• TowneBank Reports Third Quarter 2022 Earnings

    ソース: Nasdaq GlobeNewswire / 27 10 2022 08:30:02   America/New_York

    SUFFOLK, Va., Oct. 27, 2022 (GLOBE NEWSWIRE) -- TowneBank (the "Company" or "Towne") (NASDAQ: TOWN) today reported earnings for the quarter ended September 30, 2022 of $50.17 million, or $0.69 per diluted share, compared to $50.40 million, or $0.69 per diluted share, for the quarter ended September 30, 2021. Excluding acquisition-related expenses, earnings (non-GAAP) for the quarter ended September 30, 2022 were $50.78 million, or $0.70 per diluted share, compared to $51.08 million, or $0.70 per diluted share for the quarter ended September 30, 2021.

    "TowneBank's solid third quarter results demonstrate the strength and durability of our business model. Continued loan growth and positive impacts from higher interest rates led to significant margin expansion during the quarter. While credit quality continues to perform well, we remain diligent in maintaining a healthy balance sheet and strong capital levels given the uncertain economic environment. Notwithstanding some of the current headwinds facing our Realty segment, we believe our diverse business mix, disciplined expense management and long-term view of managing our company position TowneBank to enjoy continued success," said G. Robert Aston, Jr., Executive Chairman.

    Highlights for Third Quarter 2022 Compared to Third Quarter 2021:

    • Total revenues were $179.24 million, an increase of $9.16 million, or 5.39%. This year-over-year increase was driven primarily by a $23.60 million increase in net interest income partially offset by a $13.45 million decline in residential mortgage banking income.
    • Pre-provision, pre-tax, net revenues (non-GAAP), were $66.70 million, an increase of $3.05 million, or 4.80%.
    • Loans held for investment were $10.56 billion, an increase of $1.26 billion, or 13.57%, compared to September 30, 2021, and $0.13 billion, or 5.09% on an annualized basis, compared to June 30, 2022. Excluding the decline in loans from the Paycheck Protection Program ("PPP"), loans held for investment increased $1.50 billion, or 16.59%, compared to September 30, 2021, and $0.16 billion, or 6.01% on an annualized basis, from the linked quarter. Total loans on September 30, 2022, September 30, 2021, and June 30, 2022 included $12.65 million, $251.45 million, and $36.19 million, respectively, of PPP loans.
    • Total deposits were $13.41 billion, an increase of $0.40 billion, or 3.06%, compared to prior year but a decrease of $0.58 billion, or 4.17%, from June 30, 2022.
    • Noninterest bearing deposits increased by 3.33%, to $5.57 billion, representing 41.56% of total deposits. Compared to the linked quarter, noninterest bearing deposits decreased 2.60%.
    • Annualized return on common shareholders' equity was 10.69% compared to 10.68% in third quarter 2021. Annualized return on average tangible common shareholders' equity (non-GAAP) was 15.27% compared to 15.27% in third quarter 2021.
    • Net interest margin was 3.28% for the quarter and 2.76% for third quarter 2021 and taxable equivalent net interest margin (non-GAAP) was 3.30% and 2.77%.
    • Effective tax rate of 20.08% in the quarter compared to 22.73% in third quarter 2021 and 19.32% in the linked quarter.

    "We remain excited about our Farmers Bank partnership. Our teams have begun working on the integration planned for early 2023. We believe our complimentary approach to serving the needs of our members and communities will lead to a successful partnership and post integration opportunities for continued growth," stated J. Morgan Davis, Chief Executive Officer.

    Quarterly Net Interest Income Compared to Third Quarter 2021:

    • Net interest income was $124.04 million compared to $100.44 million as of September 30, 2021. The increase was driven by higher interest rates and increased loan and investment securities balances partially offset by increased deposit costs.
    • Tax-equivalent net interest margin (non-GAAP) was 3.30%, including purchase accounting accretion of 1 basis point and PPP interest and fees of 1 basis point, compared to 2.77%, including purchase accounting accretion of 3 basis points and PPP interest and fees of 15 basis points for third quarter 2021.
    • On an average basis, loans held for investment, with a yield of 4.25%, represented 69.83% of earning assets at September 30, 2022 compared to a yield of 4.24% and 64.04% of earning assets in the third quarter of 2021. Excluding PPP loans, loan yields were 4.24% in third quarter 2022 compared to 4.06% in third quarter 2021.
    • Interest and fee income on PPP loans was $0.62 million in third quarter 2022, compared to $7.77 million in third quarter 2021 and $1.52 million in the linked quarter.
    • Total cost of deposits increased to 0.30% from 0.19% at September 30, 2021. Management expects continued pressure on the cost of deposits.
    • On August 1, 2022, the Company redeemed its 4.50% fixed to floating rate subordinated notes due 2027 that had a total principal amount of $250 million. The Company recognized interest expense related to the notes of $0.99 million in third quarter 2022 and $2.96 million in third quarter 2021.
    • Average interest-earning assets totaled $14.99 billion at September 30, 2022 compared to $14.44 billion at September 30, 2021, an increase of 3.77%.
    • Average interest-bearing liabilities totaled $8.35 billion, an increase of $0.11 billion from prior year.

    Quarterly Provision for Credit Losses:

    • The quarterly provision for credit losses for on-balance-sheet loans was an expense of $3.29 million compared to a provision benefit of $1.60 million one year ago and an expense of $0.11 million in the linked quarter.
    • In the linked quarter comparison, third quarter 2022 included an increase in the allowance for credit losses on loans of $3.48 million that was driven by loan growth and weakening in the macroeconomic forecast scenarios.
    • Net loan recoveries were $0.19 million compared to net recoveries of $0.64 million one year prior and $0.08 million in the linked quarter. The ratio of net charge-offs to average loans on an annualized basis was (0.01)% in third quarter 2022, (0.03)% in third quarter 2021, and zero percent in the linked quarter.
    • The allowance for credit losses on loans represented 1.02% of total loans at September 30, 2022, 1.15% at September 30, 2021, and 1.00% on June 30, 2022. The allowance for credit losses on loans was 20.48 times nonperforming loans compared to 12.68 times at September 30, 2021 and 18.94 times at June 30, 2022.

    Quarterly Noninterest Income Compared to Third Quarter 2021:

    • Total noninterest income was $55.20 million compared to $69.63 million in 2021, a decrease of $14.44 million, or 20.73%. The decrease was driven by declines in residential mortgage banking income of $13.45 million and real estate brokerage income of $0.85 million, partially offset by increased insurance commissions of $2.04 million.
    • Residential mortgage banking income was $11.97 million compared to $25.42 million in third quarter 2021. Loan volume decreased to $0.69 billion in third quarter 2022 compared to $1.31 billion in 2021. Increases in mortgage rates have resulted in refinance activities dropping below 10% of our total mortgage production volume, the lowest level since second quarter 2018. Residential purchase activity comprised 93.20% of production volume in the third quarter of 2022 compared to 77.45% in the prior year quarter.
    • Gross margins on residential mortgages declined 59 basis points from 3.61% in third quarter 2021 to 3.02% in the current quarter.
    • Total net insurance commissions increased $2.04 million, or 11.71%, to $19.44 million in third quarter 2022 compared to 2021. This resulted from increases in property and casualty commissions, which were driven by organic growth and higher rates.
    • Property management fee revenue decreased 5.82%, or $0.61 million, to $9.89 million compared to third quarter 2021 but increased $0.44 million, or 4.64%, compared to the linked quarter. Reservation income is down compared to the prior year quarter due to decreased bookings at some of our property management locations. Compared to the linked quarter, reservation income increased at one location while others held level with prior quarter.

