TowneBank Reports Third Quarter 2024 Earnings

SUFFOLK, Va., Oct. 23, 2024 (GLOBE NEWSWIRE) -- TowneBank (the "Company" or "Towne") (NASDAQ: TOWN) today reported earnings for the quarter ended September 30, 2024 of $42.95 million, or $0.57 per diluted share, compared to $44.86 million, or $0.60 per diluted share, for the quarter ended September 30, 2023.   Excluding certain items affecting comparability, core earnings (non-GAAP) were $43.39 million, or $0.58 per diluted share, in the current quarter compared to $44.88 million, or $0.60 per diluted share, for the quarter ended September 30, 2023.

"Our third quarter results continued to deliver increased net interest income and noninterest income contributions from our diverse business model which were in line with expectations. We remain committed to prudent balance sheet management strategies. We were also excited to announce our partnership with Village Bank which will meaningfully enhance our Richmond presence, which is core to our franchise future growth. Lastly, the recently released FDIC Deposit Market Share Report for 2024 continues to demonstrate the strength of our Main Street banking model and core deposit franchise, resulting in the #1 market share, or 30%, in our legacy Virginia Beach-Norfolk-Newport News, VA-NC MSA," said G. Robert Aston, Jr., Executive Chairman.

Highlights for Third Quarter 2024:

• Total revenues were $174.52 million, an increase of $1.65 million, or 0.96%, compared to third quarter 2023. Noninterest income increased $2.43 million, driven by growth in residential mortgage banking income and insurance commissions. Partially offsetting the increase in noninterest income was a $0.78 million decline in net interest income.
• Total deposits were $14.36 billion, an increase of $482.37 million, or 3.48%, compared to third quarter 2023. Total deposits increased 0.63%, or $90.58 million, in comparison to June 30, 2024, 2.52% on an annualized basis.
• Noninterest-bearing deposits decreased 3.99%, to $4.27 billion, compared to third quarter 2023 and represented 29.71% of total deposits. Compared to the linked quarter, noninterest-bearing deposits decreased 0.84%.
• Loans held for investment were $11.41 billion, an increase of $239.55 million, or 2.14%, compared to September 30, 2023, but a decrease of $39.23 million, or 0.34%, compared to June 30, 2024.
• Annualized return on common shareholders' equity was 8.18% compared to 9.04% in third quarter 2023. Annualized return on average tangible common shareholders' equity (non-GAAP) was 11.54% compared to 13.11% in third quarter 2023.
• Net interest margin was 2.90% for the quarter and tax-equivalent net interest margin (non-GAAP) was 2.93%, including purchase accounting accretion of 3 basis points, compared to the prior year quarter net interest margin of 2.95% and tax-equivalent net interest margin (non-GAAP) of 2.98%, including purchase accounting accretion of 5 basis points.
• Compared to the linked quarter, net interest margin increased 4 bp and spread increased 6 bp.  
• The effective tax rate was 11.52% in the quarter compared to 17.34% in third quarter 2023 and 15.93% in the linked quarter. The lower effective tax rate in the current quarter was primarily due to the impact on state and federal taxes from the increase in credits and losses related to LIHTC investment properties placed in service during the period.

"Growth has certainly been challenging in the current environment but we believe our balance sheet is well positioned to support mid-single digit growth rates as we look ahead to next year. We plan to aggressively expand Towne Insurance and evaluate other opportunities to enhance our fee-based lines of business to further drive our differentiated business model," stated William I. Foster III, President and Chief Executive Officer.

Quarterly Net Interest Income:

• Net interest income was $112.28 million compared to $113.06 million for the quarter ended September 30, 2023. The decrease was driven by increased deposit costs, which were mostly offset by higher yields on earning assets.
• On an average basis, loans held for investment, with a yield of 5.46%, represented 74.16% of earning assets at September 30, 2024 compared to a yield of 5.13% and 73.45% of earning assets in the third quarter of 2023.
• The cost of interest-bearing deposits was 3.28% for the quarter ended September 30, 2024, compared to 2.77% in second quarter 2023. Interest expense on deposits increased $17.96 million, or 27.98%, over the prior year quarter driven by the increase in rate and growth in interest-bearing deposits.
• Our total cost of deposits increased to 2.29% from 1.84% for the quarter ended September 30, 2023 due to a combination of higher interest-bearing deposit balances coupled with higher rates.   The Federal Reserve Open Market Committee lowered the overnight funds rate late in the third quarter. Management is expecting the decrease to have favorable impact on deposit costs in the fourth quarter of 2024.
• Average interest-earning assets totaled $15.40 billion at September 30, 2024 compared to $15.21 billion at September 30, 2023, an increase of 1.26%. The Company anticipates approximately $604 million of cash flows from its securities portfolio to be available for reinvestment in the next twenty-four months.
• Average interest-bearing liabilities totaled $10.25 billion, an increase of $493.95 million, or 5.06%, from prior year, driven by deposit growth. Borrowings have declined between periods. There were no short term FHLB borrowings in the third quarter of 2024, compared to an average of $248.91 million in the prior year quarter.

Quarterly Provision for Credit Losses:

• The quarterly provision for credit losses was a benefit of $1.10 million compared to an expense of $1.01 million in the prior year quarter and a benefit of $177 thousand in the linked quarter.
• The allowance for credit losses on loans decreased $2.36 million in third quarter 2024, compared to the linked quarter. The decrease in the allowance was driven by a modest decline in the loan portfolio, primarily in higher-risk real estate construction and development loans, combined with continued strength in credit quality, and improvements in macroeconomic forecast scenarios utilized in our model.
• Net loan charge-offs were $0.68 million in the quarter compared to net recoveries of $1.07 million in the prior year quarter and $19 thousand in the linked quarter.   Year-to-date 2024, net loan charge-offs were $1.18 million compared to net loan charge-offs of $2.81 million in first nine months of 2023.
• The ratio of net charge-offs to average loans on an annualized basis was 0.02% in third quarter 2024, compared to (0.04)% in third quarter 2023 and 0.00% in the linked quarter.
• The allowance for credit losses on loans represented 1.08% of total loans at September 30, 2024, compared to 1.12% at September 30, 2023, and 1.10% at June 30, 2024. The allowance for credit losses on loans was 18.70 times nonperforming loans compared to 17.60 times at September 30, 2023 and 19.08 times at June 30, 2024.

Quarterly Noninterest Income:

• Total noninterest income was $62.24 million compared to $59.81 million in 2023, an increase of $2.43 million, or 4.06%.
• Residential mortgage banking income was $11.79 million compared to $10.65 million in third quarter 2023. Loan volume increased to $598.18 million in third quarter 2024 from $520.41 million in third quarter 2023. Both, the number of loans originated and the per-loan average balance increased in third quarter 2024 compared to third quarter 2023. Refinance activities increased in the quarter after more than a year of low activity. Residential purchase activity was 91.49% of production volume in the third quarter of 2024 compared to 95.96% in third quarter 2023.   Management expects mortgage production volumes to be positively impacted by any additional reductions in the Federal Reserve overnight rate.
• While level with the linked quarter at 3.28%, gross margins on residential mortgage sales increased 11 basis points from 3.17% in third quarter 2023.
• Total net insurance commissions increased $1.95 million, or 8.20%, to $25.73 million in third quarter 2024 compared to 2023. This increase was primarily attributable to increases in property and casualty commissions, which were driven by organic growth.
• Property management fee revenue decreased 12.34%, or $1.58 million, to $11.22 million in third quarter 2024 compared to 2023. Reservation levels declined compared to the prior year.

