SUFFOLK, Va., July 28, 2022 (GLOBE NEWSWIRE) -- TowneBank (the "Company" or "Towne") (NASDAQ:TOWN) today reported earnings for the quarter ended June 30, 2022 of $46.55 million, or $0.64 per diluted share, compared to $55.80 million, or $0.77 per diluted share, for the quarter ended June 30, 2021.

"Our second quarter earnings reflected prudent strategic actions taken over the past twenty-four months to prepare our balance sheet for rising interest rates. While mortgage loan production declined sharply due primarily to higher interest rates, stellar growth of the loan portfolio during the quarter led to significant growth in net interest income as we were able to move excess cash into higher yielding assets. Credit quality remains excellent and we believe our unique business model is well positioned to capitalize on opportunities that may arise during this period of economic uncertainty," said G. Robert Aston, Jr., Executive Chairman.

Highlights for Second Quarter 2022 Compared to Second Quarter 2021:

Total revenues were $166.98 million, a decrease of $0.34 million, or 0.20%. This year-over-year decrease was driven by a decline in residential mortgage banking income of $12.35 million that was mostly offset by an $8.20 million increase in net interest income and increases in insurance and property management revenue.
Pre-provision, pre-tax, net revenues (non-GAAP), were $57.75 million, a decrease of $1.98 million, or 3.32%.
Loans held for investment were $10.43 billion, an increase of $1.00 billion, or 10.63%, compared to June 30, 2021, and $0.52 billion, or 5.21%, from March 31, 2022. Excluding the decline in loans from the Paycheck Protection Program ("PPP"), loans held for investment increased $1.49 billion, or 16.75%, compared to June 30, 2021, and $0.56 billion, or 23.03%, on an annualized basis, from the linked quarter. Total loans at June 30, 2022, June 30, 2021, and March 31, 2022 included $36.19 million, $524.87 million, and $83.99 million, respectively, of PPP loans.
Total deposits were $14.00 billion, an increase of $1.03 billion, or 7.96% compared to prior year and $0.22 billion, or 6.53% on an annualized basis, from March 31, 2022.
Noninterest bearing deposits increased by 9.16%, to $5.72 billion, representing 40.89% of total deposits. Compared to the linked quarter, noninterest bearing deposits increased 13.85%, on an annualized basis.
Annualized return on common shareholders' equity was 10.03% and annualized return on average tangible common shareholders' equity was 14.37% (non-GAAP).
Net interest margin for the quarter was 2.88% and taxable equivalent net interest margin (non-GAAP) was 2.89%.
Effective tax rate of 19.32% in the quarter compared to 20.03% in second quarter 2021, and 19.77% in the linked quarter.

"Our results benefited from continued investments in our insurance line of business. Insurance segment revenues were up 11% for the first six months compared to the same period last year. We continue to invest in talent which enables our insurance platform to continue strong organic growth coupled with opportunistic partnerships through strategic acquisitions," stated J. Morgan Davis, Chief Executive Officer.

Quarterly Net Interest Income Compared to Second Quarter 2021:

Net interest income was $109.34 million compared to $101.14 million as of June 30, 2021. The increase was driven by higher interest rates and increased loan and investment securities balances.
Tax-equivalent net interest margin (non-GAAP) was 2.89%, including purchase accounting accretion of 3 basis points and PPP interest and fees of 3 basis points, compared to 2.94%, including purchase accounting accretion of 5 basis points and a 10 basis point increase in PPP interest and fees, for second quarter 2021.
On an average basis, loans held for investment, with a yield of 3.99%, represented 66.91% of earning assets at June 30, 2022 compared to a yield of 4.23% and 69.05% of earning assets in the second quarter of 2021. Excluding PPP loans, loan yields were 3.95% in second quarter 2022 compared to 4.15% in second quarter 2021.
Interest and fee income on PPP loans was $1.52 million in second quarter 2022, compared to $2.10 million in the linked quarter, and $10.02 million in second quarter 2021.
Total cost of deposits decreased to 0.16% from 0.23% at June 30, 2021.
In June 2022, the Company gave notice that on July 30, 2022, it will redeem the $250.00 million outstanding of 4.50% fixed to floating rate subordinated notes due 2027. The Company recognized interest expense related to the notes of $2.81 million in second quarter 2022 and $2.96 million in second quarter 2021.
Average interest-earning assets totaled $15.24 billion at June 30, 2022 compared to $13.93 billion at June 30, 2021, an increase of 9.45%.
Average interest-bearing liabilities totaled $8.75 billion, an increase of $0.69 billion from prior year.

