TOWN TowneBank

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

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

Highlights for First Quarter 2024:

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

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

Quarterly Net Interest Income:

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

Quarterly Provision for Credit Losses:

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

Quarterly Noninterest Income:

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

Quarterly Noninterest Expense:

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

Consolidated Balance Sheet Highlights:

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

Investment Securities:

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

Loans and Asset Quality:

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

Deposits and Borrowings:

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

Capital:

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

(1) Preliminary.

About TowneBank:Founded in 1999, TowneBank is a company built on relationships, offering a full range of banking and other financial services, with a focus of serving others and enriching lives. Dedicated to a culture of caring, Towne values all employees and members by embracing their diverse talents, perspectives, and experiences.

Now celebrating 25 years, TowneBank operates 50 banking offices throughout Hampton Roads and Central Virginia, as well as Northeastern and Central North Carolina – serving as a local leader in promoting the social, cultural, and economic growth in each community. Towne offers a competitive array of business and personal banking solutions, delivered with only the highest ethical standards. Experienced local bankers providing a higher level of expertise and personal attention with local decision-making are key to the TowneBank strategy. TowneBank has grown its capabilities beyond banking to provide expertise through its affiliated companies that include Towne Wealth Management, Towne Insurance Agency, Towne Benefits, TowneBank Mortgage, TowneBank Commercial Mortgage, Berkshire Hathaway HomeServices RW Towne Realty, Towne 1031 Exchange, LLC, and Towne Vacations. With total assets of $16.88 billion as of March 31, 2024, TowneBank is one of the largest banks headquartered in Virginia.

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

Forward-Looking Statements:This press release contains certain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts, but instead represent only the beliefs, expectations, or opinions of TowneBank and its management regarding future events, many of which, by their nature, are inherently uncertain. Forward-looking statements may be identified by the use of such words as: "believe," "expect," "anticipate," "intend," "plan,” "estimate," or words of similar meaning, or future or conditional terms, such as "will," "would," "should," "could," "may," "likely," "probably," or "possibly." These statements may address issues that involve significant risks, uncertainties, estimates, and assumptions made by management. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include among others, competitive pressures in the banking industry that may increase significantly; changes in the interest rate environment that may reduce margins and/or the volumes and values of loans made or held as well as the value of other financial assets held; an unforeseen outflow of cash or deposits or an inability to access the capital markets, which could jeopardize our overall liquidity or capitalization; changes in the creditworthiness of customers and the possible impairment of the collectability of loans; insufficiency of our allowance for credit losses due to market conditions, inflation, changing interest rates or other factors; adverse developments in the financial industry generally, such as the recent bank failures, responsive measures to mitigate and manage such developments, related supervisory and regulatory actions and costs, and related impacts on customer and client behavior; general economic conditions, either nationally or regionally, that may be less favorable than expected, resulting in, among other things, a deterioration in credit quality and/or a reduced demand for credit or other services; geopolitical instability, including wars, conflicts, civil unrest, and terrorist attacks and the potential impact, directly or indirectly, on our business; the effects of weather-related or natural disasters, which may negatively affect our operations and/or our loan portfolio and increase our cost of conducting business; public health events (such as the COVID-19 pandemic) and governmental and societal responses to them; changes in the legislative or regulatory environment, including changes in accounting standards and tax laws, that may adversely affect our business; costs or difficulties related to the integration of the businesses we have acquired may be greater than expected; expected cost savings associated with pending or recently completed acquisitions may not be fully realized or realized within the expected time frame; cybersecurity threats or attacks, the implementation of new technologies, and the ability to develop and maintain reliable electronic systems; our competitors may have greater financial resources and develop products that enable them to compete more successfully; changes in business conditions; changes in the securities market; and changes in our local economy with regard to our market area. Any forward-looking statements made by us or on our behalf speak only as of the date they are made or as of the date indicated, and we do not undertake any obligation to update forward-looking statements as a result of new information, future events, or otherwise. For additional information on factors that could materially influence forward-looking statements included in this report, see the "Risk Factors" in TowneBank’s Annual Report on Form 10-K for the year ended December 31, 2023, and related disclosures in other filings that have been, or will be, filed by TowneBank with the Federal Deposit Insurance Corporation.