Quarterly Noninterest Expense:

• Total noninterest expense was $126.90 million compared to $117.70 million in 2023, an increase of $9.20 million, or 7.81%. This increase was primarily attributable to growth in salaries and employee benefits of $4.87 million, professional fees of $1.95 million, software of $0.66 million, data processing of $0.56 million, and advertising and marketing of $0.51 million.
• Salaries and benefits expense increases were driven by an increase in banking personnel and production incentives.
• Investment in technology related to banking services and information monitoring continued to drive both direct and indirect costs. Professional fees increased due to consulting and outside services.   Software costs increased due to higher core system costs, while data processing increased due to higher processing costs and merchant fee increases.
• Advertising and marketing increased, driven by business development.

Consolidated Balance Sheet Highlights:

• Management is focused on strategic balance sheet management with a concentration on controlled loan growth and maintaining strong levels of liquidity.
• Total assets were $17.19 billion for the quarter ended September 30, 2024, a $119.18 million increase compared to $17.07 billion at June 30, 2024. Total assets increased $507.66 million, or 3.04%, from $16.68 billion at September 30, 2023.
• Loans held for investment declined $39.23 million, or 0.34%, compared to the linked quarter but increased $239.55 million, or 2.14%, compared to prior year. There were declines in several loan categories from the linked quarter, with the most significant decline in the real estate construction and development category.   The Company continued to maintain strong credit discipline throughout the period.
• Mortgage loans held for sale increased $76.27 million, or 40.56%, compared to prior year and $63.56 million, or 31.66%, compared to the linked quarter, driven by the increase in production.
• Total deposits increased $482.37 million, or 3.48%, primarily in interest-bearing demand and time deposits, compared to prior year. In the linked quarter comparison, total deposits increased $90.58 million, or 2.52% on an annualized basis.
• Noninterest-bearing deposits decreased $177.23 million, or 3.99%, compared to prior year and $36.15 million, or 0.84%, compared to the linked quarter, primarily in commercial and escrow accounts.
• Total borrowings decreased $116.22 million, or 28.55%, compared to third quarter 2023 and $4.35 million, or 1.47%, compared to the linked quarter. Short-term FHLB advances were zero at each of September 30, 2024, and the linked quarter end, compared to $100 million at September 30, 2023.

Investment Securities:

• Total investment securities were $2.60 billion compared to $2.49 billion at June 30, 2024 and $2.54 billion at September 30, 2023. The weighted average duration of the portfolio at September 30, 2024 was 3.1 years. The carrying value of the available-for-sale debt securities portfolio included net unrealized losses of $110.62 million at September 30, 2024, compared to $172.93 million at June 30, 2024 and $238.52 million at September 30, 2023, with the changes in fair value due to the change in interest rates.

Loans and Asset Quality:

• Total loans held for investment were $11.41 billion at September 30, 2024, $11.45 billion June 30, 2024, and $11.17 billion at September 30, 2023.
• Nonperforming assets were $7.47 million, or 0.04% of total assets, compared to $7.88 million, or 0.05%, at September 30, 2023, and $7.16 million, or 0.04%, in the linked quarter end.
• Nonperforming loans were 0.06% of period end loans at September 30, 2024, September 30, 2023, and the linked quarter end.
• Foreclosed property consisted of $884 thousand in repossessed autos at September 30, 2024, compared to $276 thousand in other real estate owned and $490 thousand in repossessed autos, for a total of $766 thousand in foreclosed property at September 30, 2023.

Deposits and Borrowings:

• Total deposits were $14.36 billion compared to $14.27 billion at June 30, 2024 and $13.88 billion at September 30, 2023.
• The ratio of period end loans held for investment to deposits was 79.46% compared to 80.24% at June 30, 2024 and 80.49% at September 30, 2023.
• Noninterest-bearing deposits were 29.71% of total deposits at September 30, 2024 compared to 30.15% at June 30, 2024 and 32.02% at September 30, 2023. Noninterest-bearing deposits declined $177.23 million, or 3.99%, compared to September 30, 2023, and $36.15 million, or 0.84%, compared to the linked quarter.
• Total borrowings were $290.82 million compared to $295.17 million at June 30, 2024 and $407.03 million at September 30, 2023.

Capital:

• Common equity tier 1 capital ratio of 12.63%⁽¹⁾.
• Tier 1 leverage capital ratio of 10.38%⁽¹⁾.
• Tier 1 risk-based capital ratio of 12.75%⁽¹⁾.
• Total risk-based capital ratio of 15.53% ⁽¹⁾ .
• Book value per common share was $28.59 compared to $27.62 at June 30, 2024 and $26.28 at September 30, 2023.
• Tangible book value per common share (non-GAAP) was $21.65 compared to $20.65 at June 30, 2024 and $19.28 at September 30, 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 $17.19 billion as of September 30, 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; our ability to close the transaction with Village Bank when expected or at all because required approvals and other conditions to closing are not received or satisfied on the proposed terms or on the anticipated schedule; our integration of Village Bank's business to the extent that it may take longer or be more difficult, time-consuming or costly to accomplish than expected; deposit attrition, operating costs, customer losses and business disruption following the Village Bank transaction, including adverse effects on relationships with employees and customers; costs or difficulties related to the integration of the businesses we have acquired may be greater than expected; expected growth opportunities or 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, whether directed at us or at vendors or other third parties with which we interact, 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
		September 30,				June 30,				March 31,				December 31,				September 30,
			2024				2024				2024				2023				2023
Income and Performance Ratios:
	Total revenue	$	174,518			$	174,970			$	167,102			$	155,546			$	172,864
	Net income		43,126				43,039				35,127				28,545				44,745
	Net income available to common shareholders		42,949				42,856				34,687				28,804				44,862
	Net income per common share - diluted		0.57				0.57				0.46				0.39				0.60
	Book value per common share		28.59				27.62				27.33				27.24				26.28
	Book value per common share - tangible (non-GAAP)		21.65				20.65				20.31				20.28				19.28
	Return on average assets		1.00	%			1.01	%			0.83	%			0.68	%			1.06	%
	Return on average assets - tangible (non-GAAP)		1.09	%			1.11	%			0.92	%			0.77	%			1.17	%
	Return on average equity		8.12	%			8.43	%			6.84	%			5.75	%			8.96	%
	Return on average equity - tangible (non-GAAP)		11.42	%			12.03	%			9.87	%			8.53	%			12.97	%
	Return on average common equity		8.18	%			8.49	%			6.89	%			5.79	%			9.04	%
	Return on average common equity - tangible (non-GAAP)		11.54	%			12.16	%			9.98	%			8.62	%			13.11	%
	Noninterest income as a percentage of total revenue		35.66	%			37.68	%			38.23	%			30.74	%			34.60	%
Regulatory Capital Ratios (1):
	Common equity tier 1		12.63	%			12.43	%			12.20	%			12.18	%			12.19	%
	Tier 1		12.75	%			12.55	%			12.32	%			12.29	%			12.31	%
	Total		15.53	%			15.34	%			15.10	%			15.06	%			15.09	%
	Tier 1 leverage ratio		10.38	%			10.25	%			10.15	%			10.17	%			10.06	%
Asset Quality:
	Allowance for credit losses on loans to nonperforming loans	18.70x				19.08x				18.01x				18.48x				17.60x
	Allowance for credit losses on loans to period end loans		1.08	%			1.10	%			1.10	%			1.12	%			1.12	%
	Nonperforming loans to period end loans		0.06	%			0.06	%			0.06	%			0.06	%			0.06	%
	Nonperforming assets to period end assets		0.04	%			0.04	%			0.05	%			0.05	%			0.05	%
	Net charge-offs (recoveries) to average loans (annualized)		0.02	%			—	%			0.02	%			—	%		(0.04		)%
	Net charge-offs (recoveries)	$	677			$	(19	)		$	520			$	68			$	(1,074	)
	Nonperforming loans	$	6,588			$	6,582			$	6,987			$	6,843			$	7,110
	Foreclosed property		884				581				780				908				766
	Total nonperforming assets	$	7,472			$	7,163			$	7,767			$	7,751			$	7,876
	Loans past due 90 days and still accruing interest	$	510			$	368			$	323			$	735			$	970
	Allowance for credit losses on loans	$	123,191			$	125,552			$	125,835			$	126,461			$	125,159
Mortgage Banking:
	Loans originated, mortgage	$	421,571			$	430,398			$	289,191			$	302,616			$	348,387
	Loans originated, joint venture		176,612				196,583				135,197				126,332				172,021
	Total loans originated	$	598,182			$	626,981			$	424,388			$	428,948			$	520,408
	Number of loans originated		1,637				1,700				1,247				1,237				1,487
	Number of originators		159				169				176				181				192
	Purchase %		91.49	%			94.85	%			95.66	%			95.06	%			95.96	%
	Loans sold	$	526,998			$	605,134			$	410,895			$	468,014			$	567,291
	Rate lock asset	$	1,548			$	1,930			$	1,681			$	895			$	1,348
	Gross realized gain on sales and fees as a % of loans originated		3.28	%			3.28	%			3.34	%			3.06	%			3.17	%
Other Ratios:
	Net interest margin		2.90	%			2.86	%			2.72	%			2.83	%			2.95	%
	Net interest margin-fully tax-equivalent (non-GAAP)		2.93	%			2.89	%			2.75	%			2.86	%			2.98	%
	Average earning assets/total average assets		90.43	%			90.36	%			90.52	%			90.48	%			90.73	%
	Average loans/average deposits		80.07	%			80.80	%			81.48	%			80.72	%			80.75	%
	Average noninterest deposits/total average deposits		30.19	%			30.06	%			30.25	%			31.69	%			33.50	%
	Period end equity/period end total assets		12.58	%			12.24	%			12.24	%			12.21	%			11.90	%
	Efficiency ratio (non-GAAP)		70.93	%			68.98	%			73.25	%			76.17	%			66.21	%
	(1) Current reporting period regulatory capital ratios are preliminary.