    Quarterly Noninterest Expense Compared to Third Quarter 2021:

    • Total noninterest expense was $112.03 million compared to $104.09 million in 2021, an increase of $7.95 million, or 7.64%. Growth in salaries and employee benefits of $4.23 million, occupancy expense of $1.09 million, charitable contributions of $1.02 million, and advertising and marketing expense of $0.43 million was the primary sources of the increase.
    • Salary and benefits expense increases were driven by annual base salary adjustments that went into effect July 2022 and increases in health insurance costs.
    • The increase in occupancy expense was driven by lower tenant income in 2022.
    • Advertising and marketing expense increases were primarily related to internet advertising in our realty segment and post-COVID increases in client business development.

    Consolidated Balance Sheet Highlights:

    • Total assets were $15.95 billion for the quarter ended September 30, 2022, a $0.91 billion decrease compared to $16.86 billion at June 30, 2022. Total assets increased $0.14 billion, or 0.89%, from $15.81 billion at September 30, 2021. Our asset mix has changed in the year-over-year comparison, with growth in investment securities and loans offset by declines in mortgage loans held for sale and total cash and cash equivalents.
    • Loans held for investment increased $1.26 billion, or 13.57%, compared to prior year, and $0.13 billion, or 1.28%, compared to the linked quarter. Excluding PPP loans of $12.65 million in third quarter 2022, $251.45 million in third quarter 2021, and $36.19 million in the linked quarter, loans held for investment increased $1.50 billion, or 16.59%, compared to prior year, and $0.16 billion, or 1.51%, compared to June 30, 2022, or 6.01% on an annualized basis.
    • Average loans held for investment, excluding PPP loans, were $10.45 billion in the third quarter of 2022, an increase of $1.56 billion, or 17.49%, compared to prior year. In the linked quarter comparison, average loans held for investment, excluding PPP loans, increased 3.04%, or $0.31 billion, and 12.08% on an annualized basis.
    • Mortgage loans held for sale decreased $266.82 million, or 61.79%, compared to the prior year and $46.69 million, or 22.05%, compared to the linked quarter.
    • Total deposits increased $0.40 billion, or 3.06%, compared to the prior year and decreased $0.58 billion, or 4.17%, compared to the linked quarter.
    • Total borrowings decreased $167.17 million, or 34.30%, from prior year and $279.73 million, or 46.62%, compared to the linked quarter.

    Investment Securities:

    • Total investment securities were $2.45 billion compared to $2.48 billion at June 30, 2022 and $1.59 billion at September 30, 2021. The weighted average duration of the portfolio at September 30, 2022 was 3.6 years. The carrying value of the available for sale debt securities portfolio included $199.84 million and $120.41 million in net unrealized losses, related to rising rates, at September 30, 2022 and June 30, 2022, respectively, compared to net unrealized gains of $32.06 million at September 30, 2021.

    Loans and Asset Quality:

    • Total loans held for investment were $10.56 billion at September 30, 2022 compared to $10.43 billion at June 30, 2022 and $9.30 billion at September 30, 2021.
    • Nonperforming assets were $5.44 million, or 0.03% of total assets, compared to $13.86 million, or 0.09%, at September 30, 2021.
    • Nonperforming loans were 0.05% of period end loans compared to 0.09% at September 30, 2021.
    • Foreclosed property decreased to $0.19 million from $5.41 million at September 30, 2021. The Company had no OREO properties at September 30, 2022.

    Deposits and Borrowings:

    • Total deposits were $13.41 billion compared to $14.00 billion at June 30, 2022 and $13.01 billion at September 30, 2021.
    • Total loans held for investment to deposits were 78.73% compared to 74.49% at June 30, 2022 and 71.44% at September 30, 2021.
    • Non-interest bearing deposits were 41.56% of total deposits at September 30, 2022 compared to 40.89% at June 30, 2022 and 41.45% at September 30, 2021.
    • Total borrowings were $0.32 billion compared to $0.60 billion at June 30, 2022 and $0.49 billion at September 30, 2021.

    Capital:

    • Common equity tier 1 capital ratio of 11.92%.
    • Tier 1 leverage capital ratio of 9.52%.
    • Tier 1 risk-based capital ratio of 12.05%.
    • Total risk-based capital ratio of 14.80%.
    • Book value per common share was $25.08 compared to $25.48 at June 30, 2022 and $25.91 at September 30, 2021.
    • Tangible book value per common share (non-GAAP) was $18.17 compared to $18.58 at June 30, 2022 and $18.92 at September 30, 2021.

    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.

    Today, TowneBank operates over 40 banking offices throughout Hampton Roads and Central Virginia, as well as Northeastern and Central North Carolina – serving as a local leader in promoting the social, cultural, and economic growth in each community. Towne offers a competitive array of business and personal banking solutions, delivered with only the highest ethical standards. Experienced local bankers providing a higher level of expertise and personal attention with local decision-making are key to the TowneBank strategy. TowneBank has grown its capabilities beyond banking to provide expertise through its controlled divisions and subsidiaries that include Towne Wealth Management, Towne Insurance Agency, Towne Benefits, TowneBank Mortgage, TowneBank Commercial Mortgage, Berkshire Hathaway HomeServices Towne Realty, Towne 1031 Exchange, LLC, and Towne Vacations. With total assets of $15.95 billion as of September 30, 2022, 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, pre-provision, pre-tax net revenues, 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 competitive pressures in the banking industry that may increase significantly; changes in the interest rate environment that may reduce margins and/or the volumes and values of loans made or held as well as the value of other financial assets held; changes in the credit worthiness of customers and the possible impairment of the collectability of loans; general economic conditions, either nationally or regionally, that may be less favorable than expected, resulting in, among other things, a deterioration in credit quality and/or a reduced demand for credit or other services; unusual and infrequently occurring events, such as weather-related disasters, terrorist acts or public health events (such as the COVID-19 pandemic); 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, 2021 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
    J. Morgan Davis, Chief Executive Officer, 757-673-1673

    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,
      2022   2022   2022   2021   2021 
    Income and Performance Ratios:         
    Total revenue$179,236  $166,980  $165,412  $160,424  $170,076 
    Net income 50,671   47,054   46,250   41,657   52,743 
    Net income available to common shareholders 50,169   46,547   45,586   40,183   50,400 
    Pre-provision, pre-tax, net revenues (non-GAAP) 66,700   57,748   55,369   48,483   63,647 
    Net income per common share - diluted 0.69   0.64   0.63   0.55   0.69 
    Book value per common share 25.08   25.48   25.61   26.13   25.91 
    Book value per common share - tangible (non-GAAP) 18.17   18.58   18.67   19.15   18.92 
    Return on average assets 1.22%  1.13%  1.13%  0.99%  1.27%
    Return on average assets - tangible (non-GAAP) 1.31%  1.22%  1.23%  1.08%  1.37%
    Return on average equity 10.60%  9.94%  9.73%  8.38%  10.59%
    Return on average equity - tangible (non-GAAP) 15.08%  14.20%  13.91%  12.08%  15.09%
    Return on average common equity 10.69%  10.03%  9.81%  8.45%  10.68%
    Return on average common equity - tangible (non-GAAP) 15.27%  14.37%  14.08%  12.22%  15.27%
    Noninterest income as a percentage of total revenue 30.80%  34.52%  40.03%  37.17%  40.94%
    Regulatory Capital Ratios (1):         
    Common equity tier 1 11.92%  11.83%  12.16%  12.36%  12.53%
    Tier 1 12.05%  11.97%  12.31%  12.51%  12.69%
    Total 14.80%  16.76%  17.34%  15.56%  15.85%
    Tier 1 leverage ratio 9.52%  9.19%  9.16%  9.11%  9.18%
    Asset Quality:         
    Allowance for credit losses on loans to nonperforming loans 20.48x   18.94x   21.52x   17.75x   12.68x 
    Allowance for credit losses on loans to period end loans 1.02%  1.00%  1.05%  1.12%  1.15%
    Allowance for credit losses on loans to period end loans excluding PPP loans (non-GAAP) 1.02%  1.00%  1.06%  1.13%  1.18%
    Nonperforming loans to period end loans 0.05%  0.05%  0.05%  0.06%  0.09%
    Nonperforming assets to period end assets 0.03%  0.04%  0.03%  0.06%  0.09%
    Net charge-offs (recoveries) to average loans (annualized) (0.01) %  %  0.01%  %  (0.03)%
    Net charge-offs (recoveries)$(187) $(80) $126  $(60) $(644)
              