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

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

TOWNEBANK
Selected Financial Highlights (unaudited)
(dollars in thousands, except per share data)
		Three Months Ended
		March 31,				December 31,				September 30,				June 30,				March 31,
			2024				2023				2023				2023				2023
Income and Performance Ratios:
Total revenue		$	167,102			$	155,546			$	172,864			$	181,568			$	184,144
Net income			35,127				28,545				44,745				43,368				38,478
Net income available to common shareholders			34,687				28,804				44,862				41,716				38,333
Net income per common share – diluted			0.46				0.39				0.60				0.56				0.52
Book value per common share			27.33				27.24				26.28				26.36				26.40
Book value per common share – tangible (non-GAAP)			20.31				20.28				19.28				19.31				19.04
Return on average assets			0.83	%			0.68	%			1.06	%			0.99	%			0.95	%
Return on average assets – tangible (non-GAAP)			0.92	%			0.77	%			1.17	%			1.10	%			1.05	%
Return on average equity			6.84	%			5.75	%			8.96	%			8.46	%			7.99	%
Return on average equity – tangible (non-GAAP)			9.87	%			8.53	%			12.97	%			12.35	%			11.71	%
Return on average common equity			6.89	%			5.79	%			9.04	%			8.52	%			8.05	%
Return on average common equity – tangible (non-GAAP)			9.98	%			8.62	%			13.11	%			12.48	%			11.83	%
Noninterest income as a percentage of total revenue			38.23	%			30.74	%			34.60	%			37.43	%			33.00	%
Regulatory Capital Ratios (1):
Common equity tier 1			12.20	%			12.18	%			12.19	%			11.99	%			11.68	%
Tier 1			12.32	%			12.29	%			12.31	%			12.11	%			11.80	%
Total			15.10	%			15.06	%			15.09	%			14.88	%			14.55	%
Tier 1 leverage ratio			10.15	%			10.17	%			10.06	%			9.85	%			9.86	%
Asset Quality:
Allowance for credit losses on loans to nonperforming loans			18.01	x			18.48	x			17.60	x			18.09	x			12.87	x
Allowance for credit losses on loans to period end loans			1.10	%			1.12	%			1.12	%			1.10	%			1.07	%
Nonperforming loans to period end loans			0.06	%			0.06	%			0.06	%			0.06	%			0.08	%
Nonperforming assets to period end assets			0.05	%			0.05	%			0.05	%			0.05	%			0.06	%
Net charge-offs (recoveries) to average loans (annualized)			0.02	%			—	%			(0.04	)%			—	%			0.14	%
Net charge-offs (recoveries)		$	520			$	68			$	(1,074	)		$	9			$	3,874
Nonperforming loans		$	6,987			$	6,843			$	7,110			$	6,827			$	9,322
Former bank premises			—				—				—				1,782				—
Foreclosed property			780				908				766				738				564
Total nonperforming assets		$	7,767			$	7,751			$	7,876			$	9,347			$	9,886
Loans past due 90 days and still accruing interest		$	323			$	735			$	970			$	360			$	206
Allowance for credit losses on loans		$	125,835			$	126,461			$	125,159			$	123,513			$	120,002
Mortgage Banking:
Loans originated, mortgage		$	289,191			$	302,616			$	348,387			$	409,050			$	280,401
Loans originated, joint venture			135,197				126,332				172,021				207,450				135,818
Total loans originated		$	424,388			$	428,948			$	520,408			$	616,500			$	416,219
Number of loans originated			1,247				1,237				1,487				1,715				1,249
Number of originators			176				181				192				196				194
Purchase %			95.66	%			95.06	%			95.96	%			96.32	%			94.99	%
Loans sold		$	410,895			$	468,014			$	567,291			$	525,078			$	346,288
Rate lock asset		$	1,681			$	895			$	1,348			$	1,551			$	1,435
Gross realized gain on sales and fees as a % of loans originated			3.34	%			3.06	%			3.17	%			2.96	%			3.11	%
Other Ratios:
Net interest margin			2.72	%			2.83	%			2.95	%			2.98	%			3.36	%
Net interest margin-fully tax equivalent (non-GAAP)			2.75	%			2.86	%			2.98	%			3.01	%			3.39	%
Average earning assets/total average assets			90.52	%			90.48	%			90.73	%			90.96	%			90.98	%
Average loans/average deposits			81.48	%			80.72	%			80.75	%			83.72	%			82.40	%
Average noninterest deposits/total average deposits			30.25	%			31.69	%			33.50	%			36.07	%			38.35	%
Period end equity/period end total assets			12.24	%			12.21	%			11.90	%			11.56	%			11.89	%
Efficiency ratio (non-GAAP)			73.25	%			76.17	%			66.21	%			70.41	%			65.64	%
(1) Current reporting period regulatory capital ratios are preliminary.

