TOWN TowneBank

TowneBank ("Towne") (NASDAQ: TOWN) today reported earnings for the quarter ended March 31, 2023 of $38.33 million, or $0.52 per diluted share, compared to $45.59 million, or $0.63 per diluted share, for the quarter ended March 31, 2022. Excluding acquisition-related items, core earnings (non-GAAP) for the quarter ended March 31, 2023 were $46.30 million, or $0.62 per diluted share, compared to $45.63 million, or $0.63 per diluted share, for the quarter ended March 31, 2022.

"The quarter presented unexpected industry challenges which highlighted our prudent approach to conservative balance sheet management and growth. Our capital, liquidity and core funding has been a foundational pillar of our Company since inception and remains strong in the current environment. We expect our proven business model, which emphasizes diverse revenues and deep relationships, will provide opportunities to position Towne to successfully navigate volatile market conditions," said G. Robert Aston, Jr., Executive Chairman.

Highlights for First Quarter 2023:

• Total revenues were $184.14 million, an increase of $18.73 million, or 11.32%, compared to first quarter 2022. An increase in net interest income of $24.17 million was partially offset by a $5.44 million decline in noninterest income, primarily related to the decline in residential mortgage banking income.
• Pre-provision, pre-tax, net revenues (non-GAAP) were $59.60 million, an increase of $4.23 million, or 7.65%, compared to the prior year quarter.
• Towne successfully completed the acquisition of Farmers Bankshares, Inc. and its wholly owned subsidiary Farmers Bank ("Farmers"), in January 2023. Included in that acquisition were $277.89 million in loans, $244.89 million in securities, and $514.57 million in deposits.
• Loans held for investment were $11.17 billion, an increase of $1.26 billion, or 12.76%, compared to March 31, 2022, and $379.18 million, or 3.51%, compared to December 31, 2022. Excluding loans acquired in the quarter, total loans increased $0.99 billion, or 9.96%, compared to prior year and $101.29 million, or 3.81% on an annualized basis, compared to the linked quarter.
• Total deposits were $13.60 billion, a marginal decrease of $173.67 million, or 1.26%, compared to prior year but an increase of $303.91 million, or 2.29%, from December 31, 2022. Excluding $514.57 million in acquired deposits, total deposits decreased $688.24 million, or 5.00%, compared to prior year and $210.66 million, or 6.43% on an annualized basis compare to the linked quarter.
• Noninterest bearing deposits decreased 8.37%, to $5.07 billion, compared to prior year and represented 37.28% of total deposits. Compared to the linked quarter, noninterest bearing deposits decreased 3.72%.
• Annualized return on common shareholders' equity was 8.05% compared to 9.81% in first quarter 2022. Annualized return on average tangible common shareholders' equity (non-GAAP) was 11.83% compared to 14.08% in first quarter 2022.
• Net interest margin was 3.36% for the quarter and taxable equivalent net interest margin (non-GAAP) was 3.39% compared to the prior year quarter net interest margin of 2.67% and taxable equivalent net interest margin (non-GAAP) of 2.69%.
• Effective tax rate of 20.03% in the quarter compared to 19.77% in first quarter 2022 and 19.90% in the linked quarter.

"We were pleased to close the Farmers Bank partnership during the quarter and recently completed the systems conversion. Additionally, the growth in tangible book value during the quarter evidenced our well-structured approach to this transaction. Tougher economic conditions could present additional opportunities for us to grow both organically and through acquisition across our various lines of business. Our commitment to being a strong community asset in the markets we serve is unwavering, especially in challenging environments," stated William I. Foster III, President and Chief Executive Officer.

Quarterly Net Interest Income:

• Net interest income was $123.38 million compared to $99.20 million for the quarter ended March 31, 2022. The increase was driven by higher earning asset yields and increases in loan and investment securities balances, partially offset by increased deposit costs.
• Tax-equivalent net interest margin (non-GAAP) was 3.39%, including purchase accounting accretion of 3 basis points, compared to 2.69%, including purchase accounting accretion of 6 basis points for first quarter 2022.
• On an average basis, loans held for investment, with a yield of 4.88%, represented 74.61% of earning assets at March 31, 2023 compared to a yield of 4.01% and 64.26% of earning assets in the first quarter of 2022.
• Total cost of deposits increased to 1.02% from 0.15% for the quarter ended March 31, 2022. Interest expense on deposits increased $29.04 million, or 593.38%, over the prior year quarter driven, primarily, by the increase in rate. Management expects continued pressure on the cost of deposits.
• Rising funding costs continued to negatively impact profitability in our residential mortgage banking business.
• Average interest-earning assets totaled $14.87 billion at March 31, 2023 compared to $15.05 billion at March 31, 2022, a decrease of 1.14%.
• Average interest-bearing liabilities totaled $8.91 billion, an increase of $352.08 million, or 4.11% from prior year. Average short term FHLB borrowings were $263.33 million during the quarter.

Quarterly Provision for Credit Losses:

• The quarterly provision for credit losses was an expense of $11.67 million compared to a provision benefit of $1.45 million one year ago and an expense of $6.07 million in the linked quarter. The provision includes an initial provision for credit losses of $4.01 million related to loans and commitments acquired in the Farmers transaction.
• The allowance for credit losses on loans in first quarter 2023, compared to the linked quarter, increased $9.19 million, $5.05 million of which resulted from the January 2023 acquisition of Farmers. In addition to the initial loan provision discussed above, acquisition accounting for the purchased loan portfolio included an increase in our allowance of $1.38 million on acquired loans with purchase credit deteriorated loan marks. Additional allowance increases were driven by loan growth, changes in our portfolio composition and updates in the macroeconomic forecast scenarios.
• Net loan charge-offs were $3.87 million, driven primarily by the charge-off of a single credit relationship, compared to $0.13 million one year prior and $2.90 million in the linked quarter. The ratio of net charge-offs to average loans on an annualized basis was 0.14% in first quarter 2023, 0.01% in first quarter 2022, and 0.11% in the linked quarter.
• The allowance for credit losses on loans represented 1.07% of total loans at March 31, 2023, 1.05% at March 31, 2022, and 1.03% on December 31, 2022. The allowance for credit losses on loans was 12.87 times nonperforming loans compared to 21.52 times at March 31, 2022 and 17.67 times at December 31, 2022.