Quarterly Provision for Credit Losses:

The quarterly provision for credit losses for on-balance-sheet loans was an expense of $0.11 million compared to provision benefits of $8.09 million one year ago and $2.10 million in the linked quarter.
The second quarter 2022 included an increase in the allowance for credit losses on loans of $0.19 million that was driven by core loan growth and partially offset by the release of remaining reserves associated with industries heavily impacted by COVID-19 and net recoveries.
Net loan recoveries were $0.08 million compared to net recoveries of $0.14 million one year prior and net charge-offs of $0.13 million in the linked quarter. The ratio of net charge-offs to average loans on an annualized basis was zero percent in second quarter 2022, 0.01% in the linked quarter. and (0.01)% in second quarter 2021.
The allowance for credit losses on loans represented 1.00% of total loans at June 30, 2022, 1.05% on March 31, 2022, and 1.15% at June 30, 2021. The allowance for credit losses on loans was 18.94 times nonperforming loans compared to 21.52 times at March 31, 2022 and 9.67 times at June 30, 2021.

Quarterly Noninterest Income Compared to Second Quarter 2021:

Total noninterest income was $57.64 million compared to $66.18 million in 2021, a decrease of $8.54 million, or 12.90%. Residential mortgage banking income decreased $12.35 million and real estate brokerage decreased $0.48 million, while property management income increased $2.36 million and insurance commissions increased $1.42 million.
Residential mortgage banking recorded income of $13.18 million compared to $25.52 million in second quarter 2021. Loan volume decreased to $0.84 billion in second quarter 2022 compared to $1.45 billion in 2021. Recent increases in mortgage rates have resulted in refinance activities dropping below 10% of our total mortgage production volume, the lowest level since June 2018. Residential purchase activity comprised 92.27% of production volume in the second quarter of 2022 compared to 76.95% in the prior year quarter.
Margins on residential mortgages declined 72 basis points from 3.64% in second quarter 2021 to 2.92% in the current quarter.
Total Insurance commissions, net increased $1.42 million, or 7.72%, to $19.75 million in second 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 increased 33.30%, or $2.36 million, to $9.45 million compared to second quarter 2021. Reservation income is up in the quarter over quarter comparison due primarily to the July 2021 acquisition of a vacation rental company in Tennessee, which contributed $2.22 million in property management fees during the quarter. Reservation income has declined at all property management locations from the linked quarter. Management anticipates the loosening of COVID-related travel restrictions, giving travelers more destination options, will continue the decline in reservation activity for the remainder of 2022, from the record levels of the past two years.
In April 2022, the Company implemented changes for personal accounts to eliminate fees for non-sufficient funds and other overdraft program fees. The change did not have a material effect on revenue in second quarter 2022 and is not expected to have a material effect on future revenue.

Quarterly Noninterest Expense Compared to Second Quarter 2021:

