TowneBank Reports First Quarter 2024 Earnings

ソース: Nasdaq GlobeNewswire / 24 4 2024 15:30:01 America/Chicago

SUFFOLK, Va., April 24, 2024 (GLOBE NEWSWIRE) -- TowneBank (the "Company" or "Towne") (NASDAQ: TOWN) today reported earnings for the quarter ended March 31, 2024 of $34.69 million, or $0.46 per diluted share, compared to $38.33 million, or $0.52 per diluted share, for the quarter ended March 31, 2023. Excluding acquisition-related items and the incremental FDIC special assessment, adjusted earnings (non-GAAP) for first quarter 2024 were $36.27 million, or $0.48 per diluted share, compared to $46.30 million, or $0.62 per diluted share, for first quarter 2023.

"TowneBank had a solid start to the year with our continued focus on maintaining healthy levels of capital and liquidity. While we continue to see migration to interest-bearing accounts, it was encouraging to generate overall annualized deposit growth of nearly 7% for the first quarter, demonstrating the durability of the TowneBank operating mode. Our ongoing growth strategy for our ancillary lines of business, including insurance and property management, continues to serve as a partial hedge to offset rising deposit costs," said G. Robert Aston, Jr., Executive Chairman.

Highlights for First Quarter 2024:

Total revenues were $167.10 million, a decrease of $17.04 million, or 9.25%, compared to first quarter 2023. Net interest income declined $20.16 million, driven by higher rates on deposits and the continuation a migration from noninterest-bearing to interest-bearing deposits. The decrease was partially offset by an increase in noninterest income of $3.12 million.
Total deposits were $14.13 billion, an increase of $527.94 million, or 3.88%, compared to first quarter 2023. Total deposits increased 1.68%, or $232.87 million, in comparison to December 31, 2023, 6.74% on an annualized basis.
Noninterest-bearing deposits decreased 17.27%, to $4.19 billion, compared to first quarter 2023 and represented 29.69% of total deposits. Compared to the linked quarter, noninterest-bearing deposits decreased 3.42%.
Loans held for investment were $11.45 billion, an increase of $278.56 million, or 2.49%, compared to March 31, 2023, and $123.32 million, or 1.09%, compared to December 31, 2023, 4.38% on an annualized basis.
Annualized return on common shareholders' equity was 6.89% compared to 8.05% in first quarter 2023. Annualized return on average tangible common shareholders' equity (non-GAAP) was 9.98% compared to 11.83% in first quarter 2023.
Net interest margin was 2.72% for the quarter and tax-equivalent net interest margin (non-GAAP) was 2.75%, including purchase accounting accretion of 4 basis points, compared to the prior year quarter net interest margin of 3.36% and tax-equivalent net interest margin (non-GAAP) of 3.39%, including purchase accounting accretion of 3 basis points.
The effective tax rate was 17.31% in the quarter compared to 20.03% in first quarter 2023 and 8.46% in the linked quarter. The lower tax rate in the linked quarter was due to a decline in state tax expense in fourth quarter 2023, increases in tax-advantaged income investments, and deferred taxes related to the sale of Berkshire Hathaway HomeServices ("BHHS") Towne Realty.

"We reported strong asset quality metrics for the quarter and continued to focus on our strategy to align loan and deposit growth, which is reflective of our conservative approach to Main Street banking. Additionally, we were excited to close our first property management acquisition in Florida adding another market to our unique portfolio of property management companies," stated William I. Foster III, President and Chief Executive Officer.

Quarterly Net Interest Income:

Net interest income was $103.22 million compared to $123.38 million for the quarter ended March 31, 2023. The decrease was driven by interest-bearing deposit growth, coupled with increased deposit costs, outpacing higher earning asset yields.
On an average basis, loans held for investment, with a yield of 5.37%, represented 74.54% of earning assets at March 31, 2024 compared to a yield of 4.88% and 74.61% of earning assets in the first quarter of 2023.
The cost of interest-bearing deposits was 3.24% for the quarter ended March 31, 2024, compared to 1.66% in 2023. Interest expense on deposits increased $44.45 million, or 131.00%, over the prior year quarter driven by the increase in rate.
Our total cost of deposits increased to 2.26% from 1.02% for the quarter ended March 31, 2023 due to a combination of higher interest-bearing deposit costs and the decline in noninterest-bearing deposits.
Average interest-earning assets totaled $15.27 billion at March 31, 2024 compared to $14.87 billion at March 31, 2023, an increase of 2.64%. The Company anticipates $550 million of cash flows from its securities portfolio to be available for reinvestment in the next two years.
Average interest-bearing liabilities totaled $10.21 billion, an increase of $1.30 billion, or 14.60% from prior year. Average short term FHLB borrowings were $174.73 million during the quarter compared to $263.33 million one year prior.

Quarterly Provision for Credit Losses:

The quarterly provision for credit losses was a benefit of $0.88 million compared to an expense of $11.67 million in the prior year quarter and $2.45 million in the linked quarter. Prior year quarter included $4.01 million in provision related to the acquisition of Farmers Bankshares, Inc. and its wholly owned subsidiary Farmers Bank ("Farmers").
The allowance for credit losses on loans decreased $0.63 million in first quarter 2024, compared to the linked quarter. The decrease in the allowance was driven by continued strength in credit quality and modest improvements in the macroeconomic forecast scenarios utilized in our models, partially offset by modest loan growth.
Net loan charge-offs were $520 thousand in the quarter compared to $3.87 million in the prior year quarter and $68 thousand in the linked quarter.
The ratio of net charge-offs to average loans on an annualized basis was 0.02% in first quarter 2024, 0.14% in first quarter 2023, and zero percent in the linked quarter.
The allowance for credit losses on loans represented 1.10% of total loans at March 31, 2024, 1.07% at March 31, 2023, and 1.12% at December 31, 2023. The allowance for credit losses on loans was 18.01 times nonperforming loans compared to 12.87 times at March 31, 2023 and 18.48 times at December 31, 2023.