Quarterly Noninterest Income:

• Total noninterest income was $60.77 million compared to $66.21 million in 2022, a decrease of $5.44 million, or 8.22%.
• Residential mortgage banking income was $9.37 million compared to $14.64 million in first quarter 2022. Loan volume decreased to $416.22 million in first quarter 2023 from $819.99 million in 2022. The prolonged increase in mortgage rates has resulted in refinance activities dropping to 5% of total mortgage production volume, the lowest level since second quarter 2018. Residential purchase activity comprised 94.99% of production volume in the first quarter of 2023 compared to 77.93% in the prior year quarter.
• Gross margins on residential mortgages increased 10 basis points from 3.01% in first quarter 2022 to 3.11% in the current quarter.
• Total net insurance commissions increased $3.75 million, or 19.66%, to $22.82 million in first quarter 2023 compared to 2022. This resulted from increases in property and casualty commissions, which were driven by organic growth, higher contingency income, and commissions from two recent acquisitions.
• Property management fee revenue decreased 9.40%, or $1.61 million, to $15.54 million in first quarter 2023 compared to 2022. Reservation income is down compared to the prior year due to decreased bookings at our property management locations.
• Real estate brokerage income declined driven by a 29.04% decline in sale volume. The combination of higher mortgage loan rates and continued low home sales inventories impacted income in first quarter 2023.

Quarterly Noninterest Expense:

• Total noninterest expense was $124.40 million compared to $109.38 million in 2022, an increase of $15.02 million, or 13.73%. Increases in salaries and employee benefits of $5.46 million, acquisition-related expenses of $5.91 million, software expense of $1.13 million, and charitable contributions of $1.03 million were the primary sources of the increase.
• Salaries and benefits expense increases were driven by annual base salary adjustments that went into effect July 2022 and an increase in the year-over-year number of employees, primarily related to the Farmers acquisition.
• Software expense increased due to a number of ongoing projects related to recent acquisitions, our loan portfolio and mortgage.

Consolidated Balance Sheet Highlights:

• Total assets were $16.73 billion for the quarter ended March 31, 2023, an $0.89 billion increase compared to $15.85 billion at December 31, 2022. Total assets increased $63.89 million, or 0.38%, from $16.67 billion at March 31, 2022.
• Loans held for investment increased $1.26 billion, or 12.76%, compared to prior year and $379.18 million, or 3.51%, compared to the linked quarter. Excluding loans acquired in the quarter, total loans increased $0.99 billion, or 9.96%, compared to prior year and $101.29 million, or 3.81% on an annualized basis, compared to the linked quarter.
• Mortgage loans held for sale decreased $77.46 million, or 33.01%, compared to prior year but increased $54.82 million, or 53.57%, compared to the linked quarter.
• Excluding $0.51 billion in acquired deposits, total deposits decreased $0.69 billion, or 5.00%, compared to prior year and $0.21 billion, or 1.58%, compared to the linked quarter.
• Total borrowings increased $178.31 million, or 28.40%, over prior year and $488.24 million, or 153.53%, compared to the linked quarter. FHLB advances increased $474.82 million in the quarter.

Investment Securities:

• Total investment securities were $2.67 billion compared to $2.41 billion at December 31, 2022 and $2.30 billion at March 31, 2022. The weighted average duration of the portfolio at March 31, 2023 was 3.6 years. The carrying value of the available for sale debt securities portfolio included net unrealized losses of $165.71 million at March 31, 2023, compared to $191.05 million at December 31, 2022 and $70.32 million at March 31, 2022, related to rising rates rather than credit quality issues.

Loans and Asset Quality:

• Total loans held for investment were $11.17 billion at March 31, 2023 compared to $10.79 billion at December 31, 2022 and $9.91 billion at March 31, 2022.
• Nonperforming assets were $9.89 million, or 0.06% of total assets, compared to $5.39 million, or 0.03%, at March 31, 2022.
• Nonperforming loans were 0.08% of period end loans compared to 0.05% at March 31, 2022.
• Foreclosed property increased marginally to $563.85 thousand from $560.15 thousand at March 31, 2022.

Deposits and Borrowings:

• Total deposits were $13.60 billion compared to $13.29 billion at December 31, 2022 and $13.77 billion at March 31, 2022.
• Total loans held for investment to deposits were 82.17% compared to 81.20% at December 31, 2022 and 71.95% at March 31, 2022.
• Noninterest-bearing deposits were 37.28% of total deposits at March 31, 2023 compared to 39.61% at December 31, 2022 and 40.17% at March 31, 2022.
• Total borrowings were $0.81 billion compared to $0.32 billion at December 31, 2022 and $0.63 billion at March 31, 2022.

Capital:

• Common equity tier 1 capital ratio of 11.68%.
• Tier 1 leverage capital ratio of 9.86%.
• Tier 1 risk-based capital ratio of 11.80%.
• Total risk-based capital ratio of 14.55%.
• Book value per common share was $26.40 compared to $25.73 at December 31, 2022 and $25.61 at March 31, 2022.
• Tangible book value per common share (non-GAAP) was $19.04 compared to $18.84 at December 31, 2022 and $18.67 at March 31, 2022.