Total noninterest expense was $108.73 million compared to $105.39 million in 2021, an increase of $3.33 million, or 3.16%. Increases in salaries and employee benefits of $3.53 million, advertising and marketing expense of $0.83 million, and occupancy expense of $0.78 million were partially offset by declines in other expenses.
Salary and benefits expense increases were driven by annual base salary adjustments that went into effect mid second quarter 2021, the acquisition of a vacation rental company in July 2021, and increases in health insurance costs.
The increase in occupancy expense was driven by lower tenant income at McKinnon Tower in Norfolk, Virginia. The company purchased the building in 2020 with an existing lease that termed out at year end 2021.
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 $16.86 billion for the quarter ended June 30, 2022, a $0.20 billion increase compared to $16.67 billion at March 31, 2022. Total assets increased $1.06 billion, or 6.71%, from $15.80 billion at June 30, 2021. The year-over-year increase was driven by growth in loans and investment securities.
Loans held for investment increased $1.00 billion, or 10.63%, compared to prior year and $0.52 billion, or 5.21%, compared the linked quarter. Excluding PPP loans of $36.19 million in second quarter 2022, $524.87 million in second quarter 2021, and $83.99 million in the linked quarter, loans held for investment increased $1.49 billion, or 16.75%, compared to prior year, and $0.56 billion, or 5.74%, compared to March 31, 2022, or 23.03% on an annualized basis.
Average loans held for investment, excluding PPP loans, were $10.14 billion in the second quarter of 2022, an increase of $1.29 billion, or 14.55%, compared to prior year. In the linked quarter comparison, average loans held for investment, excluding PPP loans, increased 6.12%, or $0.58 billion, 24.56% on an annualized basis.
Mortgage loans held for sale decreased $342.73 million, or 61.81%, compared to the prior year and $22.90 million, or 9.76%, compared to the linked quarter.
Total deposits increased $1.03 billion, or 7.96%, compared to the prior year and $0.22 billion, or 1.63%, compared to the linked quarter.
Total borrowings increased $9.91 million, or 1.68%, from prior year and decreased $27.93 million, or 4.45%, compared to the linked quarter.

Investment Securities:

Total investment securities were $2.48 billion compared to $2.30 billion at March 31, 2022 and $1.49 billion at June 30, 2021. The weighted average duration of the portfolio at June 30, 2022 was 3.8 years. The carrying value of the available for sale debt securities portfolio included $120.41 million, and $70.32 million in net unrealized losses at June 30, 2022 and March 31, 2022, respectively, compared to net unrealized gains of $42.18 million at June 30, 2021.

Loans and Asset Quality:

Total loans held for investment were $10.43 billion at June 30, 2022 compared to $9.91 billion at March 31, 2022 and $9.42 billion at June 30, 2021.
Nonperforming assets were $6.06 million, or 0.04% of total assets, compared to $15.22 million, or 0.10%, at June 30, 2021.
Nonperforming loans were 0.05% of period end loans compared to 0.12% at June 30, 2021.
Foreclosed property decreased to $0.56 million from $4.04 million at June 30, 2021.

Deposits and Borrowings:

Total deposits were $14.00 billion compared to $13.77 billion at March 31, 2022 and $12.96 billion at June 30, 2021.
Total loans held for investment to deposits were 74.49% compared to 71.95% at March 31, 2022 and 72.69% at June 30, 2021.
Non-interest bearing deposits were 40.89% of total deposits at June 30, 2022 compared to 40.17% at March 31, 2022 and 40.44% at June 30, 2021.
Total borrowings were $0.60 billion compared to $0.63 billion at March 31, 2022 and $0.59 billion at June 30, 2021.

Capital:

Common equity tier 1 capital ratio of 11.83%.
Tier 1 leverage capital ratio of 9.19%.
Tier 1 risk-based capital ratio of 11.97%.
Total risk-based capital ratio of 16.76%.
Book value per common share was $25.48 compared to $25.61 at March 31, 2022 and $25.51 at June 30, 2021.
Tangible book value per common share (non-GAAP) was $18.58 compared to $18.67 at March 31, 2022 and $18.70 at June 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 $16.86 billion as of June 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 the impacts of the ongoing the impact of the COVID-19 pandemic and the associated efforts to limit its spread; competitive pressures in the banking industry that may increase significantly; changes in the interest rate environment that may reduce margins and/or the volumes and values of loans made or held as well as the value of other financial assets held; changes in the credit worthiness of customers and the possible impairment of the collectability of loans; general economic conditions, either nationally or regionally, that may be less favorable than expected, resulting in, among other things, a deterioration in credit quality and/or a reduced demand for credit or other services; changes in the legislative or regulatory environment, including changes in accounting standards and tax laws, that may adversely affect our business; costs or difficulties related to the integration of the businesses we have acquired may be greater than expected; expected cost savings associated with pending or recently completed acquisitions may not be fully realized or realized within the expected time frame; cybersecurity threats or attacks, the implementation of new technologies, and the ability to develop and maintain reliable electronic systems; our competitors may have greater financial resources and develop products that enable them to compete more successfully; changes in business conditions; changes in the securities market; and changes in our local economy with regard to our market area. Any forward-looking statements made by us or on our behalf speak only as of the date they are made or as of the date indicated, and we do not undertake any obligation to update forward-looking statements as a result of new information, future events, or otherwise. For additional information on factors that could materially influence forward-looking statements included in this report, see the "Risk Factors" in TowneBank's Annual Report on Form 10-K for the year ended December 31, 2020 and related disclosures in other filings that have been, or will be, filed by TowneBank with the Federal Deposit Insurance Corporation.