TOWNEBANK
Selected Data (unaudited)
(dollars in thousands)
Investment Securities														% Change
		Q1				Q1				Q4				Q1 24 vs.			Q1 24 vs.
Available-for-sale securities, at fair value			2024				2023				2023			Q1 23			Q4 23
U.S. agency securities		$	294,723			$	334,211			$	306,386			(11.82	)%		(3.81	)%
U.S. Treasury notes			27,534				27,272				27,684			0.96	%		(0.54	)%
Municipal securities			447,323				508,439				510,134			(12.02	)%		(12.31	)%
Trust preferred and other corporate securities			87,983				76,965				86,011			14.32	%		2.29	%
Mortgage-backed securities issued by GSEs and GNMA			1,347,920				1,132,746				1,200,625			19.00	%		12.27	%
Allowance for credit losses			(1,382	)			(1,150	)			(1,498	)		20.17	%		(7.74	)%
Total		$	2,204,101			$	2,078,483			$	2,129,342			6.04	%		3.51	%
Gross unrealized gains (losses) reflected in financial statements
Total gross unrealized gains		$	1,868			$	2,218			$	3,740			(15.78	)%		(50.05	)%
Total gross unrealized losses			(172,708	)			(167,929	)			(165,863	)		2.85	%		4.13	%
Net unrealized gains (losses) and other adjustments on AFS securities		$	(170,840	)		$	(165,711	)		$	(162,123	)		3.10	%		5.38	%
Held-to-maturity securities, at amortized cost
U.S. agency securities		$	102,042			$	101,281			$	101,850			0.75	%		0.19	%
U.S. Treasury notes			197,356				433,584				362,593			(54.48	)%		(45.57	)%
Municipal securities			5,294				5,203				5,272			1.75	%		0.42	%
Trust preferred corporate securities			2,159				2,210				2,172			(2.31	)%		(0.60	)%
Mortgage-backed securities issued by GSE			5,659				5,948				5,705			(4.86	)%		(0.81	)%
Allowance for credit losses			(82	)			(88	)			(84	)		(6.82	)%		(2.38	)%
Total		$	312,428			$	548,138			$	477,508			(43.00	)%		(34.57	)%
Total gross unrealized gains		$	265			$	392			$	380			(32.40	)%		(30.26	)%
Total gross unrealized losses			(14,262	)			(24,018	)			(15,316	)		(40.62	)%		(6.88	)%
Net unrealized gains (losses) in HTM securities		$	(13,997	)		$	(23,626	)		$	(14,936	)		(40.76	)%		(6.29	)%
Total unrealized gains (losses) on AFS and HTM securities		$	(184,837	)		$	(189,337	)		$	(177,059	)		(2.38	)%		4.39	%
														% Change
Loans Held For Investment		Q1				Q1				Q4				Q1 24 vs.			Q1 24 vs.
			2024				2023				2023			Q1 23			Q4 23
Real estate – construction and development		$	1,255,741			$	1,473,034			$	1,249,735			(14.75	)%		0.48	%
Commercial real estate – owner occupied			1,700,753				1,675,119				1,699,386			1.53	%		0.08	%
Commercial real estate – non owner occupied			3,178,947				2,908,791				3,117,071			9.29	%		1.99	%
Real estate – multifamily			595,075				505,237				583,209			17.78	%		2.03	%
Residential 1-4 family			1,882,296				1,734,698				1,852,891			8.51	%		1.59	%
HELOC			386,361				387,967				382,979			(0.41	)%		0.88	%
Commercial and industrial business (C&I)			1,288,550				1,297,707				1,265,169			(0.71	)%		1.85	%
Government			528,341				510,494				525,261			3.50	%		0.59	%
Indirect			555,482				582,306				558,789			(4.61	)%		(0.59	)%
Consumer loans and other			80,797				98,432				94,531			(17.92	)%		(14.53	)%
Total		$	11,452,343			$	11,173,785			$	11,329,021			2.49	%		1.09	%
														% Change
Deposits		Q1				Q1				Q4				Q1 24 vs.			Q1 24 vs.
			2024				2023				2023			Q1 23			Q4 23
Noninterest-bearing demand		$	4,194,132			$	5,069,363			$	4,342,701			(17.27	)%		(3.42	)%
Interest-bearing:
Demand and money market accounts			6,916,701				6,284,184				6,757,619			10.07	%		2.35	%
Savings			326,179				389,173				336,492			(16.19	)%		(3.06	)%
Certificates of deposits			2,689,062				1,855,411				2,456,394			44.93	%		9.47	%
Total			14,126,074				13,598,131				13,893,206			3.88	%		1.68	%