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

TowneBank operates over 45 banking offices throughout Hampton Roads and Central Virginia, as well as Northeastern and Central North Carolina – serving as a local leader in promoting the social, cultural, and economic growth in each community. Towne offers a competitive array of business and personal banking solutions, delivered with only the highest ethical standards. Experienced local bankers providing a higher level of expertise and personal attention with local decision-making are key to the TowneBank strategy. TowneBank has grown its capabilities beyond banking to provide expertise through its controlled divisions and subsidiaries that include Towne Wealth Management, Towne Insurance Agency, Towne Benefits, TowneBank Mortgage, TowneBank Commercial Mortgage, Berkshire Hathaway HomeServices Towne Realty, Towne 1031 Exchange, LLC, and Towne Vacations. With total assets of $16.73 billion as of March 31, 2023, TowneBank is one of the largest banks headquartered in Virginia.

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

Forward-Looking Statements:This press release contains certain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts, but instead represent only the beliefs, expectations, or opinions of TowneBank and its management regarding future events, many of which, by their nature, are inherently uncertain. Forward-looking statements may be identified by the use of such words as: "believe," "expect," "anticipate," "intend," "plan,” "estimate," or words of similar meaning, or future or conditional terms, such as "will," "would," "should," "could," "may," "likely," "probably," or "possibly." These statements may address issues that involve significant risks, uncertainties, estimates, and assumptions made by management. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include competitive pressures in the banking industry that may increase significantly; changes in the interest rate environment that may reduce margins and/or the volumes and values of loans made or held as well as the value of other financial assets held; changes in the creditworthiness of customers and the possible impairment of the collectability of loans; general economic conditions, either nationally or regionally, that may be less favorable than expected, resulting in, among other things, a deterioration in credit quality and/or a reduced demand for credit or other services; unusual and infrequently occurring events, such as weather-related or natural disasters, acts of war or terrorism, or public health events (such as the COVID-19 pandemic); changes in the legislative or regulatory environment, including changes in accounting standards and tax laws, that may adversely affect our business; costs or difficulties related to the integration of the businesses we have acquired may be greater than expected; expected cost savings associated with pending or recently completed acquisitions may not be fully realized or realized within the expected time frame; cybersecurity threats or attacks, the implementation of new technologies, and the ability to develop and maintain reliable electronic systems; our competitors may have greater financial resources and develop products that enable them to compete more successfully; changes in business conditions; changes in the securities market; and changes in our local economy with regard to our market area. Any forward-looking statements made by us or on our behalf speak only as of the date they are made or as of the date indicated, and we do not undertake any obligation to update forward-looking statements as a result of new information, future events, or otherwise. For additional information on factors that could materially influence forward-looking statements included in this report, see the "Risk Factors" in TowneBank’s Annual Report on Form 10-K for the year ended December 31, 2022 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, 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,
			2023				2022				2022				2022				2022
Income and Performance Ratios:
	Total revenue	$	184,144			$	175,307			$	179,236			$	166,980			$	165,412
	Net income		38,478				46,494				50,671				47,054				46,250
	Net income available to common shareholders		38,333				46,685				50,169				46,547				45,586
	Pre-provision, pre-tax, net revenues (non-GAAP)		59,602				64,357				66,700				57,748				55,369
	Net income per common share - diluted		0.52				0.64				0.69				0.64				0.63
	Book value per common share		26.40				25.73				25.08				25.48				25.61
	Book value per common share - tangible (non-GAAP)		19.04				18.84				18.17				18.58				18.67
	Return on average assets		0.95	%			1.16	%			1.22	%			1.13	%			1.13	%
	Return on average assets - tangible (non-GAAP)		1.05	%			1.25	%			1.31	%			1.22	%			1.23	%
	Return on average equity		7.99	%			9.98	%			10.60	%			9.94	%			9.73	%
	Return on average equity - tangible (non-GAAP)		11.71	%			14.26	%			15.08	%			14.20	%			13.91	%
	Return on average common equity		8.05	%			10.07	%			10.69	%			10.03	%			9.81	%
	Return on average common equity - tangible (non-GAAP)		11.83	%			14.44	%			15.27	%			14.37	%			14.08	%
	Noninterest income as a percentage of total revenue		33.00	%			26.54	%			30.80	%			34.52	%			40.03	%
Regulatory Capital Ratios (1):
	Common equity tier 1		11.68	%			11.92	%			11.92	%			11.83	%			12.16	%
	Tier 1		11.80	%			12.04	%			12.05	%			11.97	%			12.31	%
	Total		14.55	%			14.80	%			14.80	%			16.76	%			17.34	%
	Tier 1 leverage ratio		9.86	%			9.87	%			9.52	%			9.19	%			9.16	%
Asset Quality:
	Allowance for credit losses on loans to nonperforming loans	12.87x				17.67x				20.48x				18.94x				21.52x
	Allowance for credit losses on loans to period end loans		1.07	%			1.03	%			1.02	%			1.00	%			1.05	%
	Nonperforming loans to period end loans		0.08	%			0.06	%			0.05	%			0.05	%			0.05	%
	Nonperforming assets to period end assets		0.06	%			0.04	%			0.03	%			0.04	%			0.03	%
	Net charge-offs (recoveries) to average loans (annualized)		0.14	%			0.11	%			(0.01)	%			—	%			0.01	%
	Net charge-offs (recoveries)	$	3,874			$	2,904			$	(187	)		$	(80	)		$	126
	Nonperforming loans	$	9,322			$	6,273			$	5,250			$	5,493			$	4,825
	Foreclosed property		564				560				186				563				560
	Total nonperforming assets	$	9,886			$	6,833			$	5,436			$	6,056			$	5,385
	Loans past due 90 days and still accruing interest	$	206			$	324			$	725			$	232			$	40
	Allowance for credit losses on loans	$	120,002			$	110,816			$	107,497			$	104,019			$	103,833
Mortgage Banking:
	Loans originated, mortgage	$	280,401			$	299,298			$	458,254			$	588,529			$	583,008
	Loans originated, joint venture		135,818				157,511				234,443				249,279				236,980
	Total loans originated	$	416,219			$	456,809			$	692,697			$	837,808			$	819,988
	Number of loans originated		1,249				1,355				1,983				2,282				2,237
	Number of originators		194				186				194				201				207
	Purchase %		94.99	%			95.08	%			93.20	%			92.27	%			77.93	%
	Loans sold	$	346,288			$	483,254			$	701,908			$	759,073			$	853,808
	Rate lock asset	$	1,435			$	482			$	859			$	1,935			$	3,009
	Gross realized gain on sales and fees as a % of loans originated		3.11	%			2.93	%			3.02	%			2.92	%			3.01	%
Other Ratios:
	Net interest margin		3.36	%			3.51	%			3.28	%			2.88	%			2.67	%
	Net interest margin-fully tax equivalent (non-GAAP)		3.39	%			3.53	%			3.31	%			2.89	%			2.69	%
	Average earning assets/total average assets		90.98	%			91.51	%			91.92	%			92.22	%			92.24	%
	Average loans/average deposits		82.40	%			80.14	%			76.82	%			74.57	%			71.61	%
	Average noninterest deposits/total average deposits		38.35	%			41.07	%			41.77	%			40.56	%			40.49	%
	Period end equity/period end total assets		11.89	%			11.92	%			11.56	%			11.09	%			11.28	%
	Efficiency ratio (non-GAAP)		65.64	%			61.99	%			61.03	%			63.51	%			64.42	%
	(1) Current reporting period regulatory capital ratios are preliminary.

