• TowneBank Reports Third Quarter 2023 Earnings

    Source: Nasdaq GlobeNewswire / 26 Oct 2023 07:00:02   America/Chicago

    SUFFOLK, Va., Oct. 26, 2023 (GLOBE NEWSWIRE) -- TowneBank (the "Company" or "Towne") (NASDAQ: TOWN) today reported earnings for the quarter ended September 30, 2023 of $44.86 million, or $0.60 per diluted share, compared to $50.17 million, or $0.69 per diluted share, for the quarter ended September 30, 2022.

    "We were pleased to deliver a solid performance for the quarter which reflected the strength of our core deposit franchise, diversified revenue model and robust capital levels. TowneBank continues to retain and grow its leading 28% deposit market share position in our home market in the Hampton Roads region, along with maintaining a top tier position in the Richmond, Raleigh, and Charlotte metropolitan markets, which validates our Main Street banking strategy. Average deposits were up $326 million versus the sequential quarter, excluding brokered deposits, which allowed us to reduce higher cost borrowings. Highlighting the value of our diversified revenue model, fee income benefited from stronger insurance revenues as we continue to build the intrinsic value of our insurance agency. While earnings will likely remain under pressure in the short run, we believe our conservative approach to balance sheet management will position our Company to benefit from opportunities despite a challenging operating environment," said G. Robert Aston, Jr., Executive Chairman.

    Highlights for Third Quarter 2023:

    • Total revenues were $172.86 million, a decrease of $6.37 million, or 3.56%, compared to third quarter 2022. A decline in net interest income of $10.98 million, driven by an increase in interest expense, was partially offset by an increase in noninterest income of $4.61 million.
    • Loans held for investment were $11.17 billion, an increase of $0.61 billion, or 5.81%, compared to September 30, 2022, and a decrease of $35.04 million, or 0.31%, compared to June 30, 2023, 1.24% on an annualized basis. The increase from the prior year was primarily due to the January 2023 acquisition of Farmers Bankshares, Inc., ("Farmers"). Excluding loans acquired in the first quarter, total loans would have increased $335.47 million, or 3.18%, compared to September 30, 2022.
    • Total deposits were $13.88 billion, an increase of $468.74 million, or 3.49%, compared to third quarter 2022, driven by the Farmers acquisition. In comparison to June 30, 2023, total deposits increased 0.83%, or $114.14 million, 3.29% on an annualized basis.
    • Noninterest bearing deposits decreased 20.26%, to $4.44 billion, compared to third quarter 2022 and represented 32.02% of total deposits. Compared to the linked quarter, noninterest bearing deposits decreased 6.91%.
    • Annualized return on common shareholders' equity was 9.04% compared to 10.69% in third quarter 2022. Annualized return on average tangible common shareholders' equity (non-GAAP) was 13.11% compared to 15.27% in third quarter 2022.
    • Net interest margin was 2.95% for the quarter and taxable equivalent net interest margin (non-GAAP) was 2.98%, compared to the prior year quarter net interest margin of 3.28% and taxable equivalent net interest margin (non-GAAP) of 3.31%.
    • The effective tax rate was 17.34% in the quarter compared to 20.08% in third quarter 2022 and 18.41% in the linked quarter.

    "We continue to prudently manage the Company during the uncertain economic environment. Seasonality in noninterest revenues and member deposit balances may create some volatility in the next few quarters, however, we believe in our conservative approach to growth, liquidity and capital deployment will prove to be the right strategy for our long-term success," stated William I. Foster III, President and Chief Executive Officer.

    Quarterly Net Interest Income:

    • Net interest income was $113.06 million compared to $124.04 million for the quarter ended September 30, 2022. The decrease was driven by increased deposit costs outpacing higher earning asset yields.
    • Tax-equivalent net interest margin (non-GAAP) was 2.98%, including purchase accounting accretion of 5 basis points, compared to 3.31%, including purchase accounting accretion of 2 basis points, for third quarter 2022.
    • On an average basis, loans held for investment, with a yield of 5.13%, represented 73.45% of earning assets at September 30, 2023 compared to a yield of 4.25% and 69.83% of earning assets in the third quarter of 2022.
    • Total cost of deposits increased to 1.84% from 0.30% for the quarter ended September 30, 2022. Interest expense on deposits increased $53.94 million, or 527.28%, over the prior year quarter driven by the increase in rate.
    • Higher mortgage rates and low home sale inventory have adversely impacted our residential mortgage banking business.
    • Average interest-earning assets totaled $15.21 billion at September 30, 2023 compared to $14.99 billion at September 30, 2022, an increase of 1.47%.
    • Average interest-bearing liabilities totaled $9.75 billion, an increase of $1.40 billion, or 16.83% from prior year. Average short term FHLB borrowings were $248.91 million during the quarter.

    Quarterly Provision for Credit Losses:

    • The quarterly provision for credit losses was an expense of $1.01 million compared to $3.93 million one year ago and $3.56 million in the linked quarter.
    • The allowance for credit losses on loans increased $1.65 million in third quarter 2023, compared to the linked quarter. The increase in the allowance was driven by changes in our portfolio composition, combined with changes to the macroeconomic forecast scenarios utilized in our models.
    • Net loan recoveries were $1.07 million in the quarter compared to net recoveries of $187 thousand in the prior year quarter and net charge-offs of $9 thousand in the linked quarter. Two notable recoveries in third quarter 2023 were related to charge-offs that occurred in the fourth quarter of 2022 and first quarter of 2023.
    • The ratio of net charge-offs (recoveries) to average loans on an annualized basis was (0.04)% in third quarter 2023, (0.01)% in third quarter 2022, and zero percent in the linked quarter.
    • The allowance for credit losses on loans represented 1.12% of total loans at September 30, 2023, 1.02% at September 30, 2022, and 1.10% at June 30, 2023. The allowance for credit losses on loans was 17.60 times nonperforming loans compared to 20.48 times at September 30, 2022 and 18.09 times at June 30, 2023.

    Quarterly Noninterest Income:

    • Total noninterest income was $59.81 million compared to $55.20 million in 2022, an increase of $4.61 million, or 8.35%.
    • Residential mortgage banking income was $10.65 million compared to $11.97 million in third quarter 2022. Loan volume decreased to $520.41 million in third quarter 2023 from $692.70 million in 2022. Higher mortgage rates coupled with low home sale inventory levels have adversely impacted production.   Residential purchase activity comprised 95.96% of production volume in the third quarter of 2023 compared to 93.20% in the prior year quarter.
    • Gross margins on residential mortgage sales increased 15 basis points from 3.02% in third quarter 2022 to 3.17% in the current quarter.
    • Total net insurance commissions increased $4.34 million, or 22.34%, to $23.78 million in third quarter 2023 compared to 2022. This resulted from increases in property and casualty commissions, which were driven by organic growth and commissions from a recent acquisition.
    • Property management fee revenue increased 29.41%, or $2.91 million, to $12.80 million in third quarter 2023 compared to 2022. Reservation income increased compared to the prior year due to higher rental inventories and income from a recent acquisition.

    Quarterly Noninterest Expense:

    • Total noninterest expense was $117.70 million compared to $112.03 million in 2022, an increase of $5.67 million, or 5.06%. Increases in salaries and employee benefits of $1.80 million, FDIC and other insurance of $1.37 million, software expense of $1.54 million, and amortization expense of $0.97 million were the primary sources of the increase.
    • Salaries and benefits expense increases were driven by annual base salary adjustments that went into effect July 2023 and an increase in the year-over-year number of employees, primarily related to the Farmers Bankshares, Inc. acquisition.
    • FDIC and other insurance increased due to an increased assessment rate in 2023.
    • Software expense increased due to growth related cost increases and a number of ongoing projects throughout the Company.
    • Amortization expense increased driven by the recent Farmers Bankshares, Inc. acquisition.

