TowneBank Reports Record Full Year and Fourth Quarter Financial Results for 2021

SUFFOLK, Va., Jan. 27, 2022 (GLOBE NEWSWIRE) -- TowneBank (the "Company" or "Towne") (Nasdaq: TOWN) today reported financial results for the full year and the fourth quarter ended December 31, 2021. For the year ended December 31, 2021, earnings were $215.38 million, or $2.97 per diluted share, compared to $145.54 million, or $2.01 per diluted share for the year ended December 31, 2020. Earnings in the fourth quarter of 2021 were $40.18 million, or $0.55 per diluted share, compared to fourth quarter 2020 earnings of $50.08 million, or $0.69 per diluted share.

"We were pleased with our performance for 2021, highlighted by our 22nd year of increased earnings. We achieved record financial results with total revenues surpassing $680 million for the year, which illustrates the value of Towne’s diversified business model. Credit quality remained excellent and strong deposit growth across all markets was a bright spot for the year, leading the way for TowneBank to maintain the #1 market share position for our home market in Hampton Roads. These accomplishments were the result of the hard work and dedication from our nearly 2,900 team members who embrace and define our culture of caring each day," said G. Robert Aston, Jr., Executive Chairman.

Annual Highlights for 2021 Compared to 2020:

Total revenues were $680.33 million for the year ended December 31, 2021, an increase from the prior year of $16.00 million, or 2.41%. Increases in net interest income of $22.23 million were partially offset by a $6.23 million decline in noninterest income. The decrease in noninterest income was driven by a decline in residential mortgage banking income of $2.86 million and an $8.38 million decline in gain on investment securities. Property management income increased by $15.70 million, year-over-year. A 2020 nonrecurring gain on the sale of Red Sky Insurance totaling $17.63 million also contributed to the comparative decline.
Pre-provision, pre-tax, net revenues (non-GAAP) were $253.41, an increase of $8.80 million, or 3.60%.
Loans held for investment declined $0.12 billion, or 1.28% from December 31, 2020. The balances at December 31, 2021 and 2020 included $0.16 billion and $0.86 billion, respectively, of loans originated under the Paycheck Protection Program ("PPP"). Excluding PPP loans, loans held for investment increased $0.58 billion, or 6.56%, compared to prior year.
Total deposits were $13.57 billion, an increase of $2.0 billion, or 17.29% compared to prior year.
Book value per share was $26.13, an increase of 7.47% over prior year. Tangible book value (non-GAAP) per share was $19.15, compared to $17.46 in 2020, an increase of 9.65%.
Return on average assets was 1.40% in 2021, compared to 1.03% in the prior year. Return on average tangible assets (non-GAAP) increased 33.23% to 1.51% in 2021.
Return on average common shareholders' equity was 11.70% and return on average tangible common shareholders' equity was 16.75% (non-GAAP).
Taxable equivalent net interest margin of 2.86% (non-GAAP) compared to 3.18% in the prior year.
Effective tax rate of 20.28% compared to 17.98% in 2020.

Highlights for Fourth Quarter 2021 Compared to Fourth Quarter 2020:

Total revenues were $160.42 million, in fourth quarter 2021, a decrease from the prior year quarter of $11.42 million, or 6.65%. Increases in insurance and property management income were more than offset by a $16.56 million decrease in residential mortgage banking income as mortgage demand continued to normalize after the interest rate driven surge in 2020.
Pre-provision, pre-tax, net revenues (non-GAAP) were $48.48 million, a decrease of $13.62 million, or 21.93%.
Loans held for investment increased $0.21 billion, or 2.24%, in fourth quarter 2021. Excluding PPP loans, loans held for investment increased $0.30 billion, or 13.26% on an annualized basis, from the linked quarter.
Total deposits were $13.57 billion, an increase of $0.56 billion, or 4.30%, from September 30, 2021, or 17.06% on an annualized basis.
Noninterest bearing deposits increased by 26.79%, to $5.55 billion, compared to prior year, representing 40.86% of total deposits. Compared to the linked quarter, noninterest bearing deposits increased 11.16% on an annualized basis.
In the quarter ended December 31, 2021, annualized return on average common shareholders' equity was 8.45% and annualized return on average tangible common shareholders' equity was 12.22% (non-GAAP). For the full 12 months, return on average common shareholders' equity was 11.70% and return on average tangible common shareholders' equity was 16.75% (non-GAAP).
Net interest margin of 2.70% and taxable equivalent net interest margin of 2.72% (non-GAAP) compared to the prior year quarter of 2.97% and 2.98%, respectively.
Effective tax rate of 18.97% compared to 17.21% in fourth quarter 2020 and 22.73% in the linked quarter.

"From a strategic perspective, we were encouraged to see loan growth momentum build in the back half of 2021. We have several new banking locations coming fully online in 2022 and expect to continue expanding our impressive suite of noninterest income sources. We are well-positioned to deploy our excess liquidity and should benefit in a rising rate environment," said J. Morgan Davis, Chief Executive Officer.

Quarterly Net Interest Income Compared to the Fourth Quarter of 2020:

Net interest income was $100.79 million compared to $100.61 million for the quarter ended December 31, 2020.
Taxable equivalent net interest margin (non-GAAP) was 2.72%, including purchase accounting accretion of 2 basis points and PPP accretion of 7 basis points, compared to 2.98%, including purchase accounting accretion of 5 basis points and PPP accretion of 10 basis points, for fourth quarter 2020.
On an average basis, loans held for investment, with a yield of 4.05%, represented 63.26% of earning assets in the fourth quarter of 2021 compared to a yield of 4.28%, which represented 72.32% of earning assets in the fourth quarter of 2020.
Interest and fee income on PPP loans was $3.85 million in fourth quarter 2021, compared to $7.77 million in the linked quarter, and $11.29 million in fourth quarter 2020.
Total cost of deposits decreased to 0.16% from 0.37% at December 31, 2020.
Average interest-earning assets totaled $14.80 billion at December 31, 2021 compared to $13.48 billion at December 31, 2020, an increase of 9.78%.
Average interest-bearing liabilities totaled $8.26 billion, an increase of $0.23 billion, or 2.88%, from the prior year.
We expect to continue positioning our earning asset portfolio to positively benefit interest margin in anticipation of a rising rate environment.

Quarterly Provision for Credit Losses:

The quarterly provision for credit losses for on-balance-sheet loans was a benefit of $1.18 million compared to a provision expense of $1.21 million one year ago and a benefit of $1.60 million in the linked quarter.
The fourth quarter 2021 included a release in the allowance for credit losses of $1.12 million that was driven by a combination of net recoveries and improvement in the current economic forecast, offset by core loan growth.
Net recoveries were $0.06 million compared to net charge-offs of $0.11 million one year prior. The ratio of net charge-offs (recoveries) to average loans on an annualized basis was 0.00% in fourth quarter 2021 and 2020, and (0.03)% in the linked quarter.
The allowance for credit losses on loans represented 1.12% of total loans compared to 1.15% at September 30, 2021 and 1.25% at December 31, 2020. Excluding PPP loans, which are fully government guaranteed, the allowance for credit losses on loans (non-GAAP) was 1.13% at December 31, 2021, 1.18% at September 30, 2021, and 1.37% at December 31, 2020. The allowance for credit losses on loans was 17.76 times nonperforming loans compared to 12.68 times at September 30, 2021 and 10.74 times at December 31, 2020.
Expected loss estimates are subject to change based on continuing review of models and assumptions, portfolio performance, changes in forecasted macroeconomic conditions and loan mix, which could result in material changes to the reserve in future periods.