TOWNEBANK
Selected Data (unaudited)
(dollars in thousands)
Investment Securities													% Change
	Q3				Q3				Q2				Q3 24 vs.			Q3 24 vs.
Available-for-sale securities, at fair value		2024				2023				2024			Q3 23			Q2 24
U.S. agency securities	$	291,814			$	300,161			$	281,934			(2.78	)%		3.50	%
U.S. Treasury notes		28,655				26,721				27,701			7.24	%		3.44	%
Municipal securities		455,722				484,587				442,474			(5.96	)%		2.99	%
Trust preferred and other corporate securities		91,525				74,024				88,228			23.64	%		3.74	%
Mortgage-backed securities issued by GSEs and GNMA		1,496,631				1,079,303				1,411,883			38.67	%		6.00	%
Allowance for credit losses		(1,171	)			(1,343	)			(1,541	)		(12.81	)%		(24.01	)%
Total	$	2,363,176			$	1,963,453			$	2,250,679			20.36	%		5.00	%
Gross unrealized gains (losses) reflected in financial statements
Total gross unrealized gains	$	6,703			$	475			$	1,983			1,311.16	%		238.02	%
Total gross unrealized losses		(117,319	)			(238,993	)			(174,911	)		(50.91	)%		(32.93	)%
Net unrealized gains (losses) and other adjustments on AFS securities	$	(110,616	)		$	(238,518	)		$	(172,928	)		(53.62	)%		(36.03	)%
Held-to-maturity securities, at amortized cost
U.S. agency securities	$	102,428			$	101,659			$	102,234			0.76	%		0.19	%
U.S. Treasury notes		96,942				433,015				97,171			(77.61	)%		(0.24	)%
Municipal securities		5,342				5,249				5,318			1.77	%		0.45	%
Trust preferred corporate securities		2,133				2,185				2,147			(2.38	)%		(0.65	)%
Mortgage-backed securities issued by GSEs		5,577				5,746				5,618			(2.94	)%		(0.73	)%
Allowance for credit losses		(77	)			(85	)			(79	)		(9.41	)%		(2.53	)%
Total	$	212,345			$	547,769			$	212,409			(61.23	)%		(0.03	)%
Total gross unrealized gains	$	323			$	82			$	175			293.90	%		84.57	%
Total gross unrealized losses		(7,929	)			(23,505	)			(12,880	)		(66.27	)%		(38.44	)%
Net unrealized gains (losses) in HTM securities	$	(7,606	)		$	(23,423	)		$	(12,705	)		(67.53	)%		(40.13	)%
Total unrealized gains (losses) on AFS and HTM securities	$	(118,222	)		$	(261,941	)		$	(185,633	)		(54.87	)%		(36.31	)%
													% Change
Loans Held For Investment	Q3				Q3				Q2				Q3 24 vs.			Q3 24 vs.
		2024				2023				2024			Q3 23			Q2 24
Real estate - construction and development	$	1,118,669			$	1,325,976			$	1,190,768			(15.63	)%		(6.05	)%
Commercial real estate - owner occupied		1,655,345				1,686,888				1,673,582			(1.87	)%		(1.09	)%
Commercial real estate - non owner occupied		3,179,699				3,025,985				3,155,958			5.08	%		0.75	%
Real estate - multifamily		750,906				542,611				682,537			38.39	%		10.02	%
Residential 1-4 family		1,891,216				1,818,843				1,887,420			3.98	%		0.20	%
HELOC		408,565				371,861				408,273			9.87	%		0.07	%
Commercial and industrial business (C&I)		1,256,511				1,237,524				1,297,538			1.53	%		(3.16	)%
Government		521,681				523,456				517,954			(0.34	)%		0.72	%
Indirect		546,887				548,621				558,216			(0.32	)%		(2.03	)%
Consumer loans and other		83,039				91,206				79,501			(8.95	)%		4.45	%
Total	$	11,412,518			$	11,172,971			$	11,451,747			2.14	%		(0.34	)%
													% Change
Deposits	Q3				Q3				Q2				Q3 24 vs.			Q3 24 vs.
		2024				2023				2024			Q3 23			Q2 24
Noninterest-bearing demand	$	4,267,628			$	4,444,861			$	4,303,773			(3.99	)%		(0.84	)%
Interest-bearing:
Demand and money market accounts		6,990,103				6,764,415				6,940,086			3.34	%		0.72	%
Savings		319,970				350,031				312,881			(8.59	)%		2.27	%
Certificates of deposits		2,785,469				2,321,498				2,715,848			19.99	%		2.56	%
Total		14,363,170				13,880,805				14,272,588			3.48	%		0.63	%