Media contact:

G. Robert Aston, Jr., Executive Chairman, 757-638-6780

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
		June 30,			March 31,			December 31,			September 30,			June 30,
			2022			2022			2021			2021			2021
Income and Performance Ratios:
	Total Revenue	$	166,980		$	165,412		$	160,424		$	170,076		$	167,321
	Net income		47,054			46,250			41,657			52,743			58,002
	Net income available to common shareholders		46,547			45,586			40,183			50,400			55,803
	Pre-provision, pre-tax, net revenues^(non-GAAP)		57,748			55,369			48,483			63,647			59,728
	Net income per common share - diluted		0.64			0.63			0.55			0.69			0.77
	Book value per common share		25.48			25.61			26.13			25.91			25.51
	Book value per common share - tangible^(non-GAAP)		18.58			18.67			19.15			18.92			18.70
	Return on average assets		1.13	%		1.13	%		0.99	%		1.27	%		1.48	%
	Return on average assets - tangible^(non-GAAP)		1.22	%		1.23	%		1.08	%		1.37	%		1.59	%
	Return on average equity		9.94	%		9.73	%		8.38	%		10.59	%		12.21	%
	Return on average equity - tangible^(non-GAAP)		14.20	%		13.91	%		12.08	%		15.09	%		17.38	%
	Return on average common equity		10.03	%		9.81	%		8.45	%		10.68	%		12.31	%
	Return on average common equity - tangible^(non-GAAP)		14.37	%		14.08	%		12.22	%		15.27	%		17.57	%
	Noninterest income as a percentage of total revenue		34.52	%		40.03	%		37.17	%		40.94	%		39.55	%
Regulatory Capital Ratios (1):
	Common equity tier 1		11.83	%		12.16	%		12.36	%		12.53	%		12.42	%
	Tier 1		11.97	%		12.31	%		12.51	%		12.69	%		12.57	%
	Total		16.76	%		17.34	%		15.56	%		15.85	%		15.76	%
	Tier 1 leverage ratio		9.19	%		9.16	%		9.11	%		9.18	%		9.44	%
Asset Quality:
	Allowance for credit losses on loans to nonperforming loans	18.94x			21.52x			17.75x			12.68x			9.67x
	Allowance for credit losses on loans to period end loans		1.00	%		1.05	%		1.12	%		1.15	%		1.15	%
	Allowance for credit losses on loans to period end loans excluding PPP loans^(non-GAAP)		1.00	%		1.06	%		1.13	%		1.18	%		1.22	%
	Nonperforming loans to period end loans		0.05	%		0.05	%		0.06	%		0.09	%		0.12	%
	Nonperforming assets to period end assets		0.04	%		0.03	%		0.06	%		0.09	%		0.10	%
	Net charge-offs (recoveries) to average loans (annualized)		—	%		0.01	%		—	%	(0.03)%			(0.01)%
	Net charge-offs (recoveries)	$	(80	)	$	126		$	(60	)	$	(644	)	$	(137	)