Quarterly Noninterest Income Compared to Fourth Quarter 2020:

Total noninterest income was $59.63 million compared to $71.23 million in 2020, a decrease of $11.60 million, or 16.29%. Residential mortgage banking income decreased $16.56 million, while insurance commissions increased $1.62 million, and property management income increased $3.43 million.
Residential mortgage banking income was $20.95 million compared to $37.50 million in fourth quarter 2020. Loan volume in the current quarter was $1.15 billion, with purchase activity comprising 79.36%. Loan volume in fourth quarter 2020 was $1.69 billion, with purchase activity of 59.76%. Loan volume in the linked quarter was $1.31 billion with purchase activity of 77.45%. Mortgage rates have increased compared to prior periods, resulting in a decline in refinance activity.
In addition to declines in mortgage volume and margin from prior periods, the income statement impact of derivative instruments in the fourth quarter of 2021 was a net loss of $2.90 million, compared to a net gain of $1.30 million in the fourth quarter of 2020, and a net loss of $0.77 million in the linked quarter.
Total insurance segment revenue increased $2.26 million, or 13.31%, to $19.26 million in the fourth quarter of 2021. This increase is attributable to higher property and casualty commissions and contingency income, compared to the prior year quarter. We acquired an insurance agency in December 2020, which brought in $0.53 million in additional revenue in fourth quarter 2021.
Property management fee revenue increased 60.62%, or $3.43 million, as compared to fourth quarter 2020 due to strong fourth quarter 2021 reservation activity. In July 2021, the Company acquired Venture Resorts, a cabin rental company in the Smoky Mountains of Tennessee, which brought in an additional $2.02 million in property management fees in the quarter.

Quarterly Noninterest Expense Compared to Fourth Quarter 2020:

Total noninterest expense was $110.47 million compared to $105.93 million, an increase of $4.54 million, or 4.28%. This reflects increases of $3.34 million in salary and benefits expense, $1.16 million in data processing expense, and $1.21 million in advertising and marketing expenses. The Venture Resorts acquisition resulted in an additional $3.72 million of noninterest expenses during the quarter.
Increases in salaries and benefits compared to fourth quarter 2020 were driven by second quarter 2021 annual base salary adjustments, business acquisitions, and year-end production-related bonuses.
Higher credit card fees on vacation property reservation activities and increased costs associated with our core banking platform drove the increase in data processing expense.
Advertising and marketing expenses increased, primarily in our Realty segment, driven by production based advertising programs in our property management companies and a consumer mortgage advertising program in our residential mortgage operations.
We expect first quarter 2022 noninterest expenses to be slightly lower than the current quarter and average $107 million to $109 million on a quarterly basis throughout 2022.

Consolidated Balance Sheet Highlights:

Total assets were $16.36 billion at December 31, 2021, an increase of 11.86%, compared to $14.63 billion at December 31, 2020. The increase was driven by increased liquidity levels related to strong deposit growth.
Loans held for investment decreased $0.12 billion, or 1.28%, compared to year end 2020, but increased $0.21 billion compared to the linked quarter. Excluding PPP loans of $0.16 billion in fourth quarter 2021, $0.86 billion in fourth quarter 2020, and $0.25 billion in the linked quarter, loans held for investment increased $0.58 million, or 6.56%, compared to prior year, and $0.30 million, or 2.24%, compared to September 30, 2021, or 13.26% on an annualized basis.
Average loans held for investment, excluding PPP loans, were $9.17 billion in fourth quarter 2021, an increase of $444.58 million, or 5.09%, compared to prior year. In the linked quarter comparison, average loans held for investment, excluding PPP loans, increased 3.16%, or $280.75 million, 12.53% on an annualized basis.
Unamortized fee income related to PPP loans was $4.16 million at December 31, 2021 and $14.79 million at December 31, 2020.
Mortgage loans held for sale decreased $0.18 billion, or 33.75%, compared to prior year and $0.07 billion, or 17.03%, compared to the linked quarter.
Total deposits increased $2.0 billion, or 17.29%, over December 31, 2020, and increased $0.56 billion, or 4.30%, compared to the linked quarter.
Total borrowings decreased $0.47 billion, or 49.59%, from prior year and $0.01 billion, or 1.16%, compared to the linked quarter.

Investment Securities:

Total investment securities were $1.98 billion compared to $1.59 billion at September 30, 2021 and $1.42 billion at December 31, 2020. The weighted average duration of the portfolio at December 31, 2021 was 3.89 years. The carrying value of the AFS debt securities portfolio included $17.54 million in net unrealized gains compared to $58.32 million in net unrealized gains at December 31, 2020.
We anticipate continuing to strategically deploy excess liquidity at a similar pace in the first half of 2022.

Loans and Asset Quality:

Total loans held for investment were $9.51 billion at December 31, 2021 compared to $9.30 billion at September 30, 2021 and $9.63 billion at December 31, 2020.
Nonperforming assets were $10.56 million, or 0.06% of total assets, compared to $16.21 million, or 0.11% of total assets, at December 31, 2020.
Nonperforming loans were 0.06% of period end loans compared to 0.12% at December 31, 2020.
Foreclosed property increased $0.30 million from $4.28 million at December 31, 2020. On January 14, 2022, the Company recognized a nominal gain on the sale of a foreclosed property, which had been carried on the balance sheet at $3.55 million at December 31, 2021.

Deposits and Borrowings:

Total deposits were $13.57 billion compared to $13.01 billion at September 30, 2021 and $11.57 billion at December 31, 2020.
Total loans held for investment to total deposits were 70.03% compared to 71.44% at September 30, 2021 and 83.20% at December 31, 2020.
Non-interest bearing deposits were 40.86% of total deposits at December 31, 2021 compared to 41.45% at September 30, 2021 and 37.80% at December 31, 2020. Non-interest bearing deposits experienced typical seasonality during the fourth quarter.
Total borrowings were $0.48 billion compared to $0.49 billion and $0.96 billion at September 30, 2021 and December 31, 2020, respectively.

Capital:

Common equity tier 1 capital ratio of 12.36%.
Tier 1 leverage capital ratio of 9.12%.
Tier 1 risk-based capital ratio of 12.50%.
Total risk-based capital ratio of 15.56%.
Book value per share was $26.13 compared to $25.91 at September 30, 2021 and $24.31 at December 31, 2020.
Tangible book value per share (non-GAAP) was $19.15 compared to $18.92 at September 30, 2021 and $17.46 at December 31, 2020.

Annual Meeting of Shareholders:
TowneBank intends to hold its 2022 Annual Meeting of Shareholders at 11:30 a.m. on Wednesday, May 25, 2022 at the Virginia Beach Convention Center, 1000 19th Street in Virginia Beach, Virginia.

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

Today, TowneBank operates over 40 banking offices throughout Hampton Roads and Central Virginia, as well as Northeastern and Central North Carolina – serving as a local leader in promoting the social, cultural, and economic growth in each community. Towne offers a competitive array of business and personal banking solutions, delivered with only the highest ethical standards. Experienced local bankers providing a higher level of expertise and personal attention with local decision-making are key to the TowneBank strategy. TowneBank has grown its capabilities beyond banking to provide expertise through its controlled divisions and subsidiaries that include Towne Investment Group, Towne Wealth Management, Towne Insurance Agency, Towne Benefits, TowneBank Mortgage, TowneBank Commercial Mortgage, Berkshire Hathaway HomeServices Towne Realty, Towne 1031 Exchange, LLC, and Towne Vacations. With total assets of $16.36 billion as of December 31, 2021, 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, 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 the impacts of the ongoing COVID-19 pandemic and the associated efforts to limit the spread of the virus; competitive pressures in the banking industry that may increase significantly; changes in the interest rate environment that may reduce margins and/or the volumes and values of loans made or held as well as the value of other financial assets held; changes in the credit worthiness of customers and the possible impairment of the collectability of loans; general economic conditions, either nationally or regionally, that may be less favorable than expected, resulting in, among other things, a deterioration in credit quality and/or a reduced demand for credit or other services; changes in the legislative or regulatory environment, including changes in accounting standards and tax laws, that may adversely affect our business; costs or difficulties related to the integration of the businesses we have acquired may be greater than expected; expected cost savings associated with pending or recently completed acquisitions may not be fully realized or realized within the expected time frame; cybersecurity threats or attacks, the implementation of new technologies, and the ability to develop and maintain reliable electronic systems; our competitors may have greater financial resources and develop products that enable them to compete more successfully; changes in business conditions; changes in the securities market; and changes in our local economy with regard to our market area. Any forward-looking statements made by us or on our behalf speak only as of the date they are made or as of the date indicated, and we do not undertake any obligation to update forward-looking statements as a result of new information, future events, or otherwise. For additional information on factors that could materially influence forward-looking statements included in this release, see the "Risk Factors" in TowneBank’s Annual Report on Form 10-K for the year ended December 31, 2020 and related disclosures in other filings that have been, or will be, filed by TowneBank with the Federal Deposit Insurance Corporation.