    Consolidated Balance Sheet Highlights:

    • Total assets were $16.68 billion for the quarter ended September 30, 2023, a $544.72 million decrease compared to $17.23 billion at June 30, 2023. Total assets increased $728.56 million, or 4.57%, from $15.95 billion at September 30, 2022.
    • Loans held for investment increased $0.61 billion, or 5.81%, compared to prior year but decreased $35.04 million, or 0.31%, compared to the linked quarter, 1.24% on an annualized basis.
    • Mortgage loans held for sale increased $23.03 million, or 13.95%, compared to prior year but declined $41.45 million, or 18.06%, compared to the linked quarter.
    • Total deposits increased $468.74 million, or 3.49%, compared to prior year, primarily in interest- bearing demand and time deposits. In the linked quarter comparison, total deposits increased $114.14 million, or 3.29% on an annualized basis.
    • Total borrowings increased $86.75 million, or 27.09%, over third quarter 2022 but decreased $0.65 billion, or 61.59%, compared to the linked quarter. FHLB advances, which are included in total borrowings, decreased $0.65 billion in third quarter 2023, compared to the linked quarter.

    Investment Securities:

    • Total investment securities were $2.54 billion compared to $2.61 billion at June 30, 2023 and $2.45 billion at September 30, 2022. The weighted average duration of the portfolio at September 30, 2023 was 3.3 years. The carrying value of the available for sale debt securities portfolio included net unrealized losses of $238.52 million at September 30, 2023, compared to $195.98 million at June 30, 2023 and $199.84 million at September 30, 2022, with the increases related to market valuation adjustments due to rising interest rates.

    Loans and Asset Quality:

    • Total loans held for investment were $11.17 billion at September 30, 2023 compared to $11.21 billion at June 30, 2023 and $10.56 billion at September 30, 2022.
    • Total loans for commercial real estate non-owner occupied office buildings were $714.20 million at September 30, 2023. The average loan balance was $1.83 million with less than $1.0 million total criticized or classified loans.
    • Nonperforming assets were $7.88 million, or 0.05% of total assets, compared to $5.44 million, or 0.03%, at September 30, 2022.
    • Nonperforming loans were 0.06% of period end loans compared to 0.05% at September 30, 2022.
    • Other real estate owned increased to $766 thousand from $186 thousand at September 30, 2022.

    Deposits and Borrowings:

    • Total deposits were $13.88 billion compared to $13.77 billion at June 30, 2023 and $13.41 billion at September 30, 2022.
    • Total loans held for investment to deposits was 80.49% compared to 81.41% at June 30, 2023 and 78.73% at September 30, 2022.
    • Noninterest-bearing deposits were 32.02% of total deposits at September 30, 2023 compared to 34.68% at June 30, 2023 and 41.56% at September 30, 2022. Noninterest-bearing deposits declined $1.13 billion, or 20.26%, compared to September 30, 2022, primarily in commercial and escrow accounts.
    • Total borrowings were $0.41 billion compared to $1.06 billion at June 30, 2023 and $0.32 billion at September 30, 2022.

    Capital:

    • Common equity tier 1 capital ratio of 12.19%.
    • Tier 1 leverage capital ratio of 10.06%.
    • Tier 1 risk-based capital ratio of 12.31%.
    • Total risk-based capital ratio of 15.09%.
    • Book value per common share was $26.28 compared to $26.36 at June 30, 2023 and $25.08 at September 30, 2022.
    • Tangible book value per common share (non-GAAP) was $19.28 compared to $19.31 at June 30, 2023 and $18.17 at September 30, 2022.

    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.

    TowneBank operates over 45 banking offices throughout Hampton Roads and Central Virginia, as well as Northeastern and Central North Carolina – serving as a local leader in promoting the social, cultural, and economic growth in each community. Towne offers a competitive array of business and personal banking solutions, delivered with only the highest ethical standards. Experienced local bankers providing a higher level of expertise and personal attention with local decision-making are key to the TowneBank strategy. TowneBank has grown its capabilities beyond banking to provide expertise through its affiliated companies that include Towne Wealth Management, Towne Insurance Agency, Towne Benefits, TowneBank Mortgage, TowneBank Commercial Mortgage, Berkshire Hathaway HomeServices, RW Towne Realty, Towne 1031 Exchange, LLC, and Towne Vacations. With total assets of $16.68 billion as of September 30, 2023, TowneBank is one of the largest banks headquartered in Virginia.

    Non-GAAP Financial Measures:
    This press release contains certain financial measures determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Such non-GAAP financial measures include the following: fully tax-equivalent net interest margin, core operating earnings, core net income, tangible book value per common share, total risk-based capital ratio, tier one leverage ratio, tier one capital ratio, and the tangible common equity to tangible assets ratio. Management uses these non-GAAP financial measures to assess the performance of TowneBank’s core business and the strength of its capital position. Management believes that these non-GAAP financial measures provide meaningful additional information about TowneBank to assist investors in evaluating operating results, financial strength, and capitalization. The non-GAAP financial measures should be considered as additional views of the way our financial measures are affected by significant charges for credit costs and other factors. These non-GAAP financial measures should not be considered as a substitute for operating results determined in accordance with GAAP and may not be comparable to other similarly titled measures of other companies. The computations of the non-GAAP financial measures used in this presentation are referenced in a footnote or in the appendix to this presentation.

    Forward-Looking Statements:
    This press release contains certain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts, but instead represent only the beliefs, expectations, or opinions of TowneBank and its management regarding future events, many of which, by their nature, are inherently uncertain. Forward-looking statements may be identified by the use of such words as: "believe," "expect," "anticipate," "intend," "plan,” "estimate," or words of similar meaning, or future or conditional terms, such as "will," "would," "should," "could," "may," "likely," "probably," or "possibly." These statements may address issues that involve significant risks, uncertainties, estimates, and assumptions made by management. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include competitive pressures in the banking industry that may increase significantly; changes in the interest rate environment that may reduce margins and/or the volumes and values of loans made or held as well as the value of other financial assets held; an unforeseen outflow of cash or deposits or an inability to access the capital markets, which could jeopardize our overall liquidity or capitalization; changes in the creditworthiness of customers and the possible impairment of the collectability of loans; insufficiency of our allowance for credit losses due to market conditions, inflation, changing interest rates or other factors; adverse developments in the financial industry generally, such as the recent bank failures, responsive measures to mitigate and manage such developments, related supervisory and regulatory actions and costs, and related impacts on customer and client behavior; general economic conditions, either nationally or regionally, that may be less favorable than expected, resulting in, among other things, a deterioration in credit quality and/or a reduced demand for credit or other services; unusual and infrequently occurring events, such as weather-related or natural disasters, acts of war or terrorism, 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, 2022, our Quarterly Report on Form 10-Q for the period ended June 30, 2023, and related disclosures in other filings that have been, or will be, filed by TowneBank with the Federal Deposit Insurance Corporation.