	Nonperforming loans	$	5,493		$	4,825		$	5,973		$	8,451		$	11,178
	Foreclosed property		563			560			4,583			5,409			4,041
	Total nonperforming assets	$	6,056		$	5,385		$	10,556		$	13,860		$	15,219
	Loans past due 90 days and still accruing interest	$	232		$	40		$	372		$	143		$	1,584
	Allowance for credit losses on loans	$	104,019		$	103,833		$	106,059		$	107,177		$	108,130
Mortgage Banking:
	Loans originated, mortgage	$	588,529		$	583,008		$	851,021		$	939,272		$	1,050,663
	Loans originated, joint venture		249,279			236,980			303,362			370,865			403,864
	Total loans originated	$	837,808		$	819,988		$	1,154,383		$	1,310,137		$	1,454,527
	Number of loans originated		2,282			2,237			3,408			3,917			4,514
	Number of originators		201			207			213			219			222
	Purchase %		92.27	%		77.93	%		79.36	%		77.45	%		76.95	%
	Loans sold	$	759,073		$	853,808		$	1,150,996		$	1,394,166		$	1,485,057
	Rate lock asset	$	1,935		$	3,009		$	3,455		$	6,087		$	7,760
	Gross realized gain on sales and fees as a % of loans originated		2.92	%		3.01	%		3.42	%		3.61	%		3.64	%
Other Ratios:
	Net interest margin		2.88	%		2.67	%		2.70	%		2.76	%		2.91	%
	Net interest margin-fully tax equivalent^(non-GAAP)		2.89	%		2.69	%		2.72	%		2.77	%		2.94	%
	Average earning assets/total average assets		92.22	%		92.24	%		92.13	%		91.95	%		91.97	%
	Average loans/average deposits		74.57	%		71.61	%		70.68	%		71.69	%		78.31	%
	Average noninterest deposits/total average deposits		40.56	%		40.49	%		41.42	%		40.40	%		40.21	%
	Period end equity/period end total assets		11.09	%		11.28	%		11.71	%		12.02	%		11.83	%
	Efficiency ratio^(non-GAAP)		63.51	%		64.42	%		67.03	%		59.58	%		61.46	%
	(1) Current reporting period regulatory capital ratios are preliminary

TOWNEBANK
Selected Data (unaudited)
(dollars in thousands)

Investment Securities										% Change
	Q2			Q2			Q1			Q2 22 vs.		Q2 22 vs.
*Available-for-sale securities, at fair value*		2022			2021			2022		Q2 21		Q1 22
U.S. agency securities	$	342,702		$	206,151		$	338,490		66.24	%	1.24	%
U.S. Treasury notes		27,496			1,013			970		2,614.31	%	2,734.64	%
Municipal securities		447,927			334,633			400,200		33.86	%	11.93	%
Trust preferred and other corporate securities		84,307			31,680			85,792		166.12	%	(1.73)%
Mortgage-backed securities issued by GSE and GNMA		1,012,690			881,078			1,022,169		14.94	%	(0.93)%
Allowance for credit losses		(1,111	)		(134	)		(1,081	)	729.10	%	2.78	%
Total	$	1,914,011		$	1,454,421		$	1,846,540		31.60	%	3.65	%
*Gross unrealized gains (losses) reflected in financial statements*
Total gross unrealized gains	$	1,840		$	65,152		$	3,443		(97.18)%		(46.56)%
Total gross unrealized losses		(122,253	)		(22,968	)		(73,758	)	432.28	%	65.75	%
Net unrealized gains (losses) and other adjustments on AFS securities	$	(120,413	)	$	42,184		$	(70,315	)	(385.45)%		71.25	%
*Held-to-maturity securities, at amortized cost*
U.S. agency securities	$	100,718		$	—		$	83,004		N/M		21.34	%
U.S. Treasury notes		434,432			—			336,193		N/M		29.22	%
Municipal securities		5,138			5,053			5,116		1.68	%	0.43	%
Trust preferred corporate securities		2,248			2,297			2,260		(2.13)%		(0.53)%
Mortgage-backed securities issued by GSE and GNMA		6,547			8,039			6,811		(18.56)%		(3.88)%
Allowance for credit losses		(85	)		(97	)		(92	)	(12.37)%		(7.61)%
Total	$	548,998		$	15,292		$	433,292		3,490.10	%	26.70	%