Media contact:
G. Robert Aston, Jr., Executive Chairman, 757-638-6780
J. Morgan Davis, Chief Executive Officer, 757-673-1673

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

TOWNEBANK
Selected Financial Highlights (unaudited)
(dollars in thousands, except per share data)

		Three Months Ended
		December 31,				September 30,			June 30,			March 31,			December 31,
			2021				2021			2021			2021			2020
Income and Performance Ratios:
	Total revenue, net of interest expense	$	160,424			$	170,076		$	167,321		$	182,509		$	171,848
	Net income		41,657				52,743			58,002			72,631			53,891
	Net income available to common shareholders		40,183				50,400			55,803			68,995			50,082
	Pre-provision, pre-tax, net revenues ^(non-GAAP)		48,483				63,647			59,728			81,578			62,107
	Net income per common share - diluted		0.55				0.69			0.77			0.95			0.69
	Book value per common share		26.13				25.91			25.51			24.78			24.31
	Book value per share - tangible ^(non-GAAP)		19.15				18.92			18.70			17.94			17.46
	Return on average assets		0.99	%			1.27	%		1.48	%		1.92	%		1.35	%
	Return on average assets - tangible ^(non-GAAP)		1.08	%			1.37	%		1.59	%		2.05	%		1.46	%
	Return on average equity		8.38	%			10.59	%		12.21	%		15.56	%		11.26	%
	Return on average equity - tangible ^(non-GAAP)		12.08	%			15.09	%		17.38	%		22.19	%		16.28	%
	Return on average common equity		8.45	%			10.68	%		12.31	%		15.70	%		11.36	%
	Return on average common equity - tangible ^(non-GAAP)		12.22	%			15.27	%		17.57	%		22.45	%		16.48	%
	Noninterest income as a percentage of total revenue		37.17	%			40.94	%		39.55	%		45.21	%		41.45	%
Regulatory Capital Ratios (1):
	Common equity tier 1		12.36	%			12.53	%		12.42	%		12.15	%		11.87	%
	Tier 1		12.50	%			12.69	%		12.57	%		12.30	%		12.04	%
	Total		15.56	%			15.85	%		15.76	%		15.59	%		15.42	%
	Tier 1 leverage ratio		9.12	%			9.18	%		9.44	%		9.54	%		8.99	%
Asset Quality:
	Allowance for credit losses on loans to nonperforming loans		17.76x				12.68x			9.67x			9.09x			10.74x
	Allowance for credit losses on loans to period end loans		1.12	%			1.15	%		1.15	%		1.19	%		1.25	%
	Allowance for credit losses on loans to period end loans excluding PPP loans ^(non-GAAP)		1.13	%			1.18	%		1.22	%		1.31	%		1.37	%
	Nonperforming loans to period end loans		0.06	%			0.09	%		0.12	%		0.13	%		0.12	%
	Nonperforming assets to period end assets		0.06	%			0.09	%		0.10	%		0.11	%		0.11	%
	Net charge-offs (recoveries) to average loans (annualized)		—	%			(0.03	)%		(0.01	)%		0.03	%		—	%
	Net charge-offs (recoveries)		(60	)			(644	)		(137	)		669			109

	Nonperforming loans	$	5,973			$	8,451		$	11,178		$	12,768		$	11,188
	Former bank premises		—				—			—			750			750
	Foreclosed property		4,583				5,409			4,041			3,748			4,276
	Total nonperforming assets	$	10,556			$	13,860		$	15,219		$	17,266		$	16,214
	Loans past due 90 days and still accruing interest	$	372			$	143		$	1,584		$	108		$	528
	Allowance for credit losses on loans		106,059				107,177			108,130			116,077			120,157
Mortgage Banking:
	Loans originated, mortgage	$	851,021			$	939,272		$	1,050,663		$	1,187,595		$	1,257,963
	Loans originated, joint venture		303,362				370,865			403,864			417,177			429,848
	Total loans originated	$	1,154,383			$	1,310,137		$	1,454,527		$	1,604,772		$	1,687,811
	Number of loans originated		3,408				3,917			4,514			5,164			5,481
	Number of originators		213				219			222			229			228
	Purchase %		79.36	%			77.45	%		76.95	%		53.45	%		59.76	%
	Loans sold	$	1,150,996			$	1,394,166		$	1,485,057		$	1,601,480		$	1,845,926
	Rate lock asset	$	3,455			$	6,087		$	7,760		$	12,522		$	11,781
	Gross realized gain on sales and fees as a % of loans originated		3.42	%			3.61	%		3.64	%		4.01	%		4.02	%
Other Ratios:
	Net interest margin		2.70	%			2.76	%		2.92	%		3.04	%		2.97	%
	Net interest margin-fully tax equivalent ^(non-GAAP)		2.72	%			2.78	%		2.94	%		3.06	%		2.98	%
	Average earning assets/total average assets		92.08	%			91.89	%		91.89	%		91.46	%		91.59	%
	Average loans/average deposits		70.68	%			71.69	%		78.22	%		82.71	%		83.42	%
	Average noninterest deposits/total average deposits		41.42	%			40.40	%		40.21	%		38.39	%		39.61	%
	Period end equity/period end total assets		11.71	%	‍¹		12.02	%		11.83	%		12.04	%		12.20	%
	Efficiency ratio ^(non-GAAP)		67.03	%			59.58	%		61.46	%		52.11	%		60.02	%
	(1) Current reporting period regulatory capital ratios are preliminary.

TOWNEBANK
Selected Data (unaudited)
(dollars in thousands)


	Investment Securities										% Change
		Q4			Q4			Q3			Q4 21 vs.			Q4 21 vs.
	*Available-for-sale securities, at fair value*		2021			2020			2021		Q4 20			Q3 21
	U.S. agency securities	$	310,587		$	184,657		$	207,949			68.20	%		49.36	%
	U.S. Treasury notes		1,000			1,000			1,007			—	%		(0.70	)%
	Municipal securities		385,673			353,651			350,980			9.05	%		9.88	%
	Trust preferred and other corporate securities		53,950			31,499			31,591			71.28	%		70.78	%
	Mortgage-backed securities issued by GSE and GNMA		1,055,183			797,765			969,017			32.27	%		8.89	%
	Allowance for credit losses		(210	)		(348	)		(142	)		(39.66	)%		47.89	%
	Total	$	1,806,183		$	1,368,224		$	1,560,402			32.01	%		15.75	%
	*Gross unrealized gains (losses) reflected in financial statements*
	Total gross unrealized gains	$	32,054		$	60,025		$	40,906			(46.60	)%		(21.64	)%
	Total gross unrealized losses		(14,514	)		(1,703	)		(8,845	)		752.26	%		64.09	%
	Net unrealized gain (loss) on AFS securities	$	17,540		$	58,322		$	32,061			(69.93	)%		(45.29	)%