Quarterly Noninterest Income:

Total noninterest income was $63.88 million compared to $60.77 million in 2023, an increase of $3.12 million, or 5.13%.
Residential mortgage banking income was $10.48 million compared to $9.37 million in first quarter 2023. Loan volume increased to $424.39 million in first quarter 2024 from $416.22 million in first quarter 2023. The number of loans originated was consistent with first quarter 2023, but higher per-loan average balances resulted in higher production volume. Residential purchase activity comprised 95.66% of production volume in the first quarter of 2024 compared to 94.99% in the prior year quarter.
Gross margins on residential mortgage sales increased 23 basis points to 3.34% in the current quarter from 3.11% in first quarter 2023.
Total net insurance commissions increased $2.72 million, or 11.90%, to $25.54 million in first quarter 2024 compared to 2023. This increase was attributable to increases in property and casualty commissions which were driven by organic growth and a full quarter of income in 2024 related to the 2023 Manry-Rawls, LLC acquisition.
Property management fee revenue increased 7.97%, or $1.24 million, to $16.77 million in first quarter 2024 compared to 2023. Reservation income increased compared to the prior year due to an acquisition in March 2024 and a full quarter of revenue from an acquisition in March 2023.

Quarterly Noninterest Expense:

Total noninterest expense was $125.59 million compared to $124.40 million in 2023, an increase of $1.19 million, or 0.96%. Increases in salaries and employee benefits of $1.96 million, FDIC and other insurance of $2.75 million, and various expense line items, were partially offset by a decrease in acquisition expenses of $5.37 million.
Salaries and benefits expense increases were driven by annual base salary adjustments effective third quarter 2023, acquisition-related increases in the number of employees, and higher health insurance costs. The increases were partially offset by a decline in incentive accruals and decreases in our Realty segment related to cost reductions in our mortgage business and the sale of BHHS Towne Realty in 2023.
FDIC and other insurance increased due to a higher assessment rate and an additional expense accrual of $1.29 million before taxes, pursuant to the revised estimated FDIC special assessment.

Consolidated Balance Sheet Highlights:

In first quarter 2024, management continued its focus on strategic balance sheet management with a concentration on controlled loan growth and maintaining liquidity.
Total assets were $16.88 billion for the quarter ended March 31, 2024, a $49.20 million increase compared to $16.84 billion at December 31, 2023. Total assets increased $153.76 million, or 0.92%, from $16.73 billion at March 31, 2023.
Loans held for investment increased $278.56 million, or 2.49%, compared to prior year and $123.32 million, or 1.09%, compared to the linked quarter, 4.38% on an annualized basis.
Mortgage loans held for sale decreased $6.43 million, or 4.09%, compared to prior year but increased $0.74 million, or 0.49%, compared to the linked quarter.
Total deposits increased $527.94 million, or 3.88%, compared to prior year, primarily in interest- bearing demand and time deposits. In the linked quarter comparison, total deposits increased $232.87 million, or 6.74% on an annualized basis.
Noninterest-bearing deposits decreased $875.23 million or 17.27%, compared to prior year, and $148.57 million, or 3.42%, compared to the linked quarter.
Total borrowings decreased $515.27 million, or 63.91%, compared to first quarter 2023 and $201.60 million, or 40.93%, compared to the linked quarter driven by declines in short-term FHLB advances.

Investment Securities:

Total investment securities were $2.54 billion compared to $2.64 billion at December 31, 2023 and $2.67 billion at March 31, 2023. The weighted average duration of the portfolio at March 31, 2024 was 3.3 years. The carrying value of the available for sale debt securities portfolio included net unrealized losses of $170.84 million at March 31, 2024, compared to $162.12 million at December 31, 2023 and $165.71 million at March 31, 2023, with the changes related to market valuation adjustments due to changing interest rates.

Loans and Asset Quality:

Total loans held for investment were $11.45 billion at March 31, 2024 compared to $11.33 billion at December 31, 2023 and $11.17 billion at March 31, 2023.
Nonperforming assets were $7.77 million, or 0.05% of total assets, compared to $9.89 million, or 0.06%, at March 31, 2023.
Nonperforming loans were 0.06% of period end loans at March 31, 2024, compared to 0.08% at March 31, 2023.
Foreclosed property increased to $780 thousand from $564 thousand at March 31, 2023.

Deposits and Borrowings:

Total deposits were $14.13 billion compared to $13.89 billion at December 31, 2023 and $13.60 billion at March 31, 2023.
The ratio of period end loans held for investment to deposits was 81.07% compared to 81.54% at December 31, 2023 and 82.17% at March 31, 2023.
Noninterest-bearing deposits were 29.69% of total deposits at March 31, 2024 compared to 31.26% at December 31, 2023 and 37.28% at March 31, 2023. Noninterest-bearing deposits declined $0.88 billion, or 17.27%, compared to March 31, 2023, primarily in commercial and escrow accounts.
Total borrowings were $290.98 million compared to $492.58 million at December 31, 2023 and $806.25 million at March 31, 2023.

Capital:

Common equity tier 1 capital ratio of 12.20%⁽¹⁾.
Tier 1 leverage capital ratio of 10.15%⁽¹⁾.
Tier 1 risk-based capital ratio of 12.32%⁽¹⁾.
Total risk-based capital ratio of 15.10%⁽¹⁾^.
Book value per common share was $27.33 compared to $27.24 at December 31, 2023 and $26.40 at March 31, 2023.
Tangible book value per common share (non-GAAP) was $20.31 compared to $20.28 at December 31, 2023 and $19.04 at March 31, 2023.

^{(1) Preliminary.}

About TowneBank:
Founded in 1999, TowneBank is a company built on relationships, offering a full range of banking and other financial services, with a focus 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.

Now celebrating 25 years, TowneBank operates 50 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 affiliated companies that include Towne Wealth Management, Towne Insurance Agency, Towne Benefits, TowneBank Mortgage, TowneBank Commercial Mortgage, Berkshire Hathaway HomeServices RW Towne Realty, Towne 1031 Exchange, LLC, and Towne Vacations. With total assets of $16.88 billion as of March 31, 2024, 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 TowneBank’s 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 among others, 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; an unforeseen outflow of cash or deposits or an inability to access the capital markets, which could jeopardize our overall liquidity or capitalization; changes in the creditworthiness of customers and the possible impairment of the collectability of loans; insufficiency of our allowance for credit losses due to market conditions, inflation, changing interest rates or other factors; adverse developments in the financial industry generally, such as the recent bank failures, responsive measures to mitigate and manage such developments, related supervisory and regulatory actions and costs, and related impacts on customer and client behavior; 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; geopolitical instability, including wars, conflicts, civil unrest, and terrorist attacks and the potential impact, directly or indirectly, on our business; the effects of weather-related or natural disasters, which may negatively affect our operations and/or our loan portfolio and increase our cost of conducting business; public health events (such as the COVID-19 pandemic) and governmental and societal responses to them; 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 TowneBank’s Annual Report on Form 10-K for the year ended December 31, 2023, 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, 757-638-6780
William I. Foster III, President and Chief Executive Officer, 757-417-6482