TOWNEBANK
Average Balances, Yields and Rate Paid (unaudited)
(dollars in thousands)
	Three Months Ended											Three Months Ended											Three Months Ended
	September 30, 2024											June 30, 2024											September 30, 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)	$	11,419,428			$	156,610			5.46	%		$	11,471,669			$	155,374			5.45	%		$	11,169,924			$	144,457			5.13	%
Taxable investment securities		2,376,102				20,940			3.53	%			2,368,476				21,671			3.66	%			2,373,731				18,645			3.14	%
Tax-exempt investment securities		168,768				1,686			4.00	%			156,503				1,521			3.89	%			206,639				1,993			3.86	%
Total securities		2,544,870				22,626			3.56	%			2,524,979				23,192			3.67	%			2,580,370				20,638			3.20	%
Interest-bearing deposits		1,226,445				15,249			4.95	%			1,182,816				14,512			4.93	%			1,230,582				15,031			4.85	%
Mortgage loans held for sale		208,513				3,247			6.23	%			165,392				2,945			7.12	%			227,426				3,928			6.91	%
Total earning assets		15,399,256				197,732			5.11	%			15,344,856				196,023			5.14	%			15,208,302				184,054			4.80	%
Less: allowance for loan losses		(125,331	)										(126,792	)										(125,553	)
Total nonearning assets		1,754,216											1,764,418											1,680,110
Total assets	$	17,028,141										$	16,982,482										$	16,762,859
Liabilities and Equity:
Interest-bearing deposits
Demand and money market	$	6,917,622			$	48,896			2.81	%		$	6,896,176			$	48,161			2.81	%		$	6,605,853			$	41,381			2.49	%
Savings		315,338				842			1.06	%			317,774				845			1.07	%			356,116				938			1.05	%
Certificates of deposit		2,723,437				32,390			4.73	%			2,715,615				33,017			4.89	%			2,236,102				21,852			3.88	%
Total interest-bearing deposits		9,956,397				82,128			3.28	%			9,929,565				82,023			3.32	%			9,198,071				64,171			2.77	%
Borrowings		33,867				(25	)		(0.29	)%			100,165				1,627			6.43	%			299,105				3,382			4.42	%
Subordinated debt, net		256,309				2,237			3.49	%			256,093				2,236			3.49	%			255,446				2,245			3.52	%
Total interest-bearing liabilities		10,246,573				84,340			3.27	%			10,285,823				85,886			3.36	%			9,752,622				69,798			2.84	%
Demand deposits		4,305,783											4,267,590											4,633,856
Other noninterest-bearing liabilities		370,736											383,447											389,912
Total liabilities		14,923,092											14,936,860											14,776,390
Shareholders’ equity		2,105,049											2,045,622											1,986,469
Total liabilities and equity	$	17,028,141										$	16,982,482										$	16,762,859
Net interest income (tax-equivalent basis) (4)					$	113,392										$	110,137										$	114,256
Reconciliation of Non-GAAP Financial Measures
Tax-equivalent basis adjustment						(1,110	)										(1,089	)										(1,198	)
Net interest income (GAAP)					$	112,282										$	109,048										$	113,058
Interest rate spread (2)(4)									1.84	%										1.78	%										1.96	%
Interest expense as a percent of average earning assets									2.18	%										2.25	%										1.82	%
Net interest margin (tax-equivalent basis) (3)(4)									2.93	%										2.89	%										2.98	%
Total cost of deposits									2.29	%										2.32	%										1.84	%
(1) Yields and interest income are presented on a tax-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
Average Balances, Yields and Rate Paid (unaudited)
(dollars in thousands)
	Nine Months Ended											Nine Months Ended
	September 30, 2024											September 30, 2023
					Interest				Average							Interest				Average
	Average				Income/				Yield/			Average				Income/				Yield/
	Balance				Expense				Rate (1)			Balance				Expense				Rate (1)
Assets:
Loans (net of unearned income and deferred costs)	$	11,423,458			$	463,794			5.42	%		$	11,159,329			$	417,808			5.01	%
Taxable investment securities		2,395,007				61,327			3.41	%			2,420,634				52,656			2.90	%
Tax-exempt investment securities		162,294				4,756			3.91	%			201,535				5,883			3.89	%
Total securities		2,557,301				66,083			3.45	%			2,622,169				58,539			2.98	%
Interest-bearing deposits		1,192,319				43,995			4.93	%			1,179,952				40,168			4.55	%
Mortgage loans held for sale		163,755				7,908			6.44	%			168,822				8,079			6.38	%
Total earning assets		15,336,833				581,780			5.07	%			15,130,272				524,594			4.64	%
Less: allowance for loan losses		(126,508	)										(120,420	)
Total nonearning assets		1,748,215											1,637,952
Total assets	$	16,958,540										$	16,647,804
Liabilities and Equity:
Interest-bearing deposits
Demand and money market	$	6,880,752			$	145,042			2.82	%		$	6,349,422			$	96,742			2.04	%
Savings		320,696				2,569			1.07	%			376,282				2,676			0.95	%
Certificates of deposit		2,674,509				94,928			4.74	%			1,964,718				47,358			3.22	%
Total interest-bearing deposits		9,875,957				242,539			3.28	%			8,690,422				146,776			2.26	%
Borrowings		115,171				4,679			5.34	%			505,856				17,644			4.60	%
Subordinated debt, net		256,094				6,710			3.49	%			253,612				6,650			3.50	%
Total interest-bearing liabilities		10,247,222				253,928			3.31	%			9,449,890				171,070			2.42	%
Demand deposits		4,265,971											4,873,945
Other noninterest-bearing liabilities		381,547											353,459
Total liabilities		14,894,740											14,677,294
Shareholders’ equity		2,063,800											1,970,510
Total liabilities and equity	$	16,958,540										$	16,647,804
Net interest income (tax-equivalent basis)(4)					$	327,852										$	353,524
Reconciliation of Non-GAAP Financial Measures
Tax-equivalent basis adjustment						(3,304	)										(3,477	)
Net interest income (GAAP)					$	324,548										$	350,047
Interest rate spread (2)(4)									1.76	%										2.22	%
Interest expense as a percent of average earning assets									2.21	%										1.51	%
Net interest margin (tax-equivalent basis) (3)(4)									2.86	%										3.12	%
Total cost of deposits									2.29	%										1.45	%
(1) Yields and interest income are presented on a tax-equivalent basis using the federal statutory 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)
	September 30,				December 31,
		2024				2023
	(unaudited)				(audited)
ASSETS
Cash and due from banks	$	131,068			$	85,584
Interest-bearing deposits at FRB		1,061,596				939,356
Interest-bearing deposits in financial institutions		103,400				103,417
Total Cash and Cash Equivalents		1,296,064				1,128,357
Securities available for sale, at fair value (amortized cost of $2,474,963 and $2,292,963, and allowance for credit losses of $1,171 and $1,498 at September 30, 2024 and December 31, 2023, respectively)		2,363,176				2,129,342
Securities held to maturity, at amortized cost (fair value $204,816 and $462,656 at September 30, 2024 and December 31, 2023, respectively)		212,422				477,592
Less: Allowance for credit losses		(77	)			(84	)
Securities held to maturity, net of allowance for credit losses		212,345				477,508
Other equity securities		12,681				13,792
FHLB stock		12,134				21,372
Total Securities		2,600,336				2,642,014
Mortgage loans held for sale		264,320				149,987
Loans, net of unearned income and deferred costs		11,412,518				11,329,021
Less: allowance for credit losses		(123,191	)			(126,461	)
Net Loans		11,289,327				11,202,560
Premises and equipment, net		365,764				337,598
Goodwill		457,619				456,335
Other intangible assets, net		63,265				64,634
BOLI		279,325				277,445
Other assets		572,000				576,109
TOTAL ASSETS	$	17,188,020			$	16,835,039
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand	$	4,267,628			$	4,342,701
Interest-bearing:
Demand and money market accounts		6,990,103				6,757,619
Savings		319,970				336,492
Certificates of deposit		2,785,469				2,456,394
Total Deposits		14,363,170				13,893,206
Advances from the FHLB		3,405				203,958
Subordinated debt, net		256,444				255,796
Repurchase agreements and other borrowings		30,970				32,826
Total Borrowings		290,819				492,580
Other liabilities		371,316				393,375
TOTAL LIABILITIES		15,025,305				14,779,161
Preferred stock, authorized and unissued shares - 2,000,000		—				—
Common stock, $1.667 par value: 150,000,000 shares authorized;
75,068,662 and 74,893,462 shares issued at
September 30, 2024 and December 31, 2023, respectively		125,139				124,847
Capital surplus		1,117,279				1,112,761
Retained earnings		985,343				921,126
Common stock issued to deferred compensation trust, at cost:
1,056,823 and 1,004,717 shares at September 30, 2024 and December 31, 2023, respectively		(22,224	)			(20,813	)
Deferred compensation trust		22,224				20,813
Accumulated other comprehensive income (loss)		(81,482	)			(118,762	)
TOTAL SHAREHOLDERS’ EQUITY		2,146,279				2,039,972
Noncontrolling interest		16,436				15,906
TOTAL EQUITY		2,162,715				2,055,878
TOTAL LIABILITIES AND EQUITY	$	17,188,020			$	16,835,039