TOWNEBANK
Average Balances, Yields and Rate Paid (unaudited)
(dollars in thousands)
		Three Months Ended											Three Months Ended											Three Months Ended
		March 31, 2024											December 31, 2023											March 31, 2023
						Interest				Average							Interest				Average							Interest				Average
		Average				Income/				Yield/			Average				Income/				Yield/			Average				Income/				Yield/
		Balance				Expense				Rate (1)			Balance				Expense				Rate (1)			Balance				Expense				Rate (1)
Assets:
Loans (net of unearned income and deferred costs)		$	11,379,323			$	151,811			5.37	%		$	11,229,965			$	147,647			5.22	%		$	11,097,626			$	133,536			4.88	%
Taxable investment securities			2,440,652				18,716			3.07	%			2,365,928				18,820			3.18	%			2,438,489				16,816			2.76	%
Tax-exempt investment securities			161,538				1,549			3.84	%			195,603				1,989			4.07	%			188,033				1,887			4.01	%
Total securities			2,602,190				20,265			3.12	%			2,561,531				20,809			3.25	%			2,626,522				18,703			2.85	%
Interest-bearing deposits			1,167,322				14,234			4.90	%			1,141,086				13,967			4.86	%			1,044,538				10,649			4.13	%
Mortgage loans held for sale			116,868				1,716			5.87	%			162,543				2,886			7.10	%			105,018				1,604			6.11	%
Total earning assets			15,265,703				188,026			4.95	%			15,095,125				185,309			4.87	%			14,873,704				164,492			4.49	%
Less: allowance for loan losses			(127,413	)										(126,205	)										(114,447	)
Total nonearning assets			1,725,945											1,714,122											1,589,783
Total assets		$	16,864,235										$	16,683,042										$	16,349,040
Liabilities and Equity:
Interest-bearing deposits
Demand and money market		$	6,828,053			$	47,985			2.83	%		$	6,786,850			$	46,833			2.74	%		$	6,217,754			$	23,302			1.52	%
Savings			329,036				881			1.08	%			345,172				962			1.11	%			401,776				844			0.85	%
Certificates of deposit			2,583,938				29,522			4.60	%			2,370,723				25,405			4.25	%			1,683,354				9,788			2.36	%
Total interest-bearing deposits			9,741,027				78,388			3.24	%			9,502,745				73,200			3.06	%			8,302,884				33,934			1.66	%
Borrowings			212,375				3,078			5.73	%			114,151				958			3.28	%			355,833				3,915			4.40	%
Subordinated debt, net			255,878				2,236			3.50	%			255,663				2,236			3.50	%			250,066				2,169			3.47	%
Total interest-bearing liabilities			10,209,280				83,702			3.30	%			9,872,559				76,394			3.07	%			8,908,783				40,018			1.82	%
Demand deposits			4,224,104											4,408,712											5,164,415
Other noninterest-bearing liabilities			390,576											413,469											329,840
Total liabilities			14,823,960											14,694,740											14,403,038
Shareholders’ equity			2,040,275											1,988,302											1,946,002
Total liabilities and equity		$	16,864,235										$	16,683,042										$	16,349,040
Net interest income (tax-equivalent basis) (4)						$	104,324										$	108,915										$	124,474
Reconciliation of Non-GAAP Financial Measures
Tax-equivalent basis adjustment							(1,106	)										(1,182	)										(1,096	)
Net interest income (GAAP)						$	103,218										$	107,733										$	123,378
Interest rate spread (2)(4)										1.65	%										1.80	%										2.67	%
Interest expense as a percent of average earning assets										2.21	%										2.01	%										1.09	%
Net interest margin (tax equivalent basis) (3)(4)										2.75	%										2.86	%										3.39	%
Total cost of deposits										2.26	%										2.09	%										1.02	%

