankPer common share informationBasic earnings $ 0.55 $ 0.70 $ 0.77 $ 0.95 $ 0.69 Diluted earnings $ 0.55 $ 0.69 $ 0.77 $ 0.95 $ 0.69 (1)Basic weightedaverage shares 72,525,504 72,506,877 72,468,094 72,414,953 72,357,177 outstandingDiluted weightedaverage shares 72,624,610 72,591,281 72,560,234 72,517,008 72,455,096 outstandingCash dividends $ 0.20 $ 0.20 $ 0.20 $ 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, 2021 over 2020 30, 2021 2020 2021 2021 2020 Amount Percent

Revenue Net interest $ 98,345 $ 97,412 $ 97,668 $ 391,751 $ 367,353 $ 24,398 6.64 %incomeNoninterest incomeServicecharges on 2,479 1,707 2,524 9,584 8,021 1,563 19.49 %depositaccountsCredit card 1,412 1,377 1,660 6,042 5,169 873 16.89 %merchant feesOther income 4,876 5,983 6,334 21,584 21,809 (225 ) (1.03 ) %Subtotal 8,767 9,067 10,518 37,210 34,999 2,211 6.32 %Gain (loss) oninvestment ? ? 1,252 9,634 (8,382 ) n/m securitiesTotal )noninterest 8,767 9,067 10,518 38,462 44,633 (6,171 ) (13.83 %incomeTotal revenue 107,112 106,479 108,186 430,213 411,986 18,227 4.42 % Provision for (1,199 ) 1,628 (1,728 ) (15,859 ) 65,799 (81,658 ) (124.10 )credit losses % Expenses Salaries and )employee 37,678 37,358 34,791 140,105 142,328 (2,223 ) (1.56 %benefitsOccupancy 5,541 5,681 5,098 21,198 21,237 (39 ) (0.18 )expense %Furniture and 2,570 2,625 2,602 10,657 10,425 232 2.23 %equipmentAmortization )of intangible 812 1,013 862 3,549 4,354 (805 ) (18.49 %assetsOther expenses 19,484 19,892 16,580 68,504 65,107 3,397 5.22 %Total expenses 66,085 66,569 59,933 244,013 243,451 562 0.23 %Income beforeincome tax,corporate 42,226 38,282 49,981 202,059 102,736 99,323 96.68 %allocation andnoncontrollinginterestCorporate 1,260 643 1,241 5,041 2,534 2,507 98.93 %allocationIncome beforeincome taxprovision and 43,486 38,925 51,222 207,100 105,270 101,830 96.73 %noncontrollinginterestProvision forincome tax 7,123 5,163 10,225 37,584 14,467 23,117 159.79 %expenseNet income 36,363 33,762 40,997 169,516 90,803 78,713 86.69 %Noncontrolling (3 ) 4 2 (4 ) 6 (10 ) n/m interestNet incomeattributable $ 36,360 $ 33,766 $ 40,999 $ 169,512 $ 90,809 $ 78,703 86.67 %to TowneBank Efficiencyratio^ 60.94 % 61.57 % 54.60 % 56.06 % 59.42 % (non-GAAP)

TOWNEBANKRealty Segment Financial Information(dollars in thousands)

Three Months Ended Year Ended Increase/(Decrease) December 31, September December 31, 2021 over 2020 30, 2021 2020 2021 2021 2020 Amount PercentRevenue Residentialmortgage $ 22,257 $ 38,040 $ 26,637 $ 113,155 $ 114,589 $ (1,434 ) (1.25 )%brokerageincome, netReal estatebrokerage 3,165 3,564 3,781 13,290 11,776 1,514 12.86 %income, netTitleinsurance and 610 669 706 2,527 2,397 130 5.42 %settlementfeesPropertymanagement 9,099 5,665 10,502 42,175 26,473 15,702 59.31 %fees, netIncome fromunconsolidated 113 398 269 1,077 1,336 (259 ) (19.39 )%subsidiaryNet interestand other 3,010 3,627 3,154 12,232 13,889 (1,657 ) (11.93 )%incomeTotal revenue 38,254 51,963 45,049 184,456 170,460 13,996 8.21 % Provision for 89 (11 ) 146 (915 ) 1,378 $ (2,293 ) n/m credit losses Expenses Salaries andemployee $ 17,682 $ 16,168 $ 17,375 $ 67,922 $ 58,263 $ 9,659 16.58 %benefitsOccupancy 1,957 1,869 1,926 7,689 7,465 224 3.00 %expenseFurniture and 727 614 693 2,661 2,622 39 1.49 %equipmentAmortizationof intangible 931 658 702 2,813 2,630 183 6.96 %assetsOther expenses 9,805 8,779 11,103 40,579 33,143 7,436 22.44 %Total expenses 31,102 28,088 31,799 121,664 104,123 17,541 16.85 % Income (loss)before incometax, corporateallocation, 7,063 23,886 13,104 63,707 64,959 (1,252 ) (1.93 )%andnoncontrollinginterestCorporate (1,000 ) (403 ) (1,000 ) (4,000 ) (1,522 ) (2,478 ) 162.81 %allocationIncome (loss)before incometax provision 6,063 23,483 12,104 59,707 63,437 (3,730 ) (5.88 )%andnoncontrollinginterestProvision for 1,894 4,421 3,546 13,911 12,035 1,876 15.59 %income taxNet income 4,169 19,062 8,558 45,796 51,402 (5,606 ) (10.91 )%(loss)Noncontrolling (1,471 ) (3,813 ) (2,345 ) (9,647 ) (11,809 ) 2,162 (18.31 )%interestNet income(loss) $ 2,698 $ 15,249 $ 6,213 $ 36,149 $ 39,593 $ (3,444 ) (8.70 )%attributableto TowneBank Efficiencyratio^ 78.87 % 52.79 % 69.03 % 64.43 % 59.54 % (non-GAAP)