Total gross unrealized gains	$	448		$	1,708		$	714		(73.77)%		(37.25)%
Total gross unrealized losses		(18,615	)		—			(11,915	)	—	%	—	%
Net unrealized gains (losses) in HTM securities	$	(18,167	)	$	1,708		$	(11,201	)	(1,163.64)%		62.19	%
Loans Held For Investment(1)										% Change
	Q2			Q2			Q1			Q2 22 vs.		Q2 22 vs.
		2022			2021			2022		Q2 21		Q1 22
Real estate - construction and development	$	1,383,791		$	1,029,811		$	1,236,294		34.37	%	11.93	%
Commercial real estate - owner occupied		1,579,464			1,445,328			1,561,117		9.28	%	1.18	%
Commercial real estate - non owner occupied		2,757,651			2,597,405			2,697,929		6.17	%	2.21	%
Real estate - multifamily		371,658			343,764			339,220		8.11	%	9.56	%
Residential 1-4 family		1,513,662			1,166,898			1,392,052		29.72	%	8.74	%
HELOC		386,067			390,726			376,480		(1.19)%		2.55	%
Commercial and industrial business (C&I)		1,261,279			1,529,788			1,212,973		(17.55)%		3.98	%
Government		527,230			479,664			518,839		9.92	%	1.62	%
Indirect		555,638			310,492			485,620		78.95	%	14.42	%
Consumer loans and other		89,320			129,702			88,784		(31.13)%		0.60	%
Total	$	10,425,760		$	9,423,578		$	9,909,308		10.63	%	5.21	%
(1) Paycheck Protection Program loans totaling $0.04 billion, $0.52 billion, and $0.08 billion, primarily in C&I, are included in Q2 22, Q2 21, and Q1 22, respectively.
Deposits										% Change
	Q2			Q2			Q1			Q2 22 vs.		Q2 22 vs.
		2022			2021			2022		Q2 21		Q1 22
Noninterest-bearing demand	$	5,723,415		$	5,243,074		$	5,532,337		9.16	%	3.45	%
Interest-bearing:
Demand and money market accounts		6,384,818			5,373,146			6,432,005		18.83	%	(0.73)%
Savings		388,364			349,552			393,119		11.10	%	(1.21)%
Certificates of deposits		1,499,514			1,998,828			1,414,339		(24.98)%		6.02	%
Total	$	13,996,111		$	12,964,600		$	13,771,800		7.96	%	1.63	%

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

	Three Months Ended								Three Months Ended								Three Months Ended
	June 30, 2022								March 31, 2022								June 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)	$	10,199,019		$	101,463		3.99	%	$	9,668,724		$	95,596		4.01	%	$	9,616,787		$	101,490		4.23	%
Taxable investment securities		2,331,410			11,388		1.95	%		2,059,614			9,013		1.75	%		1,351,922			6,476		1.92	%
Tax-exempt investment securities		132,304			879		2.66	%		110,698			680		2.46	%		128,094			434		1.36	%
Total securities		2,463,714			12,267		1.99	%		2,170,312			9,693		1.79	%		1,480,016			6,910		1.87	%
Interest-bearing deposits		2,368,147			4,616		0.78	%		2,929,929			1,347		0.19	%		2,327,310			619		0.11	%
Loans held for sale		213,109			2,217		4.16	%		276,448			2,375		3.44	%		503,706			3,711		2.95	%
Total earning assets		15,243,989			120,563		3.17	%		15,045,413			109,011		2.94	%		13,927,819			112,730		3.25	%
Less: allowance for credit losses		(103,871	)							(106,172	)							(116,025	)
Total nonearning assets		1,389,692								1,372,757								1,332,094
Total assets	$	16,529,810							$	16,311,998							$	15,143,888
Liabilities and Equity:
Interest-bearing deposits
Demand and money market	$	6,349,725		$	3,094		0.20	%	$	6,178,217		$	2,262		0.15	%	$	5,179,907		$	2,004		0.16	%
Savings		387,498			526		0.54	%		382,839			511		0.54	%		346,177			528		0.61	%
Certificates of deposit		1,392,474			1,953		0.56	%		1,472,942			2,121		0.58	%		1,816,283			4,612		1.02	%
Total interest-bearing deposits		8,129,697			5,573		0.27	%		8,033,998			4,894		0.25	%		7,342,367			7,144		0.39	%
Borrowings		128,276			135		0.42	%		135,775			137		0.40	%		476,122			565		0.47	%
Subordinated debt, net		496,862			5,091		4.10	%		386,934			4,120		4.26	%		249,260			2,962		4.75	%
Total interest-bearing liabilities		8,754,835			10,799		0.49	%		8,556,707			9,151		0.43	%		8,067,749			10,671		0.53	%
Demand deposits		5,547,936								5,467,153								4,937,754
Other noninterest-bearing liabilities		348,678								387,871								304,793
Total liabilities		14,651,449								14,411,731								13,310,296
Shareholders' equity		1,878,361								1,900,267								1,833,592
Total liabilities and equity	$	16,529,810							$	16,311,998							$	15,143,888
Net interest income (tax-equivalent basis) (6)				$	109,764							$	99,860							$	102,059
Reconciliation of Non-GAAP Financial Measures
Tax-equivalent basis adjustment					(424	)							(656	)							(915	)
Net interest income (GAAP)				$	109,340							$	99,204							$	101,144