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

TOWNEBANK
Consolidated Balance Sheets
(dollars in thousands, except share data)
		March 31,				December 31,
			2024				2023
		(unaudited)				(audited)
ASSETS
Cash and due from banks		$	75,802			$	85,584
Interest-bearing deposits at FRB – Richmond			926,635				939,356
Federal funds sold and interest-bearing deposits in financial institutions			98,673				103,417
Total Cash and Cash Equivalents			1,101,110				1,128,357
Securities available for sale, at fair value (amortized cost of $2,376,323 and $2,292,963, and allowance for credit losses of $1,382 and $1,498 at March 31, 2024 and December 31, 2023, respectively)			2,204,101				2,129,342
Securities held to maturity, at amortized cost (fair value $298,513 and $462,656 at March 31, 2024 and December 31, 2023, respectively)			312,510				477,592
Less: allowance for credit losses			(82	)			(84	)
Securities held to maturity, net of allowance for credit losses			312,428				477,508
Other equity securities			13,661				13,792
FHLB stock			12,139				21,372
Total Securities			2,542,329				2,642,014
Mortgage loans held for sale			150,727				149,987
Loans, net of unearned income and deferred costs			11,452,343				11,329,021
Less: allowance for credit losses			(125,835	)			(126,461	)
Net Loans			11,326,508				11,202,560
Premises and equipment, net			342,569				337,598
Goodwill			457,619				456,335
Other intangible assets, net			68,758				64,634
BOLI			279,293				277,445
Other assets			615,324				576,109
TOTAL ASSETS		$	16,884,237			$	16,835,039
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand		$	4,194,132			$	4,342,701
Interest-bearing:
Demand and money market accounts			6,916,701				6,757,619
Savings			326,179				336,492
Certificates of deposit			2,689,062				2,456,394
Total Deposits			14,126,074				13,893,206
Advances from the FHLB			3,775				203,958
Subordinated debt, net			256,011				255,796
Repurchase agreements and other borrowings			31,198				32,826
Total Borrowings			290,984				492,580
Other liabilities			401,307				393,375
TOTAL LIABILITIES			14,818,365				14,779,161
Preferred stock, authorized and unissued shares – 2,000,000			—				—
Common stock, $1.667 par value: 150,000,000 shares authorized 74,990,437 and 74,893,462 shares issued at March 31, 2024 and December 31, 2023, respectively			125,009				124,847
Capital surplus			1,114,038				1,112,761
Retained earnings			937,065				921,126
Common stock issued to deferred compensation trust, at cost 1,008,276 and 1,004,717 shares at March 31, 2024 and December 31, 2023, respectively			(20,915	)			(20,813	)
Deferred compensation trust			20,915				20,813
Accumulated other comprehensive income (loss)			(126,586	)			(118,762	)
TOTAL SHAREHOLDERS’ EQUITY			2,049,526				2,039,972
Noncontrolling interest			16,346				15,906
TOTAL EQUITY			2,065,872				2,055,878
TOTAL LIABILITIES AND EQUITY		$	16,884,237			$	16,835,039

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

TOWNEBANK
Consolidated Balance Sheets – Five Quarter Trend
(dollars in thousands, except share data)
		March 31,				December 31,				September 30,				June 30,				March 31,
			2024				2023				2023				2023				2023
		(unaudited)				(audited)				(unaudited)				(unaudited)				(unaudited)
ASSETS
Cash and due from banks		$	75,802			$	85,584			$	83,949			$	106,994			$	97,502
Interest-bearing deposits at FRB – Richmond			926,635				939,356				1,029,276				1,427,044				1,040,112
Federal funds sold and interest-bearing deposits in financial institutions			98,673				103,417				102,527				102,231				104,924
Total Cash and Cash Equivalents			1,101,110				1,128,357				1,215,752				1,636,269				1,242,538
Securities available for sale			2,204,101				2,129,342				1,963,453				2,005,851				2,078,483
Securities held to maturity			312,510				477,592				547,854				548,017				548,226
Less: allowance for credit losses			(82	)			(84	)			(85	)			(87	)			(88	)
Securities held to maturity, net of allowance for credit losses			312,428				477,508				547,769				547,930				548,138
Other equity securities			13,661				13,792				14,062				13,798				13,341
FHLB stock			12,139				21,372				16,634				40,454				29,837
Total Securities			2,542,329				2,642,014				2,541,918				2,608,033				2,669,799
Mortgage loans held for sale			150,727				149,987				188,048				229,502				157,161
Loans, net of unearned income and deferred costs			11,452,343				11,329,021				11,172,971				11,208,014				11,173,785
Less: allowance for credit losses			(125,835	)			(126,461	)			(125,159	)			(123,513	)			(120,002	)
Net Loans			11,326,508				11,202,560				11,047,812				11,084,501				11,053,783
Premises and equipment, net			342,569				337,598				335,522				326,686				321,944
Goodwill			457,619				456,335				456,684				456,695				477,234
Other intangible assets, net			68,758				64,634				67,496				71,106				73,238
BOLI			279,293				277,445				275,240				273,435				271,704
Other assets			615,324				576,109				551,884				538,848				463,076
TOTAL ASSETS		$	16,884,237			$	16,835,039			$	16,680,356			$	17,225,075			$	16,730,477
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand		$	4,194,132			$	4,342,701			$	4,444,861			$	4,774,830			$	5,069,363
Interest-bearing:
Demand and money market accounts			6,916,701				6,757,619				6,764,415				6,529,336				6,284,184
Savings			326,179				336,492				350,031				361,891				389,173
Certificates of deposit			2,689,062				2,456,394				2,321,498				2,100,604				1,855,411
Total Deposits			14,126,074				13,893,206				13,880,805				13,766,661				13,598,131
Advances from the FHLB			3,775				203,958				104,139				754,319				504,497
Subordinated debt, net			256,011				255,796				255,580				255,365				255,151
Repurchase agreements and other borrowings			31,198				32,826				47,315				49,898				46,602
Total Borrowings			290,984				492,580				407,034				1,059,582				806,250
Other liabilities			401,307				393,375				408,305				408,333				336,201
TOTAL LIABILITIES			14,818,365				14,779,161				14,696,144				15,234,576				14,740,582
Preferred stock			—				—				—				—				—
Common stock, $1.667 par value			125,009				124,847				124,837				124,805				124,682
Capital surplus			1,114,038				1,112,761				1,111,152				1,109,526				1,109,387
Retained earnings			937,065				921,126				911,042				884,901				861,905
Common stock issued to deferred compensation trust, at cost			(20,915	)			(20,813	)			(20,740	)			(20,134	)			(18,839	)
Deferred compensation trust			20,915				20,813				20,740				20,134				18,839
Accumulated other comprehensive income (loss)			(126,586	)			(118,762	)			(179,043	)			(145,392	)			(121,297	)
TOTAL SHAREHOLDERS’ EQUITY			2,049,526				2,039,972				1,967,988				1,973,840				1,974,677
Noncontrolling interest			16,346				15,906				16,224				16,659				15,218
TOTAL EQUITY			2,065,872				2,055,878				1,984,212				1,990,499				1,989,895
TOTAL LIABILITIES AND EQUITY		$	16,884,237			$	16,835,039			$	16,680,356			$	17,225,075			$	16,730,477