TOWNEBANK
Selected Data (unaudited)
(dollars in thousands)
Investment Securities														% Change
	Q1				Q1				Q4					Q1 23 vs.				Q1 23 vs.
Available-for-sale securities, at fair value		2023				2022				2022				Q1 22				Q4 22
U.S. agency securities	$	334,211			$	338,490			$	293,894				(1.26)	%			13.72	%
U.S. Treasury notes		27,272				970				26,693				2,711.55	%			2.17	%
Municipal securities		508,439				400,200				431,299				27.05	%			17.89	%
Trust preferred and other corporate securities		76,965				85,792				78,436				(10.29)	%			(1.88)	%
Mortgage-backed securities issued by GSE		1,132,746				1,022,169				1,011,666				10.82	%			11.97	%
Allowance for credit losses		(1,150	)			(1,081	)			(1,086	)			6.38	%			5.89	%
Total	$	2,078,483			$	1,846,540			$	1,840,902				12.56	%			12.91	%
Gross unrealized gains (losses) reflected in financial statements
Total gross unrealized gains	$	2,218			$	3,443			$	1,111				(35.58)	%			99.64	%
Total gross unrealized losses		(167,929	)			(73,758	)			(192,163	)			127.68	%			(12.61)	%
Net unrealized gains (losses) and other adjustments on AFS securities	$	(165,711	)		$	(70,315	)		$	(191,052	)			135.67	%			(13.26)	%
Held-to-maturity securities, at amortized cost
U.S. agency securities	$	101,281			$	83,004			$	101,092				22.02	%			0.19	%
U.S. Treasury notes		433,584				336,193				433,866				28.97	%			(0.06)	%
Municipal securities		5,203				5,116				5,181				1.70	%			0.42	%
Trust preferred corporate securities		2,210				2,260				2,223				(2.21)	%			(0.58)	%
Mortgage-backed securities issued by GSE		5,948				6,811				6,113				(12.67)	%			(2.70)	%
Allowance for credit losses		(88	)			(92	)			(83	)			(4.35)	%			6.02	%
Total	$	548,138			$	433,292			$	548,392				26.51	%			(0.05)	%
Total gross unrealized gains	$	392			$	714			$	320				(45.10)	%			22.50	%
Total gross unrealized losses		(24,018	)			(11,915	)			(29,802	)			101.58	%			(19.41)	%
Net unrealized gains (losses) in HTM securities	$	(23,626	)		$	(11,201	)		$	(29,482	)			110.93	%			(19.86)	%
Total unrealized (losses) gains on AFS and HTM securities	$	(189,337	)		$	(81,516	)		$	(220,534	)			132.27	%			(14.15)	%
														% Change
Loans Held For Investment	Q1				Q1				Q4					Q1 23 vs.				Q1 23 vs.
		2023				2022				2022				Q1 22				Q4 22
Real estate - construction and development	$	1,473,034			$	1,236,294			$	1,428,376				19.15	%			3.13	%
Commercial real estate - owner occupied		1,675,119				1,561,117				1,580,099				7.30	%			6.01	%
Commercial real estate - non owner occupied		2,908,791				2,697,929				2,830,620				7.82	%			2.76	%
Real estate - multifamily		505,237				339,220				496,190				48.94	%			1.82	%
Residential 1-4 family		1,734,698				1,392,052				1,634,062				24.61	%			6.16	%
HELOC		387,967				376,480				395,526				3.05	%			(1.91)	%
Commercial and industrial business (C&I)		1,297,707				1,212,973				1,256,697				6.99	%			3.26	%
Government		510,494				518,839				512,265				(1.61)	%			(0.35)	%
Indirect		582,306				485,620				568,190				19.91	%			2.48	%
Consumer loans and other		98,432				88,784				92,577				10.87	%			6.32	%
Total	$	11,173,785			$	9,909,308			$	10,794,602				12.76	%			3.51	%
														% Change
Deposits	Q1				Q1				Q4					Q1 23 vs.				Q1 23 vs.
		2023				2022				2022				Q1 22				Q4 22
Noninterest-bearing demand	$	5,069,363			$	5,532,337			$	5,265,186				(8.37)	%			(3.72)	%
Interest-bearing:
Demand and money market accounts		6,284,184				6,432,005				6,185,075				(2.30)	%			1.60	%
Savings		389,173				393,119				374,987				(1.00)	%			3.78	%
Certificates of deposits		1,855,411				1,414,339				1,468,975				31.19	%			26.31	%
Total		13,598,131				13,771,800				13,294,223				(1.26)	%			2.29	%