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


TOWNEBANK
Selected Financial Highlights (unaudited)
(dollars in thousands, except per share data)

	Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
		2024			2023			2023			2023			2023
Income and Performance Ratios:
Total revenue	$	167,102		$	155,546		$	172,864		$	181,568		$	184,144
Net income		35,127			28,545			44,745			43,368			38,478
Net income available to common shareholders		34,687			28,804			44,862			41,716			38,333
Net income per common share – diluted		0.46			0.39			0.60			0.56			0.52
Book value per common share		27.33			27.24			26.28			26.36			26.40
Book value per common share – tangible ^(non-GAAP)		20.31			20.28			19.28			19.31			19.04
Return on average assets		0.83	%		0.68	%		1.06	%		0.99	%		0.95	%
Return on average assets – tangible ^(non-GAAP)		0.92	%		0.77	%		1.17	%		1.10	%		1.05	%
Return on average equity		6.84	%		5.75	%		8.96	%		8.46	%		7.99	%
Return on average equity – tangible ^(non-GAAP)		9.87	%		8.53	%		12.97	%		12.35	%		11.71	%
Return on average common equity		6.89	%		5.79	%		9.04	%		8.52	%		8.05	%
Return on average common equity – tangible ^(non-GAAP)		9.98	%		8.62	%		13.11	%		12.48	%		11.83	%
Noninterest income as a percentage of total revenue		38.23	%		30.74	%		34.60	%		37.43	%		33.00	%
Regulatory Capital Ratios (1):
Common equity tier 1		12.20	%		12.18	%		12.19	%		11.99	%		11.68	%
Tier 1		12.32	%		12.29	%		12.31	%		12.11	%		11.80	%
Total		15.10	%		15.06	%		15.09	%		14.88	%		14.55	%
Tier 1 leverage ratio		10.15	%		10.17	%		10.06	%		9.85	%		9.86	%
Asset Quality:
Allowance for credit losses on loans to nonperforming loans		18.01	x		18.48	x		17.60	x		18.09	x		12.87	x
Allowance for credit losses on loans to period end loans		1.10	%		1.12	%		1.12	%		1.10	%		1.07	%
Nonperforming loans to period end loans		0.06	%		0.06	%		0.06	%		0.06	%		0.08	%
Nonperforming assets to period end assets		0.05	%		0.05	%		0.05	%		0.05	%		0.06	%
Net charge-offs (recoveries) to average loans (annualized)		0.02	%		—	%		(0.04	)%		—	%		0.14	%
Net charge-offs (recoveries)	$	520		$	68		$	(1,074	)	$	9		$	3,874

Nonperforming loans	$	6,987		$	6,843		$	7,110		$	6,827		$	9,322
Former bank premises		—			—			—			1,782			—
Foreclosed property		780			908			766			738			564
Total nonperforming assets	$	7,767		$	7,751		$	7,876		$	9,347		$	9,886
Loans past due 90 days and still accruing interest	$	323		$	735		$	970		$	360		$	206
Allowance for credit losses on loans	$	125,835		$	126,461		$	125,159		$	123,513		$	120,002
Mortgage Banking:
Loans originated, mortgage	$	289,191		$	302,616		$	348,387		$	409,050		$	280,401
Loans originated, joint venture		135,197			126,332			172,021			207,450			135,818
Total loans originated	$	424,388		$	428,948		$	520,408		$	616,500		$	416,219
Number of loans originated		1,247			1,237			1,487			1,715			1,249
Number of originators		176			181			192			196			194
Purchase %		95.66	%		95.06	%		95.96	%		96.32	%		94.99	%
Loans sold	$	410,895		$	468,014		$	567,291		$	525,078		$	346,288
Rate lock asset	$	1,681		$	895		$	1,348		$	1,551		$	1,435
Gross realized gain on sales and fees as a % of loans originated		3.34	%		3.06	%		3.17	%		2.96	%		3.11	%
Other Ratios:
Net interest margin		2.72	%		2.83	%		2.95	%		2.98	%		3.36	%
Net interest margin-fully tax equivalent ^(non-GAAP)		2.75	%		2.86	%		2.98	%		3.01	%		3.39	%
Average earning assets/total average assets		90.52	%		90.48	%		90.73	%		90.96	%		90.98	%
Average loans/average deposits		81.48	%		80.72	%		80.75	%		83.72	%		82.40	%
Average noninterest deposits/total average deposits		30.25	%		31.69	%		33.50	%		36.07	%		38.35	%
Period end equity/period end total assets		12.24	%		12.21	%		11.90	%		11.56	%		11.89	%
Efficiency ratio ^(non-GAAP)		73.25	%		76.17	%		66.21	%		70.41	%		65.64	%
(1) Current reporting period regulatory capital ratios are preliminary.

TOWNEBANK
Selected Data (unaudited)
(dollars in thousands)

Investment Securities										% Change
	Q1			Q1			Q4			Q1 24 vs.		Q1 24 vs.
*Available-for-sale securities, at fair value*		2024			2023			2023		Q1 23		Q4 23
U.S. agency securities	$	294,723		$	334,211		$	306,386		(11.82	)%	(3.81	)%
U.S. Treasury notes		27,534			27,272			27,684		0.96	%	(0.54	)%
Municipal securities		447,323			508,439			510,134		(12.02	)%	(12.31	)%
Trust preferred and other corporate securities		87,983			76,965			86,011		14.32	%	2.29	%
Mortgage-backed securities issued by GSEs and GNMA		1,347,920			1,132,746			1,200,625		19.00	%	12.27	%
Allowance for credit losses		(1,382	)		(1,150	)		(1,498	)	20.17	%	(7.74	)%
Total	$	2,204,101		$	2,078,483		$	2,129,342		6.04	%	3.51	%
*Gross unrealized gains (losses) reflected in financial statements*
Total gross unrealized gains	$	1,868		$	2,218		$	3,740		(15.78	)%	(50.05	)%
Total gross unrealized losses		(172,708	)		(167,929	)		(165,863	)	2.85	%	4.13	%
Net unrealized gains (losses) and other adjustments on AFS securities	$	(170,840	)	$	(165,711	)	$	(162,123	)	3.10	%	5.38	%
*Held-to-maturity securities, at amortized cost*
U.S. agency securities	$	102,042		$	101,281		$	101,850		0.75	%	0.19	%
U.S. Treasury notes		197,356			433,584			362,593		(54.48	)%	(45.57	)%
Municipal securities		5,294			5,203			5,272		1.75	%	0.42	%
Trust preferred corporate securities		2,159			2,210			2,172		(2.31	)%	(0.60	)%
Mortgage-backed securities issued by GSE		5,659			5,948			5,705		(4.86	)%	(0.81	)%
Allowance for credit losses		(82	)		(88	)		(84	)	(6.82	)%	(2.38	)%
Total	$	312,428		$	548,138		$	477,508		(43.00	)%	(34.57	)%