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

TOWNEBANK
Banking Segment Financial Information (unaudited)
(dollars in thousands)
		Three Months Ended												Increase/(Decrease)
		March 31,								December 31,				YTD 2024 over 2023
			2024				2023				2023			Amount				Percent
Revenue
Net interest income		$	102,682			$	123,650			$	106,906			$	(20,968	)		(16.96	)%
Service charges on deposit accounts			3,061				2,851				3,035				210			7.37	%
Credit card merchant fees			1,551				1,545				1,476				6			0.39	%
Other income			5,790				5,740				6,544				50			0.87	%
Subtotal			10,402				10,136				11,055				266			2.62	%
Net gain/(loss) on investment securities			74				—				—				74			N/M
Total noninterest income			10,476				10,136				11,055				340			3.35	%
Total revenue			113,158				133,786				117,961				(20,628	)		(15.42	)%
Provision for credit losses			(976	)			11,754				2,831				(12,730	)		(108.30	)%
Expenses
Salaries and employee benefits			46,474				43,193				42,573				3,281			7.60	%
Occupancy			7,061				6,233				6,981				828			13.28	%
Furniture and equipment			3,648				3,333				3,621				315			9.45	%
Amortization of intangible assets			1,162				1,281				1,236				(119	)		(9.29	)%
Other expenses			26,953				28,444				29,602				(1,491	)		(5.24	)%
Total expenses			85,298				82,484				84,013				2,814			3.41	%
Income before income tax, corporate allocation and noncontrolling interest			28,836				39,548				31,117				(10,712	)		(27.09	)%
Corporate allocation			1,069				1,200				1,054				(131	)		(10.92	)%
Income before income tax provision and noncontrolling interest			29,905				40,748				32,171				(10,843	)		(26.61	)%
Provision for income tax expense			4,105				7,651				2,661				(3,546	)		(46.35	)%
Net income			25,800				33,097				29,510				(7,297	)		(22.05	)%
Noncontrolling interest			120				—				—				120			N/M
Net income attributable to TowneBank		$	25,920			$	33,097			$	29,510			$	(7,177	)		(21.68	)%
Efficiency ratio (non-GAAP)			74.40	%			60.70	%			70.17	%			13.70	%		22.57	%