    Media contact:
    G. Robert Aston, Jr., Executive Chairman, 757-638-6780
    William I. Foster III, President and Chief Executive Officer, 757-417-6482

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


    TOWNEBANK
    Selected Financial Highlights (unaudited)
    (dollars in thousands, except per share data)
       
      Three Months Ended
      September 30, June 30, March 31, December 31, September 30,
      2023   2023   2023   2022   2022 
    Income and Performance Ratios:         
     Total revenue$172,864  $181,568  $184,144  $175,307  $179,236 
     Net income 44,745   43,368   38,478   46,494   50,671 
     Net income available to common shareholders 44,862   41,716   38,333   46,685   50,169 
     Net income per common share - diluted 0.60   0.56   0.52   0.64   0.69 
     Book value per common share 26.28   26.36   26.40   25.73   25.08 
     Book value per common share - tangible(non-GAAP) 19.28   19.31   19.04   18.84   18.17 
     Return on average assets 1.06%  0.99%  0.95%  1.16%  1.22%
     Return on average assets - tangible(non-GAAP) 1.17%  1.10%  1.05%  1.25%  1.31%
     Return on average equity 8.96%  8.46%  7.99%  9.98%  10.60%
     Return on average equity - tangible(non-GAAP) 12.97%  12.35%  11.71%  14.26%  15.08%
     Return on average common equity 9.04%  8.52%  8.05%  10.07%  10.69%
     Return on average common equity - tangible(non-GAAP) 13.11%  12.48%  11.83%  14.44%  15.27%
     Noninterest income as a percentage of total revenue 34.60%  37.43%  33.00%  26.54%  30.80%
    Regulatory Capital Ratios (1):         
     Common equity tier 1 12.19%  11.99%  11.68%  11.92%  11.92%
     Tier 1 12.31%  12.11%  11.80%  12.04%  12.05%
     Total 15.09%  14.88%  14.55%  14.80%  14.80%
     Tier 1 leverage ratio 10.06%  9.85%  9.86%  9.87%  9.52%
    Asset Quality:         
     Allowance for credit losses on loans to nonperforming loans17.60x 18.09x 12.87x 17.67x 20.48x
     Allowance for credit losses on loans to period end loans 1.12%  1.10%  1.07%  1.03%  1.02%
     Nonperforming loans to period end loans 0.06%  0.06%  0.08%  0.06%  0.05%
     Nonperforming assets to period end assets 0.05%  0.05%  0.06%  0.04%  0.03%
     Net charge-offs (recoveries) to average loans (annualized)(0.04)%  %  0.14%  0.11% (0.01)%
     Net charge-offs (recoveries)$(1,074) $9  $3,874  $2,904  $(187)
               
     Nonperforming loans$7,110  $6,827  $9,322  $6,273  $5,250 
     Former bank premises    1,782          
     Foreclosed property 766   738   564   560   186 
     Total nonperforming assets$7,876  $9,347  $9,886  $6,833  $5,436 
     Loans past due 90 days and still accruing interest$970  $360  $206  $324  $725 
     Allowance for credit losses on loans$125,159  $123,513  $120,002  $110,816  $107,497 
    Mortgage Banking:         
     Loans originated, mortgage$348,387  $409,050  $280,401  $299,298  $458,254 
     Loans originated, joint venture 172,021   207,450   135,818   157,511   234,443 
     Total loans originated$520,408  $616,500  $416,219  $456,809  $692,697 
     Number of loans originated 1,487   1,715   1,249   1,355   1,983 
     Number of originators 192   196   194   186   194 
     Purchase % 95.96%  96.32%  94.99%  95.08%  93.20%
     Loans sold$567,291  $525,078  $346,288  $483,254  $701,908 
     Rate lock asset$1,348  $1,551  $1,435  $482  $859 
     Gross realized gain on sales and fees as a % of loans originated 3.17%  2.96%  3.11%  2.93%  3.02%
    Other Ratios:         
     Net interest margin 2.95%  2.98%  3.36%  3.51%  3.28%
     Net interest margin-fully tax equivalent(non-GAAP) 2.98%  3.01%  3.39%  3.53%  3.31%
     Average earning assets/total average assets 90.73%  90.96%  90.98%  91.51%  91.92%
     Average loans/average deposits 80.75%  83.72%  82.40%  80.14%  76.82%
     Average noninterest deposits/total average deposits 33.50%  36.07%  38.35%  41.07%  41.77%
     Period end equity/period end total assets 11.90%  11.56%  11.89%  11.92%  11.56%
     Efficiency ratio(non-GAAP) 66.21%  70.41%  65.64%  61.99%  61.03%
     (1) Current reporting period regulatory capital ratios are preliminary.      
            


    TOWNEBANK
    Selected Data (unaudited)
    (dollars in thousands)
     
    Investment Securities      % Change
     Q3 Q3 Q2 Q3 23 vs. Q3 23 vs.
    Available-for-sale securities, at fair value 2023   2022   2023  Q3 22 Q2 23
    U.S. agency securities$300,161  $331,297  $318,354  (9.40)% (5.71)%
    U.S. Treasury notes 26,721   26,399   26,874  1.22% (0.57)%
    Municipal securities 484,587   426,720   503,792  13.56% (3.81)%
    Trust preferred and other corporate securities 74,024   79,501   71,116  (6.89)% 4.09%
    Mortgage-backed securities issued by GSE 1,079,303   1,027,331   1,086,947  5.06% (0.70)%
    Allowance for credit losses (1,343)  (1,112)  (1,232) 20.77% 9.01%
    Total$1,963,453  $1,890,136  $2,005,851  3.88% (2.11)%
    Gross unrealized gains (losses) reflected in financial statements      
    Total gross unrealized gains$475  $1,292  $975  (63.24)% (51.28)%
    Total gross unrealized losses (238,993)  (201,127)  (196,954) 18.83% 21.34%
    Net unrealized gains (losses) and other adjustments on AFS securities$(238,518) $(199,835) $(195,979) 19.36% 21.71%
    Held-to-maturity securities, at amortized cost         
    U.S. agency securities$101,659  $100,905  $101,469  0.75% 0.19%
    U.S. Treasury notes 433,015   434,148   433,298  (0.26)% (0.07)%
    Municipal securities 5,249   5,159   5,226  1.74% 0.44%
    Trust preferred corporate securities 2,185   2,235   2,198  (2.24)% (0.59)%
    Mortgage-backed securities issued by GSE 5,746   6,298   5,826  (8.76)% (1.37)%
    Allowance for credit losses (85)  (83)  (87) 2.41% (2.30)%
    Total$547,769  $548,662  $547,930  (0.16)% (0.03)%
              
    Total gross unrealized gains$82  $153  $272  (46.41)% (69.85)%
    Total gross unrealized losses (23,505)  (31,116)  (25,914) (24.46)% (9.30)%
    Net unrealized gains (losses) in HTM securities$(23,423) $(30,963) $(25,642) (24.35)% (8.65)%
    Total unrealized (losses) gains on AFS and HTM securities$(261,941) $(230,798) $(221,621) 13.49% 18.19%
           % Change
    Loans Held For InvestmentQ3 Q3 Q2 Q3 23 vs. Q3 23 vs.
      2023   2022   2023  Q3 22 Q2 23
    Real estate - construction and development$1,325,976  $1,324,831  $1,364,575  0.09% (2.83)%
    Commercial real estate - owner occupied 1,686,888   1,590,371   1,687,261  6.07% (0.02)%
    Commercial real estate - non owner occupied 3,025,985   2,799,363   3,034,548  8.10% (0.28)%
    Real estate - multifamily 542,611   458,803   520,464  18.27% 4.26%
    Residential 1-4 family 1,818,843   1,567,024   1,790,225  16.07% 1.60%
    HELOC 371,861   388,305   380,501  (4.23)% (2.27)%
    Commercial and industrial business (C&I) 1,237,524   1,251,350   1,259,282  (1.10)% (1.73)%
    Government 523,456   520,198   520,994  0.63% 0.47%
    Indirect 548,621   572,710   562,161  (4.21)% (2.41)%
    Consumer loans and other 91,206   86,656   88,003  5.25% 3.64%
    Total$11,172,971  $10,559,611  $11,208,014  5.81% (0.31)%
              