Interest rate spread (4)(6)							2.68	%							2.51	%							2.72	%
Interest expense as a percent of average earning assets							0.28	%							0.25	%							0.31	%
Net interest margin (tax equivalent basis) (5)(6)							2.89	%							2.69	%							2.94	%
Total cost of deposits							0.16	%							0.15	%							0.23	%

(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 June 30, 2021 and related yields have been restated to include, previously excluded, nonaccrual loans of $11.98 million.

(3) June 30, 2022, June 30, 2021, and March 31, 2022 includes average PPP balances of $60.89 million, $766.47 million and $115.51 million, and related interest and fee income of $1.52 million, $10.02 million, and $2.10 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)

	Six Months Ended								Six Months Ended								Six Months Ended June 30,
	June 30, 2022								June 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)	$	9,935,337		$	197,059		4.00	%	$	9,638,329		$	203,451		4.26	%	$	(6,392	)	$	(12,533	)	$	6,141
Taxable investment securities		2,196,263			20,401		1.86	%		1,327,862			13,080		1.97	%		7,321			(785	)		8,106
Tax-exempt investment securities		121,561			1,559		2.57	%		133,944			976		1.46	%		583			681			(98	)
Total securities		2,317,824			21,960		1.89	%		1,461,806			14,056		1.92	%		7,904			(104	)		8,008
Interest-bearing deposits		2,647,485			5,963		0.45	%		2,022,901			1,035		0.10	%		4,928			4,518			410
Loans held for sale		244,604			4,592		3.75	%		520,260			7,072		2.72	%		(2,480	)		2,098			(4,578	)
Total earning assets		15,145,250			229,574		3.06	%		13,643,296			225,614		3.33	%		3,960			(6,021	)		9,981
Less: allowance for credit losses		(105,015	)							(118,466	)
Total nonearning assets		1,381,271								1,344,845
Total assets	$	16,421,506							$	14,869,675
Liabilities and Equity:
Interest-bearing deposits
Demand and money market	$	6,264,444		$	5,355		0.17	%	$	5,043,155		$	4,080		0.16	%	$	1,275		$	242		$	1,033
Savings		385,182			1,037		0.54	%		339,131			1,050		0.62	%		(13	)		(146	)		133
Certificates of deposit		1,432,486			4,074		0.57	%		1,887,359			10,563		1.13	%		(6,489	)		(4,355	)		(2,134	)
Total interest-bearing deposits		8,082,112			10,466		0.26	%		7,269,645			15,693		0.44	%		(5,227	)		(4,259	)		(968	)
Borrowings		132,004			272		0.41	%		519,048			1,387		0.53	%		(1,115	)		(262	)		(853	)
Subordinated debt, net		442,202			9,212		4.17	%		249,188			5,892		4.73	%		3,320			(773	)		4,093
Total interest-bearing liabilities		8,656,318			19,950		0.46	%		8,037,881			22,972		0.58	%		(3,022	)		(5,294	)		2,272
Demand deposits		5,507,768								4,711,854
Other noninterest-bearing liabilities		368,166								304,162
Total liabilities		14,532,252								13,053,897
Shareholders' equity		1,889,254								1,815,778
Total liabilities and equity	$	16,421,506							$	14,869,675
Net interest income (tax-equivalent basis)(6)				$	209,624							$	202,642				$	6,982		$	(727	)	$	7,709
Reconciliation of Non-GAAP Financial Measures
Tax-equivalent basis adjustment					(1,080	)							(1,508	)				428
Net interest income (GAAP)				$	208,544							$	201,134				$	7,410