Total gross unrealized gains	$	265		$	392		$	380		(32.40	)%	(30.26	)%
Total gross unrealized losses		(14,262	)		(24,018	)		(15,316	)	(40.62	)%	(6.88	)%
Net unrealized gains (losses) in HTM securities	$	(13,997	)	$	(23,626	)	$	(14,936	)	(40.76	)%	(6.29	)%
Total unrealized gains (losses) on AFS and HTM securities	$	(184,837	)	$	(189,337	)	$	(177,059	)	(2.38	)%	4.39	%
										% Change
Loans Held For Investment	Q1			Q1			Q4			Q1 24 vs.		Q1 24 vs.
		2024			2023			2023		Q1 23		Q4 23
Real estate – construction and development	$	1,255,741		$	1,473,034		$	1,249,735		(14.75	)%	0.48	%
Commercial real estate – owner occupied		1,700,753			1,675,119			1,699,386		1.53	%	0.08	%
Commercial real estate – non owner occupied		3,178,947			2,908,791			3,117,071		9.29	%	1.99	%
Real estate – multifamily		595,075			505,237			583,209		17.78	%	2.03	%
Residential 1-4 family		1,882,296			1,734,698			1,852,891		8.51	%	1.59	%
HELOC		386,361			387,967			382,979		(0.41	)%	0.88	%
Commercial and industrial business (C&I)		1,288,550			1,297,707			1,265,169		(0.71	)%	1.85	%
Government		528,341			510,494			525,261		3.50	%	0.59	%
Indirect		555,482			582,306			558,789		(4.61	)%	(0.59	)%
Consumer loans and other		80,797			98,432			94,531		(17.92	)%	(14.53	)%
Total	$	11,452,343		$	11,173,785		$	11,329,021		2.49	%	1.09	%

										% Change
Deposits	Q1			Q1			Q4			Q1 24 vs.		Q1 24 vs.
		2024			2023			2023		Q1 23		Q4 23
Noninterest-bearing demand	$	4,194,132		$	5,069,363		$	4,342,701		(17.27	)%	(3.42	)%
Interest-bearing:
Demand and money market accounts		6,916,701			6,284,184			6,757,619		10.07	%	2.35	%
Savings		326,179			389,173			336,492		(16.19	)%	(3.06	)%
Certificates of deposits		2,689,062			1,855,411			2,456,394		44.93	%	9.47	%
Total		14,126,074			13,598,131			13,893,206		3.88	%	1.68	%

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

	Three Months Ended								Three Months Ended								Three Months Ended
	March 31, 2024								December 31, 2023								March 31, 2023
				Interest			Average					Interest			Average					Interest			Average
	Average			Income/			Yield/		Average			Income/			Yield/		Average			Income/			Yield/
	Balance			Expense			Rate (1)		Balance			Expense			Rate (1)		Balance			Expense			Rate (1)
Assets:
Loans (net of unearned income and deferred costs)	$	11,379,323		$	151,811		5.37	%	$	11,229,965		$	147,647		5.22	%	$	11,097,626		$	133,536		4.88	%
Taxable investment securities		2,440,652			18,716		3.07	%		2,365,928			18,820		3.18	%		2,438,489			16,816		2.76	%
Tax-exempt investment securities		161,538			1,549		3.84	%		195,603			1,989		4.07	%		188,033			1,887		4.01	%
Total securities		2,602,190			20,265		3.12	%		2,561,531			20,809		3.25	%		2,626,522			18,703		2.85	%
Interest-bearing deposits		1,167,322			14,234		4.90	%		1,141,086			13,967		4.86	%		1,044,538			10,649		4.13	%
Mortgage loans held for sale		116,868			1,716		5.87	%		162,543			2,886		7.10	%		105,018			1,604		6.11	%
Total earning assets		15,265,703			188,026		4.95	%		15,095,125			185,309		4.87	%		14,873,704			164,492		4.49	%
Less: allowance for loan losses		(127,413	)							(126,205	)							(114,447	)
Total nonearning assets		1,725,945								1,714,122								1,589,783
Total assets	$	16,864,235							$	16,683,042							$	16,349,040
Liabilities and Equity:
Interest-bearing deposits
Demand and money market	$	6,828,053		$	47,985		2.83	%	$	6,786,850		$	46,833		2.74	%	$	6,217,754		$	23,302		1.52	%
Savings		329,036			881		1.08	%		345,172			962		1.11	%		401,776			844		0.85	%
Certificates of deposit		2,583,938			29,522		4.60	%		2,370,723			25,405		4.25	%		1,683,354			9,788		2.36	%
Total interest-bearing deposits		9,741,027			78,388		3.24	%		9,502,745			73,200		3.06	%		8,302,884			33,934		1.66	%
Borrowings		212,375			3,078		5.73	%		114,151			958		3.28	%		355,833			3,915		4.40	%
Subordinated debt, net		255,878			2,236		3.50	%		255,663			2,236		3.50	%		250,066			2,169		3.47	%
Total interest-bearing liabilities		10,209,280			83,702		3.30	%		9,872,559			76,394		3.07	%		8,908,783			40,018		1.82	%
Demand deposits		4,224,104								4,408,712								5,164,415
Other noninterest-bearing liabilities		390,576								413,469								329,840
Total liabilities		14,823,960								14,694,740								14,403,038
Shareholders’ equity		2,040,275								1,988,302								1,946,002
Total liabilities and equity	$	16,864,235							$	16,683,042							$	16,349,040
Net interest income (tax-equivalent basis) (4)				$	104,324							$	108,915							$	124,474
Reconciliation of Non-GAAP Financial Measures
Tax-equivalent basis adjustment					(1,106	)							(1,182	)							(1,096	)
Net interest income (GAAP)				$	103,218							$	107,733							$	123,378