TOWNEBANK
Consolidated Statements of Income (unaudited)
(dollars in thousands, except per share data)
	Three Months Ended								Nine Months Ended
	September 30,								September 30,
		2024				2023				2024				2023
INTEREST INCOME:
Loans, including fees	$	155,792			$	143,605			$	461,316			$	415,351
Investment securities		22,334				20,292				65,257				57,519
Interest-bearing deposits in financial institutions and federal funds sold		15,249				15,031				43,995				40,168
Mortgage loans held for sale		3,247				3,928				7,908				8,079
Total interest income		196,622				182,856				578,476				521,117
INTEREST EXPENSE:
Deposits		82,128				64,171				242,539				146,776
Advances from the FHLB		29				3,438				3,408				16,838
Subordinated debt, net		2,237				2,245				6,710				6,650
Repurchase agreements and other borrowings		(54	)			(56	)			1,271				806
Total interest expense		84,340				69,798				253,928				171,070
Net interest income		112,282				113,058				324,548				350,047
PROVISION FOR CREDIT LOSSES		(1,100	)			1,007				(2,154	)			16,232
Net interest income after provision for credit losses		113,382				112,051				326,702				333,815
NONINTEREST INCOME:
Residential mortgage banking income, net		11,786				10,648				35,685				31,380
Insurance commissions and related income, net		25,727				23,777				75,297				69,098
Property management income, net		11,221				12,800				42,306				40,433
Real estate brokerage income, net		—				(63	)			—				3,562
Service charges on deposit accounts		3,117				2,823				9,548				8,577
Credit card merchant fees, net		1,830				2,006				5,042				5,232
Investment commissions, net		2,835				2,363				7,759				6,581
BOLI		1,886				1,814				6,966				5,196
Gain on sale of equity investment		20				554				20				9,386
Other income		3,814				3,084				9,345				9,083
Net gain/(loss) on investment securities		—				—				74				—
Total noninterest income		62,236				59,806				192,042				188,528
NONINTEREST EXPENSE:
Salaries and employee benefits		72,123				67,258				214,849				204,124
Occupancy		9,351				9,027				28,490				27,579
Furniture and equipment		4,657				4,100				13,769				12,733
Amortization - intangibles		3,130				3,610				9,675				10,744
Software		6,790				6,130				19,947				17,922
Data processing		4,701				4,140				13,223				11,504
Professional fees		4,720				2,770				11,689				8,948
Advertising and marketing		4,162				3,653				12,268				12,012
Other expenses		17,266				17,014				52,565				61,762
Total noninterest expense		126,900				117,702				376,475				367,328
Income before income tax expense and noncontrolling interest		48,718				54,155				142,269				155,015
Provision for income tax expense		5,592				9,410				20,977				28,424
Net income	$	43,126			$	44,745			$	121,292			$	126,591
Net income attributable to noncontrolling interest		(177	)			117				(800	)			(1,680	)
Net income attributable to TowneBank	$	42,949			$	44,862			$	120,492			$	124,911
Per common share information
Basic earnings	$	0.57			$	0.60			$	1.61			$	1.67
Diluted earnings	$	0.57			$	0.60			$	1.61			$	1.67
Cash dividends declared	$	0.25			$	0.25			$	0.75			$	0.73