	*Held-to-maturity securities, at amortized cost*
	U.S. agency securities	$	73,360		$	—		$	—			100.00	%		100.00	%
	U.S. Treasury notes		66,326			—			—			100.00	%		100.00	%
	Municipal securities		5,095			5,012			2,285			1.66	%		122.98	%
	Trust preferred corporate securities		2,272			2,321			5,074			(2.11	)%		(55.22	)%
	Mortgage-backed securities issued by GSE and GNMA		7,168			9,179			7,539			(21.91	)%		(4.92	)%
	Allowance for credit losses		(94	)		(97	)		(94	)		(3.09	)%		—	%
	Total	$	154,127		$	16,415		$	14,804			838.94	%		941.12	%
*Gross unrealized gains (losses) not reflected in financial statements*
	Total gross unrealized gains	$	1,561		$	1,957		$	1,591			(20.24	)%		(1.89	)%
	Total gross unrealized losses		(106	)		—			—		n/m			n/m
	Net unrealized gain (loss) on HTM securities	$	1,455		$	1,957		$	1,591			(25.65	)%		(8.55	)%

	Loans Held For Investment (1)										% Change
		Q4			Q4			Q3			Q4 21 vs.			Q4 21 vs.
			2021			2020			2021		Q4 20			Q3 21
	Real estate - construction and development	$	1,125,863		$	1,199,772		$	1,005,592			(6.16	)%		11.96	%
	Commercial real estate - owner occupied		1,494,000			1,380,516			1,463,000			8.22	%		2.12	%
	Commercial real estate - non owner occupied		2,620,334			2,335,235			2,647,625			12.21	%		(1.03	)%
	Multifamily		332,659			295,488			363,733			12.58	%		(8.54	)%
	Residential 1-4 family		1,305,915			1,216,629			1,233,125			7.34	%		5.90	%
	HELOC		380,834			412,476			389,974			(7.67	)%		(2.34	)%
	Commercial and industrial business (C&I)		1,206,911			1,990,808			1,253,972			(39.38	)%		(3.75	)%
	Government		525,358			379,243			471,037			38.53	%		11.53	%
	Indirect		394,802			271,459			348,864			45.44	%		13.17	%
	Consumer loans and other		119,576			147,442			120,643			(18.90	)%		(0.88	)%
	Total	$	9,506,252		$	9,629,068		$	9,297,565			(1.28	)%		2.24	%
(1) PPP loans totaling $0.16 billion, $0.86 billion and $0.25 billion, primarily in C&I, are included in Q4 2021, Q4 2020 and Q3 2021, respectively.

	Deposits										% Change
		Q4			Q4			Q3			Q4 21 vs.			Q4 21 vs.
			2021			2020			2021		Q4 20			Q3 21
	Noninterest-bearing demand	$	5,546,665		$	4,374,566		$	5,394,952			26.79	%		2.81	%
	Interest-bearing:
	Demand and money market accounts		6,139,714			4,819,604			5,681,181			27.39	%		8.07	%
	Savings		371,356			330,091			366,165			12.50	%		1.42	%
	Certificates of deposits		1,515,891			2,048,905			1,571,752			(26.01	)%		(3.55	)%
	Total	$	13,573,626		$	11,573,166		$	13,014,050			17.29	%		4.30	%

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

	Three Months Ended								Three Months Ended								Three Months Ended
	December 31, 2021								September 30, 2021								December 31, 2020
				Interest			Average					Interest			Average					Interest			Average
	Average			Income/			Yield/		Average			Income/			Yield/		Average			Income/			Yield/
	Balance			Expense			Rate		Balance			Expense			Rate		Balance			Expense			Rate
Assets:
Loans (net of unearned income and deferred costs), excluding nonaccrual loans (1)	$	9,364,498		$	95,696		4.05	%	$	9,238,922		$	98,732		4.24	%	$	9,752,150		$	104,799		4.28	%
Taxable investment securities		1,625,683			10,217		2.51	%		1,421,347			6,560		1.85	%		1,250,375			6,878		2.20	%
Tax-exempt investment securities		157,855			292		0.74	%		125,523			487		1.55	%		139,572			520		1.49	%
Total securities		1,783,538			10,509		2.36	%		1,546,870			7,047		1.82	%		1,389,947			7,398		2.13	%
Interest-bearing deposits		3,274,392			1,215		0.15	%		3,179,010			1,182		0.15	%		1,754,365			435		0.10	%
Loans held for sale		379,808			2,750		2.90	%		468,323			3,406		2.91	%		587,517			3,867		2.63	%
Total earning assets		14,802,236			110,170		2.95	%		14,433,125			110,367		3.03	%		13,483,979			116,499		3.44	%
Less: allowance for credit losses		(107,215	)							(108,478	)							(121,402	)
Total nonearning assets		1,380,488								1,382,351								1,359,808
Total assets	$	16,075,509							$	15,706,998							$	14,722,385
Liabilities and Equity:
Interest-bearing deposits
Demand and money market	$	5,853,873		$	2,148		0.15	%	$	5,486,788		$	2,095		0.15	%	$	4,582,588		$	2,633		0.23	%
Savings		371,901			534		0.57	%		358,739			533		0.59	%		317,561			552		0.69	%
Certificates of deposit		1,541,483			2,707		0.70	%		1,842,948			3,400		0.73	%		2,159,573			7,578		1.40	%
Total interest-bearing deposits		7,767,257			5,389		0.28	%		7,688,475			6,028		0.31	%		7,059,722			10,763		0.61	%
Borrowings		245,622			360		0.58	%		300,505			412		0.54	%		722,291			1,645		0.89	%
Subordinated debt, net		249,555			2,962		4.75	%		249,405			2,962		4.75	%		248,965			2,962		4.76	%
Total interest-bearing liabilities		8,262,434			8,711		0.42	%		8,238,385			9,402		0.45	%		8,030,978			15,370		0.76	%
Demand deposits		5,492,894								5,212,271								4,630,665
Other noninterest-bearing liabilities		417,707								367,891								291,836
Total liabilities		14,173,035								13,818,547								12,953,479
Shareholders’ equity		1,902,474								1,888,451								1,768,906
Total liabilities and equity	$	16,075,509							$	15,706,998							$	14,722,385
Net interest income (tax-equivalent basis) (4)				$	101,459							$	100,965							$	101,129
Reconciliation of Non-GAAP Financial Measures
Tax-equivalent basis adjustment					(667	)							(522	)							(515	)
Net interest income (GAAP)				$	100,792							$	100,443							$	100,614
Interest rate spread (2)(3)							2.53	%							2.58	%							2.68	%
Interest expense as a percent of average earning assets							0.23	%							0.26	%							0.45	%
Net interest margin (tax equivalent basis) (3)(4)							2.72	%							2.78	%							2.98	%
Total cost of deposits							0.16	%							0.19	%							0.37	%

(1) December 31, 2021, December 31, 2020, and September 30, 2021 balances include average PPP balances of $0.20 billion, $1.04 billion, and $0.36 billion, and related interest and fee income of $3.85 million, $11.29 million, and $7.77 million, respectively. There were no PPP balances at December 31, 2019.
(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)