           % Change
    DepositsQ3 Q3 Q2 Q3 23 vs. Q3 23 vs.
      2023   2022   2023  Q3 22 Q2 23
    Noninterest-bearing demand$4,444,861  $5,574,528  $4,774,830  (20.26)% (6.91)%
    Interest-bearing:         
    Demand and money market accounts 6,764,415   6,042,417   6,529,336  11.95% 3.60%
    Savings 350,031   387,622   361,891  (9.70)% (3.28)%
    Certificates of deposits 2,321,498   1,407,495   2,100,604  64.94% 10.52%
    Total 13,880,805   13,412,062   13,766,661  3.49% 0.83%
                      


    TOWNEBANK
    Average Balances, Yields and Rate Paid (unaudited)
    (dollars in thousands)
     
     Three Months Ended Three Months Ended Three Months Ended
     September 30, 2023 June 30, 2023 September 30, 2022
       Interest Average   Interest Average   Interest Average
     Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
     Balance Expense Rate (1) Balance Expense Rate (1) Balance Expense Rate (1)
    Assets:                 
    Loans (net of unearned income
    and deferred costs)
    $11,169,924  $144,457  5.13% $11,209,641  $139,814  5.00% $10,465,441  $112,225  4.25%
    Taxable investment securities 2,373,731   18,645  3.14%  2,450,393   17,195  2.81%  2,385,218   12,943  2.17%
    Tax-exempt investment securities 206,639   1,993  3.86%  209,728   2,003  3.82%  147,184   1,252  3.41%
    Total securities 2,580,370   20,638  3.20%  2,660,121   19,198  2.89%  2,532,402   14,195  2.24%
    Interest-bearing deposits 1,230,582   15,031  4.85%  1,262,692   14,488  4.60%  1,800,798   9,509  2.09%
    Loans held for sale 227,426   3,928  6.91%  172,679   2,547  5.90%  188,737   2,446  5.18%
    Total earning assets 15,208,302   184,054  4.80%  15,305,133   176,047  4.61%  14,987,378   138,375  3.66%
    Less: allowance for credit losses (125,553)      (121,140)      (104,178)    
    Total nonearning assets 1,680,110       1,642,972       1,421,094     
    Total assets$16,762,859      $16,826,965      $16,304,294     
    Liabilities and Equity:                 
    Interest-bearing deposits                 
    Demand and money market$6,605,853  $41,381  2.49% $6,220,394  $32,058  2.07% $6,084,753  $6,542  0.43%
    Savings 356,116   938  1.05%  371,455   895  0.97%  391,437   628  0.64%
    Certificates of deposit 2,236,102   21,852  3.88%  1,968,623   15,718  3.20%  1,456,746   3,060  0.83%
    Total interest-bearing deposits 9,198,071   64,171  2.77%  8,560,472   48,671  2.28%  7,932,936   10,230  0.51%
    Borrowings 299,105   3,382  4.42%  863,255   10,345  4.74%  94,411   139  0.58%
    Subordinated debt, net 255,446   2,245  3.52%  255,264   2,236  3.50%  320,518   3,117  3.89%
    Total interest-bearing liabilities 9,752,622   69,798  2.84%  9,678,991   61,252  2.54%  8,347,865   13,486  0.64%
    Demand deposits 4,633,856       4,829,395       5,690,020     
    Other noninterest-bearing liabilities 389,912       339,966       387,835     
    Total liabilities 14,776,390       14,848,352       14,425,720     
    Shareholders’ equity 1,986,469       1,978,613       1,878,574     
    Total liabilities and equity$16,762,859      $16,826,965      $16,304,294     
    Net interest income (tax-equivalent basis) (4)  $114,256      $114,795      $124,889   
    Reconciliation of Non-GAAP Financial Measures                
    Tax-equivalent basis adjustment   (1,198)      (1,184)      (851)  
    Net interest income (GAAP)  $113,058      $113,611      $124,038   
                      
    Interest rate spread (2)(4)    1.96%     2.07%     3.02%
    Interest expense as a percent of average earning assets   1.82%     1.61%     0.36%
    Net interest margin (tax equivalent basis) (3)(4)   2.98%     3.01%     3.31%
    Total cost of deposits    1.84%     1.46%     0.30%
                      

    (1) Yields and interest income are presented on a taxable-equivalent basis using the federal statutory tax rate of 21%.
    (2) Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities. Fully tax equivalent.
    (3) Net interest margin is net interest income expressed as a percentage of average earning assets. Fully tax equivalent.
    (4) Non-GAAP.

     
    TOWNEBANK
    Average Balances, Yields and Rate Paid (unaudited)
    (dollars in thousands)
     
     Nine Months Ended Nine Months Ended
     September 30, 2023 September 30, 2022
       Interest Average   Interest Average
     Average  Income/ Yield/ Average  Income/ Yield/
     Balance Expense Rate (1) Balance Expense Rate (1)
    Assets:           
    Loans (net of unearned income and deferred costs)$11,159,329  $417,808  5.01% $10,113,980  $309,283  4.09%
    Taxable investment securities 2,420,634   52,656  2.90%  2,259,940   33,344  1.97%
    Tax-exempt investment securities 201,535   5,883  3.89%  130,196   3,090  3.16%
    Total securities 2,622,169   58,539  2.98%  2,390,136   36,434  2.03%
    Interest-bearing deposits 1,179,952   40,168  4.55%  2,362,155   15,472  0.88%
    Loans held for sale 168,822   8,079  6.38%  225,777   7,038  4.16%
    Total earning assets 15,130,272   524,594  4.64%  15,092,048   368,227  3.26%
    Less: allowance for credit losses (120,420)      (104,733)    
    Total nonearning assets 1,637,952       1,394,691     
    Total assets$16,647,804      $16,382,006     
    Liabilities and Equity:           
    Interest-bearing deposits           
    Demand and money market$6,349,422  $96,742  2.04% $6,203,889  $11,898  0.26%
    Savings 376,282   2,676  0.95%  387,290   1,664  0.57%
    Certificates of deposit 1,964,718   47,358  3.22%  1,440,661   7,134  0.66%
    Total interest-bearing deposits 8,690,422   146,776  2.26%  8,031,840   20,696  0.34%
    Borrowings 505,856   17,644  4.60%  119,336   412  0.46%
    Subordinated debt, net 253,612   6,650  3.50%  401,195   12,328  4.10%
    Total interest-bearing liabilities 9,449,890   171,070  2.42%  8,552,371   33,436  0.52%
    Demand deposits 4,873,945       5,569,186     
    Other noninterest-bearing liabilities 353,459       374,794     
    Total liabilities 14,677,294       14,496,351     
    Shareholders’ equity 1,970,510       1,885,655     
    Total liabilities and equity$16,647,804      $16,382,006     
    Net interest income (tax-equivalent basis)(4)  $353,524      $334,791   
    Reconciliation of Non-GAAP Financial Measures          
    Tax-equivalent basis adjustment   (3,477)      (2,209)  
    Net interest income (GAAP)  $350,047      $332,582   
                
    Interest rate spread (2)(4)    2.22%     2.74%
    Interest expense as a percent of average earning assets   1.51%     0.30%
    Net interest margin (tax equivalent basis) (3)(4)   3.12%     2.97%
    Total cost of deposits    1.45%     0.20%
                
    (1) Yields and interest income are presented on a taxable-equivalent basis using the federal statutory rate of 21%.
    (2) Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities. Fully tax equivalent.
    (3) Net interest margin is net interest income expressed as a percentage of average earning assets. Fully tax equivalent.
    (4) Non-GAAP.
     