    Nonperforming loans$5,250  $5,493  $4,825  $5,973  $8,451 
    Foreclosed property 186   563   560   4,583   5,409 
    Total nonperforming assets$5,436  $6,056  $5,385  $10,556  $13,860 
    Loans past due 90 days and still accruing interest$725  $232  $40  $372  $143 
    Allowance for credit losses on loans$107,497  $104,019  $103,833  $106,059  $107,177 
    Mortgage Banking:         
    Loans originated, mortgage$458,254  $588,529  $583,008  $851,021  $939,272 
    Loans originated, joint venture 234,443   249,279   236,980   303,362   370,865 
    Total loans originated$692,697  $837,808  $819,988  $1,154,383  $1,310,137 
    Number of loans originated 1,983   2,282   2,237   3,408   3,917 
    Number of originators 194   201   207   213   219 
    Purchase % 93.20%  92.27%  77.93%  79.36%  77.45%
    Loans sold$701,908  $759,073  $853,808  $1,150,996  $1,394,166 
    Rate lock asset$859  $1,935  $3,009  $3,455  $6,087 
    Gross realized gain on sales and fees as a % of loans originated 3.02%  2.92%  3.01%  3.42%  3.61%
    Other Ratios:         
    Net interest margin 3.28%  2.88%  2.67%  2.70%  2.76%
    Net interest margin-fully tax equivalent (non-GAAP) 3.30%  2.89%  2.69%  2.72%  2.77%
    Average earning assets/total average assets 91.92%  92.22%  92.24%  92.13%  91.95%
    Average loans/average deposits 76.82%  74.57%  71.61%  70.68%  71.69%
    Average noninterest deposits/total average deposits 41.77%  40.56%  40.49%  41.42%  40.40%
    Period end equity/period end total assets 11.56%  11.09%  11.28%  11.71%  12.02%
    Efficiency ratio (non-GAAP) 61.03%  63.51%  64.42%  67.03%  59.58%
    (1) Current reporting period regulatory capital ratios are preliminary.      


    TOWNEBANK
    Selected Data (unaudited)
    (dollars in thousands)
     
    Investment Securities      % Change
     Q3 Q3 Q2 Q3 22 vs. Q3 22 vs.
    Available-for-sale securities, at fair value 2022   2021   2022  Q3 21 Q2 22
    U.S. agency securities$331,297  $207,949  $342,702  59.32% (3.33)%
    U.S. Treasury notes 26,399   1,007   27,496  2,521.55% (3.99)%
    Municipal securities 426,720   350,980   447,927  21.58% (4.73)%
    Trust preferred and other corporate securities 79,501   31,591   84,307  151.66% (5.70)%
    Mortgage-backed securities issued by GSE and GNMA 1,027,331   969,017   1,012,690  6.02% 1.45%
    Allowance for credit losses (1,112)  (142)  (1,111) 683.10% 0.09%
    Total$1,890,136  $1,560,402  $1,914,011  21.13% (1.25)%
    Gross unrealized gains (losses) reflected in financial statements      
    Total gross unrealized gains$1,292  $40,906  $1,840  (96.84)% (29.78)%
    Total gross unrealized losses (201,127)  (8,845)  (122,253) 2,173.91% 64.52%
    Net unrealized gains (losses) and other adjustments on AFS securities$(199,835) $32,061  $(120,413) (723.30)% 65.96%
    Held-to-maturity securities, at amortized cost         
    U.S. agency securities$100,905  $  $100,718  N/M  0.19%
    U.S. Treasury notes 434,148      434,432  N/M  (0.07)%
    Municipal securities 5,159   5,074   5,138  1.68% 0.41%
    Trust preferred corporate securities 2,235   2,285   2,248  (2.19)% (0.58)%
    Mortgage-backed securities issued by GSE and GNMA 6,298   7,539   6,547  (16.46)% (3.80)%
    Allowance for credit losses (83)  (94)  (85) (11.70)% (2.35)%
    Total$548,662  $14,804  $548,998  3,606.17% (0.06)%
              
    Total gross unrealized gains$153  $1,591  $448  (90.38)% (65.85)%
    Total gross unrealized losses (31,116)     (18,615) % 67.16%
    Net unrealized gains (losses) in HTM securities$(30,963) $1,591  $(18,167) (2,046.13)% 70.44%
    Loans Held For Investment (1)      % Change
     Q3 Q3 Q2 Q3 22 vs. Q3 22 vs.
      2022   2021   2022  Q3 21 Q2 22
    Real estate - construction and development$1,324,831  $1,005,592  $1,383,791  31.75% (4.26)%
    Commercial real estate - owner occupied 1,590,371   1,463,000   1,579,464  8.71% 0.69%
    Commercial real estate - non owner occupied 2,799,363   2,647,625   2,757,651  5.73% 1.51%
    Real estate - multifamily 458,803   363,733   371,658  26.14% 23.45%
    Residential 1-4 family 1,567,024   1,233,125   1,513,662  27.08% 3.53%
    HELOC 388,305   389,974   386,067  (0.43)% 0.58%
    Commercial and industrial business (C&I) 1,251,350   1,253,972   1,261,279  (0.21)% (0.79)%
    Government 520,198   471,037   527,230  10.44% (1.33)%
    Indirect 572,710   348,864   555,638  64.16% 3.07%
    Consumer loans and other 86,656   120,643   89,320  (28.17)% (2.98)%
    Total$10,559,611  $9,297,565  $10,425,760  13.57% 1.28%
    (1) Paycheck Protection Program loans totaling $0.01 billion, $0.25 billion, and $0.04 billion, primarily in C&I, are included in Q3 22, Q3 21, and Q2 22, respectively.
    Deposits      % Change
     Q3 Q3 Q2 Q3 22 vs. Q3 22 vs.
      2022   2021   2022  Q3 21 Q2 22
    Noninterest-bearing demand$5,574,528  $5,394,952  $5,723,415  3.33% (2.60)%
    Interest-bearing:         
    Demand and money market accounts 6,042,417   5,681,181   6,384,818  6.36% (5.36)%
    Savings 387,622   366,165   388,364  5.86% (0.19)%
    Certificates of deposits 1,407,495   1,571,752   1,499,514  (10.45)% (6.14)%
    Total$13,412,062  $13,014,050  $13,996,111  3.06% (4.17)%


    TOWNEBANK
    Average Balances, Yields and Rate Paid (unaudited)
    (dollars in thousands)
     