	Year Ended December 31,
		2021								2020								2019
				Interest			Average					Interest			Average					Interest			Average
	Average			Income/			Yield/		Average			Income/			Yield/		Average			Income/			Yield/
	Balance			Expense			Rate		Balance			Expense			Rate		Balance			Expense			Rate
Assets:
Loans (net of unearned income and deferred costs), excluding nonaccrual loans (1)	$	9,462,448		$	397,877		4.20	%	$	9,420,584		$	411,421		4.37	%	$	8,122,210		$	405,511		4.99	%
Taxable investment securities		1,426,493			29,857		2.09	%		1,252,926			30,181		2.41	%		1,202,107			34,141		2.84	%
Tax-exempt investment securities		137,848			1,755		1.27	%		140,078			2,997		2.14	%		102,731			3,426		3.34	%
Total securities		1,564,341			31,612		2.02	%		1,393,004			33,178		2.38	%		1,304,838			37,567		2.88	%
Interest-bearing deposits		2,640,191			3,432		0.13	%		689,715			2,603		0.38	%		665,903			13,825		2.08	%
Mortgage loans held for sale		471,767			13,227		2.80	%		505,502			15,252		3.02	%		335,588			13,379		3.99	%
Total earning assets		14,138,747			446,148		3.16	%		12,008,805			462,454		3.85	%		10,428,539			470,282		4.51	%
Less: allowance for credit losses		(113,113	)							(85,570	)							(54,476	)
Total nonearning assets		1,359,028								2,248,971								1,264,363
Total assets	$	15,384,662							$	14,172,206							$	11,638,426
Liabilities and Equity:
Interest-bearing deposits
Demand and money market	$	5,359,321		$	8,323		0.16	%	$	4,070,562		$	13,105		0.32	%	$	3,351,135		$	26,909		0.80	%
Savings		352,333			2,117		0.60	%		297,441			2,254		0.76	%		280,894			3,296		1.17	%
Certificates of deposit		1,788,985			16,669		0.93	%		2,378,281			42,502		1.79	%		2,478,663			56,050		2.26	%
Total interest-bearing deposits		7,500,639			27,109		0.36	%		6,746,284			57,861		0.86	%		6,110,692			86,255		1.41	%
Borrowings		395,045			2,159		0.54	%		1,269,064			10,306		0.80	%		609,142			11,368		1.84	%
Subordinated debt, net		249,335			11,816		4.74	%		248,736			11,847		4.76	%		248,139			11,847		4.77	%
Total interest-bearing liabilities		8,145,019			41,084		0.50	%		8,264,084			80,014		0.97	%		6,967,973			109,470		1.57	%
Demand deposits		5,034,851								3,924,797								2,844,178
Other noninterest-bearing liabilities		348,844								262,266								228,994
Total liabilities		13,528,714								12,451,147								10,041,145
Shareholders' equity		1,855,948								1,721,059								1,597,281
Total liabilities and equity	$	15,384,662							$	14,172,206							$	11,638,426
Net interest income (tax-equivalent basis) (4)				$	405,064							$	382,440							$	360,812
Reconciliation of Non-GAAP Financial Measures
Tax-equivalent basis adjustment					(2,695	)							(2,296	)							(2,457	)
Net interest income (GAAP)				$	402,369							$	380,144							$	358,355
Interest rate spread (2)(4)							2.65	%							2.88	%							2.94	%
Interest expense as a percent of average earning assets							0.29	%							0.67	%							1.05	%
Net interest margin (tax-equivalent basis) (3)(4)							2.86	%							3.18	%							3.46	%
Total cost of deposits							0.22	%							0.54	%							0.96	%

(1) December 31, 2021 and December 31, 2020 balances include average PPP balances of $0.53 billion and $0.74 billion and related interest and fee income of $33.27 million and $26.94 million, respectively There were no PPP balances at December 31, 2019.
(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 per share data)

		2021			2020
	(unaudited)			(audited)
ASSETS
Cash and due from banks	$	17,373		$	41,514
Interest-bearing deposits at FRB - Richmond		3,244,484			1,795,241
Interest-bearing deposits in financial institutions		34,779			27,532
Total Cash and Cash Equivalents		3,296,636			1,864,287
Securities available for sale, at fair value (amortized cost of $1,788,853 and $1,310,250, and allowance for credit losses of $210 and $348 at December 31, 2021 and December 31, 2020, respectively.		1,806,183			1,368,224
Securities held to maturity, at amortized cost (fair value $155,676 and $18,469 at December 31, 2021 and December 31, 2020, respectively.		154,221			16,512
Less: allowance for credit losses		(94	)		(97	)
Securities held to maturity, net of allowance for credit losses		154,127			16,415
Other equity securities		6,759			6,492
FHLB stock		13,146			30,135
Total Securities		1,980,215			1,421,266
Mortgage loans held for sale		358,303			540,798
Loans, net of unearned income and deferred costs		9,506,252			9,629,068
Less: allowance for credit losses		(106,059	)		(120,157	)
Net Loans		9,400,193			9,508,911
Premises and equipment, net		270,772			260,242
Goodwill		457,187			452,328
Other intangible assets, net		50,379			45,533
BOLI		251,805			246,109
Other assets		295,897			286,970
TOTAL ASSETS	$	16,361,387		$	14,626,444
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand	$	5,546,665		$	4,374,566
Interest-bearing:
Demand and money market accounts		6,139,714			4,819,604
Savings		371,356			330,091
Certificates of deposit		1,515,891			2,048,905
Total Deposits		13,573,626			11,573,166
Advances from the FHLB		155,367			456,038
Subordinated debt, net		249,652			249,055
FRB PPP Lending Facility		—			182,852
Repurchase agreements and other borrowings		76,797			67,786
Total Borrowings		481,816			955,731
Other liabilities		389,771			313,719
TOTAL LIABILITIES		14,445,213			12,842,616
Preferred stock
Authorized and unissued shares - 2,000,000		—			—
Common stock, $1.667 par: Authorized shares - 150,000,000
Issued and outstanding shares 72,683,985 in 2021 and 72,667,541 in 2020		121,164			121,132
Capital surplus		1,050,948			1,046,642
Retained earnings		716,605			557,889
Common stock issued to deferred compensation trust, at cost
911,458 shares in 2021 and 873,486 shares in 2020		(18,257	)		(16,969	)
Deferred compensation trust		18,257			16,969
Accumulated other comprehensive income (loss)		10,597			41,184
TOTAL SHAREHOLDERS’ EQUITY		1,899,314			1,766,847
Noncontrolling interest		16,860			16,981
TOTAL EQUITY		1,916,174			1,783,828
TOTAL LIABILITIES AND EQUITY	$	16,361,387		$	14,626,444

TOWNEBANK
Consolidated Statements of Income
(dollars in thousands, except per share data)

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
		2021			2020			2021			2020
	(unaudited)			(unaudited)			(unaudited)			(audited)
INTEREST INCOME:
Loans, including fees	$	95,054		$	104,182		$	395,322		$	409,252
Investment securities		10,484			7,499			31,472			33,052
Interest-bearing deposits in financial institutions and federal funds sold		1,215			435			3,432			2,603
Mortgage loans held for sale		2,750			3,867			13,227			15,252
Total interest income		109,503			115,983			443,453			460,159
INTEREST EXPENSE:
Deposits		5,389			10,762			27,109			57,862
Advances from the FHLB		206			1,404			1,224			8,393
Subordinated debt, net		2,962			2,962			11,816			11,847
Repurchase agreements and other borrowings		154			241			935			1,913
Total interest expense		8,711			15,369			41,084			80,015
Net interest income		100,792			100,614			402,369			380,144
PROVISION FOR CREDIT LOSSES		(1,110	)		1,617			(16,774	)		67,177
Net interest income after provision for credit losses		101,902			98,997			419,143			312,967
NONINTEREST INCOME:
Residential mortgage banking income, net		20,945			37,504			109,304			112,166
Insurance commissions and other title fees and income, net		15,486			13,868			67,541			65,840
Property management income, net		9,099			5,665			42,175			26,473
Real estate commission income, net		3,165			3,564			13,290			11,776
Service charges on deposit accounts		2,479			1,707			9,584			8,021
Credit card merchant fees, net		1,412			1,377			6,042			5,170
BOLI		1,904			1,990			7,265			8,285
Other income		5,142			5,559			21,508			36,826
Net gain/(loss) on investment securities		—			—			1,252			9,634
Total noninterest income		59,632			71,234			277,961			284,191
NONINTEREST EXPENSE:
Salaries and employee benefits		64,814			61,475			245,844			235,676
Occupancy expense		8,371			8,193			31,657			31,317
Furniture and equipment		3,528			3,462			14,175			13,914
Amortization - intangibles		2,935			2,797			11,127			11,498
Software expense		4,014			4,066			16,911			14,622
Data processing		3,524			2,363			13,779			10,985
Professional fees		2,723			2,591			9,548			11,268
Advertising and marketing		3,414			2,204			13,504			9,643
Other expenses		17,144			18,781			60,727			56,902
Total noninterest expense		110,467			105,932			417,272			395,825
Income before income tax expense and noncontrolling interest		51,067			64,299			279,832			201,333
Provision for income tax expense		9,410			10,408			54,798			31,900
Net income	$	41,657		$	53,891		$	225,034		$	169,433
Net income attributable to noncontrolling interest		(1,474	)		(3,809	)		(9,651	)		(23,898	)
Net income attributable to TowneBank	$	40,183		$	50,082		$	215,383		$	145,535