TOWNEBANK
Realty Segment Financial Information (unaudited)
(dollars in thousands)
		Three Months Ended												Increase/(Decrease)
		March 31,								December 31,				YTD 2024 over 2023
			2024				2023				2023			Amount				Percent
Revenue
Residential mortgage brokerage income, net		$	10,798			$	9,794			$	8,322			$	1,004			10.25	%
Real estate brokerage income, net			—				1,791				(32	)			(1,791	)		(100.00	)%
Title insurance and settlement fees			—				291				—				(291	)		(100.00	)%
Property management fees, net			16,773				15,535				7,358				1,238			7.97	%
Income (loss) from unconsolidated subsidiary			30				66				(425	)			(36	)		(54.55	)%
Net interest and other income			784				184				1,111				600			326.09	%
Total revenue			28,385				27,661				16,334				724			2.62	%
Provision for credit losses			99				(84	)			(385	)			183			(217.86	)%
Expenses
Salaries and employee benefits			12,188				14,839				11,288				(2,651	)		(17.87	)%
Occupancy			1,569				2,021				1,600				(452	)		(22.37	)%
Furniture and equipment			594				693				611				(99	)		(14.29	)%
Amortization of intangible assets			677				683				737				(6	)		(0.88	)%
Other expenses			8,199				8,437				7,240				(238	)		(2.82	)%
Total expenses			23,227				26,673				21,476				(3,446	)		(12.92	)%
Income (loss) before income tax, corporate allocation and noncontrolling interest			5,059				1,072				(4,757	)			3,987			371.92	%
Corporate allocation			(348	)			(600	)			(352	)			252			(42.00	)%
Income (loss) before income tax provision and noncontrolling interest			4,711				472				(5,109	)			4,239			898.09	%
Provision for income tax expense			1,156				182				(1,072	)			974			535.16	%
Net income (loss)			3,555				290				(4,037	)			3,265			1,125.86	%
Noncontrolling interest			(560	)			(145	)			259				(415	)		(286.21	)%
Net income (loss) attributable to TowneBank		$	2,995			$	145			$	(3,778	)			2,850			1,965.52	%
Efficiency ratio excluding gain on equity investment (non-GAAP)			79.44	%			93.96	%			126.97	%			(14.52	)%		(15.45	)%

TOWNEBANK
Insurance Segment Financial Information (unaudited)
(dollars in thousands)
		Three Months Ended												Increase/(Decrease)
		March 31,								December 31,				YTD 2024 over 2023
			2024				2023				2023			Amount				Percent
Commission and fee income
Property and casualty		$	20,722			$	18,129			$	19,795			$	2,593			14.30	%
Employee benefits			4,826				4,587				4,332				239			5.21	%
Specialized benefit services			9				159				36				(150	)		(94.34	)%
Total commissions and fees			25,557				22,875				24,163				2,682			11.72	%
Contingency and bonus revenue			4,503				4,369				1,276				134			3.07	%
Other income			11				6				8				5			83.33	%
Total revenue			30,071				27,250				25,447				2,821			10.35	%
Employee commission expense			4,512				4,553				4,197				(41	)		(0.90	)%
Revenue, net of commission expense			25,559				22,697				21,250				2,862			12.61	%
Salaries and employee benefits			12,715				11,388				12,174				1,327			11.65	%
Occupancy			792				810				727				(18	)		(2.22	)%
Furniture and equipment			236				218				213				18			8.26	%
Amortization of intangible assets			1,407				1,560				1,438				(153	)		(9.81	)%
Other expenses			1,916				1,264				1,853				652			51.58	%
Total operating expenses			17,066				15,240				16,405				1,826			11.98	%
Income before income tax, corporate allocation and noncontrolling interest			8,493				7,457				4,845				1,036			13.89	%
Corporate allocation			(721	)			(600	)			(702	)			(121	)		20.17	%
Income before income tax provision and noncontrolling interest			7,772				6,857				4,143				915			13.34	%
Provision for income tax expense			2,000				1,766				1,071				234			13.25	%
Net income			5,772				5,091				3,072				681			13.38	%
Noncontrolling interest			—				—				—				—			N/M
Net income attributable to TowneBank		$	5,772			$	5,091			$	3,072				681			13.38	%
Provision for income taxes			2,000				1,766				1,071				234			13.25	%
Depreciation, amortization and interest expense			1,553				1,706				1,588				(153	)		(8.97	)%
EBITDA(non-GAAP)		$	9,325			$	8,563			$	5,731				762			8.90	%
Efficiency ratio(non-GAAP)			61.27	%			60.27	%			70.43	%			1.00	%		1.66	%