     Three Months Ended Three Months Ended Three Months Ended
     September 30, 2022 June 30, 2022 September 30, 2021
       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) (2)(3)
    $10,465,441  $112,225  4.25% $10,199,019  $101,463  3.99% $9,248,867  $98,733  4.24%
    Taxable investment securities 2,385,218   12,943  2.17%  2,331,410   11,388  1.95%  1,421,347   6,560  1.85%
    Tax-exempt investment securities 147,184   1,054  2.86%  132,304   879  2.66%  125,523   487  1.55%
    Total securities 2,532,402   13,997  2.21%  2,463,714   12,267  1.99%  1,546,870   7,047  1.82%
    Interest-bearing deposits 1,800,798   9,509  2.09%  2,368,147   4,616  0.78%  3,179,010   1,182  0.15%
    Loans held for sale 188,737   2,446  5.18%  213,109   2,217  4.16%  468,323   3,405  2.91%
    Total earning assets 14,987,378   138,177  3.66%  15,243,989   120,563  3.17%  14,443,070   110,367  3.03%
    Less: allowance for credit losses (104,178)      (103,871)      (108,478)    
    Total nonearning assets 1,421,094       1,389,692       1,372,406     
    Total assets$16,304,294      $16,529,810      $15,706,998     
    Liabilities and Equity:                 
    Interest-bearing deposits                 
    Demand and money market$6,084,753  $6,542  0.43% $6,349,725  $3,094  0.20% $5,486,788  $2,095  0.15%
    Savings 391,437   628  0.64%  387,498   526  0.54%  358,739   533  0.59%
    Certificates of deposit 1,456,746   3,060  0.83%  1,392,474   1,953  0.56%  1,842,948   3,400  0.73%
    Total interest-bearing deposits 7,932,936   10,230  0.51%  8,129,697   5,573  0.27%  7,688,475   6,028  0.31%
    Borrowings 94,411   139  0.58%  128,276   135  0.42%  300,505   412  0.54%
    Subordinated debt, net 320,518   3,117  3.89%  496,862   5,091  4.10%  249,405   2,962  4.75%
    Total interest-bearing liabilities 8,347,865   13,486  0.64%  8,754,835   10,799  0.49%  8,238,385   9,402  0.45%
    Demand deposits 5,690,020       5,547,936       5,212,271     
    Other noninterest-bearing liabilities 387,835       348,678       367,891     
    Total liabilities 14,425,720       14,651,449       13,818,547     
    Shareholders’ equity 1,878,574       1,878,361       1,888,451     
    Total liabilities and equity$16,304,294      $16,529,810      $15,706,998     
    Net interest income (tax-equivalent basis) (6)  $124,691      $109,764      $100,965   
    Reconciliation of Non-GAAP Financial Measures                
    Tax-equivalent basis adjustment   (653)      (424)      (522)  
    Net interest income (GAAP)  $124,038      $109,340      $100,443   
                      
    Interest rate spread (4)(6)    3.02%     2.68%     2.58%
    Interest expense as a percent of average earning assets   0.36%     0.28%     0.26%
    Net interest margin (tax equivalent basis) (5)(6)   3.30%     2.89%     2.77%
    Total cost of deposits    0.30%     0.16%     0.19%
                      

    (1) Yields and interest income are presented on a taxable-equivalent basis using the federal statutory tax rate of 21%.
    (2)  Average loan balances for September 30, 2021 and related yields have been restated to include, previously excluded, nonaccrual loans of $9.95 million.
    (3)  September 30, 2022, September 30, 2021, and June 30, 2022 includes average PPP balances of $18.68 million, $357.17 million and $60.89 million, respectively, and related interest and fee income of $0.62 million, $7.77 million, and $1.52 million, respectively.
    (4) Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities. Fully tax equivalent.
    (5) Net interest margin is net interest income expressed as a percentage of average earning assets. Fully tax equivalent.
    (6) Non-GAAP.

    TOWNEBANK
    Average Balances, Yields and Rate Paid (unaudited)
    (dollars in thousands)
     
     Nine Months Ended Nine Months Ended Nine Months Ended September 30,
     September 30, 2022 September 30, 2021 2022 Compared with 2021
       Interest Average   Interest Average    
     Average  Income/ Yield/ Average  Income/ Yield/ Increase Change Due to
     Balance Expense Rate (1) Balance Expense Rate (1) (Decrease) Rate Volume
    Assets:                 
    Loans (net of unearned income
    and deferred costs) (2)(3)
    $10,113,980  $309,283  4.09% $9,507,082  $302,182  4.25% $7,101  $(11,730) $18,831 
    Taxable investment securities 2,259,940   33,344  1.97%  1,359,366   19,640  1.93%  13,704   425   13,279 
    Tax-exempt investment securities 130,196   2,613  2.68%  131,106   1,462  1.49%  1,151   1,161   (10)
    Total securities 2,390,136   35,957  2.01%  1,490,472   21,102  1.89%  14,855   1,586   13,269 
    Interest-bearing deposits 2,362,155   15,472  0.88%  2,426,468   2,218  0.12%  13,254   13,314   (60)
    Loans held for sale 225,777   7,038  4.16%  502,758   10,477  2.78%  (3,439)  3,839   (7,278)
    Total earning assets 15,092,048   367,750  3.26%  13,926,780   335,979  3.23%  31,771   7,009   24,762 
    Less: allowance for credit losses (104,733)      (115,100)          
    Total nonearning assets 1,394,691       1,340,170           
    Total assets$16,382,006      $15,151,850           
    Liabilities and Equity:                 
    Interest-bearing deposits                 
    Demand and money market$6,203,889  $11,898  0.26% $5,192,658  $6,175  0.16% $5,723  $4,343  $1,380 
    Savings 387,290   1,664  0.57%  345,739   1,583  0.61%  81   (101)  182 
    Certificates of deposit 1,440,661   7,134  0.66%  1,872,393   13,963  1.00%  (6,829)  (4,050)  (2,779)
    Total interest-bearing deposits 8,031,840   20,696  0.34%  7,410,790   21,721  0.39%  (1,025)  192   (1,217)
    Borrowings 119,336   412  0.46%  445,399   1,798  0.53%  (1,386)  (229)  (1,157)
    Subordinated debt, net 401,195   12,328  4.10%  249,261   8,854  4.74%  3,474   (1,327)  4,801 
    Total interest-bearing liabilities 8,552,371   33,436  0.52%  8,105,450   32,373  0.53%  1,063   (1,364)  2,427 
    Demand deposits 5,569,186       4,880,493           
    Other noninterest-bearing
    liabilities
     374,794       325,639           
    Total liabilities 14,496,351       13,311,582           
    Shareholders’ equity 1,885,655       1,840,268           
    Total liabilities and equity$16,382,006      $15,151,850           
    Net interest income (tax-equivalent basis)(6)  $334,314      $303,606    $30,708  $8,373  $22,335 
    Reconciliation of Non-GAAP Financial Measures                
    Tax-equivalent basis adjustment   (1,732)      (2,029)    297     
    Net interest income (GAAP)  $332,582      $301,577    $31,005     
                      
    Interest rate spread (4)(6)    2.74%     2.70%      
    Interest expense as a percent of average earning assets   0.30%     0.31%      
    Net interest margin (tax equivalent basis) (5)(6)   2.96%     2.91%      
    Total cost of deposits    0.20%     0.24%      
                      
    (1) Yields and interest income are presented on a taxable-equivalent basis using the federal statutory rate of 21%.
    (2) Average loan balances for September 30, 2021 and related yields have been restated to include, previously excluded, nonaccrual loans of $11.63
    million.
    (3) Average loan balances for September 30, 2022 and September 30, 2021 includes average PPP balances of $64.67 million and $641.82 million,
    respectively, and related interest income of $4.24 million and $29.42 million, respectively.
    (4) Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities. Fully tax equivalent.
    (5) Net interest margin is net interest income expressed as a percentage of average earning assets. Fully tax equivalent.
    (6) Non-GAAP.