Per common share information
Basic earnings	$	0.55		$	0.69		$	2.97		$	2.01
Diluted earnings	$	0.55		$	0.69		$	2.97		$	2.01
Cash dividends declared	$	0.20		$	0.18		$	0.78		$	0.72

TOWNEBANK
Consolidated Balance Sheets - Five Quarter Trend
(dollars in thousands, except per share data)


	December 31,			September 30,			June 30,			March 31,			December 31,
		2021			2021			2021			2021			2020
	(unaudited)			(unaudited)			(unaudited)			(unaudited)			(audited)
ASSETS
Cash and due from banks	$	17,373		$	75,370		$	117,797		$	141,545		$	41,514
Interest-bearing deposits at FRB - Richmond		3,244,484			3,155,039			2,970,490			1,936,458			1,795,241
Interest-bearing deposits in financial institutions		34,779			33,506			31,971			30,031			27,532
Total Cash and Cash Equivalents		3,296,636			3,263,915			3,120,258			2,108,034			1,864,287
Securities available for sale, at fair value		1,806,183			1,560,402			1,454,421			1,418,006			1,368,224
Securities held to maturity		154,221			14,898			15,389			15,980			16,512
Less: allowance for credit losses		(94	)		(94	)		(97	)		(97	)		(97	)
Securities held to maturity, net of allowance for credit losses		154,127			14,804			15,292			15,883			16,415
Other equity securities		6,759			6,621			6,395			6,355			6,492
Federal Home Loan Bank stock		13,146			13,146			16,909			16,909			30,135
Total Securities		1,980,215			1,594,973			1,493,017			1,457,153			1,421,266
Mortgage loans held for sale		358,303			431,846			554,447			582,905			540,798
Loans, net of unearned income and deferred costs		9,506,252			9,297,565			9,423,578			9,734,583			9,629,068
Less: allowance for credit losses		(106,059	)		(107,177	)		(108,130	)		(116,077	)		(120,157	)
Net Loans		9,400,193			9,190,388			9,315,448			9,618,506			9,508,911
Premises and equipment, net		270,772			270,810			265,644			261,831			260,242
Goodwill		457,187			457,187			452,328			452,328			452,328
Other intangible assets, net		50,379			50,839			42,271			44,808			45,533
BOLI		251,805			249,862			249,213			247,655			246,109
Other assets		295,897			301,552			311,209			306,176			286,970
TOTAL ASSETS	$	16,361,387		$	15,811,372		$	15,803,835		$	15,079,396		$	14,626,444
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand	$	5,546,665		$	5,394,952		$	5,243,074		$	4,840,678		$	4,374,566
Interest-bearing:
Demand and money market accounts		6,139,714			5,681,181			5,373,146			5,062,461			4,819,604
Savings		371,356			366,165			349,552			342,554			330,091
Certificates of deposit		1,515,891			1,571,752			1,998,828			1,893,951			2,048,905
Total Deposits		13,573,626			13,014,050			12,964,600			12,139,644			11,573,166
Advances from the FHLB		155,367			155,537			255,706			255,872			456,038
Subordinated debt, net		249,652			249,503			249,353			249,204			249,055
FRB PPP Lending Facility		—			—			—			183,164			182,852
Repurchase agreements and other borrowings		76,797			82,413			85,042			68,509			67,786
Total Borrowings		481,816			487,453			590,101			756,749			955,731
Other liabilities		389,771			409,435			379,278			366,697			313,719
TOTAL LIABILITIES		14,445,213			13,910,938			13,933,979			13,263,090			12,842,616
Preferred stock
Authorized shares - 2,000,000		—			—			—			—			—
Common stock, $1.667 par value		121,164			121,163			121,144			121,108			121,132
Capital surplus		1,050,948			1,049,367			1,048,332			1,047,312			1,046,642
Retained earnings		716,605			690,960			655,095			613,826			557,889
Common stock issued to deferred compensation trust, at cost		(18,257	)		(18,076	)		(18,076	)		(17,063	)		(16,969	)
Deferred compensation trust		18,257			18,076			18,076			17,063			16,969
Accumulated other comprehensive income (loss)		10,597			21,597			29,273			17,969			41,184
TOTAL SHAREHOLDERS’ EQUITY		1,899,314			1,883,087			1,853,844			1,800,215			1,766,847
Noncontrolling interest		16,860			17,347			16,012			16,091			16,981
TOTAL EQUITY		1,916,174			1,900,434			1,869,856			1,816,306			1,783,828
TOTAL LIABILITIES AND EQUITY	$	16,361,387		$	15,811,372		$	15,803,835		$	15,079,396		$	14,626,444

TOWNEBANK
Consolidated Statements of Income - Five Quarter Trend (unaudited)
(dollars in thousands, except per share data)