Interest rate spread (2)(4)							1.65	%							1.80	%							2.67	%
Interest expense as a percent of average earning assets							2.21	%							2.01	%							1.09	%
Net interest margin (tax equivalent basis) (3)(4)							2.75	%							2.86	%							3.39	%
Total cost of deposits							2.26	%							2.09	%							1.02	%

^{(1) Yields and interest income are presented on a taxable-equivalent basis using the federal statutory tax rate of 21%.}
^{(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.}

TOWNEBANK
Consolidated Balance Sheets
(dollars in thousands, except share data)


	March 31,			December 31,
		2024			2023
	(unaudited)			(audited)
ASSETS
Cash and due from banks	$	75,802		$	85,584
Interest-bearing deposits at FRB – Richmond		926,635			939,356
Federal funds sold and interest-bearing deposits in financial institutions		98,673			103,417
Total Cash and Cash Equivalents		1,101,110			1,128,357
Securities available for sale, at fair value (amortized cost of $2,376,323 and $2,292,963, and allowance for credit losses of $1,382 and $1,498 at March 31, 2024 and December 31, 2023, respectively)		2,204,101			2,129,342
Securities held to maturity, at amortized cost (fair value $298,513 and $462,656 at March 31, 2024 and December 31, 2023, respectively)		312,510			477,592
Less: allowance for credit losses		(82	)		(84	)
Securities held to maturity, net of allowance for credit losses		312,428			477,508
Other equity securities		13,661			13,792
FHLB stock		12,139			21,372
Total Securities		2,542,329			2,642,014
Mortgage loans held for sale		150,727			149,987
Loans, net of unearned income and deferred costs		11,452,343			11,329,021
Less: allowance for credit losses		(125,835	)		(126,461	)
Net Loans		11,326,508			11,202,560
Premises and equipment, net		342,569			337,598
Goodwill		457,619			456,335
Other intangible assets, net		68,758			64,634
BOLI		279,293			277,445
Other assets		615,324			576,109
TOTAL ASSETS	$	16,884,237		$	16,835,039

LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand	$	4,194,132		$	4,342,701
Interest-bearing:
Demand and money market accounts		6,916,701			6,757,619
Savings		326,179			336,492
Certificates of deposit		2,689,062			2,456,394
Total Deposits		14,126,074			13,893,206
Advances from the FHLB		3,775			203,958
Subordinated debt, net		256,011			255,796
Repurchase agreements and other borrowings		31,198			32,826
Total Borrowings		290,984			492,580
Other liabilities		401,307			393,375
TOTAL LIABILITIES		14,818,365			14,779,161
Preferred stock, authorized and unissued shares – 2,000,000		—			—
Common stock, $1.667 par value: 150,000,000 shares authorized 74,990,437 and 74,893,462 shares issued at March 31, 2024 and December 31, 2023, respectively		125,009			124,847
Capital surplus		1,114,038			1,112,761
Retained earnings		937,065			921,126
Common stock issued to deferred compensation trust, at cost 1,008,276 and 1,004,717 shares at March 31, 2024 and December 31, 2023, respectively		(20,915	)		(20,813	)
Deferred compensation trust		20,915			20,813
Accumulated other comprehensive income (loss)		(126,586	)		(118,762	)
TOTAL SHAREHOLDERS’ EQUITY		2,049,526			2,039,972
Noncontrolling interest		16,346			15,906
TOTAL EQUITY		2,065,872			2,055,878
TOTAL LIABILITIES AND EQUITY	$	16,884,237		$	16,835,039

TOWNEBANK
Consolidated Statements of Income (unaudited)
(dollars in thousands, except per share data)


	Three Months Ended
	March 31,
		2024			2023
INTEREST INCOME:
Loans, including fees	$	150,974		$	132,768
Investment securities		19,996			18,375
Interest-bearing deposits in financial institutions and federal funds sold		14,234			10,649
Mortgage loans held for sale		1,716			1,604
Total interest income		186,920			163,396
INTEREST EXPENSE:
Deposits		78,388			33,934
Advances from the FHLB		2,438			2,992
Subordinated debt, net		2,236			2,169
Repurchase agreements and other borrowings		640			923
Total interest expense		83,702			40,018
Net interest income		103,218			123,378
PROVISION FOR CREDIT LOSSES		(877	)		11,670
Net interest income after provision for credit losses		104,095			111,708
NONINTEREST INCOME:
Residential mortgage banking income, net		10,477			9,372
Insurance commissions and other income, net		25,539			22,823
Property management income, net		16,773			15,535
Real estate brokerage income, net		—			1,791
Service charges on deposit accounts		3,061			2,851
Credit card merchant fees, net		1,551			1,545
BOLI		1,842			1,672
Other income		4,567			5,177
Net gain/(loss) on investment securities		74			—
Total noninterest income		63,884			60,766
NONINTEREST EXPENSE:
Salaries and employee benefits		71,377			69,420
Occupancy		9,422			9,064
Furniture and equipment		4,478			4,244
Amortization – intangibles		3,246			3,524
Software		6,100			5,624
Data processing		3,916			3,353
Professional fees		3,180			3,011
Advertising and marketing		4,582			4,401
Other expenses		19,290			21,756
Total noninterest expense		125,591			124,397
Income before income tax expense and noncontrolling interest		42,388			48,077
Provision for income tax expense		7,261			9,599
Net income	$	35,127		$	38,478
Net income attributable to noncontrolling interest		(440	)		(145	)
Net income attributable to TowneBank	$	34,687		$	38,333
Per common share information
Basic earnings	$	0.46		$	0.52
Diluted earnings	$	0.46		$	0.52
Cash dividends declared	$	0.25		$	0.23

TOWNEBANK
Consolidated Balance Sheets – Five Quarter Trend
(dollars in thousands, except share data)