    TOWNEBANK
    Consolidated Balance Sheets
    (dollars in thousands, except share data)
      
       
     September 30, December 31,
      2022   2021 
     (unaudited) (audited)
    ASSETS   
    Cash and due from banks$97,290  $17,373 
    Interest-bearing deposits at FRB - Richmond 1,245,067   3,244,484 
    Interest-bearing deposits in financial institutions 96,862   34,779 
    Total Cash and Cash Equivalents 1,439,219   3,296,636 
    Securities available for sale, at fair value (amortized cost of $2,091,083 and $1,788,853, and allowance for credit losses of $1,112 and $210 at September 30, 2022 and December 31, 2021, respectively.) 1,890,136   1,806,183 
    Securities held to maturity, at amortized cost (fair value $517,782 and $155,676 at September 30, 2022 and December 31, 2021, respectively.) 548,745   154,221 
    Less: allowance for credit losses (83)  (94)
    Securities held to maturity, net of allowance for credit losses 548,662   154,127 
    Other equity securities 6,360   6,759 
    FHLB stock 9,475   13,146 
    Total Securities 2,454,633   1,980,215 
    Mortgage loans held for sale 165,023   358,303 
    Loans, net of unearned income and deferred costs 10,559,611   9,506,252 
    Less: allowance for credit losses (107,497)  (106,059)
    Net Loans 10,452,114   9,400,193 
    Premises and equipment, net 295,345   270,772 
    Goodwill 458,482   457,187 
    Other intangible assets, net 44,854   50,379 
    BOLI         256,074                   251,805         
    Other assets 386,053   295,897 
    TOTAL ASSETS$15,951,797  $16,361,387 
        
    LIABILITIES AND EQUITY   
    Deposits:   
    Noninterest-bearing demand$5,574,528  $5,546,665 
    Interest-bearing:   
    Demand and money market accounts 6,042,417   6,139,714 
    Savings 387,622   371,356 
    Certificates of deposit 1,407,495   1,515,891 
    Total Deposits 13,412,062   13,573,626 
    Advances from the FHLB 29,850   155,367 
    Subordinated debt, net 247,265   249,652 
    Repurchase agreements and other borrowings 43,165   76,797 
    Total Borrowings 320,280   481,816 
    Other liabilities 375,869   389,771 
    TOTAL LIABILITIES 14,108,211   14,445,213 
    Preferred stock, authorized and unissued shares - 2,000,000     
    Common stock, $1.667 par: 150,000,000 shares authorized   
    72,839,291 and 72,683,985 shares issued at   
    September 30, 2022 and December 31, 2021, respectively 121,423   121,164 
    Capital surplus 1,052,374   1,050,948 
    Retained earnings 810,845   716,605 
    Common stock issued to deferred compensation trust, at cost   
    927,176 and 911,458 shares at September 30, 2022 and December 31, 2021, respectively (18,862)  (18,257)
    Deferred compensation trust 18,862   18,257 
    Accumulated other comprehensive income (loss) (157,980)  10,597 
    TOTAL SHAREHOLDERS’ EQUITY 1,826,662   1,899,314 
    Noncontrolling interest 16,924   16,860 
    TOTAL EQUITY 1,843,586   1,916,174 
    TOTAL LIABILITIES AND EQUITY$15,951,797  $16,361,387 


    TOWNEBANK
    Consolidated Statements of Income (unaudited)
    (dollars in thousands, except per share data)
            
            
     Three Months Ended Nine Months Ended
     September 30, September 30,
      2022   2021   2022   2021 
    INTEREST INCOME:       
    Loans, including fees$111,590  $98,258  $307,595  $300,268 
    Investment securities 13,979   7,000   35,913   20,987 
    Interest-bearing deposits in financial institutions and federal funds sold 9,509   1,182   15,472   2,218 
    Mortgage loans held for sale 2,446   3,405   7,038   10,477 
    Total interest income 137,524   109,845   366,018   333,950 
    INTEREST EXPENSE:       
    Deposits 10,230   6,028   20,696   21,721 
    Advances from the FHLB 83   247   261   1,017 
    Subordinated debt, net 3,117   2,962   12,328   8,854 
    Repurchase agreements and other borrowings 56   165   151   781 
    Total interest expense 13,486   9,402   33,436   32,373 
    Net interest income 124,038   100,443   332,582   301,577 
    PROVISION FOR CREDIT LOSSES 3,925   (1,582)  2,532   (15,665)
    Net interest income after provision for credit losses 120,113   102,025   330,050   317,242 
    NONINTEREST INCOME:       
    Residential mortgage banking income, net 11,968   25,422   39,782   88,359 
    Insurance commissions and other title fees and income, net 19,435   17,398   58,255   52,055 
    Property management income, net 9,891   10,502   36,489   33,076 
    Real estate commission income, net 2,932   3,781   8,899   10,125 
    Service charges on deposit accounts 2,455   2,524   7,474   7,104 
    Credit card merchant fees, net 1,658   1,660   4,940   4,630 
    BOLI 1,585   2,301   5,155   5,361 
    Other income 5,274   6,045   18,052   16,367 
    Net gain/(loss) on investment securities          1,252 
    Total noninterest income 55,198   69,633   179,046   218,329 
    NONINTEREST EXPENSE:       
    Salaries and employee benefits 65,463   61,230   194,318   181,030 
    Occupancy expense 8,748   7,656   25,417   23,286 
    Furniture and equipment 3,764   3,513   11,097   10,647 
    Amortization - intangibles 2,644   2,750   8,145   8,192 
    Software expense 4,594   4,209   13,848   12,896 
    Data processing 3,628   3,603   10,778   10,255 
    Professional fees 2,627   2,227   6,416   6,826 
    Advertising and marketing 4,290   3,865   12,508   10,090 
    Other expenses 16,276   15,033   47,612   43,583 
    Total noninterest expense 112,034   104,086   330,139   306,805 
    Income before income tax expense and noncontrolling interest 63,277   67,572   178,957   228,766 
    Provision for income tax expense 12,606   14,829   34,983   45,388 
    Net income$50,671  $52,743  $143,974  $183,378 
    Net income attributable to noncontrolling interest (502)  (2,343)  (1,672)  (8,177)
    Net income attributable to TowneBank$50,169  $50,400  $142,302  $175,201 
    Per common share information       
    Basic earnings$0.69  $0.70  $1.96  $2.42 
    Diluted earnings$0.69  $0.69  $1.97  $2.41 
    Cash dividends declared$0.23  $0.20  $0.66  $0.58 


    TOWNEBANK
    Consolidated Balance Sheets - Five Quarter Trend
    (dollars in thousands, except share data)
     