TOWNEBANKInsurance Segment Financial Information(dollars in thousands)

Three Months Ended Year Ended Increase/(Decrease) December31, September30, December31, 2021 over 2020 2021 2020 2021 2021 2020 Amount PercentCommission and fee incomeProperty and $ 13,135 $ 11,942 $ 15,338 $ 57,603 $ 52,726 $ 4,877 9.25 %casualtyEmployee 3,682 3,725 3,820 14,817 15,259 (442 ) (2.90 )%benefitsTravel ? ? ? ? 3,526 (3,526 ) (100.00 )%insurance (1)Specializedbenefit 172 175 164 666 664 2 0.30 %servicesTotalcommissions 16,989 15,842 19,322 73,086 72,175 911 1.26 %and feesContingencyand bonus 2,231 1,087 1,664 8,977 6,230 2,747 44.09 %revenueOther income 40 69 40 196 17,976 (17,780 ) (98.91 )(1) %Total revenue 19,260 16,998 21,026 82,259 96,381 (14,122 ) (14.65 )%Employeecommission 4,202 3,592 4,185 16,598 14,492 2,106 14.53 %expenseRevenue, netof commission 15,058 13,406 16,841 65,661 81,889 (16,228 ) (19.82 )%expense Expenses Salaries andemployee $ 9,454 $ 7,949 $ 9,064 $ 37,817 $ 35,085 $ 2,732 7.79 %benefitsOccupancy 873 643 632 2,770 2,615 155 5.93 %expenseFurniture and 231 223 218 857 867 (10 ) (1.15 )%equipmentAmortizationof intangible 1,192 1,126 1,186 4,765 4,514 251 5.56 %assetsOther expenses 1,530 1,334 1,254 5,386 5,170 216 4.18 %Totaloperating 13,280 11,275 12,354 51,595 48,251 3,344 6.93 %expensesIncome beforeincome tax and 1,778 2,131 4,487 14,066 33,638 (19,572 ) (58.18 )%noncontrollinginterestCorporate (260 ) (240 ) (241 ) (1,041 ) (1,012 ) (29 ) 2.87 %allocationIncome beforeincome taxprovision and 1,518 1,891 4,246 13,025 32,626 (19,601 ) (60.08 )%noncontrollinginterestProvision forincome tax 393 824 1,058 3,303 5,398 (2,095 ) (38.81 )%expenseNet income 1,125 1,067 3,188 9,722 27,228 (17,506 ) (64.29 )%Noncontrolling ? ? ? ? (12,095 ) 12,095 (100.00 )%interest (1)Net incomeattributable $ 1,125 $ 1,067 $ 3,188 $ 9,722 $ 15,133 $ (5,411 ) (35.76 )%to TowneBank Provision for 393 824 1,058 3,303 5,398 (2,095 ) (38.81 )%income taxesDepreciation,amortization 1,342 1,274 1,330 5,341 5,151 190 3.69 %and interestexpenseEBITDA ^ $ 2,860 $ 3,165 $ 5,576 $ 18,366 $ 25,682 $ (7,316 ) (28.49 )%(non-GAAP) Efficiencyratio ^ 80.28 % 75.70 % 66.31 % 71.32 % 68.06 % (non-GAAP)(1) In third quarter 2020, we sold Red Sky Insurance, our travel insurancejoint venture. 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, 2021 2021 2020 2021 2020 Return onaverage assets 0.99 % 1.27 % 1.35 % 1.40 % 1.03 %(GAAP)Impact ofexcludingaveragegoodwill and 0.09 % 0.10 % 0.11 % 0.11 % 0.10 %otherintangiblesandamortizationReturn onaveragetangible 1.08 % 1.37 % 1.46 % 1.51 % 1.13 %assets(non-GAAP) Return onaverage equity 8.38 % 10.59 % 11.26 % 11.61 % 8.46 %(GAAP)Impact ofexcludingaveragegoodwill and 3.70 % 4.50 % 5.02 % 4.94 % 