TOWNEBANK
Reconciliation of Non-GAAP Financial Measures
(dollars in thousands)
		Three Months Ended
		March 31,				March 31,				December 31,
			2024				2023				2023
Return on average assets (GAAP)			0.83	%			0.95	%			0.68	%
Impact of excluding average goodwill and other intangibles and amortization			0.09	%			0.10	%			0.09	%
Return on average tangible assets (non-GAAP)			0.92	%			1.05	%			0.77	%
Return on average equity (GAAP)			6.84	%			7.99	%			5.75	%
Impact of excluding average goodwill and other intangibles and amortization			3.03	%			3.72	%			2.78	%
Return on average tangible equity (non-GAAP)			9.87	%			11.71	%			8.53	%
Return on average common equity (GAAP)			6.89	%			8.05	%			5.79	%
Impact of excluding average goodwill and other intangibles and amortization			3.09	%			3.78	%			2.83	%
Return on average tangible common equity (non-GAAP)			9.98	%			11.83	%			8.62	%
Book value (GAAP)		$	27.33			$	26.40			$	27.24
Impact of excluding average goodwill and other intangibles and amortization			(7.02	)			(7.36	)			(6.96	)
Tangible book value (non-GAAP)		$	20.31			$	19.04			$	20.28
Efficiency ratio (GAAP)			75.16	%			67.55	%			78.36	%
Impact of exclusions			(1.91	)%			(1.91	)%			(2.19	)%
Efficiency ratio (non-GAAP)			73.25	%			65.64	%			76.17	%
Average assets (GAAP)		$	16,864,235			$	16,349,040			$	16,683,041
Less: average goodwill and intangible assets			522,675				521,972				523,086
Average tangible assets (non-GAAP)		$	16,341,560			$	15,827,068			$	16,159,955
Average equity (GAAP)		$	2,040,275			$	1,946,002			$	1,988,302
Less: average goodwill and intangible assets			522,675				521,972				523,086
Average tangible equity (non-GAAP)		$	1,517,600			$	1,424,030			$	1,465,216
Average common equity (GAAP)		$	2,024,169			$	1,931,063			$	1,972,138
Less: average goodwill and intangible assets			522,675				521,972				523,086
Average tangible common equity (non-GAAP)		$	1,501,494			$	1,409,091			$	1,449,052
Net income (GAAP)		$	34,687			$	38,333			$	28,804
Amortization of intangibles, net of tax			2,564				2,784				2,695
Tangible net income (non-GAAP)		$	37,251			$	41,117			$	31,499
Total revenue (GAAP)		$	167,102			$	184,144			$	155,546
Net (gain)/loss on investment securities			(74	)			—				—
Other nonrecurring (income) loss			—				—				10
Total Revenue for efficiency calculation (non-GAAP)		$	167,028			$	184,144			$	155,556
Noninterest expense (GAAP)		$	125,591			$	124,397			$	121,895
Less: amortization of intangibles			3,246				3,524				3,411
Noninterest expense net of amortization (non-GAAP)		$	122,345			$	120,873			$	118,484

TOWNEBANK
Reconciliation of Non-GAAP Financial Measures
(dollars in thousands, except per share data)
Reconciliation of GAAP Earnings to Operating Earnings Excluding Certain Items Affecting Comparability		Three Months Ended
		March 31,				December 31,				September 30,				June 30,				March 31,
			2024				2023				2023				2023				2023
Net income (GAAP)		$	34,687			$	28,804			$	44,862			$	41,716			$	38,333
Adjustments
Plus: Acquisition-related expenses, net of tax			564				56				458				2,457				4,803
Plus: Initial provision for acquired loans, net of tax			—				—				—				—				3,166
Plus: FDIC special assessment, net of tax			1,021				4,083				—				—				—
Less: Gain on sale of equity investments, net of noncontrolling interest			—				(1,846	)			(438	)			(5,513	)			—
Core operating earnings, excluding certain items affecting comparability (non-GAAP)		$	36,272			$	31,097			$	44,882			$	38,660			$	46,302
Weighted average diluted shares			74,979,501				74,793,557				74,765,515				74,699,810				74,390,614
Diluted EPS (GAAP)		$	0.46			$	0.39			$	0.60			$	0.56			$	0.52
Diluted EPS, excluding certain items affecting comparability (non-GAAP)		$	0.48			$	0.42			$	0.60			$	0.52			$	0.62
Average assets		$	16,864,235			$	16,683,041			$	16,762,859			$	16,826,965			$	16,349,040
Average tangible equity		$	1,517,600			$	1,465,216				1,460,024			$	1,447,955			$	1,424,030
Average common tangible equity		$	1,501,494			$	1,449,052			$	1,443,453			$	1,432,506			$	1,409,091
Return on average assets, excluding certain items affecting comparability (non-GAAP)			0.87	%			0.74	%			1.06	%			0.92	%			1.15	%
Return on average tangible equity, excluding certain items affecting comparability (non-GAAP)			10.29	%			9.15	%			12.97	%			11.50	%			13.98	%
Return on average common tangible equity, excluding certain items affecting comparability (non-GAAP)			10.40	%			9.25	%			13.13	%			11.62	%			14.13	%
Efficiency ratio, excluding certain items affecting comparability (non-GAAP)			74.84	%			78.33	%			67.76	%			67.32	%			64.32	%