TOWNEBANK
Consolidated Balance Sheets - Five Quarter Trend
(dollars in thousands, except share data)
	September 30,				June 30,				March 31,				December 31,				September 30,
		2024				2024				2024				2023				2023
	(unaudited)				(unaudited)				(unaudited)				(audited)				(unaudited)
ASSETS
Cash and due from banks	$	131,068			$	140,028			$	75,802			$	85,584			$	83,949
Interest-bearing deposits at FRB		1,061,596				1,062,115				926,635				939,356				1,029,276
Interest-bearing deposits in financial institutions		103,400				99,303				98,673				103,417				102,527
Total Cash and Cash Equivalents		1,296,064				1,301,446				1,101,110				1,128,357				1,215,752
Securities available for sale		2,363,176				2,250,679				2,204,101				2,129,342				1,963,453
Securities held to maturity		212,422				212,488				312,510				477,592				547,854
Less: allowance for credit losses		(77	)			(79	)			(82	)			(84	)			(85	)
Securities held to maturity, net of allowance for credit losses		212,345				212,409				312,428				477,508				547,769
Other equity securities		12,681				13,566				13,661				13,792				14,062
FHLB stock		12,134				12,134				12,139				21,372				16,634
Total Securities		2,600,336				2,488,788				2,542,329				2,642,014				2,541,918
Mortgage loans held for sale		264,320				200,762				150,727				149,987				188,048
Loans, net of unearned income and deferred costs		11,412,518				11,451,747				11,452,343				11,329,021				11,172,971
Less: Allowance for credit losses		(123,191	)			(125,552	)			(125,835	)			(126,461	)			(125,159	)
Net Loans		11,289,327				11,326,195				11,326,508				11,202,560				11,047,812
Premises and equipment, net		365,764				340,348				342,569				337,598				335,522
Goodwill		457,619				457,619				457,619				456,335				456,684
Other intangible assets, net		63,265				65,460				68,758				64,634				67,496
BOLI		279,325				277,434				279,293				277,445				275,240
Other assets		572,000				610,791				615,324				576,109				551,884
TOTAL ASSETS	$	17,188,020			$	17,068,843			$	16,884,237			$	16,835,039			$	16,680,356
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand	$	4,267,628			$	4,303,773			$	4,194,132			$	4,342,701			$	4,444,861
Interest-bearing:
Demand and money market accounts		6,990,103				6,940,086				6,916,701				6,757,619				6,764,415
Savings		319,970				312,881				326,179				336,492				350,031
Certificates of deposit		2,785,469				2,715,848				2,689,062				2,456,394				2,321,498
Total Deposits		14,363,170				14,272,588				14,126,074				13,893,206				13,880,805
Advances from the FHLB		3,405				3,591				3,775				203,958				104,139
Subordinated debt, net		256,444				256,227				256,011				255,796				255,580
Repurchase agreements and other borrowings		30,970				35,351				31,198				32,826				47,315
Total Borrowings		290,819				295,169				290,984				492,580				407,034
Other liabilities		371,316				411,770				401,307				393,375				408,305
TOTAL LIABILITIES		15,025,305				14,979,527				14,818,365				14,779,161				14,696,144
Preferred stock		—				—				—				—				—
Common stock, $1.667 par value		125,139				125,090				125,009				124,847				124,837
Capital surplus		1,117,279				1,115,759				1,114,038				1,112,761				1,111,152
Retained earnings		985,343				961,162				937,065				921,126				911,042
Common stock issued to deferred compensation trust, at cost		(22,224	)			(22,756	)			(20,915	)			(20,813	)			(20,740	)
Deferred compensation trust		22,224				22,756				20,915				20,813				20,740
Accumulated other comprehensive income (loss)		(81,482	)			(129,224	)			(126,586	)			(118,762	)			(179,043	)
TOTAL SHAREHOLDERS’ EQUITY		2,146,279				2,072,787				2,049,526				2,039,972				1,967,988
Noncontrolling interest		16,436				16,529				16,346				15,906				16,224
TOTAL EQUITY		2,162,715				2,089,316				2,065,872				2,055,878				1,984,212
TOTAL LIABILITIES AND EQUITY	$	17,188,020			$	17,068,843			$	16,884,237			$	16,835,039			$	16,680,356

TOWNEBANK
Consolidated Statements of Income - Five Quarter Trend (unaudited)
(dollars in thousands, except share data)
	Three Months Ended
	September 30,				June 30,				March 31,				December 31,				September 30,
		2024				2024				2024				2023				2023
INTEREST INCOME:
Loans, including fees	$	155,792			$	154,549			$	150,974			$	146,810			$	143,605
Investment securities		22,334				22,928				19,996				20,464				20,292
Interest-bearing deposits in financial institutions and federal funds sold		15,249				14,512				14,234				13,967				15,031
Mortgage loans held for sale		3,247				2,945				1,716				2,886				3,928
Total interest income		196,622				194,934				186,920				184,127				182,856
INTEREST EXPENSE:
Deposits		82,128				82,023				78,388				73,200				64,171
Advances from the FHLB		29				942				2,438				917				3,438
Subordinated debt, net		2,237				2,236				2,236				2,236				2,245
Repurchase agreements and other borrowings		(54	)			685				640				41				(56	)
Total interest expense		84,340				85,886				83,702				76,394				69,798
Net interest income		112,282				109,048				103,218				107,733				113,058
PROVISION FOR CREDIT LOSSES		(1,100	)			(177	)			(877	)			2,446				1,007
Net interest income after provision for credit losses		113,382				109,225				104,095				105,287				112,051
NONINTEREST INCOME:
Residential mortgage banking income, net		11,786				13,422				10,477				8,035				10,648
Insurance commissions and related income, net		25,727				24,031				25,539				21,207				23,777
Property management income, net		11,221				14,312				16,773				7,358				12,800
Real estate brokerage income, net		—				—				—				(32	)			(63	)
Service charges on deposit accounts		3,117				3,353				3,079				3,056				2,823
Credit card merchant fees, net		1,830				1,662				1,551				1,476				2,006
Investment commissions, net		2,835				2,580				2,343				2,380				2,363
BOLI		1,886				3,238				1,842				2,206				1,814
Other income		3,834				3,324				2,206				2,127				3,638
Net gain/(loss) on investment securities		—				—				74				—				—
Total noninterest income		62,236				65,922				63,884				47,813				59,806
NONINTEREST EXPENSE:
Salaries and employee benefits		72,123				71,349				71,377				66,035				67,258
Occupancy		9,351				9,717				9,422				9,308				9,027
Furniture and equipment		4,657				4,634				4,478				4,445				4,100
Amortization - intangibles		3,130				3,298				3,246				3,411				3,610
Software		6,790				7,056				6,100				6,743				6,130
Data processing		4,701				4,606				3,916				3,529				4,140
Professional fees		4,720				3,788				3,180				3,339				2,770
Advertising and marketing		4,162				3,524				4,582				3,377				3,653
Other expenses		17,266				16,012				19,290				21,708				17,014
Total noninterest expense		126,900				123,984				125,591				121,895				117,702
Income before income tax expense and noncontrolling interest		48,718				51,163				42,388				31,205				54,155
Provision for income tax expense		5,592				8,124				7,261				2,660				9,410
Net income		43,126				43,039				35,127				28,545				44,745
Net income attributable to noncontrolling interest		(177	)			(183	)			(440	)			259				117
Net income attributable to TowneBank	$	42,949			$	42,856			$	34,687			$	28,804			$	44,862
Per common share information
Basic earnings	$	0.57			$	0.57			$	0.46			$	0.39			$	0.60
Diluted earnings	$	0.57			$	0.57			$	0.46			$	0.39			$	0.60
Basic weighted average shares outstanding		74,940,827				74,925,877				74,816,420				74,773,335				74,750,294
Diluted weighted average shares outstanding		75,141,661				75,037,955				74,979,501				74,793,557				74,765,515
Cash dividends declared	$	0.25			$	0.25			$	0.25			$	0.25			$	0.25