              
     September 30, June 30, March 31, December 31, September 30,
      2022   2022   2022   2021   2021 
     (unaudited) (unaudited) (unaudited) (audited) (unaudited)
    ASSETS         
    Cash and due from banks$97,290  $72,592  $74,991  $17,373  $75,370 
    Interest-bearing deposits at FRB - Richmond 1,245,067   2,341,942   2,857,327   3,244,484   3,155,039 
    Interest-bearing deposits in financial institutions 96,862   35,087   34,684   34,779   33,506 
    Total Cash and Cash Equivalents 1,439,219   2,449,621   2,967,002   3,296,636   3,263,915 
    Securities available for sale 1,890,136   1,914,011   1,846,540   1,806,183   1,560,402 
    Securities held to maturity 548,745   549,083   433,384   154,221   14,898 
    Less: allowance for credit losses (83)  (85)  (92)  (94)  (94)
    Securities held to maturity, net of allowance for credit losses 548,662   548,998   433,292   154,127   14,804 
    Other equity securities 6,360   6,679   6,789   6,759   6,621 
    FHLB stock 9,475   10,432   10,432   13,146   13,146 
    Total Securities 2,454,633   2,480,120   2,297,053   1,980,215   1,594,973 
    Mortgage loans held for sale 165,023   211,716   234,620   358,303   431,846 
    Loans, net of unearned income and deferred costs 10,559,611   10,425,760   9,909,308   9,506,252   9,297,565 
    Less: allowance for credit losses (107,497)  (104,019)  (103,833)  (106,059)  (107,177)
    Net Loans 10,452,114   10,321,741   9,805,475   9,400,193   9,190,388 
    Premises and equipment, net 295,345   289,753   277,764   270,772   270,810 
    Goodwill 458,482   457,162   457,162   457,187   457,187 
    Other intangible assets, net 44,854   44,878   47,562   50,379   50,839 
    BOLI 256,074   254,478   253,112   251,805   249,862 
    Other assets 386,053   354,570   326,838   295,897   301,552 
    TOTAL ASSETS$15,951,797  $16,864,039  $16,666,588  $16,361,387  $15,811,372 
    LIABILITIES AND EQUITY         
    Deposits:         
    Noninterest-bearing demand$5,574,528  $5,723,415  $5,532,337  $5,546,665  $5,394,952 
    Interest-bearing:         
    Demand and money market accounts 6,042,417   6,384,818   6,432,005   6,139,714   5,681,181 
    Savings 387,622   388,364   393,119   371,356   366,165 
    Certificates of deposit 1,407,495   1,499,514   1,414,339   1,515,891   1,571,752 
    Total Deposits 13,412,062   13,996,111   13,771,800   13,573,626   13,014,050 
    Advances from the FHLB 29,850   55,024   55,196   155,367   155,537 
    Subordinated debt, net 247,265   497,061   496,757   249,652   249,503 
    Repurchase agreements and other borrowings 43,165   47,922   75,988   76,797   82,413 
    Total Borrowings 320,280   600,007   627,941   481,816   487,453 
    Other liabilities 375,869   397,388   387,087   389,771   409,435 
    TOTAL LIABILITIES 14,108,211   14,993,506   14,786,828   14,445,213   13,910,938 
    Preferred stock         
    Authorized shares - 2,000,000              
    Common stock, $1.667 par value 121,423   121,265   121,231   121,164   121,163 
    Capital surplus 1,052,374   1,051,384   1,050,387   1,050,948   1,049,367 
    Retained earnings 810,845   777,430   747,614   716,605   690,960 
    Common stock issued to deferred compensation         
    trust, at cost (18,862)  (19,349)  (18,323)  (18,257)  (18,076)
    Deferred compensation trust 18,862   19,349   18,323   18,257   18,076 
    Accumulated other comprehensive income (loss) (157,980)  (96,358)  (56,712)  10,597   21,597 
    TOTAL SHAREHOLDERS’ EQUITY 1,826,662   1,853,721   1,862,520   1,899,314   1,883,087 
    Noncontrolling interest 16,924   16,812   17,240   16,860   17,347 
    TOTAL EQUITY 1,843,586   1,870,533   1,879,760   1,916,174   1,900,434 
    TOTAL LIABILITIES AND EQUITY$15,951,797  $16,864,039  $16,666,588  $16,361,387  $15,811,372 


    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,
      2022   2022   2022   2021   2021 
    INTEREST INCOME:         
    Loans, including fees$111,590  $101,043  $94,962  $95,054  $98,258 
    Investment securities 13,979   12,263   9,671   10,484   7,000 
    Interest-bearing deposits in financial institutions and federal funds sold 9,509   4,616   1,347   1,215   1,182 
    Mortgage loans held for sale 2,446   2,217   2,375   2,750   3,405 
    Total interest income 137,524   120,139   108,355   109,503   109,845 
    INTEREST EXPENSE:         
    Deposits 10,230   5,573   4,894   5,389   6,028 
    Advances from the FHLB 83   86   92   206   247 
    Subordinated debt, net 3,117   5,091   4,120   2,962   2,962 
    Repurchase agreements and other borrowings 56   49   45   154   165 
    Total interest expense 13,486   10,799   9,151   8,711   9,402 
    Net interest income 124,038   109,340   99,204   100,792   100,443 
    PROVISION FOR CREDIT LOSSES 3,925   56   (1,449)  (1,110)  (1,582)
    Net interest income after provision for credit losses 120,113   109,284   100,653   101,902   102,025 
    NONINTEREST INCOME:         
    Residential mortgage banking income, net 11,968   13,176   14,638   20,945   25,422 
    Insurance commissions and other title fees and income, net 19,435   19,746   19,074   15,486   17,398 
    Property management income, net 9,891   9,452   17,147   9,099   10,502 
    Real estate commission income, net 2,932   3,412   2,554   3,165   3,781 
    Service charges on deposit accounts 2,455   2,446   2,574   2,479   2,524 
    Credit card merchant fees, net 1,658   1,906   1,375   1,412   1,660 
    BOLI 1,585   1,853   1,717   1,904   2,301 
    Other income 5,274   5,649   7,129   5,142   6,045 
    Total noninterest income 55,198   57,640   66,208   59,632   69,633 
    NONINTEREST EXPENSE:         
    Salaries and employee benefits 65,463   64,892   63,963   64,814   61,230 
    Occupancy expense 8,748   8,342   8,327   8,371   7,656 
    Furniture and equipment 3,764   3,643   3,690   3,528   3,513 
    Amortization - intangibles 2,644   2,684   2,817   2,935   2,750 
    Software expense 4,594   4,762   4,492   4,014   4,209 
    Data processing 3,628   3,556   3,594   3,524   3,603 
    Professional fees 2,627   1,761   2,027   2,723   2,227 
    Advertising and marketing 4,290   4,091   4,127   3,414   3,865 
    Other expenses 16,276   14,994   16,342   17,144   15,033 
    Total noninterest expense 112,034   108,725   109,379   110,467   104,086 
    Income before income tax expense and noncontrolling interest 63,277   58,199   57,482   51,067   67,572 
    Provision for income tax expense 12,606   11,145   11,232   9,410   14,829 
    Net income 50,671   47,054   46,250   41,657   52,743 
    Net income attributable to noncontrolling interest (502)  (507)  (664)  (1,474)  (2,343)
    Net income attributable to TowneBank$50,169  $46,547  $45,586  $40,183  $50,400 
    Per common share information         
    Basic earnings$0.69  $0.64  $0.63  $0.55  $0.70 
    Diluted earnings$0.69  $0.64  $0.63  $0.55  $0.69 
    Basic weighted average shares outstanding 72,578,736   72,559,537   72,498,075   72,525,504   72,506,877 
    Diluted weighted average shares outstanding 72,594,474   72,568,886   72,562,122   72,624,610   72,591,281 
    Cash dividends declared$0.23  $0.23  $0.20  $0.20  $0.20 


    TOWNEBANK
    Banking Segment Financial Information (unaudited)
    (dollars in thousands)
     