TOWNEBANK
Average Balances, Yields and Rate Paid (unaudited)
(dollars in thousands)
	Three Months Ended											Three Months Ended											Three Months Ended
	March 31, 2023											December 31, 2022											March 31, 2022
					Interest				Average							Interest				Average							Interest				Average
	Average				Income/				Yield/			Average				Income/				Yield/			Average				Income/				Yield/
	Balance				Expense				Rate (1)			Balance				Expense				Rate (1)			Balance				Expense				Rate (1)
Assets:
Loans (net of unearned income and deferred costs)	$	11,097,626			$	133,536			4.88	%		$	10,701,612			$	124,064			4.60	%		$	9,668,724			$	95,596			4.01	%
Taxable investment securities		2,438,489				16,816			2.76	%			2,288,344				14,251			2.49	%			2,059,614				9,013			1.75	%
Tax-exempt investment securities		188,033				1,887			4.01	%			140,108				1,262			3.60	%			110,698				777			2.81	%
Total securities		2,626,522				18,703			2.85	%			2,428,452				15,513			2.56	%			2,170,312				9,790			1.80	%
Interest-bearing deposits		1,044,538				10,649			4.13	%			1,321,964				11,387			3.42	%			2,929,929				1,347			0.19	%
Loans held for sale		105,018				1,604			6.11	%			124,949				1,842			5.90	%			276,448				2,375			3.44	%
Total earning assets		14,873,704				164,492			4.49	%			14,576,977				152,806			4.16	%			15,045,413				109,108			2.94	%
Less: allowance for credit losses		(114,447	)										(108,288	)										(106,172	)
Total nonearning assets		1,589,783											1,461,067											1,372,757
Total assets	$	16,349,040										$	15,929,756										$	16,311,998
Liabilities and Equity:
Interest-bearing deposits
Demand and money market	$	6,217,754			$	23,302			1.52	%		$	6,022,582			$	13,903			0.92	%		$	6,178,217			$	2,262			0.15	%
Savings		401,776				844			0.85	%			378,816				763			0.80	%			382,839				511			0.54	%
Certificates of deposit		1,683,354				9,788			2.36	%			1,468,589				5,452			1.47	%			1,472,942				2,121			0.58	%
Total interest-bearing deposits		8,302,884				33,934			1.66	%			7,869,987				20,118			1.01	%			8,033,998				4,894			0.25	%
Borrowings		355,833				3,915			4.40	%			138,510				909			2.57	%			135,775				137			0.40	%
Subordinated debt, net		250,066				2,169			3.47	%			247,319				2,108			3.41	%			386,934				4,120			4.26	%
Total interest-bearing liabilities		8,908,783				40,018			1.82	%			8,255,816				23,135			1.11	%			8,556,707				9,151			0.43	%
Demand deposits		5,164,415											5,484,477											5,467,153
Other noninterest-bearing liabilities		329,840											334,033											387,871
Total liabilities		14,403,038											14,074,326											14,411,731
Shareholders’ equity		1,946,002											1,855,430											1,900,267
Total liabilities and equity	$	16,349,040										$	15,929,756										$	16,311,998
Net interest income (tax-equivalent basis) (4)					$	124,474										$	129,671										$	99,957
Reconciliation of Non-GAAP Financial Measures
Tax-equivalent basis adjustment						(1,096	)										(888	)										(753	)
Net interest income (GAAP)					$	123,378										$	128,783										$	99,204
Interest rate spread (2)(4)									2.67	%										3.05	%										2.51	%
Interest expense as a percent of average earning assets									1.09	%										0.63	%										0.25	%
Net interest margin (tax equivalent basis) (3)(4)									3.39	%										3.53	%										2.69	%
Total cost of deposits									1.02	%										0.60	%										0.15	%

(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,
		2023				2022
	(unaudited)				(audited)
ASSETS
Cash and due from banks	$	97,502			$	55,381
Interest-bearing deposits at FRB - Richmond		1,040,112				1,000,205
Federal funds sold and interest-bearing deposits in financial institutions		104,924				97,244
Total Cash and Cash Equivalents		1,242,538				1,152,830
Securities available for sale, at fair value (amortized cost of $2,245,344 and $2,033,040, and allowance for credit losses of $1,150 and $1,086 at March 31, 2023 and December 31, 2022, respectively)		2,078,483				1,840,902
Securities held to maturity, at amortized cost (fair value $524,600 and $518,993 at March 31, 2023 and December 31, 2022, respectively)		548,226				548,475
Less: allowance for credit losses		(88	)			(83	)
Securities held to maturity, net of allowance for credit losses		548,138				548,392
Other equity securities		13,341				6,424
FHLB stock		29,837				9,617
Total Securities		2,669,799				2,405,335
Mortgage loans held for sale		157,161				102,339
Loans, net of unearned income and deferred costs		11,173,785				10,794,602
Less: allowance for credit losses		(120,002	)			(110,816	)
Net Loans		11,053,783				10,683,786
Premises and equipment, net		321,944				304,802
Goodwill		477,234				458,482
Other intangible assets, net		73,238				43,163
BOLI		271,704				258,069
Other assets		463,076				436,461
TOTAL ASSETS	$	16,730,477			$	15,845,267
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand	$	5,069,363			$	5,265,186
Interest-bearing:
Demand and money market accounts		6,284,184				6,185,075
Savings		389,173				374,987
Certificates of deposit		1,855,411				1,468,975
Total Deposits		13,598,131				13,294,223
Advances from the FHLB		504,497				29,674
Subordinated debt, net		255,151				247,420
Repurchase agreements and other borrowings		46,602				40,918
Total Borrowings		806,250				318,012
Other liabilities		336,201				344,275
TOTAL LIABILITIES		14,740,582				13,956,510
Preferred stock, authorized and unissued shares - 2,000,000		—				—
Common stock, $1.667 par value: 150,000,000 shares authorized
74,804,431 and 72,841,379 shares issued at
March 31, 2023 and December 31, 2022, respectively		124,682				121,426
Capital surplus		1,109,387				1,052,262
Retained earnings		861,905				840,777
Common stock issued to deferred compensation trust, at cost
926,727 and 931,030 shares at March 31, 2023 and December 31, 2022, respectively		(18,839	)			(18,974	)
Deferred compensation trust		18,839				18,974
Accumulated other comprehensive income (loss)		(121,297	)			(140,505	)
TOTAL SHAREHOLDERS’ EQUITY		1,974,677				1,873,960
Noncontrolling interest		15,218				14,797
TOTAL EQUITY		1,989,895				1,888,757
TOTAL LIABILITIES AND EQUITY	$	16,730,477			$	15,845,267