	Three Months Ended
	December 31,			September 30,			June 30,			March 31,			December 31,
		2021			2021			2021			2021			2020
INTEREST INCOME:
Loans, including fees	$	95,054		$	98,258		$	100,614		$	101,396		$	104,182
Investment securities		10,484			7,000			6,871			7,117			7,499
Interest-bearing deposits in financial institutions and federal funds sold		1,215			1,182			619			416			435
Mortgage loans held for sale		2,750			3,405			3,711			3,361			3,867
Total interest income		109,503			109,845			111,815			112,290			115,983
INTEREST EXPENSE:
Deposits		5,389			6,028			7,144			8,548			10,762
Advances from the FHLB		206			247			274			497			1,404
Subordinated debt		2,962			2,962			2,962			2,930			2,962
Repurchase agreements and other borrowings		154			165			291			325			241
Total interest expense		8,711			9,402			10,671			12,300			15,369
Net interest income		100,792			100,443			101,144			99,990			100,614
PROVISION FOR CREDIT LOSSES		(1,110	)		(1,582	)		(10,055	)		(4,027	)		1,617
Net interest income after provision for credit losses		101,902			102,025			111,199			104,017			98,997
NONINTEREST INCOME:
Residential mortgage banking income, net		20,945			25,422			25,524			37,412			37,504
Insurance commissions and other title fees and income, net		15,486			17,398			18,331			16,325			13,868
Property management income, net		9,099			10,502			7,091			15,483			5,665
Real estate commission income, net		3,165			3,781			3,893			2,451			3,564
Service charges on deposit accounts		2,479			2,524			2,391			2,190			1,707
Credit card merchant fees, net		1,412			1,660			1,667			1,302			1,377
BOLI		1,904			2,301			1,541			1,519			1,990
Other income		5,142			6,045			5,487			4,837			5,559
Net gain/(loss) on investment securities		—			—			252			1,000			—
Total noninterest income		59,632			69,633			66,177			82,519			71,234
NONINTEREST EXPENSE:
Salaries and employee benefits		64,814			61,230			61,365			58,435			61,475
Occupancy expense		8,371			7,656			7,559			8,072			8,193
Furniture and equipment		3,528			3,513			3,622			3,512			3,462
Amortization - intangibles		2,935			2,750			2,719			2,723			2,797
Software expense		4,014			4,209			4,494			4,194			4,066
Data processing		3,524			3,603			3,414			3,239			2,363
Professional fees		2,723			2,227			2,259			2,339			2,591
Advertising and marketing		3,414			3,865			3,257			2,968			2,204
Other expenses		17,144			15,033			16,705			11,844			18,781
Total noninterest expense		110,467			104,086			105,394			97,326			105,932
Income before income tax expense and noncontrolling interest		51,067			67,572			71,982			89,210			64,299
Provision for income tax expense		9,410			14,829			13,980			16,579			10,408
Net income		41,657			52,743			58,002			72,631			53,891
Net income attributable to noncontrolling interest		(1,474	)		(2,343	)		(2,199	)		(3,636	)		(3,809	)
Net income attributable to TowneBank	$	40,183		$	50,400		$	55,803		$	68,995		$	50,082
Per common share information
Basic earnings	$	0.55		$	0.70		$	0.77		$	0.95		$	0.69
Diluted earnings (1)	$	0.55		$	0.69		$	0.77		$	0.95		$	0.69
Basic weighted average shares outstanding		72,525,504			72,506,877			72,468,094			72,414,953			72,357,177
Diluted weighted average shares outstanding		72,624,610			72,591,281			72,560,234			72,517,008			72,455,096
Cash dividends declared	$	0.20		$	0.20		$	0.20		$	0.18		$	0.18

(1) The quarterly diluted EPS do not sum to the total year diluted EPS due to rounding.

TOWNEBANK
Banking Segment Financial Information
(dollars in thousands)


	Three Months Ended									Year Ended						Increase/(Decrease)
	December 31,						September 30, 2021			December 31,						2021 over 2020
		2021			2020		September 30, 2021				2021			2020		Amount			Percent
Revenue
Net interest income	$	98,345		$	97,412		$	97,668		$	391,751		$	367,353		$	24,398		6.64	%
Noninterest income
Service charges on deposit accounts		2,479			1,707			2,524			9,584			8,021			1,563		19.49	%
Credit card merchant fees		1,412			1,377			1,660			6,042			5,169			873		16.89	%
Other income		4,876			5,983			6,334			21,584			21,809			(225	)	(1.03	)%
Subtotal		8,767			9,067			10,518			37,210			34,999			2,211		6.32	%
Gain (loss) on investment securities		—						—			1,252			9,634			(8,382	)	n/m
Total noninterest income		8,767			9,067			10,518			38,462			44,633			(6,171	)	(13.83	)%
Total revenue		107,112			106,479			108,186			430,213			411,986			18,227		4.42	%

Provision for credit losses		(1,199	)		1,628			(1,728	)		(15,859	)		65,799			(81,658	)	(124.10	)%

Expenses
Salaries and employee benefits		37,678			37,358			34,791			140,105			142,328			(2,223	)	(1.56	)%
Occupancy expense		5,541			5,681			5,098			21,198			21,237			(39	)	(0.18	)%
Furniture and equipment		2,570			2,625			2,602			10,657			10,425			232		2.23	%
Amortization of intangible assets		812			1,013			862			3,549			4,354			(805	)	(18.49	)%
Other expenses		19,484			19,892			16,580			68,504			65,107			3,397		5.22	%
Total expenses		66,085			66,569			59,933			244,013			243,451			562		0.23	%
Income before income tax, corporate allocation and noncontrolling interest		42,226			38,282			49,981			202,059			102,736			99,323		96.68	%
Corporate allocation		1,260			643			1,241			5,041			2,534			2,507		98.93	%
Income before income tax provision and noncontrolling interest		43,486			38,925			51,222			207,100			105,270			101,830		96.73	%
Provision for income tax expense		7,123			5,163			10,225			37,584			14,467			23,117		159.79	%
Net income		36,363			33,762			40,997			169,516			90,803			78,713		86.69	%
Noncontrolling interest		(3	)		4			2			(4	)		6			(10	)	n/m
Net income attributable to TowneBank	$	36,360		$	33,766		$	40,999		$	169,512		$	90,809		$	78,703		86.67	%

Efficiency ratio ^(non-GAAP)		60.94	%		61.57	%		54.60	%		56.06	%		59.42	%

TOWNEBANK
Realty Segment Financial Information
(dollars in thousands)


	Three Months Ended									Year Ended						Increase/(Decrease)
	December 31,						September 30,			December 31,						2021 over 2020
		2021			2020			2021			2021			2020		Amount			Percent
Revenue
Residential mortgage brokerage income, net	$	22,257		$	38,040		$	26,637		$	113,155		$	114,589		$	(1,434	)	(1.25	)%
Real estate brokerage income, net		3,165			3,564			3,781			13,290			11,776			1,514		12.86	%
Title insurance and settlement fees		610			669			706			2,527			2,397			130		5.42	%
Property management fees, net		9,099			5,665			10,502			42,175			26,473			15,702		59.31	%
Income from unconsolidated subsidiary		113			398			269			1,077			1,336			(259	)	(19.39	)%
Net interest and other income		3,010			3,627			3,154			12,232			13,889			(1,657	)	(11.93	)%
Total revenue		38,254			51,963			45,049			184,456			170,460			13,996		8.21	%

Provision for credit losses		89			(11	)		146			(915	)		1,378		$	(2,293	)	n/m

Expenses
Salaries and employee benefits	$	17,682		$	16,168		$	17,375		$	67,922		$	58,263		$	9,659		16.58	%
Occupancy expense		1,957			1,869			1,926			7,689			7,465			224		3.00	%
Furniture and equipment		727			614			693			2,661			2,622			39		1.49	%
Amortization of intangible assets		931			658			702			2,813			2,630			183		6.96	%
Other expenses		9,805			8,779			11,103			40,579			33,143			7,436		22.44	%
Total expenses		31,102			28,088			31,799			121,664			104,123			17,541		16.85	%

Income (loss) before income tax, corporate allocation, and noncontrolling interest		7,063			23,886			13,104			63,707			64,959			(1,252	)	(1.93	)%
Corporate allocation		(1,000	)		(403	)		(1,000	)		(4,000	)		(1,522	)		(2,478	)	162.81	%
Income (loss) before income tax provision and noncontrolling interest		6,063			23,483			12,104			59,707			63,437			(3,730	)	(5.88	)%
Provision for income tax		1,894			4,421			3,546			13,911			12,035			1,876		15.59	%
Net income (loss)		4,169			19,062			8,558			45,796			51,402			(5,606	)	(10.91	)%
Noncontrolling interest		(1,471	)		(3,813	)		(2,345	)		(9,647	)		(11,809	)		2,162		(18.31	)%
Net income (loss) attributable to TowneBank	$	2,698		$	15,249		$	6,213		$	36,149		$	39,593		$	(3,444	)	(8.70	)%

Efficiency ratio ^(non-GAAP)		78.87	%		52.79	%		69.03	%		64.43	%		59.54	%

TOWNEBANK
Insurance Segment Financial Information
(dollars in thousands)