TOWNEBANK
Banking Segment Financial Information (unaudited)
(dollars in thousands)
	Three Months Ended												Nine Months Ended								Increase/(Decrease)
	September 30,								June 30,				September 30,								YTD 2024 over 2023
		2024				2023				2024				2024				2023			Amount				Percent
Revenue
Net interest income	$	111,569			$	112,189			$	108,029			$	322,280			$	349,165			$	(26,885	)		(7.70	)%
Service charges on deposit accounts		3,117				2,823				3,352				9,548				8,577				971			11.32	%
Credit card merchant fees		1,830				2,006				1,662				5,042				5,232				(190	)		(3.63	)%
Investment commissions, net		2,835				2,363				2,580				7,759				6,581				1,178			17.90	%
Other income		4,828				4,224				4,840				13,096				12,012				1,084			9.02	%
Subtotal		12,610				11,416				12,434				35,445				32,402				3,043			9.39	%
Net gain/(loss) on investment securities		—				—				—				74				—				74			N/M
Total noninterest income		12,610				11,416				12,434				35,519				32,402				3,117			9.62	%
Total revenue		124,179				123,605				120,463				357,799				381,567				(23,768	)		(6.23	)%
Provision for credit losses		(1,043	)			1,206				(170	)			(2,189	)			16,442				(18,631	)		(113.31	)%
Expenses
Salaries and employee benefits		47,148				42,727				46,640				140,261				128,161				12,100			9.44	%
Occupancy		6,963				6,637				7,194				21,217				19,717				1,500			7.61	%
Furniture and equipment		3,878				3,273				3,810				11,336				10,150				1,186			11.68	%
Amortization of intangible assets		1,072				1,296				1,117				3,352				3,918				(566	)		(14.45	)%
Other expenses		26,674				22,595				23,587				77,215				80,215				(3,000	)		(3.74	)%
Total expenses		85,735				76,528				82,348				253,381				242,161				11,220			4.63	%
Income before income tax, corporate allocation and noncontrolling interest		39,487				45,871				38,285				106,607				122,964				(16,357	)		(13.30	)%
Corporate allocation		1,223				1,291				1,232				3,524				3,763				(239	)		(6.35	)%
Income before income tax provision and noncontrolling interest		40,710				47,162				39,517				110,131				126,727				(16,596	)		(13.10	)%
Provision for income tax expense		3,495				7,440				5,130				12,731				21,204				(8,473	)		(39.96	)%
Net income		37,215				39,722				34,387				97,400				105,523				(8,123	)		(7.70	)%
Noncontrolling interest		(29	)			—				(58	)			34				—				34			N/M
Net income attributable to TowneBank	$	37,186			$	39,722			$	34,329			$	97,434			$	105,523			$	(8,089	)		(7.67	)%
Efficiency ratio (non-GAAP)		68.18	%			60.86	%			67.43	%			69.89	%			62.44	%			7.45	%		11.93	%

TOWNEBANK
Realty Segment Financial Information (unaudited)
(dollars in thousands)
	Three Months Ended												Nine Months Ended								Increase/(Decrease)
	September 30,								June 30,				September 30,								YTD 2024 over 2023
		2024				2023				2024				2024				2023			Amount				Percent
Revenue
Residential mortgage brokerage income, net	$	12,211			$	10,955			$	13,996			$	37,006			$	32,964			$	4,042			12.26	%
Real estate brokerage income, net		—				(63	)			—				—				3,562				(3,562	)		(100.00	)%
Title insurance and settlement fees		—				—				—				—				443				(443	)		(100.00	)%
Property management fees, net		11,221				12,800				14,312				42,306				40,433				1,873			4.63	%
Income (loss) from unconsolidated subsidiary		51				(63	)			67				148				(884	)			1,032			116.74	%
Gain on equity investment		—				—				—				—				8,833				(8,833	)		(100.00	)%
Net interest and other income		906				1,163				1,317				3,007				1,984				1,023			51.56	%
Total revenue		24,389				24,792				29,692				82,467				87,335				(4,868	)		(5.57	)%
Provision for credit losses		(57	)			(199	)			(7	)			35				(210	)			245			116.67	%
Expenses
Salaries and employee benefits		12,355				12,881				12,370				36,913				41,670				(4,757	)		(11.42	)%
Occupancy		1,638				1,669				1,811				5,019				5,559				(540	)		(9.71	)%
Furniture and equipment		604				600				596				1,794				1,933				(139	)		(7.19	)%
Amortization of intangible assets		637				742				781				2,094				2,166				(72	)		(3.32	)%
Other expenses		8,839				9,544				9,136				26,174				27,319				(1,145	)		(4.19	)%
Total expenses		24,073				25,436				24,694				71,994				78,647				(6,653	)		(8.46	)%
Income before income tax, corporate allocation and noncontrolling interest		373				(445	)			5,005				10,438				8,898				1,540			17.31	%
Corporate allocation		(484	)			(600	)			(490	)			(1,322	)			(1,800	)			478			(26.56	)%
Income before income tax provision and noncontrolling interest		(111	)			(1,045	)			4,515				9,116				7,098				2,018			28.43	%
Provision for income tax expense		18				(99	)			1,163				2,336				1,769				567			32.05	%
Net income		(129	)			(946	)			3,352				6,780				5,329				1,451			27.23	%
Noncontrolling interest		(148	)			117				(125	)			(834	)			(1,680	)			846			(50.36	)%
Net income attributable to TowneBank	$	(277	)		$	(829	)		$	3,227			$	5,946			$	3,649			$	2,297			62.95	%
Efficiency ratio excluding gain on equity investment (non-GAAP)		96.09	%			99.61	%			80.54	%			84.76	%			97.43	%		(12.67		)%		(13.00	)%

TOWNEBANK
Insurance Segment Financial Information (unaudited)
(dollars in thousands)
	Three Months Ended												Nine Months Ended								Increase/(Decrease)
	September 30,								June 30,				September 30,								YTD 2024 over 2023
		2024				2023				2024				2024				2023			Amount				Percent
Commission and fee income
Property and casualty	$	23,157			$	22,103			$	22,225			$	66,104			$	60,259			$	5,845			9.70	%
Employee benefits		4,483				4,245				4,404				13,712				13,393				319			2.38	%
Specialized benefit services		—				133				—				10				445				(435	)		(97.75	)%
Total commissions and fees		27,640				26,481				26,629				79,826				74,097				5,729			7.73	%
Contingency and bonus revenue		2,731				2,335				2,951				10,185				9,343				842			9.01	%
Other income		25				557				6				41				573				(532	)		(92.84	)%
Total revenue		30,396				29,373				29,586				90,052				84,013				6,039			7.19	%
Employee commission expense		4,446				4,906				4,771				13,728				14,340				(612	)		(4.27	)%
Revenue, net of commission expense		25,950				24,467				24,815				76,324				69,673				6,651			9.55	%
Salaries and employee benefits		12,620				11,650				12,339				37,675				34,293				3,382			9.86	%
Occupancy		750				721				712				2,254				2,303				(49	)		(2.13	)%
Furniture and equipment		175				227				228				639				650				(11	)		(1.69	)%
Amortization of intangible assets		1,421				1,572				1,400				4,229				4,660				(431	)		(9.25	)%
Other expenses		2,126				1,568				2,263				6,303				4,614				1,689			36.61	%
Total operating expenses		17,092				15,738				16,942				51,100				46,520				4,580			9.85	%
Income before income tax, corporate allocation and noncontrolling interest		8,858				8,729				7,873				25,224				23,153				2,071			8.94	%
Corporate allocation		(739	)			(691	)			(742	)			(2,202	)			(1,963	)			(239	)		12.18	%
Income before income tax provision and noncontrolling interest		8,119				8,038				7,131				23,022				21,190				1,832			8.65	%
Provision for income tax expense		2,079				2,069				1,831				5,910				5,451				459			8.42	%
Net income		6,040				5,969				5,300				17,112				15,739				1,373			8.72	%
Noncontrolling interest		—				—				—				—				—				—			—	%
Net income attributable to TowneBank	$	6,040			$	5,969			$	5,300			$	17,112			$	15,739			$	1,373			8.72	%
Provision for income taxes		2,079				2,069				1,831				5,910				5,451				459			8.42	%
Depreciation, amortization and interest expense		1,550				1,726				1,529				4,632				5,115				(483	)		(9.44	)%
EBITDA (non-GAAP)	$	9,669			$	9,764			$	8,660			$	27,654			$	26,305			$	1,349			5.13	%
Efficiency ratio (non-GAAP)		60.44	%			59.21	%			62.63	%			61.43	%			60.55	%			0.88	%		1.45	%