    TOWNEBANK
    Consolidated Balance Sheets
    (dollars in thousands, except share data)
      
       
     September 30, December 31,
      2023   2022 
     (unaudited) (audited)
    ASSETS   
    Cash and due from banks$83,949  $55,381 
    Interest-bearing deposits at FRB - Richmond 1,029,276   1,000,205 
    Federal funds sold and interest-bearing deposits in financial institutions 102,527   97,244 
    Total Cash and Cash Equivalents 1,215,752   1,152,830 
    Securities available for sale, at fair value (amortized cost of $2,203,314 and $2,033,040, and allowance for credit losses of $1,343 and $1,086 at September 30, 2023 and December 31, 2022, respectively) 1,963,453   1,840,902 
    Securities held to maturity, at amortized cost (fair value $524,431 and $518,993 at September 30, 2023 and December 31, 2022, respectively) 547,854   548,475 
    Less: allowance for credit losses (85)  (83)
    Securities held to maturity, net of allowance for credit losses 547,769   548,392 
    Other equity securities 14,062   6,424 
    FHLB stock 16,634   9,617 
    Total Securities 2,541,918   2,405,335 
    Mortgage loans held for sale 188,048   102,339 
    Loans, net of unearned income and deferred costs 11,172,971   10,794,602 
    Less: allowance for credit losses (125,159)  (110,816)
    Net Loans 11,047,812   10,683,786 
    Premises and equipment, net 335,522   304,802 
    Goodwill 456,684   458,482 
    Other intangible assets, net 67,496   43,163 
    BOLI 275,240   258,069 
    Other assets 551,884   436,461 
    TOTAL ASSETS$16,680,356  $15,845,267 
        
    LIABILITIES AND EQUITY   
    Deposits:   
    Noninterest-bearing demand$4,444,861  $5,265,186 
    Interest-bearing:   
    Demand and money market accounts 6,764,415   6,185,075 
    Savings 350,031   374,987 
    Certificates of deposit 2,321,498   1,468,975 
    Total Deposits 13,880,805   13,294,223 
    Advances from the FHLB 104,139   29,674 
    Subordinated debt, net 255,580   247,420 
    Repurchase agreements and other borrowings 47,315   40,918 
    Total Borrowings 407,034   318,012 
    Other liabilities 408,305   344,275 
    TOTAL LIABILITIES 14,696,144   13,956,510 
    Preferred stock, authorized and unissued shares - 2,000,000     
    Common stock, $1.667 par value: 150,000,000 shares authorized   
    74,887,083 and 72,841,379 shares issued at   
    September 30, 2023 and December 31, 2022, respectively 124,837   121,426 
    Capital surplus 1,111,152   1,052,262 
    Retained earnings 911,042   840,777 
    Common stock issued to deferred compensation trust, at cost   
    1,001,376 and 931,030 shares at September 30, 2023 and December 31, 2022, respectively (20,740)  (18,974)
    Deferred compensation trust 20,740   18,974 
    Accumulated other comprehensive income (loss) (179,043)  (140,505)
    TOTAL SHAREHOLDERS’ EQUITY 1,967,988   1,873,960 
    Noncontrolling interest 16,224   14,797 
    TOTAL EQUITY 1,984,212   1,888,757 
    TOTAL LIABILITIES AND EQUITY$16,680,356  $15,845,267 
     


    TOWNEBANK
    Consolidated Statements of Income (unaudited)
    (dollars in thousands, except per share data)
            
            
     Three Months Ended Nine Months Ended
     September 30, September 30,
      2023   2022   2023   2022 
    INTEREST INCOME:       
    Loans, including fees$143,605  $111,590  $415,351  $307,595 
    Investment securities 20,292   13,979   57,519   35,913 
    Interest-bearing deposits in financial institutions and federal funds sold 15,031   9,509   40,168   15,472 
    Mortgage loans held for sale 3,928   2,446   8,079   7,038 
    Total interest income 182,856   137,524   521,117   366,018 
    INTEREST EXPENSE:       
    Deposits 64,171   10,230   146,776   20,696 
    Advances from the FHLB 3,438   83   16,838   261 
    Subordinated debt, net 2,245   3,117   6,650   12,328 
    Repurchase agreements and other borrowings (56)  56   806   151 
    Total interest expense 69,798   13,486   171,070   33,436 
    Net interest income 113,058   124,038   350,047   332,582 
    PROVISION FOR CREDIT LOSSES 1,007   3,925   16,232   2,532 
    Net interest income after provision for credit losses 112,051   120,113   333,815   330,050 
    NONINTEREST INCOME:       
    Residential mortgage banking income, net 10,648   11,968   31,380   39,782 
    Insurance commissions and other income, net 23,777   19,435   69,098   58,255 
    Property management income, net 12,800   9,891   40,433   36,489 
    Real estate brokerage income, net (63)  2,932   3,562   8,899 
    Service charges on deposit accounts 2,802   2,455   8,671   7,474 
    Credit card merchant fees, net 2,006   1,658   5,232   4,940 
    BOLI 1,814   1,585   5,196   5,155 
    Other income 6,022   5,274   24,956   18,052 
    Total noninterest income 59,806   55,198   188,528   179,046 
    NONINTEREST EXPENSE:       
    Salaries and employee benefits 67,258   65,463   204,124   194,318 
    Occupancy 9,027   8,748   27,579   25,417 
    Furniture and equipment 4,100   3,764   12,733   11,097 
    Amortization - intangibles 3,610   2,644   10,744   8,145 
    Software expense 6,130   4,594   17,922   13,848 
    Data processing 4,140   3,628   11,504   10,778 
    Professional fees 2,770   2,627   8,948   6,416 
    Advertising and marketing 3,653   4,290   12,012   12,508 
    Other expenses 17,014   16,276   61,762   47,612 
    Total noninterest expense 117,702   112,034   367,328   330,139 
    Income before income tax expense and noncontrolling interest 54,155   63,277   155,015   178,957 
    Provision for income tax expense 9,410   12,606   28,424   34,983 
    Net income$44,745  $50,671  $126,591  $143,974 
    Net income attributable to noncontrolling interest 117   (502)  (1,680)  (1,672)
    Net income attributable to TowneBank$44,862  $50,169  $124,911  $142,302 
    Per common share information       
    Basic earnings$0.60  $0.69  $1.67  $1.96 
    Diluted earnings$0.60  $0.69  $1.67  $1.96 
    Cash dividends declared$0.25  $0.23  $0.73  $0.66 
                    


    TOWNEBANK
    Consolidated Balance Sheets - Five Quarter Trend
    (dollars in thousands, except share data)
     