TOWNEBANK
Consolidated Statements of Income (unaudited)
(dollars in thousands, except per share data)
	Three Months Ended
	March 31,
		2023				2022
INTEREST INCOME:
Loans, including fees	$	132,768			$	94,962
Investment securities		18,375				9,671
Interest-bearing deposits in financial institutions and federal funds sold		10,649				1,347
Mortgage loans held for sale		1,604				2,375
Total interest income		163,396				108,355
INTEREST EXPENSE:
Deposits		33,934				4,894
Advances from the FHLB		2,992				92
Subordinated debt, net		2,169				4,120
Repurchase agreements and other borrowings		923				45
Total interest expense		40,018				9,151
Net interest income		123,378				99,204
PROVISION FOR CREDIT LOSSES		11,670				(1,449	)
Net interest income after provision for credit losses		111,708				100,653
NONINTEREST INCOME:
Residential mortgage banking income, net		9,372				14,638
Insurance commissions and other title fees and income, net		22,823				19,074
Property management income, net		15,535				17,147
Real estate brokerage income, net		1,791				2,554
Service charges on deposit accounts		2,851				2,574
Credit card merchant fees, net		1,545				1,375
BOLI		1,672				1,717
Other income		5,177				7,129
Total noninterest income		60,766				66,208
NONINTEREST EXPENSE:
Salaries and employee benefits		69,420				63,963
Occupancy		9,064				8,327
Furniture and equipment		4,244				3,690
Amortization - intangibles		3,524				2,817
Software expense		5,624				4,492
Data processing		3,353				3,594
Professional fees		3,011				2,027
Advertising and marketing		4,401				4,127
Other expenses		21,756				16,342
Total noninterest expense		124,397				109,379
Income before income tax expense and noncontrolling interest		48,077				57,482
Provision for income tax expense		9,599				11,232
Net income	$	38,478			$	46,250
Net income attributable to noncontrolling interest		(145	)			(664	)
Net income attributable to TowneBank	$	38,333			$	45,586
Per common share information
Basic earnings	$	0.52			$	0.63
Diluted earnings	$	0.52			$	0.63
Cash dividends declared	$	0.23			$	0.20

TOWNEBANK
Consolidated Balance Sheets - Five Quarter Trend
(dollars in thousands, except share data)
	March 31,				December 31,				September 30,				June 30,				March 31,
		2023				2022				2022				2022				2022
	(unaudited)				(audited)				(unaudited)				(unaudited)				(unaudited)
ASSETS
Cash and due from banks	$	97,502			$	55,381			$	97,290			$	72,592			$	74,991
Interest-bearing deposits at FRB - Richmond		1,040,112				1,000,205				1,245,067				2,341,942				2,857,327
Federal funds sold and interest-bearing deposits in financial institutions		104,924				97,244				96,862				35,087				34,684
Total Cash and Cash Equivalents		1,242,538				1,152,830				1,439,219				2,449,621				2,967,002
Securities available for sale		2,078,483				1,840,902				1,890,136				1,914,011				1,846,540
Securities held to maturity		548,226				548,475				548,745				549,083				433,384
Less: allowance for credit losses		(88	)			(83	)			(83	)			(85	)			(92	)
Securities held to maturity, net of allowance for credit losses		548,138				548,392				548,662				548,998				433,292
Other equity securities		13,341				6,424				6,360				6,679				6,789
FHLB stock		29,837				9,617				9,475				10,432				10,432
Total Securities		2,669,799				2,405,335				2,454,633				2,480,120				2,297,053
Mortgage loans held for sale		157,161				102,339				165,023				211,716				234,620
Loans, net of unearned income and deferred costs		11,173,785				10,794,602				10,559,611				10,425,760				9,909,308
Less: allowance for credit losses		(120,002	)			(110,816	)			(107,497	)			(104,019	)			(103,833	)
Net Loans		11,053,783				10,683,786				10,452,114				10,321,741				9,805,475
Premises and equipment, net		321,944				304,802				295,345				289,753				277,764
Goodwill		477,234				458,482				458,482				457,162				457,162
Other intangible assets, net		73,238				43,163				44,854				44,878				47,562
BOLI		271,704				258,069				256,074				254,478				253,112
Other assets		463,076				436,461				386,053				354,570				326,838
TOTAL ASSETS	$	16,730,477			$	15,845,267			$	15,951,797			$	16,864,039			$	16,666,588
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand	$	5,069,363			$	5,265,186			$	5,574,528			$	5,723,415			$	5,532,337
Interest-bearing:
Demand and money market accounts		6,284,184				6,185,075				6,042,417				6,384,818				6,432,005
Savings		389,173				374,987				387,622				388,364				393,119
Certificates of deposit		1,855,411				1,468,975				1,407,495				1,499,514				1,414,339
Total Deposits		13,598,131				13,294,223				13,412,062				13,996,111				13,771,800
Advances from the FHLB		504,497				29,674				29,850				55,024				55,196
Subordinated debt, net		255,151				247,420				247,265				497,061				496,757
Repurchase agreements and other borrowings		46,602				40,918				43,165				47,922				75,988
Total Borrowings		806,250				318,012				320,280				600,007				627,941
Other liabilities		336,201				344,275				375,869				397,388				387,087
TOTAL LIABILITIES		14,740,582				13,956,510				14,108,211				14,993,506				14,786,828
Preferred stock		—				—				—				—				—
Common stock, $1.667 par value		124,682				121,426				121,423				121,265				121,231
Capital surplus		1,109,387				1,052,262				1,052,374				1,051,384				1,050,387
Retained earnings		861,905				840,777				810,845				777,430				747,614
Common stock issued to deferred compensation
trust, at cost		(18,839	)			(18,974	)			(18,862	)			(19,349	)			(18,323	)
Deferred compensation trust		18,839				18,974				18,862				19,349				18,323
Accumulated other comprehensive income (loss)		(121,297	)			(140,505	)			(157,980	)			(96,358	)			(56,712	)
TOTAL SHAREHOLDERS’ EQUITY		1,974,677				1,873,960				1,826,662				1,853,721				1,862,520
Noncontrolling interest		15,218				14,797				16,924				16,812				17,240
TOTAL EQUITY		1,989,895				1,888,757				1,843,586				1,870,533				1,879,760
TOTAL LIABILITIES AND EQUITY	$	16,730,477			$	15,845,267			$	15,951,797			$	16,864,039			$	16,666,588