	March 31,			December 31,			September 30,			June 30,			March 31,
		2024			2023			2023			2023			2023
	(unaudited)			(audited)			(unaudited)			(unaudited)			(unaudited)
ASSETS
Cash and due from banks	$	75,802		$	85,584		$	83,949		$	106,994		$	97,502
Interest-bearing deposits at FRB – Richmond		926,635			939,356			1,029,276			1,427,044			1,040,112
Federal funds sold and interest-bearing deposits in financial institutions		98,673			103,417			102,527			102,231			104,924
Total Cash and Cash Equivalents		1,101,110			1,128,357			1,215,752			1,636,269			1,242,538
Securities available for sale		2,204,101			2,129,342			1,963,453			2,005,851			2,078,483
Securities held to maturity		312,510			477,592			547,854			548,017			548,226
Less: allowance for credit losses		(82	)		(84	)		(85	)		(87	)		(88	)
Securities held to maturity, net of allowance for credit losses		312,428			477,508			547,769			547,930			548,138
Other equity securities		13,661			13,792			14,062			13,798			13,341
FHLB stock		12,139			21,372			16,634			40,454			29,837
Total Securities		2,542,329			2,642,014			2,541,918			2,608,033			2,669,799
Mortgage loans held for sale		150,727			149,987			188,048			229,502			157,161
Loans, net of unearned income and deferred costs		11,452,343			11,329,021			11,172,971			11,208,014			11,173,785
Less: allowance for credit losses		(125,835	)		(126,461	)		(125,159	)		(123,513	)		(120,002	)
Net Loans		11,326,508			11,202,560			11,047,812			11,084,501			11,053,783
Premises and equipment, net		342,569			337,598			335,522			326,686			321,944
Goodwill		457,619			456,335			456,684			456,695			477,234
Other intangible assets, net		68,758			64,634			67,496			71,106			73,238
BOLI		279,293			277,445			275,240			273,435			271,704
Other assets		615,324			576,109			551,884			538,848			463,076
TOTAL ASSETS	$	16,884,237		$	16,835,039		$	16,680,356		$	17,225,075		$	16,730,477
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand	$	4,194,132		$	4,342,701		$	4,444,861		$	4,774,830		$	5,069,363
Interest-bearing:
Demand and money market accounts		6,916,701			6,757,619			6,764,415			6,529,336			6,284,184
Savings		326,179			336,492			350,031			361,891			389,173
Certificates of deposit		2,689,062			2,456,394			2,321,498			2,100,604			1,855,411
Total Deposits		14,126,074			13,893,206			13,880,805			13,766,661			13,598,131
Advances from the FHLB		3,775			203,958			104,139			754,319			504,497
Subordinated debt, net		256,011			255,796			255,580			255,365			255,151
Repurchase agreements and other borrowings		31,198			32,826			47,315			49,898			46,602
Total Borrowings		290,984			492,580			407,034			1,059,582			806,250
Other liabilities		401,307			393,375			408,305			408,333			336,201
TOTAL LIABILITIES		14,818,365			14,779,161			14,696,144			15,234,576			14,740,582

Preferred stock		—			—			—			—			—
Common stock, $1.667 par value		125,009			124,847			124,837			124,805			124,682
Capital surplus		1,114,038			1,112,761			1,111,152			1,109,526			1,109,387
Retained earnings		937,065			921,126			911,042			884,901			861,905
Common stock issued to deferred compensation trust, at cost		(20,915	)		(20,813	)		(20,740	)		(20,134	)		(18,839	)
Deferred compensation trust		20,915			20,813			20,740			20,134			18,839
Accumulated other comprehensive income (loss)		(126,586	)		(118,762	)		(179,043	)		(145,392	)		(121,297	)
TOTAL SHAREHOLDERS’ EQUITY		2,049,526			2,039,972			1,967,988			1,973,840			1,974,677
Noncontrolling interest		16,346			15,906			16,224			16,659			15,218
TOTAL EQUITY		2,065,872			2,055,878			1,984,212			1,990,499			1,989,895
TOTAL LIABILITIES AND EQUITY	$	16,884,237		$	16,835,039		$	16,680,356		$	17,225,075		$	16,730,477

TOWNEBANK
Consolidated Statements of Income – Five Quarter Trend (unaudited)
(dollars in thousands, except share data)


	Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
		2024			2023			2023			2023			2023
INTEREST INCOME:
Loans, including fees	$	150,974		$	146,810		$	143,605		$	138,977		$	132,768
Investment securities		19,996			20,464			20,292			18,851			18,375
Interest-bearing deposits in financial institutions and federal funds sold		14,234			13,967			15,031			14,488			10,649
Mortgage loans held for sale		1,716			2,886			3,928			2,547			1,604
Total interest income		186,920			184,127			182,856			174,863			163,396
INTEREST EXPENSE:
Deposits		78,388			73,200			64,171			48,671			33,934
Advances from the FHLB		2,438			917			3,438			10,407			2,992
Subordinated debt, net		2,236			2,236			2,245			2,236			2,169
Repurchase agreements and other borrowings		640			41			(56	)		(62	)		923
Total interest expense		83,702			76,394			69,798			61,252			40,018
Net interest income		103,218			107,733			113,058			113,611			123,378
PROVISION FOR CREDIT LOSSES		(877	)		2,446			1,007			3,556			11,670
Net interest income after provision for credit losses		104,095			105,287			112,051			110,055			111,708
NONINTEREST INCOME:
Residential mortgage banking income, net		10,477			8,035			10,648			11,360			9,372
Insurance commissions and other income, net		25,539			21,207			23,777			22,498			22,823
Property management income, net		16,773			7,358			12,800			12,098			15,535
Real estate brokerage income, net		—			(32	)		(63	)		1,834			1,791
Service charges on deposit accounts		3,061			3,035			2,802			3,018			2,851
Credit card merchant fees, net		1,551			1,476			2,006			1,682			1,545
BOLI		1,842			2,206			1,814			1,710			1,672
Other income		4,567			4,528			6,022			13,757			5,177
Net gain/(loss) on investment securities		74			—			—			—			—
Total noninterest income		63,884			47,813			59,806			67,957			60,766
NONINTEREST EXPENSE:
Salaries and employee benefits		71,377			66,035			67,258			67,445			69,420
Occupancy		9,422			9,308			9,027			9,487			9,064
Furniture and equipment		4,478			4,445			4,100			4,389			4,244
Amortization – intangibles		3,246			3,411			3,610			3,610			3,524
Software expense		6,100			6,743			6,130			6,169			5,624
Data processing		3,916			3,529			4,140			4,011			3,353
Professional fees		3,180			3,339			2,770			3,166			3,011
Advertising and marketing		4,582			3,377			3,653			3,959			4,401
Other expenses		19,290			21,708			17,014			22,992			21,756
Total noninterest expense		125,591			121,895			117,702			125,228			124,397
Income before income tax expense and noncontrolling interest		42,388			31,205			54,155			52,784			48,077
Provision for income tax expense		7,261			2,660			9,410			9,416			9,599
Net income		35,127			28,545			44,745			43,368			38,478
Net income attributable to noncontrolling interest		(440	)		259			117			(1,652	)		(145	)
Net income attributable to TowneBank	$	34,687		$	28,804		$	44,862		$	41,716		$	38,333
Per common share information
Basic earnings	$	0.46		$	0.39		$	0.60		$	0.56		$	0.52
Diluted earnings	$	0.46		$	0.39		$	0.60		$	0.56		$	0.52
Basic weighted average shares outstanding		74,816,420			74,773,335			74,750,294			74,691,121			74,363,222
Diluted weighted average shares outstanding		74,979,501			74,793,557			74,765,515			74,699,810			74,390,614
Cash dividends declared	$	0.25		$	0.25		$	0.25		$	0.25		$	0.23