              
     September 30, June 30, March 31, December 31, September 30,
      2023   2023   2023   2022   2022 
     (unaudited) (unaudited) (unaudited) (audited) (unaudited)
    ASSETS         
    Cash and due from banks$83,949  $106,994  $97,502  $55,381  $97,290 
    Interest-bearing deposits at FRB - Richmond 1,029,276   1,427,044   1,040,112   1,000,205   1,245,067 
    Federal funds sold and interest-bearing deposits in financial institutions 102,527   102,231   104,924   97,244   96,862 
    Total Cash and Cash Equivalents 1,215,752   1,636,269   1,242,538   1,152,830   1,439,219 
    Securities available for sale 1,963,453   2,005,851   2,078,483   1,840,902   1,890,136 
    Securities held to maturity 547,854   548,017   548,226   548,475   548,745 
    Less: allowance for credit losses (85)  (87)  (88)  (83)  (83)
    Securities held to maturity, net of allowance for credit losses 547,769   547,930   548,138   548,392   548,662 
    Other equity securities 14,062   13,798   13,341   6,424   6,360 
    FHLB stock 16,634   40,454   29,837   9,617   9,475 
    Total Securities 2,541,918   2,608,033   2,669,799   2,405,335   2,454,633 
    Mortgage loans held for sale 188,048   229,502   157,161   102,339   165,023 
    Loans, net of unearned income and deferred costs 11,172,971   11,208,014   11,173,785   10,794,602   10,559,611 
    Less: allowance for credit losses (125,159)  (123,513)  (120,002)  (110,816)  (107,497)
    Net Loans 11,047,812   11,084,501   11,053,783   10,683,786   10,452,114 
    Premises and equipment, net 335,522   326,686   321,944   304,802   295,345 
    Goodwill 456,684   456,695   477,234   458,482   458,482 
    Other intangible assets, net 67,496   71,106   73,238   43,163   44,854 
    BOLI 275,240   273,435   271,704   258,069   256,074 
    Other assets 551,884   538,848   463,076   436,461   386,053 
    TOTAL ASSETS$16,680,356  $17,225,075  $16,730,477  $15,845,267  $15,951,797 
    LIABILITIES AND EQUITY         
    Deposits:         
    Noninterest-bearing demand$4,444,861  $4,774,830  $5,069,363  $5,265,186  $5,574,528 
    Interest-bearing:         
    Demand and money market accounts 6,764,415   6,529,336   6,284,184   6,185,075   6,042,417 
    Savings 350,031   361,891   389,173   374,987   387,622 
    Certificates of deposit 2,321,498   2,100,604   1,855,411   1,468,975   1,407,495 
    Total Deposits 13,880,805   13,766,661   13,598,131   13,294,223   13,412,062 
    Advances from the FHLB 104,139   754,319   504,497   29,674   29,850 
    Subordinated debt, net 255,580   255,365   255,151   247,420   247,265 
    Repurchase agreements and other borrowings 47,315   49,898   46,602   40,918   43,165 
    Total Borrowings 407,034   1,059,582   806,250   318,012   320,280 
    Other liabilities 408,305   408,333   336,201   344,275   375,869 
    TOTAL LIABILITIES 14,696,144   15,234,576   14,740,582   13,956,510   14,108,211 
              
    Preferred stock              
    Common stock, $1.667 par value 124,837   124,805   124,682   121,426   121,423 
    Capital surplus 1,111,152   1,109,526   1,109,387   1,052,262   1,052,374 
    Retained earnings 911,042   884,901   861,905   840,777   810,845 
    Common stock issued to deferred compensation         
    trust, at cost (20,740)  (20,134)  (18,839)  (18,974)  (18,862)
    Deferred compensation trust 20,740   20,134   18,839   18,974   18,862 
    Accumulated other comprehensive income (loss) (179,043)  (145,392)  (121,297)  (140,505)  (157,980)
    TOTAL SHAREHOLDERS’ EQUITY 1,967,988   1,973,840   1,974,677   1,873,960   1,826,662 
    Noncontrolling interest 16,224   16,659   15,218   14,797   16,924 
    TOTAL EQUITY 1,984,212   1,990,499   1,989,895   1,888,757   1,843,586 
    TOTAL LIABILITIES AND EQUITY$16,680,356  $17,225,075  $16,730,477  $15,845,267  $15,951,797 


     
    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,
      2023   2023   2023   2022  2022 
    INTEREST INCOME:         
    Loans, including fees$143,605  $138,977  $132,768  $123,395 $111,590 
    Investment securities 20,292   18,851   18,375   15,294  13,979 
    Interest-bearing deposits in financial institutions and federal funds sold 15,031   14,488   10,649   11,387  9,509 
    Mortgage loans held for sale 3,928   2,547   1,604   1,842  2,446 
    Total interest income 182,856   174,863   163,396   151,918  137,524 
    INTEREST EXPENSE:         
    Deposits 64,171   48,671   33,934   20,118  10,230 
    Advances from the FHLB 3,438   10,407   2,992   665  83 
    Subordinated debt, net 2,245   2,236   2,169   2,108  3,117 
    Repurchase agreements and other borrowings (56)  (62)  923   244  56 
    Total interest expense 69,798   61,252   40,018   23,135  13,486 
    Net interest income 113,058   113,611   123,378   128,783  124,038 
    PROVISION FOR CREDIT LOSSES 1,007   3,556   11,670   6,074  3,925 
    Net interest income after provision for credit losses 112,051   110,055   111,708   122,709  120,113 
    NONINTEREST INCOME:         
    Residential mortgage banking income, net 10,648   11,360   9,372   7,368  11,968 
    Insurance commissions and other income, net 23,777   22,498   22,823   17,324  19,435 
    Property management income, net 12,800   12,098   15,535   7,756  9,891 
    Real estate brokerage income, net (63)  1,834   1,791   2,355  2,932 
    Service charges on deposit accounts 2,802   3,018   2,851   2,655  2,455 
    Credit card merchant fees, net 2,006   1,682   1,545   1,653  1,658 
    BOLI 1,814   1,710   1,672   1,985  1,585 
    Other income 6,022   13,757   5,177   5,428  5,274 
    Total noninterest income 59,806   67,957   60,766   46,524  55,198 
    NONINTEREST EXPENSE:         
    Salaries and employee benefits 67,258   67,445   69,420   61,307  65,463 
    Occupancy 9,027   9,487   9,064   9,252  8,748 
    Furniture and equipment 4,100   4,389   4,244   3,983  3,764 
    Amortization - intangibles 3,610   3,610   3,524   2,475  2,644 
    Software expense 6,130   6,169   5,624   5,111  4,594 
    Data processing 4,140   4,011   3,353   3,096  3,628 
    Professional fees 2,770   3,166   3,011   3,605  2,627 
    Advertising and marketing 3,653   3,959   4,401   3,489  4,290 
    Other expenses 17,014   22,992   21,756   18,823  16,276 
    Total noninterest expense 117,702   125,228   124,397   111,141  112,034 
    Income before income tax expense and noncontrolling interest 54,155   52,784   48,077   58,092  63,277 
    Provision for income tax expense 9,410   9,416   9,599   11,598  12,606 
    Net income 44,745   43,368   38,478   46,494  50,671 
    Net income attributable to noncontrolling interest 117   (1,652)  (145)  191  (502)
    Net income attributable to TowneBank$44,862  $41,716  $38,333  $46,685 $50,169 
    Per common share information         
    Basic earnings$0.60  $0.56  $0.52  $0.64 $0.69 
    Diluted earnings$0.60  $0.56  $0.52  $0.64 $0.69 
    Basic weighted average shares outstanding 74,750,294   74,691,121   74,363,222   72,686,303  72,578,736 
    Diluted weighted average shares outstanding 74,765,515   74,699,810   74,390,614   72,724,189  72,594,474 
    Cash dividends declared$0.25  $0.25  $0.23  $0.23 $0.23 
              