	Three Months Ended									Year Ended						Increase/(Decrease)
	December 31,						September 30,			December 31,						2021 over 2020
		2021			2020			2021			2021			2020		Amount			Percent
Commission and fee income
Property and casualty	$	13,135		$	11,942		$	15,338		$	57,603		$	52,726		$	4,877		9.25	%
Employee benefits		3,682			3,725			3,820			14,817			15,259			(442	)	(2.90	)%
Travel insurance (1)		—			—			—			—			3,526			(3,526	)	(100.00	)%
Specialized benefit services		172			175			164			666			664			2		0.30	%
Total commissions and fees		16,989			15,842			19,322			73,086			72,175			911		1.26	%
Contingency and bonus revenue		2,231			1,087			1,664			8,977			6,230			2,747		44.09	%
Other income (1)		40			69			40			196			17,976			(17,780	)	(98.91	)%
Total revenue		19,260			16,998			21,026			82,259			96,381			(14,122	)	(14.65	)%
Employee commission expense		4,202			3,592			4,185			16,598			14,492			2,106		14.53	%
Revenue, net of commission expense		15,058			13,406			16,841			65,661			81,889			(16,228	)	(19.82	)%

Expenses
Salaries and employee benefits	$	9,454		$	7,949		$	9,064		$	37,817		$	35,085		$	2,732		7.79	%
Occupancy expense		873			643			632			2,770			2,615			155		5.93	%
Furniture and equipment		231			223			218			857			867			(10	)	(1.15	)%
Amortization of intangible assets		1,192			1,126			1,186			4,765			4,514			251		5.56	%
Other expenses		1,530			1,334			1,254			5,386			5,170			216		4.18	%
Total operating expenses		13,280			11,275			12,354			51,595			48,251			3,344		6.93	%
Income before income tax and noncontrolling interest		1,778			2,131			4,487			14,066			33,638			(19,572	)	(58.18	)%
Corporate allocation		(260	)		(240	)		(241	)		(1,041	)		(1,012	)		(29	)	2.87	%
Income before income tax provision and noncontrolling interest		1,518			1,891			4,246			13,025			32,626			(19,601	)	(60.08	)%
Provision for income tax expense		393			824			1,058			3,303			5,398			(2,095	)	(38.81	)%
Net income		1,125			1,067			3,188			9,722			27,228			(17,506	)	(64.29	)%
Noncontrolling interest (1)		—			—			—			—			(12,095	)		12,095		(100.00	)%
Net income attributable to TowneBank	$	1,125		$	1,067		$	3,188		$	9,722		$	15,133		$	(5,411	)	(35.76	)%

Provision for income taxes		393			824			1,058			3,303			5,398			(2,095	)	(38.81	)%
Depreciation, amortization and interest expense		1,342			1,274			1,330			5,341			5,151			190		3.69	%
EBITDA ^(non-GAAP)	$	2,860		$	3,165		$	5,576		$	18,366		$	25,682		$	(7,316	)	(28.49	)%

Efficiency ratio ^(non-GAAP)		80.28	%		75.70	%		66.31	%		71.32	%		68.06	%
(1) In third quarter 2020, we sold Red Sky Insurance, our travel insurance joint venture. We recorded a gross gain on sale in other income of $17,626. Our re-tax net gain, after distributions to noncontrolling interest was $6,521.

TOWNEBANK
Reconciliation of Non-GAAP Financial Measures:


	Three Months Ended									Twelve Months Ended
	December 31,			September 30,			December 31,			December 31,
		2021			2021			2020			2021			2020

Return on average assets (GAAP)		0.99	%		1.27	%		1.35	%		1.40	%		1.03	%
Impact of excluding average goodwill and other intangibles and amortization		0.09	%		0.10	%		0.11	%		0.11	%		0.10	%
Return on average tangible assets (non-GAAP)		1.08	%		1.37	%		1.46	%		1.51	%		1.13	%

Return on average equity (GAAP)		8.38	%		10.59	%		11.26	%		11.61	%		8.46	%
Impact of excluding average goodwill and other intangibles and amortization		3.70	%		4.50	%		5.02	%		4.94	%		4.16	%
Return on average tangible equity (non-GAAP)		12.08	%		15.09	%		16.28	%		16.55	%		12.62	%

Return on average common equity (GAAP)		8.45	%		10.68	%		11.36	%		11.70	%		8.52	%
Impact of excluding average goodwill and other intangibles and amortization		3.77	%		4.59	%		5.12	%		5.05	%		4.24	%
Return on average tangible common equity (non-GAAP)		12.22	%		15.27	%		16.48	%		16.75	%		12.76	%

Book value (GAAP)	$	26.13		$	25.91		$	24.31		$	26.13		$	24.31
Impact of excluding average goodwill and other intangibles and amortization		(6.98	)		(6.99	)		(6.85	)		(6.98	)		(6.85	)
Tangible book value (non-GAAP)	$	19.15		$	18.92		$	17.46		$	19.15			17.46

Efficiency ratio (GAAP)		68.86	%		61.20	%		61.64	%		61.33	%		59.58	%
Impact of excluding gain/(loss) on investments and amortization expense		(1.83	)%		(1.62	)%		(1.62	)%		(1.52)	)%		0.75	%
Efficiency ratio (non-GAAP)		67.03	%		59.58	%		60.02	%		59.81	%		60.33	%

Average assets (GAAP)	$	16,075,509		$	15,706,998		$	14,722,385		$	15,384,662		$	14,172,206
Less: average goodwill and intangible assets		506,867			506,231			491,453			501,689			495,707
Average tangible assets (non-GAAP)	$	15,568,642		$	15,200,767		$	14,230,932		$	14,882,973		$	13,676,499

Average equity (GAAP)	$	1,902,474		$	1,888,451		$	1,768,906		$	1,855,948		$	1,721,059
Less: average goodwill and intangible assets		506,867			506,231			491,453			501,689			495,707
Average tangible equity (non-GAAP)	$	1,395,607		$	1,382,220		$	1,277,453		$	1,354,259		$	1,225,352

Average common equity (GAAP)	$	1,886,279		$	1,871,820		$	1,753,596		$	1,840,261		$	1,707,635
Less: average goodwill and intangible assets		506,867			506,231			491,453			501,689			495,707
Average tangible common equity (non-GAAP)	$	1,379,412		$	1,365,589		$	1,262,143		$	1,338,572		$	1,211,928

Net income (GAAP)	$	40,183		$	50,400		$	50,082		$	215,383		$	145,535
Amortization of intangibles, net of tax		2,318			2,172			2,210			8,790			9,086
Tangible net income (non-GAAP)	$	42,501		$	52,572		$	52,292		$	224,173		$	154,621

Net income (GAAP)	$	40,183		$	50,400		$	50,082		$	215,383		$	145,535
Provision for credit losses		(1,110	)		(1,582	)		1,617			(16,774	)		67,177
Provision for income taxes		9,410			14,829			10,408			54,798			31,900
(Gain)/loss on equity investment net of noncontrolling interest		—			—		$	—			30			(17,626	)
Pre-provision, pre-tax net revenues (non-GAAP)	$	48,483		$	63,647		$	62,107		$	253,437		$	226,986

Total revenue (GAAP)	$	160,424		$	170,076		$	171,848		$	680,331		$	664,335
Net (gain) loss on investment securities		—			—			—			(1,252	)		(9,634	)
Net (gain) loss on equity investment		—			—			—			30			(17,626	)
Total revenue for efficiency calculation (non-GAAP)	$	160,424		$	170,076		$	171,848		$	679,109		$	637,075

Noninterest expense (GAAP)	$	110,467		$	104,086		$	105,932		$	417,272		$	395,825
Less: Amortization of intangibles		2,935			2,750			2,797			11,127			11,498
Noninterest expense net of amortization (non-GAAP)	$	107,532		$	101,336		$	103,135		$	406,145		$	384,327