TOWNEBANK
Banking Segment Financial Information (unaudited)
(dollars in thousands)


	Three Months Ended									Increase/(Decrease)
	March 31,						December 31,			YTD 2024 over 2023
		2024			2023			2023		Amount			Percent
Revenue
Net interest income	$	102,682		$	123,650		$	106,906		$	(20,968	)	(16.96	)%
Service charges on deposit accounts		3,061			2,851			3,035			210		7.37	%
Credit card merchant fees		1,551			1,545			1,476			6		0.39	%
Other income		5,790			5,740			6,544			50		0.87	%
Subtotal		10,402			10,136			11,055			266		2.62	%
Net gain/(loss) on investment securities		74			—			—			74		N/M
Total noninterest income		10,476			10,136			11,055			340		3.35	%
Total revenue		113,158			133,786			117,961			(20,628	)	(15.42	)%

Provision for credit losses		(976	)		11,754			2,831			(12,730	)	(108.30	)%

Expenses
Salaries and employee benefits		46,474			43,193			42,573			3,281		7.60	%
Occupancy		7,061			6,233			6,981			828		13.28	%
Furniture and equipment		3,648			3,333			3,621			315		9.45	%
Amortization of intangible assets		1,162			1,281			1,236			(119	)	(9.29	)%
Other expenses		26,953			28,444			29,602			(1,491	)	(5.24	)%
Total expenses		85,298			82,484			84,013			2,814		3.41	%
Income before income tax, corporate allocation and noncontrolling interest		28,836			39,548			31,117			(10,712	)	(27.09	)%
Corporate allocation		1,069			1,200			1,054			(131	)	(10.92	)%
Income before income tax provision and noncontrolling interest		29,905			40,748			32,171			(10,843	)	(26.61	)%
Provision for income tax expense		4,105			7,651			2,661			(3,546	)	(46.35	)%
Net income		25,800			33,097			29,510			(7,297	)	(22.05	)%
Noncontrolling interest		120			—			—			120		N/M
Net income attributable to TowneBank	$	25,920		$	33,097		$	29,510		$	(7,177	)	(21.68	)%

Efficiency ratio ^(non-GAAP)		74.40	%		60.70	%		70.17	%		13.70	%	22.57	%

TOWNEBANK
Realty Segment Financial Information (unaudited)
(dollars in thousands)


	Three Months Ended									Increase/(Decrease)
	March 31,						December 31,			YTD 2024 over 2023
		2024			2023			2023		Amount			Percent
Revenue
Residential mortgage brokerage income, net	$	10,798		$	9,794		$	8,322		$	1,004		10.25	%
Real estate brokerage income, net		—			1,791			(32	)		(1,791	)	(100.00	)%
Title insurance and settlement fees		—			291			—			(291	)	(100.00	)%
Property management fees, net		16,773			15,535			7,358			1,238		7.97	%
Income (loss) from unconsolidated subsidiary		30			66			(425	)		(36	)	(54.55	)%
Net interest and other income		784			184			1,111			600		326.09	%
Total revenue		28,385			27,661			16,334			724		2.62	%

Provision for credit losses		99			(84	)		(385	)		183		(217.86	)%

Expenses
Salaries and employee benefits		12,188			14,839			11,288			(2,651	)	(17.87	)%
Occupancy		1,569			2,021			1,600			(452	)	(22.37	)%
Furniture and equipment		594			693			611			(99	)	(14.29	)%
Amortization of intangible assets		677			683			737			(6	)	(0.88	)%
Other expenses		8,199			8,437			7,240			(238	)	(2.82	)%
Total expenses		23,227			26,673			21,476			(3,446	)	(12.92	)%

Income (loss) before income tax, corporate allocation and noncontrolling interest		5,059			1,072			(4,757	)		3,987		371.92	%
Corporate allocation		(348	)		(600	)		(352	)		252		(42.00	)%
Income (loss) before income tax provision and noncontrolling interest		4,711			472			(5,109	)		4,239		898.09	%
Provision for income tax expense		1,156			182			(1,072	)		974		535.16	%
Net income (loss)		3,555			290			(4,037	)		3,265		1,125.86	%
Noncontrolling interest		(560	)		(145	)		259			(415	)	(286.21	)%
Net income (loss) attributable to TowneBank	$	2,995		$	145		$	(3,778	)		2,850		1,965.52	%

Efficiency ratio excluding gain on equity investment ^(non-GAAP)		79.44	%		93.96	%		126.97	%		(14.52	)%	(15.45	)%

TOWNEBANK
Insurance Segment Financial Information (unaudited)
(dollars in thousands)


	Three Months Ended									Increase/(Decrease)
	March 31,						December 31,			YTD 2024 over 2023
		2024			2023			2023		Amount			Percent
Commission and fee income
Property and casualty	$	20,722		$	18,129		$	19,795		$	2,593		14.30	%
Employee benefits		4,826			4,587			4,332			239		5.21	%
Specialized benefit services		9			159			36			(150	)	(94.34	)%
Total commissions and fees		25,557			22,875			24,163			2,682		11.72	%

Contingency and bonus revenue		4,503			4,369			1,276			134		3.07	%
Other income		11			6			8			5		83.33	%
Total revenue		30,071			27,250			25,447			2,821		10.35	%

Employee commission expense		4,512			4,553			4,197			(41	)	(0.90	)%
Revenue, net of commission expense		25,559			22,697			21,250			2,862		12.61	%