              
     Three Months Ended Nine Months Ended Increase/(Decrease)
     September 30, June 30, September 30, 2022 over 2021
      2022   2021   2022   2022   2021  Amount Percent
    Revenue             
    Net interest income$123,039  $97,668  $107,417  $327,226  $293,407  $33,819  11.53%
    Service charges on deposit             
    accounts 2,455   2,524   2,446   7,474   7,104   370  5.21%
    Credit card merchant fees 1,658   1,660   1,906   4,940   4,630   310  6.70%
    Other income 5,332   6,334   5,042   17,083   16,706   377  2.26%
    Subtotal 9,445   10,518   9,394   29,497   28,440   1,057  3.72%
    Net gain/(loss) on investment securities             1,252   (1,252) (100.00)%
    Total noninterest income 9,445   10,518   9,394   29,497   29,692   (195) (0.66)%
    Total revenue 132,484   108,186   116,811   356,723   323,099   33,624  10.41%
                  
    Provision for credit losses 4,240   (1,728)  (160)  2,247   (14,661)  16,908  (115.33)%
                  
    Expenses             
    Salaries and employee benefits 39,349   34,791   38,673   115,082   102,427   12,655  12.36%
    Occupancy expense 6,109   5,098   5,633   17,401   15,657   1,744  11.14%
    Furniture and equipment 2,803   2,602   2,747   8,259   8,086   173  2.14%
    Amortization of intangibles 726   862   777   2,330   2,737   (407) (14.87)%
    Other expenses 21,075   16,580   17,856   57,158   49,020   8,138  16.60%
    Total expenses 70,062   59,933   65,686   200,230   177,927   22,303  12.53%
    Income before income tax, corporate allocation and noncontrolling interest 58,182   49,981   51,285   154,246   159,833   (5,587) (3.50)%
    Corporate allocation 902   1,241   1,325   3,520   3,782   (262) (6.93)%
    Income before income tax provision and noncontrolling interest 59,084   51,222   52,610   157,766   163,615   (5,849) (3.57)%
    Provision for income tax expense 11,507   10,225   9,756   29,782   30,461   (679) (2.23)%
    Net income 47,577   40,997   42,854   127,984   133,154   (5,170) (3.88)%
    Noncontrolling interest    2         (1)  1  (100.00)%
    Net income attributable to TowneBank$47,577  $40,999  $42,854  $127,984  $133,153  $(5,169) (3.88)%
    Efficiency ratio (non-GAAP) 52.34%  54.60%  55.57%  55.48%  54.43%  1.05% 1.93%


    TOWNEBANK
    Realty Segment Financial Information (unaudited)
    (dollars in thousands)
     
        
     Three Months Ended Nine Months Ended Increase/(Decrease)
     September 30, June 30, September 30, 2022 over 2021
      2022   2021   2022   2022   2021  Amount Percent
    Revenue             
    Residential mortgage brokerage
    income, net
    $12,726  $26,637  $14,858  $43,491  $90,898  $(47,407) (52.15)%
    Real estate brokerage income, net 2,932   3,781   3,412   8,899   10,125   (1,226) (12.11)%
    Title insurance and settlement fees 525   706   561   1,590   1,917   (327) (17.06)%
    Property management fees, net 9,891   10,502   9,452   36,489   33,076   3,413  10.32%
    Income from unconsolidated
    subsidiary
     77   269   115   359   964   (605) (62.76)%
    Net interest and other income 1,508   3,154   2,411   6,851   9,223   (2,372) (25.72)%
    Total revenue 27,659   45,049   30,809   97,679   146,203   (48,524) (33.19)%
                  
    Provision for credit losses (315)  146   216   285   (1,004)  1,289  (128.39)%
                  
    Expenses             
    Salaries and employee benefits 15,854   17,375   16,501   49,646   50,240   (594) (1.18)%
    Occupancy expense 1,919   1,926   1,997   5,814   5,732   82  1.43%
    Furniture and equipment 765   693   707   2,232   1,934   298  15.41%
    Amortization of intangible assets 817   702   816   2,449   1,882   567  30.13%
    Other expenses 8,687   11,103   9,932   29,472   30,774   (1,302) (4.23)%
    Total expenses 28,042   31,799   29,953   89,613   90,562   (949) (1.05)%
                  
    Income before income tax, corporate allocation and noncontrolling interest (68)  13,104   640   7,781   56,645   (48,864) (86.26)%
    Corporate allocation (602)  (1,000)  (1,000)  (2,602)  (3,000)  398  (13.27)%
    Income before income tax provision and noncontrolling interest (670)  12,104   (360)  5,179   53,645   (48,466) (90.35)%
    Provision for income tax expense (120)  3,546   (144)  1,110   12,017   (10,907) (90.76)%
    Net income (550)  8,558   (216)  4,069   41,628   (37,559) (90.23)%
    Noncontrolling interest (502)  (2,345)  (507)  (1,672)  (8,176)  6,504  (79.55)%
    Net income attributable to TowneBank$(1,052) $6,213  $(723) $2,397  $33,452  $(31,055) (92.83)%
                  
    Efficiency ratio (non-GAAP) 98.43%  69.03%  94.57%  89.24%  60.66%  28.58% 47.12%


    TOWNEBANK
    Insurance Segment Financial Information (unaudited)
    (dollars in thousands)
     
              
     Three Months Ended Nine Months Ended Increase/(Decrease)
     September 30, June 30, September 30, 2022 over 2021
      2022   2021   2022   2022   2021  Amount Percent
    Commission and fee income             
    Property and casualty$17,567  $15,338  $16,546  $49,451  $44,467  $4,984  11.21%
    Employee benefits 4,020   3,820   3,924   12,105   11,135   970  8.71%
    Specialized benefit services 160   164   160   489   494   (5) (1.01) %
    Total commissions and fees 21,747   19,322   20,630   62,045   56,096   5,949  10.61%
                  
    Contingency and bonus revenue 1,654   1,664   2,994   8,052   6,746   1,306  19.36%
    Other income 23   40   15   72   157   (85) (54.14) %
    Total revenue 23,424   21,026   23,639   70,169   62,999   7,170  11.38%
                  
    Employee commission expense 4,331   4,185   4,279   12,943   12,395   548  4.42%
    Revenue, net of commission expense 19,093   16,841   19,360   57,226   50,604   6,622  13.09%
                  
    Salaries and employee benefits 10,260   9,064   9,718   29,590   28,363   1,227  4.33%
    Occupancy expense 720   632   712   2,202   1,897   305  16.08%
    Furniture and equipment 196   218   189   606   626   (20) (3.19) %
    Amortization of intangible assets 1,101   1,186   1,091   3,366   3,573   (207) (5.79) %
    Other expenses 1,653   1,254   1,376   4,532   3,857   675  17.50%
    Total operating expenses 13,930   12,354   13,086   40,296   38,316   1,980  5.17%
    Income before income tax, corporate allocation and noncontrolling interest 5,163   4,487   6,274   16,930   12,288   4,642  37.78%
    Corporate allocation (300)  (241)  (325)  (918)  (782)  (136) 17.39%
    Income before income tax provision and noncontrolling interest 4,863   4,246   5,949   16,012   11,506   4,506  39.16%
    Provision for income tax expense 1,219   1,058   1,533   4,091   2,910   1,181  40.58%
    Net income 3,644   3,188   4,416   11,921   8,596   3,325  38.68%
    Noncontrolling interest                  N/M 
    Net income attributable to TowneBank$3,644  $3,188  $4,416  $11,921  $8,596   3,325  38.68%
                  