    TOWNEBANK
    Banking Segment Financial Information (unaudited)
    (dollars in thousands)
     
              
     Three Months Ended Nine Months Ended Increase/(Decrease)
     September 30, June 30, September 30, YTD 2023 over 2022
      2023   2022   2023   2023   2022  Amount Percent
    Revenue             
    Net interest income$112,189  $123,039  $113,327  $349,165  $327,226  $21,939  6.70%
    Service charges on deposit accounts 2,802   2,455   3,018   8,671   7,474   1,197  16.02%
    Credit card merchant fees 2,006   1,658   1,682   5,232   4,940   292  5.91%
    Other income 6,608   5,332   6,153   18,499   17,083   1,416  8.29%
    Total noninterest income 11,416   9,445   10,853   32,402   29,497   2,905  9.85%
    Total revenue 123,605   132,484   124,180   381,567   356,723   24,844  6.96%
                  
    Provision for credit losses 1,206   4,240   3,482   16,442   2,247   14,195  631.73%
                  
    Expenses             
    Salaries and employee benefits 42,727   39,349   42,240   128,161   115,082   13,079  11.36%
    Occupancy 6,637   6,109   6,846   19,717   17,401   2,316  13.31%
    Furniture and equipment 3,273   2,803   3,544   10,150   8,259   1,891  22.90%
    Amortization of intangible assets 1,296   726   1,341   3,918   2,330   1,588  68.15%
    Other expenses 22,595   21,075   29,178   80,215   57,158   23,057  40.34%
    Total expenses 76,528   70,062   83,149   242,161   200,230   41,931  20.94%
    Income before income tax, corporate allocation and noncontrolling interest 45,871   58,182   37,549   122,964   154,246   (31,282) (20.28)%
    Corporate allocation 1,291   902   1,271   3,763   3,520   243  6.90%
    Income before income tax provision and noncontrolling interest 47,162   59,084   38,820   126,727   157,766   (31,039) (19.67)%
    Provision for income tax expense 7,440   11,507   6,114   21,204   29,782   (8,578) (28.80)%
    Net income 39,722   47,577   32,706   105,523   127,984   (22,461) (17.55)%
    Noncontrolling interest                  N/M
    Net income attributable to TowneBank$39,722  $47,577  $32,706  $105,523  $127,984  $(22,461) (17.55)%
                  
    Efficiency ratio(non-GAAP) 60.86%  52.34%  65.88%  62.44%  55.48%  6.96% 12.55%
                               


    TOWNEBANK
    Realty Segment Financial Information (unaudited)
    (dollars in thousands)
     
        
     Three Months Ended Nine Months Ended Increase/(Decrease)
     September 30, June 30, September 30, YTD 2023 over 2022
      2023   2022   2023   2023   2022  Amount Percent
    Revenue             
    Residential mortgage brokerage
    income, net
    $10,955  $12,726  $12,215  $32,964  $43,491  $(10,527) (24.21)%
    Real estate brokerage income, net (63)  2,932   1,834   3,562   8,899   (5,337) (59.97)%
    Title insurance and settlement fees    525   152   443   1,590   (1,147) (72.14)%
    Property management fees, net 12,800   9,891   12,098   40,433   36,489   3,944  10.81%
    Income from unconsolidated subsidiary (63)  77   (886)  (884)  359   (1,243) (346.24)%
    Net interest and other income 1,163   1,508   9,468   10,817   6,851   3,966  57.89%
    Total revenue 24,792   27,659   34,881   87,335   97,679   (10,344) (10.59)%
                  
    Provision for credit losses (199)  (315)  74   (210)  285   (495) (173.68)%
                  
    Expenses             
    Salaries and employee benefits 12,881   15,854   13,949   41,670   49,646   (7,976) (16.07)%
    Occupancy 1,669   1,919   1,869   5,559   5,814   (255) (4.39)%
    Furniture and equipment 600   765   640   1,933   2,232   (299) (13.40)%
    Amortization of intangible assets 742   817   741   2,166   2,449   (283) (11.56)%
    Other expenses 9,544   8,687   9,337   27,319   29,472   (2,153) (7.31)%
    Total expenses 25,436   28,042   26,536   78,647   89,613   (10,966) (12.24)%
                  
    Income before income tax, corporate allocation and noncontrolling interest (445)  (68)  8,271   8,898   7,781   1,117  14.36%
    Corporate allocation (600)  (602)  (600)  (1,800)  (2,602)  802  (30.82)%
    Income before income tax provision and noncontrolling interest (1,045)  (670)  7,671   7,098   5,179   1,919  37.05%
    Provision for income tax expense (99)  (120)  1,686   1,769   1,110   659  59.37%
    Net income (946)  (550)  5,985   5,329   4,069   1,260  30.97%
    Noncontrolling interest 117   (502)  (1,652)  (1,680)  (1,672)  (8) 0.48%
    Net income attributable to TowneBank$(829) $(1,052) $4,333  $3,649  $2,397  $1,252  52.23%
                  
    Efficiency ratio excluding gain on equity investment(non-GAAP) 99.61%  98.43%  99.03%  97.43%  89.24%  8.19% 9.18%
                  


    TOWNEBANK
    Insurance Segment Financial Information (unaudited)
    (dollars in thousands)
     
              
     Three Months Ended Nine Months Ended Increase/(Decrease)
     September 30, June 30, September 30, YTD 2023 over 2022
      2023   2022   2023   2023   2022  Amount Percent
    Commission and fee income             
    Property and casualty$22,103  $17,567  $20,028  $60,259  $49,451  $10,808  21.86%
    Employee benefits 4,245   4,020   4,561   13,393   12,105   1,288  10.64%
    Specialized benefit services 133   160   153   445   489   (44) (9.00)%
    Total commissions and fees 26,481   21,747   24,742   74,097   62,045   12,052  19.42%
                  
    Contingency and bonus revenue 2,335   1,654   2,638   9,343   8,052   1,291  16.03%
    Other income 557   23   8   573   72   501  695.83%
    Total revenue 29,373   23,424   27,388   84,013   70,169   13,844  19.73%
                  
    Employee commission expense 4,906   4,331   4,881   14,340   12,943   1,397  10.79%
    Revenue, net of commission expense 24,467   19,093   22,507   69,673   57,226   12,447  21.75%
                  
    Salaries and employee benefits 11,650   10,260   11,256   34,293   29,590   4,703  15.89%
    Occupancy 721   720   772   2,303   2,202   101  4.59%
    Furniture and equipment 227   196   205   650   606   44  7.26%
    Amortization of intangible assets 1,572   1,101   1,528   4,660   3,366   1,294  38.44%
    Other expenses 1,568   1,653   1,782   4,614   4,532   82  1.81%
    Total operating expenses 15,738   13,930   15,543   46,520   40,296   6,224  15.45%
    Income before income tax, corporate allocation and noncontrolling interest 8,729   5,163   6,964   23,153   16,930   6,223  36.76%
    Corporate allocation (691)  (300)  (671)  (1,963)  (918)  (1,045) 113.83%
    Income before income tax provision and noncontrolling interest 8,038   4,863   6,293   21,190   16,012   5,178  32.34%
    Provision for income tax expense 2,069   1,219   1,616   5,451   4,091   1,360  33.24%
    Net income 5,969   3,644   4,677   15,739   11,921   3,818  32.03%
    Noncontrolling interest                  N/M 
    Net income attributable to TowneBank$5,969  $3,644  $4,677  $15,739  $11,921  $3,818  32.03%
                  