4.16 %otherintangiblesandamortizationReturn onaveragetangible 12.08 % 15.09 % 16.28 % 16.55 % 12.62 %equity(non-GAAP) Return onaverage common 8.45 % 10.68 % 11.36 % 11.70 % 8.52 %equity (GAAP)Impact ofexcludingaveragegoodwill and 3.77 % 4.59 % 5.12 % 5.05 % 4.24 %otherintangiblesandamortizationReturn onaveragetangible 12.22 % 15.27 % 16.48 % 16.75 % 12.76 %common equity(non-GAAP) Book value $ 26.13 $ 25.91 $ 24.31 $ 26.13 $ 24.31 (GAAP)Impact ofexcludingaveragegoodwill and (6.98 ) (6.99 ) (6.85 ) (6.98 ) (6.85 )otherintangiblesandamortizationTangible bookvalue $ 19.15 $ 18.92 $ 17.46 $ 19.15 17.46 (non-GAAP) Efficiency 68.86 % 61.20 % 61.64 % 61.33 % 59.58 %ratio (GAAP)Impact ofexcluding gain /(loss) on ) ) ) )investments (1.83 % (1.62 % (1.62 % (1.52) % 0.75 %and amortizationexpenseEfficiencyratio 67.03 % 59.58 % 60.02 % 59.81 % 60.33 %(non-GAAP) Average assets $ 16,075,509 $ 15,706,998 $ 14,722,385 $ 15,384,662 $ 14,172,206 (GAAP)Less: averagegoodwill and 506,867 506,231 491,453 501,689 495,707 intangibleassetsAveragetangible $ 15,568,642 $ 15,200,767 $ 14,230,932 $ 14,882,973 $ 13,676,499 assets(non-GAAP) Average equity $ 1,902,474 $ 1,888,451 $ 1,768,906 $ 1,855,948 $ 1,721,059 (GAAP)Less: averagegoodwill and 506,867 506,231 491,453 501,689 495,707 intangibleassetsAveragetangible $ 1,395,607 $ 1,382,220 $ 1,277,453 $ 1,354,259 $ 1,225,352 equity(non-GAAP) Average common $ 1,886,279 $ 1,871,820 $ 1,753,596 $ 1,840,261 $ 1,707,635 equity (GAAP)Less: averagegoodwill and 506,867 506,231 491,453 501,689 495,707 intangibleassetsAveragetangible $ 1,379,412 $ 1,365,589 $ 1,262,143 $ 1,338,572 $ 1,211,928 common equity(non-GAAP) Net income $ 40,183 $ 50,400 $ 50,082 $ 215,383 $ 145,535 (GAAP)Amortizationof 2,318 2,172 2,210 8,790 9,086 intangibles,net of taxTangible netincome $ 42,501 $ 52,572 $ 52,292 $ 224,173 $ 154,621 (non-GAAP) Net income $ 40,183 $ 50,400 $ 50,082 $ 215,383 $ 145,535 (GAAP)Provision for (1,110 ) (1,582 ) 1,617 (16,774 ) 67,177 credit lossesProvision for 9,410 14,829 10,408 54,798 31,900 income taxes(Gain)/loss onequityinvestment net ? ? $ ? 30 (17,626 )ofnoncontrollinginterestPre-provision,pre-tax net $ 48,483 $ 63,647 $ 62,107 $ 253,437 $ 226,986 revenues(non-GAAP) Total revenue $ 160,424 $ 170,076 $ 171,848 $ 680,331 $ 664,335 (GAAP)Net (gain)loss on ? ? ? (1,252 ) (9,634 )investmentsecuritiesNet (gain)loss on equity ? ? ? 30 (17,626 )investmentTotal revenuefor efficiency $ 160,424 $ 170,076 $ 171,848 $ 679,109 $ 637,075 calculation(non-GAAP) Noninterest $ 110,467 $ 104,086 $ 105,932 $ 417,272 $ 395,825 expense (GAAP)Less:Amortization 2,935 2,750 2,797 11,127 11,498 of intangiblesNoninterestexpense net of $ 107,532 $ 101,336 $ 103,135 $ 406,145 $ 384,327 amortization(non-GAAP)