    Provision for income taxes 1,219   1,058   1,533   4,091   2,910   1,181  40.58%
    Depreciation, amortization and interest expense 1,228   1,330   1,220   3,767   3,999   (232) (5.80) %
    EBITDA (non-GAAP)$6,091  $5,576  $7,169  $19,779  $15,505  $4,274  27.57%
                  
    Efficiency ratio (non-GAAP) 67.19%  66.31%  61.96%  64.53%  68.66%  (4.13) % (6.02) %


    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,
      2022   2021   2022   2022   2021 
              
    Return on average assets (GAAP) 1.22%  1.27%  1.13%  1.16%  1.55%
    Impact of excluding average goodwill and other
    intangibles and amortization
     0.09%  0.10%  0.09%  0.09%  0.11%
    Return on average tangible assets (non-GAAP) 1.31%  1.37%  1.22%  1.25%  1.66%
              
    Return on average equity (GAAP) 10.60%  10.59%  9.94%  10.09%  12.73%
    Impact of excluding average goodwill and other
    intangibles and amortization
     4.48%  4.50%  4.26%  4.31%  5.39%
    Return on average tangible equity (non-GAAP) 15.08%  15.09%  14.20%  14.40%  18.12%
              
    Return on average common equity (GAAP) 10.69%  10.68%  10.03%  10.18%  12.84%
    Impact of excluding average goodwill and other
    intangibles and amortization
     4.58%  4.59%  4.34%  4.39%  5.49%
    Return on average tangible common equity
    (non-GAAP)
     15.27%  15.27%  14.37%  14.57%  18.33%
              
    Book value (GAAP)$25.08  $25.91  $25.48  $25.08  $25.91 
    Impact of excluding average goodwill and other
    intangibles and amortization
     (6.91)  (6.99)  (6.90)  (6.91)  (6.99)
    Tangible book value (non-GAAP)$18.17  $18.92  $18.58  $18.17  $18.92 
              
    Efficiency ratio (GAAP) 62.51%  61.20%  65.11%  64.53%  59.01%
    Impact of exclusions (1.48) %  (1.62)%  (1.60)%  (1.59)%  (1.44)%
    Efficiency ratio (non-GAAP) 61.03%  59.58%  63.51%  62.94%  57.57%
              
    Average assets (GAAP)$16,304,294  $15,706,998  $16,529,810  $16,382,006  $15,151,850 
    Less: average goodwill and intangible assets 504,000   506,231   503,678   504,715   499,944 
    Average tangible assets (non-GAAP)$15,800,294  $15,200,767  $16,026,132  $15,877,291  $14,651,906 
              
    Average equity (GAAP)$1,878,574  $1,888,451  $1,878,361  $1,885,655  $1,840,268 
    Less: average goodwill and intangible assets 504,000   506,231   503,678   504,715   499,944 
    Average tangible equity (non-GAAP)$1,374,574  $1,382,220  $1,374,683  $1,380,940  $1,340,324 
              
    Average common equity (GAAP)$1,861,845  $1,871,820  $1,861,635  $1,869,112  $1,824,753 
    Less: average goodwill and intangible assets 504,000   506,231   503,678   504,715   499,944 
    Average tangible common equity (non-GAAP)$1,357,845  $1,365,589  $1,357,957  $1,364,397  $1,324,809 
              
    Net income (GAAP)$50,169  $50,400  $46,547  $142,302  $175,201 
    Amortization of intangibles, net of tax 2,089   2,172   2,120   6,435   6,472 
    Tangible net income (non-GAAP)$52,258  $52,572  $48,667  $148,737  $181,673 
              
    Net income (GAAP)$50,169  $50,400  $46,547  $142,302  $175,201 
    Provision for credit losses 3,925   (1,582)  56   2,532   (15,665)
    Provision for income tax 12,606   14,829   11,145   34,983   45,388 
    Other nonrecurring (income) loss             30 
    Pre-provision, pre-tax net revenues (non-GAAP)$66,700  $63,647  $57,748  $179,817  $204,954 
              
    Total revenue (GAAP)$179,236  $170,076  $166,980  $511,628  $519,906 
    Net (gain)/loss on investment securities             (1,252)
    Other nonrecurring (income) loss             30 
    Total Revenue for efficiency calculation (non-GAAP)$179,236  $170,076  $166,980  $511,628  $518,684 
              
    Noninterest expense (GAAP)$112,034  $104,086  $108,725  $330,139  $306,805 
    Less: amortization of intangibles 2,644   2,750   2,684   8,145   8,192 
    Noninterest expense net of amortization (non-GAAP)$109,390  $101,336  $106,041  $321,994  $298,613 


    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,
       2022   2022   2022   2021   2021 
    Net income (GAAP) $50,169  $46,547  $45,586  $40,183  $50,400 
               
    Acquisition-related expenses  616   51   59   50   719 
    Income tax expense (benefit)  (6)  (1)  (12)  (7)  (41)
    Total charges, net of taxes  610   50   47   43   678 
    Operating earnings, excluding certain items affecting comparability (non-GAAP) $50,779  $46,597  $45,633  $40,226  $51,078 
    Weighted average diluted shares  72,594,474   72,568,886   72,562,122   72,624,610   72,591,281 
    Diluted EPS (GAAP) $0.69  $0.64  $0.63  $0.55  $0.69 
    Diluted EPS, excluding certain items affecting
    comparability (non-GAAP)
     $0.70  $0.64  $0.63  $0.55  $0.70 
    Average assets $16,304,294  $16,529,810  $16,311,998  $16,075,509  $15,706,998 
    Average tangible equity $1,374,574  $1,374,683   1,393,771  $1,395,607  $1,382,220 
    Average common tangible equity $1,357,845  $1,357,957  $1,377,605  $1,379,412  $1,365,589 
    Return on average assets, excluding certain items
    affecting comparability (non-GAAP)
      1.24%  1.13%  1.13%  0.99%  1.29%
    Return on average tangible equity, excluding certain items affecting comparability (non-GAAP)  15.26%  14.21%  13.93%  12.09%  15.28%
    Return on average common tangible equity, excluding certain items affecting comparability (non-GAAP)  15.45%  14.39%  14.09%  12.24%  15.47%
    Efficiency ratio, excluding certain items affecting
    comparability (non-GAAP)
      62.16%  65.08%  66.09%  68.83%  60.78%


    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,
       2022   2021 
    Net income (GAAP) $142,302  $175,201 
         
    Acquisition-related expenses  726   972 
    Income tax expense (benefit)  (21)  (50)
    Total charges, net of taxes  705   922 
    Operating earnings, excluding certain items affecting
    comparability (non-GAAP)
     $143,007  $176,123 
    Weighted average diluted shares  72,567,596   72,547,478 
    Diluted EPS (GAAP) $1.97  $2.41 
    Diluted EPS, excluding certain items affecting
    comparability (non-GAAP)
     $1.97  $2.43 
    Average assets $16,382,006  $15,151,850 
    Average tangible equity $1,380,940  $1,340,324 
    Average tangible common equity $1,364,397  $1,324,809 
    Return on average assets, excluding certain items
    affecting comparability (non-GAAP)
      1.17%  1.55%
    Return on average tangible equity, excluding certain items affecting comparability (non-GAAP)  14.47%  18.21%
    Return on average common tangible equity, excluding certain items affecting comparability (non-GAAP)  14.64%  18.43%
    Efficiency ratio, excluding certain items affecting
    comparability (non-GAAP)
      64.39%  58.96%

     


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