    Provision for income taxes 2,069   1,219   1,616   5,451   4,091   1,360  33.24%
    Depreciation, amortization and interest expense 1,726   1,228   1,683   5,115   3,767   1,348  35.78%
    EBITDA(non-GAAP)$9,764  $6,091  $7,976  $26,305  $19,779  $6,526  32.99%
                  
    Efficiency ratio(non-GAAP) 59.21%  67.19%  62.27%  60.55%  64.53% (3.98)        % (6.17)%
                            


    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,
      2023   2022   2023   2023   2022 
              
    Return on average assets (GAAP) 1.06%  1.22%  0.99%  1.00%  1.16%
    Impact of excluding average goodwill and other
    intangibles and amortization
     0.11%  0.09%  0.11%  0.11%  0.09%
    Return on average tangible assets (non-GAAP) 1.17%  1.31%  1.10%  1.11%  1.25%
              
    Return on average equity (GAAP) 8.96%  10.60%  8.46%  8.48%  10.09%
    Impact of excluding average goodwill and other
    intangibles and amortization
     4.01%  4.48%  3.89%  3.87%  4.31%
    Return on average tangible equity (non-GAAP) 12.97%  15.08%  12.35%  12.35%  14.40%
              
    Return on average common equity (GAAP) 9.04%  10.69%  8.52%  8.54%  10.18%
    Impact of excluding average goodwill and other
    intangibles and amortization
     4.07%  4.58%  3.96%  3.95%  4.39%
    Return on average tangible common equity
    (non-GAAP)
     13.11%  15.27%  12.48%  12.49%  14.57%
              
    Book value (GAAP)$26.28  $25.08  $26.36  $26.28  $25.08 
    Impact of excluding average goodwill and other
    intangibles and amortization
     (7.00)  (6.91)  (7.05)  (7.00)  (6.91)
    Tangible book value (non-GAAP)$19.28  $18.17  $19.31  $19.28  $18.17 
              
    Efficiency ratio (GAAP) 68.09%  62.51%  68.97%  68.20%  64.53%
    Impact of exclusions(1.88)        % (1.48)        %  1.44% (0.82)        % (1.59)        %
    Efficiency ratio (non-GAAP) 66.21%  61.03%  70.41%  67.38%  62.94%
              
    Average assets (GAAP)$16,762,859  $16,304,294  $16,826,965  $16,647,804  $16,382,006 
    Less: average goodwill and intangible assets 526,445   504,000   530,658   526,375   504,715 
    Average tangible assets (non-GAAP)$16,236,414  $15,800,294  $16,296,307  $16,121,429  $15,877,291 
              
    Average equity (GAAP)$1,986,469  $1,878,574  $1,978,613  $1,970,510  $1,885,655 
    Less: average goodwill and intangible assets 526,445   504,000   530,658   526,375   504,715 
    Average tangible equity (non-GAAP)$1,460,024  $1,374,574  $1,447,955  $1,444,135  $1,380,940 
              
    Average common equity (GAAP)$1,969,898  $1,861,845  $1,963,164  $1,954,850  $1,869,112 
    Less: average goodwill and intangible assets 526,445   504,000   530,658   526,375   504,715 
    Average tangible common equity (non-GAAP)$1,443,453  $1,357,845  $1,432,506  $1,428,475  $1,364,397 
              
    Net income (GAAP)$44,862  $50,169  $41,716  $124,911  $142,302 
    Amortization of intangibles, net of tax 2,852   2,089   2,852   8,488   6,435 
    Tangible net income (non-GAAP)$47,714  $52,258  $44,568  $133,399  $148,737 
              
    Noninterest expense (GAAP)$117,702  $112,034  $125,228  $367,328  $330,139 
    Less: amortization of intangibles 3,610   2,644   3,610   10,744   8,145 
    Noninterest expense net of amortization (non-GAAP)$114,092  $109,390  $121,618  $356,584  $321,994 


     
    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,
       2023   2023   2023   2022   2022 
    Net income (GAAP) $44,862  $41,716  $38,333  $46,685  $50,169 
               
    Adjustments          
    Plus: Acquisition-related expenses, net of tax  458   2,457   4,803   320   610 
    Plus: Initial provision for acquired loans, net of tax        3,166       
    Less: Gain on sale of equity investments, net of noncontrolling interest and tax  (438)  (5,513)         
    Core operating earnings, excluding certain items affecting comparability (non-GAAP) $44,882  $38,660  $46,302  $47,005  $50,779 
    Weighted average diluted shares  74,765,515   74,699,810   74,390,614   72,724,189   72,594,474 
    Diluted EPS (GAAP) $0.60  $0.56  $0.52  $0.64  $0.69 
    Diluted EPS, excluding certain items affecting
    comparability (non-GAAP)
     $0.60  $0.52  $0.62  $0.65  $0.70 
    Average assets $16,762,859  $16,826,965  $16,349,040  $15,929,756  $16,304,294 
    Average tangible equity $1,460,024  $1,447,955   1,424,030  $1,352,891  $1,374,574 
    Average common tangible equity $1,443,453  $1,432,506  $1,409,091  $1,336,356  $1,357,845 
    Return on average assets, excluding certain items
    affecting comparability (non-GAAP)
      1.06%  0.92%  1.15%  1.17%  1.24%
    Return on average tangible equity, excluding certain items affecting comparability (non-GAAP)  12.97%  11.50%  13.98%  14.36%  15.26%
    Return on average common tangible equity, excluding certain items affecting comparability (non-GAAP)  13.12%  11.62%  14.13%  14.54%  15.45%
    Efficiency ratio, excluding certain items affecting
    comparability (non-GAAP)
      67.76%  67.32%  64.32%  63.20%  62.16%
               


    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,
       2023   2022 
    Net income (GAAP) $124,911  $142,302 
         
    Adjustments    
    Plus: Acquisition-related expenses, net of tax  7,718   705 
    Plus: Initial provision for acquired loans, net of tax  3,166    
    Less: Gain on sale of equity investments, net of noncontrolling interest and tax  (5,951)   
    Total charges, net of taxes  4,933   705 
    Core operating earnings, excluding certain items affecting comparability (non-GAAP) $129,844  $143,007 
    Weighted average diluted shares  74,618,743   72,567,596 
    Diluted EPS (GAAP) $1.67  $1.96 
    Diluted EPS, excluding certain items affecting comparability (non-GAAP) $1.74  $1.96 
    Average assets $16,647,804  $16,382,006 
    Average tangible equity $1,444,135  $1,380,940 
    Average tangible common equity $1,428,475  $1,364,397 
    Return on average assets, excluding certain items affecting comparability (non-GAAP)  1.04%  1.17%
    Return on average tangible equity, excluding certain items affecting comparability (non-GAAP)  12.81%  14.47%
    Return on average common tangible equity, excluding certain items affecting comparability (non-GAAP)  12.95%  14.64%
    Efficiency ratio, excluding certain items affecting comparability (non-GAAP)  67.61%  64.39%
         


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