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,
		2023				2022				2022				2022				2022
INTEREST INCOME:
Loans, including fees	$	132,768			$	123,395			$	111,590			$	101,043			$	94,962
Investment securities		18,375				15,294				13,979				12,263				9,671
Interest-bearing deposits in financial institutions and federal funds sold		10,649				11,387				9,509				4,616				1,347
Mortgage loans held for sale		1,604				1,842				2,446				2,217				2,375
Total interest income		163,396				151,918				137,524				120,139				108,355
INTEREST EXPENSE:
Deposits		33,934				20,118				10,230				5,573				4,894
Advances from the FHLB		2,992				665				83				86				92
Subordinated debt, net		2,169				2,108				3,117				5,091				4,120
Repurchase agreements and other borrowings		923				244				56				49				45
Total interest expense		40,018				23,135				13,486				10,799				9,151
Net interest income		123,378				128,783				124,038				109,340				99,204
PROVISION FOR CREDIT LOSSES		11,670				6,074				3,925				56				(1,449	)
Net interest income after provision for credit losses		111,708				122,709				120,113				109,284				100,653
NONINTEREST INCOME:
Residential mortgage banking income, net		9,372				7,368				11,968				13,176				14,638
Insurance commissions and other title fees and income, net		22,823				17,324				19,435				19,746				19,074
Property management income, net		15,535				7,756				9,891				9,452				17,147
Real estate brokerage income, net		1,791				2,355				2,932				3,412				2,554
Service charges on deposit accounts		2,851				2,655				2,455				2,446				2,574
Credit card merchant fees, net		1,545				1,653				1,658				1,906				1,375
BOLI		1,672				1,985				1,585				1,853				1,717
Other income		5,177				5,428				5,274				5,649				7,129
Total noninterest income		60,766				46,524				55,198				57,640				66,208
NONINTEREST EXPENSE:
Salaries and employee benefits		69,420				61,307				65,463				64,892				63,963
Occupancy		9,064				9,252				8,748				8,342				8,327
Furniture and equipment		4,244				3,983				3,764				3,643				3,690
Amortization - intangibles		3,524				2,475				2,644				2,684				2,817
Software expense		5,624				5,111				4,594				4,762				4,492
Data processing		3,353				3,096				3,628				3,556				3,594
Professional fees		3,011				3,605				2,627				1,761				2,027
Advertising and marketing		4,401				3,489				4,290				4,091				4,127
Other expenses		21,756				18,823				16,276				14,994				16,342
Total noninterest expense		124,397				111,141				112,034				108,725				109,379
Income before income tax expense and noncontrolling interest		48,077				58,092				63,277				58,199				57,482
Provision for income tax expense		9,599				11,598				12,606				11,145				11,232
Net income		38,478				46,494				50,671				47,054				46,250
Net income attributable to noncontrolling interest		(145	)			191				(502	)			(507	)			(664	)
Net income attributable to TowneBank	$	38,333			$	46,685			$	50,169			$	46,547			$	45,586
Per common share information
Basic earnings	$	0.52			$	0.64			$	0.69			$	0.64			$	0.63
Diluted earnings	$	0.52			$	0.64			$	0.69			$	0.64			$	0.63
Basic weighted average shares outstanding		74,363,222				72,686,303				72,578,736				72,559,537				72,498,075
Diluted weighted average shares outstanding		74,390,614				72,724,189				72,594,474				72,568,886				72,562,122
Cash dividends declared	$	0.23			$	0.23			$	0.23			$	0.23			$	0.20