TOWNEBANK
Reconciliation of Non-GAAP Financial Measures
(dollars in thousands)
	Three Months Ended												Nine Months Ended
	September 30,				September 30,				June 30,				September 30,				September 30,
		2024				2023				2024				2024				2023
Return on average assets (GAAP)		1.00	%			1.06	%			1.01	%			0.95	%			1.00	%
Impact of excluding average goodwill and other intangibles and amortization		0.09	%			0.11	%			0.10	%			0.09	%			0.11	%
Return on average tangible assets (non-GAAP)		1.09	%			1.17	%			1.11	%			1.04	%			1.11	%
Return on average equity (GAAP)		8.12	%			8.96	%			8.43	%			7.80	%			8.48	%
Impact of excluding average goodwill and other intangibles and amortization		3.30	%			4.01	%			3.60	%			3.31	%			3.87	%
Return on average tangible equity (non-GAAP)		11.42	%			12.97	%			12.03	%			11.11	%			12.35	%
Return on average common equity (GAAP)		8.18	%			9.04	%			8.49	%			7.86	%			8.54	%
Impact of excluding average goodwill and other intangibles and amortization		3.36	%			4.07	%			3.67	%			3.37	%			3.95	%
Return on average tangible common equity (non-GAAP)		11.54	%			13.11	%			12.16	%			11.23	%			12.49	%
Book value (GAAP)	$	28.59			$	26.28			$	27.62			$	28.59			$	26.28
Impact of excluding average goodwill and other intangibles and amortization		(6.94	)			(7.00	)			(6.97	)			(6.94	)			(7.00	)
Tangible book value (non-GAAP)	$	21.65			$	19.28			$	20.65			$	21.65			$	19.28
Efficiency ratio (GAAP)		72.71	%			68.09	%			70.86	%			72.88	%			68.20	%
Impact of exclusions	(1.78		)%		(1.88		)%		(1.88		)%		(1.86		)%		(0.82		)%
Efficiency ratio (non-GAAP)		70.93	%			66.21	%			68.98	%			71.02	%			67.38	%
Average assets (GAAP)	$	17,028,141			$	16,762,859			$	16,982,482			$	16,958,540			$	16,647,804
Less: average goodwill and intangible assets		522,219				526,445				525,122				523,335				526,375
Average tangible assets (non-GAAP)	$	16,505,922			$	16,236,414			$	16,457,360			$	16,435,205			$	16,121,429
Average equity (GAAP)	$	2,105,049			$	1,986,469			$	2,045,622			$	2,063,800			$	1,970,510
Less: average goodwill and intangible assets		522,219				526,445				525,122				523,335				526,375
Average tangible equity (non-GAAP)	$	1,582,830			$	1,460,024			$	1,520,500			$	1,540,465			$	1,444,135
Average common equity (GAAP)	$	2,088,674			$	1,969,898			$	2,029,150			$	2,047,482			$	1,954,850
Less: average goodwill and intangible assets		522,219				526,445				525,122				523,335				526,375
Average tangible common equity (non-GAAP)	$	1,566,455			$	1,443,453			$	1,504,028			$	1,524,147			$	1,428,475
Net income (GAAP)	$	42,949			$	44,862			$	42,856			$	120,492			$	124,911
Amortization of intangibles, net of tax		2,473				2,852				2,605				7,643				8,488
Tangible net income (non-GAAP)	$	45,422			$	47,714			$	45,461			$	128,135			$	133,399
Total revenue (GAAP)	$	174,518			$	172,864			$	174,970			$	516,590			$	538,575
Net (gain)/loss on investment securities		—				—				—				(74	)			—
Other nonrecurring (income) loss		(20	)			(554	)			—				(20	)			(9,386	)
Total Revenue for efficiency calculation (non-GAAP)	$	174,498			$	172,310			$	174,970			$	516,496			$	529,189
Noninterest expense (GAAP)	$	126,900			$	117,702			$	123,984			$	376,475			$	367,328
Less: amortization of intangibles		3,130				3,610				3,298				9,675				10,744
Noninterest expense net of amortization (non-GAAP)	$	123,770			$	114,092			$	120,686			$	366,800			$	356,584

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
		September 30,				June 30,				March 31,				December 31,				September 30,
			2024				2024				2023				2023				2023
Net income (GAAP)		$	42,949			$	42,856			$	34,687			$	28,804			$	44,862
Adjustments
Plus: Acquisition-related expenses, net of tax			460				18				564				56				458
Plus: FDIC special assessment, net of tax			—				(310	)			1,021				4,083				—
Less: Gain on sale of equity investments, net of noncontrolling interest			(16	)			—				—				(1,846	)			(438	)
Core operating earnings, excluding certain items affecting comparability (non-GAAP)		$	43,393			$	42,564			$	36,272			$	31,097			$	44,882
Weighted average diluted shares			75,141,661				75,037,955				74,979,501				74,793,557				74,765,515
Diluted EPS (GAAP)		$	0.57			$	0.57			$	0.46			$	0.39			$	0.60
Diluted EPS, excluding certain items affecting comparability (non-GAAP)		$	0.58			$	0.57			$	0.48			$	0.42			$	0.60
Average assets		$	17,028,141			$	16,982,482			$	16,864,235			$	16,683,041			$	16,762,859
Average tangible equity		$	1,582,830			$	1,520,500				1,517,600			$	1,465,216			$	1,460,024
Average common tangible equity		$	1,566,455			$	1,504,028			$	1,501,494			$	1,449,052			$	1,443,453
Return on average assets, excluding certain items affecting comparability (non-GAAP)			1.01	%			1.01	%			0.87	%			0.74	%			1.06	%
Return on average tangible equity, excluding certain items affecting comparability (non-GAAP)			11.53	%			11.95	%			10.29	%			9.15	%			12.97	%
Return on average common tangible equity, excluding certain items affecting comparability (non-GAAP)			11.65	%			12.08	%			10.40	%			9.25	%			13.13	%
Efficiency ratio, excluding certain items affecting comparability (non-GAAP)			72.45	%			70.85	%			74.84	%			78.33	%			67.76	%

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		Nine Months Ended
		September 30,				September 30,
			2024				2023
Net income (GAAP)		$	120,492			$	124,911
Adjustments
Plus: Acquisition-related expenses, net of tax			1,040				7,718
Plus: FDIC special assessment, net of tax			711				—
Plus: Initial provision for acquired loans, net of tax			—				3,166
Less: Gain on sale of equity investments, net of noncontrolling interest and tax			(16	)			(5,951	)
Core operating earnings, excluding certain items affecting comparability (non-GAAP)		$	122,227			$	129,844
Weighted average diluted shares			75,043,848				74,618,743
Diluted EPS (GAAP)		$	1.61			$	1.67
Diluted EPS, excluding certain items affecting comparability (non-GAAP)		$	1.63			$	1.74
Average assets		$	16,958,540			$	16,647,804
Average tangible equity		$	1,540,465			$	1,444,135
Average tangible common equity		$	1,524,147			$	1,428,475
Return on average assets, excluding certain items affecting comparability (non-GAAP)			0.96	%			1.04	%
Return on average tangible equity, excluding certain items affecting comparability (non-GAAP)			11.26	%			12.81	%
Return on average common tangible equity, excluding certain items affecting comparability (non-GAAP)			11.38	%			12.95	%
Efficiency ratio, excluding certain items affecting comparability (non-GAAP)			72.68	%			67.61	%