Salaries and employee benefits		12,715			11,388			12,174			1,327		11.65	%
Occupancy		792			810			727			(18	)	(2.22	)%
Furniture and equipment		236			218			213			18		8.26	%
Amortization of intangible assets		1,407			1,560			1,438			(153	)	(9.81	)%
Other expenses		1,916			1,264			1,853			652		51.58	%
Total operating expenses		17,066			15,240			16,405			1,826		11.98	%
Income before income tax, corporate allocation and noncontrolling interest		8,493			7,457			4,845			1,036		13.89	%
Corporate allocation		(721	)		(600	)		(702	)		(121	)	20.17	%
Income before income tax provision and noncontrolling interest		7,772			6,857			4,143			915		13.34	%
Provision for income tax expense		2,000			1,766			1,071			234		13.25	%
Net income		5,772			5,091			3,072			681		13.38	%
Noncontrolling interest		—			—			—			—		N/M
Net income attributable to TowneBank	$	5,772		$	5,091		$	3,072			681		13.38	%

Provision for income taxes		2,000			1,766			1,071			234		13.25	%
Depreciation, amortization and interest expense		1,553			1,706			1,588			(153	)	(8.97	)%
EBITDA^(non-GAAP)	$	9,325		$	8,563		$	5,731			762		8.90	%

Efficiency ratio^(non-GAAP)		61.27	%		60.27	%		70.43	%		1.00	%	1.66	%

TOWNEBANK
Reconciliation of Non-GAAP Financial Measures
(dollars in thousands)

	Three Months Ended
	March 31,			March 31,			December 31,
		2024			2023			2023

Return on average assets (GAAP)		0.83	%		0.95	%		0.68	%
Impact of excluding average goodwill and other intangibles and amortization		0.09	%		0.10	%		0.09	%
Return on average tangible assets (non-GAAP)		0.92	%		1.05	%		0.77	%

Return on average equity (GAAP)		6.84	%		7.99	%		5.75	%
Impact of excluding average goodwill and other intangibles and amortization		3.03	%		3.72	%		2.78	%
Return on average tangible equity (non-GAAP)		9.87	%		11.71	%		8.53	%

Return on average common equity (GAAP)		6.89	%		8.05	%		5.79	%
Impact of excluding average goodwill and other intangibles and amortization		3.09	%		3.78	%		2.83	%
Return on average tangible common equity (non-GAAP)		9.98	%		11.83	%		8.62	%

Book value (GAAP)	$	27.33		$	26.40		$	27.24
Impact of excluding average goodwill and other intangibles and amortization		(7.02	)		(7.36	)		(6.96	)
Tangible book value (non-GAAP)	$	20.31		$	19.04		$	20.28

Efficiency ratio (GAAP)		75.16	%		67.55	%		78.36	%
Impact of exclusions		(1.91	)%		(1.91	)%		(2.19	)%
Efficiency ratio (non-GAAP)		73.25	%		65.64	%		76.17	%

Average assets (GAAP)	$	16,864,235		$	16,349,040		$	16,683,041
Less: average goodwill and intangible assets		522,675			521,972			523,086
Average tangible assets (non-GAAP)	$	16,341,560		$	15,827,068		$	16,159,955

Average equity (GAAP)	$	2,040,275		$	1,946,002		$	1,988,302
Less: average goodwill and intangible assets		522,675			521,972			523,086
Average tangible equity (non-GAAP)	$	1,517,600		$	1,424,030		$	1,465,216

Average common equity (GAAP)	$	2,024,169		$	1,931,063		$	1,972,138
Less: average goodwill and intangible assets		522,675			521,972			523,086
Average tangible common equity (non-GAAP)	$	1,501,494		$	1,409,091		$	1,449,052

Net income (GAAP)	$	34,687		$	38,333		$	28,804
Amortization of intangibles, net of tax		2,564			2,784			2,695
Tangible net income (non-GAAP)	$	37,251		$	41,117		$	31,499

Total revenue (GAAP)	$	167,102		$	184,144		$	155,546
Net (gain)/loss on investment securities		(74	)		—			—
Other nonrecurring (income) loss		—			—			10
Total Revenue for efficiency calculation (non-GAAP)	$	167,028		$	184,144		$	155,556

Noninterest expense (GAAP)	$	125,591		$	124,397		$	121,895
Less: amortization of intangibles		3,246			3,524			3,411
Noninterest expense net of amortization (non-GAAP)	$	122,345		$	120,873		$	118,484

TOWNEBANK
Reconciliation of Non-GAAP Financial Measures
(dollars in thousands, except per share data)


Reconciliation of GAAP Earnings to Operating Earnings Excluding Certain Items Affecting Comparability	Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
		2024			2023			2023			2023			2023
Net income (GAAP)	$	34,687		$	28,804		$	44,862		$	41,716		$	38,333

Adjustments
Plus: Acquisition-related expenses, net of tax		564			56			458			2,457			4,803
Plus: Initial provision for acquired loans, net of tax		—			—			—			—			3,166
Plus: FDIC special assessment, net of tax		1,021			4,083			—			—			—
Less: Gain on sale of equity investments, net of noncontrolling interest		—			(1,846	)		(438	)		(5,513	)		—
Core operating earnings, excluding certain items affecting comparability (non-GAAP)	$	36,272		$	31,097		$	44,882		$	38,660		$	46,302
Weighted average diluted shares		74,979,501			74,793,557			74,765,515			74,699,810			74,390,614
Diluted EPS (GAAP)	$	0.46		$	0.39		$	0.60		$	0.56		$	0.52
Diluted EPS, excluding certain items affecting comparability (non-GAAP)	$	0.48		$	0.42		$	0.60		$	0.52		$	0.62
Average assets	$	16,864,235		$	16,683,041		$	16,762,859		$	16,826,965		$	16,349,040
Average tangible equity	$	1,517,600		$	1,465,216			1,460,024		$	1,447,955		$	1,424,030
Average common tangible equity	$	1,501,494		$	1,449,052		$	1,443,453		$	1,432,506		$	1,409,091
Return on average assets, excluding certain items affecting comparability (non-GAAP)		0.87	%		0.74	%		1.06	%		0.92	%		1.15	%
Return on average tangible equity, excluding certain items affecting comparability (non-GAAP)		10.29	%		9.15	%		12.97	%		11.50	%		13.98	%
Return on average common tangible equity, excluding certain items affecting comparability (non-GAAP)		10.40	%		9.25	%		13.13	%		11.62	%		14.13	%
Efficiency ratio, excluding certain items affecting comparability (non-GAAP)		74.84	%		78.33	%		67.76	%		67.32	%		64.32	%

TowneBank Reports First Quarter 2024 Earnings

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