Interest rate spread (4)(6)							2.60	%							2.75	%
Interest expense as a percent of average earning assets							0.27	%							0.34	%
Net interest margin (tax equivalent basis) (5)(6)							2.79	%							3.00	%
Total cost of deposits							0.16	%							0.26	%

(1) Yields and interest income are presented on a taxable-equivalent basis using the federal statutory rate of 21%.
(2) Average loan balances for June 30, 2021 and related yields have been restated to include, previously excluded, nonaccrual loans of $12.48 million.
(1) June 30, 2022 and June 30, 2021 includes average PPP balances of $88.05 million and $786.50 million and related interest income of $3.62 million and $21.65 million, respectively.
(2) Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities. Fully tax equivalent.
(3) Net interest margin is net interest income expressed as a percentage of average earning assets. Fully tax equivalent.
(4) Non-GAAP.

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


	June 30,			December 31,
		2022			2021
	(unaudited)			(audited)
ASSETS
Cash and due from banks	$	72,592		$	17,373
Interest-bearing deposits at FRB - Richmond		2,341,942			3,244,484
Interest-bearing deposits in financial institutions		35,087			34,779
Total Cash and Cash Equivalents		2,449,621			3,296,636
Securities available for sale, at fair value (amortized cost of $2,035,535 and $1,788,853, and allowance for credit losses of $1,111 and $210 at June 30, 2022 and December 31, 2021, respectively.)		1,914,011			1,806,183
Securities held to maturity, at amortized cost (fair value $530,916 and $155,676 at June 30, 2022 and December 31, 2021, respectively.)		549,083			154,221
Less: allowance for credit losses		(85	)		(94	)
Securities held to maturity, net of allowance for credit losses		548,998			154,127
Other equity securities		6,679			6,759
FHLB stock		10,432			13,146
Total Securities		2,480,120			1,980,215
Mortgage loans held for sale		211,716			358,303
Loans, net of unearned income and deferred costs		10,425,760			9,506,252
Less: allowance for credit losses		(104,019	)		(106,059	)
Net Loans		10,321,741			9,400,193
Premises and equipment, net		289,753			270,772
Goodwill		457,162			457,187
Other intangible assets, net		44,878			50,379
BOLI		254,478			251,805
Other assets		354,570			295,897
TOTAL ASSETS	$	16,864,039		$	16,361,387

LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand	$	5,723,415		$	5,546,665
Interest-bearing:
Demand and money market accounts		6,384,818			6,139,714
Savings		388,364			371,356
Certificates of deposit		1,499,514			1,515,891
Total Deposits		13,996,111			13,573,626
Advances from the FHLB		55,024			155,367
Subordinated debt, net		497,061			249,652
FRB PPP lending facility		—			—
Repurchase agreements and other borrowings		47,922			76,797
Total Borrowings		600,007			481,816
Other liabilities		397,388			389,771
TOTAL LIABILITIES		14,993,506			14,445,213
Preferred stock, authorized and unissued shares - 2,000,000		—			—
Common stock, $1.667 par: 150,000,000 shares authorized
72,744,374 and 72,683,985 shares issued at
June 30, 2022 and December 31, 2021, respectively		121,265			121,164
Capital surplus		1,051,384			1,050,948
Retained earnings		777,430			716,605
Common stock issued to deferred compensation trust, at cost
945,183 and 911,458 shares at June 30, 2022 and December 31, 2021, respectively		(19,349	)		(18,257	)
Deferred compensation trust		19,349			18,257
Accumulated other comprehensive income (loss)		(96,358	)		10,597
TOTAL SHAREHOLDERS' EQUITY		1,853,721			1,899,314
Noncontrolling interest		16,812			16,860
TOTAL EQUITY