TOWNEBANK
Banking Segment Financial Information (unaudited)
(dollars in thousands)
	Three Months Ended												Increase/(Decrease)
	March 31,								December 31,				2023 over 2022
		2023				2022				2022			Amount					Percent
Revenue
Net interest income	$	123,650			$	96,770			$	128,655			$	26,880				27.78	%
Service charges on deposit
accounts		2,851				2,574				2,656				277				10.76	%
Credit card merchant fees		1,545				1,375				1,653				170				12.36	%
Other income		5,740				6,710				5,799				(970	)			(14.46)	%
Total noninterest income		10,136				10,659				10,108				(523	)			(4.91)	%
Total revenue		133,786				107,429				138,763				26,357				24.53	%
Provision for credit losses		11,754				(1,833	)			6,312				13,587				(741.24)	%
Expenses
Salaries and employee benefits		43,193				37,059				37,788				6,134				16.55	%
Occupancy		6,233				5,659				6,500				574				10.14	%
Furniture and equipment		3,333				2,709				3,061				624				23.03	%
Amortization of intangible assets		1,281				827				676				454				54.90	%
Other expenses		28,444				18,228				24,141				10,216				56.05	%
Total expenses		82,484				64,482				72,166				18,002				27.92	%
Income before income tax, corporate allocation and noncontrolling interest		39,548				44,780				60,285				(5,232	)			(11.68)	%
Corporate allocation		1,200				1,292				861				(92	)			(7.12)	%
Income before income tax provision and noncontrolling interest		40,748				46,072				61,146				(5,324	)			(11.56)	%
Provision for income tax expense		7,651				8,519				12,162				(868	)			(10.19)	%
Net income		33,097				37,553				48,984				(4,456	)			(11.87)	%
Noncontrolling interest		—				—				—				—				N/M
Net income attributable to TowneBank	$	33,097			$	37,553			$	48,984			$	(4,456	)			(11.87)	%
Efficiency ratio (non-GAAP)		60.70	%			59.25	%			51.52	%			1.45	%			2.45	%

TOWNEBANK
Realty Segment Financial Information (unaudited)
(dollars in thousands)
	Three Months Ended												Increase/(Decrease)
	March 31,								December 31,				2023 over 2022
		2023				2022				2022			Amount				Percent
Revenue
Residential mortgage brokerageincome, net	$	9,794			$	15,906			$	8,292			$	(6,112	)		(38.43)%
Real estate brokerage income, net		1,791				2,554				2,354				(763	)		(29.87)%
Title insurance and settlement fees		291				504				391				(213	)		(42.26)%
Property management fees, net		15,535				17,147				7,757				(1,612	)		(9.40)%
Income from unconsolidatedsubsidiary		66				167				10				(101	)		(60.48)%
Net interest and other income		184				2,932				626				(2,748	)		(93.72)%
Total revenue		27,661				39,210				19,430				(11,549	)		(29.45)%
Provision for credit losses		(84	)			384				(238	)			(468	)		(121.88)%
Expenses
Salaries and employee benefits		14,839				17,291				13,617				(2,452	)		(14.18)%
Occupancy		2,021				1,898				1,970				123			6.48	%
Furniture and equipment		693				761				738				(68	)		(8.94)%
Amortization of intangible assets		683				816				653				(133	)		(16.30)%
Other expenses		8,437				10,852				8,056				(2,415	)		(22.25)%
Total expenses		26,673				31,618				25,034				(4,945	)		(15.64)%
Income before income tax, corporate allocation and noncontrolling interest		1,072				7,208				(5,366	)			(6,136	)		(85.13)%
Corporate allocation		(600	)			(1,000	)			(600	)			400			(40.00)%
Income before income tax provision and noncontrolling interest		472				6,208				(5,966	)			(5,736	)		(92.40)%
Provision for income tax expense		182				1,374				(1,296	)			(1,192	)		(86.75)%
Net income		290				4,834				(4,670	)			(4,544	)		(94.00)%
Noncontrolling interest		(145	)			(664	)			191				519			(78.16)%
Net income attributable to TowneBank	$	145			$	4,170			$	(4,479	)		$	(4,025	)		(96.52)%
Efficiency ratio (non-GAAP)		93.96	%			78.56	%			125.48	%			15.40	%		19.60	%

TOWNEBANK
Insurance Segment Financial Information (unaudited)
(dollars in thousands)
	Three Months Ended												Increase/(Decrease)
	March 31,								December 31,				2023 over 2022
		2023				2022				2022			Amount				Percent
Commission and fee income
Property and casualty	$	18,129			$	15,337			$	15,221			$	2,792			18.20	%
Employee benefits		4,587				4,161				3,949				426			10.24	%
Specialized benefit services		159				170				169				(11	)		(6.47)	%
Total commissions and fees		22,875				19,668				19,339				3,207			16.31	%
Contingency and bonus revenue		4,369				3,404				2,033				965			28.35	%
Other income		6				33				12				(27	)		(81.82)	%
Total revenue		27,250				23,105				21,384				4,145			17.94	%
Employee commission expense		4,553				4,332				4,270				221			5.10	%
Revenue, net of commission expense		22,697				18,773				17,114				3,924			20.90	%
Salaries and employee benefits		11,388				9,613				9,902				1,775			18.46	%
Occupancy		810				770				782				40			5.19	%
Furniture and equipment		218				220				184				(2	)		(0.91)	%
Amortization of intangible assets		1,560				1,174				1,146				386			32.88	%
Other expenses		1,264				1,502				1,927				(238	)		(15.85)	%
Total operating expenses		15,240				13,279				13,941				1,961			14.77	%
Income before income tax, corporate allocation and noncontrolling interest		7,457				5,494				3,173				1,963			35.73	%
Corporate allocation		(600	)			(292	)			(261	)			(308	)		105.48	%
Income before income tax provision and noncontrolling interest		6,857				5,202				2,912				1,655			31.81	%
Provision for income tax expense		1,766				1,339				732				427			31.89	%
Net income		5,091				3,863				2,180				1,228			31.79	%
Noncontrolling interest		—				—				—				—			N/M
Net income attributable to TowneBank	$	5,091			$	3,863			$	2,180			$	1,228			31.79	%
Provision for income taxes		1,766				1,339				732				427			31.89	%
Depreciation, amortization and interest expense		1,706				1,319				1,285				387			29.34	%
EBITDA (non-GAAP)	$	8,563			$	6,521			$	4,197			$	2,042			31.31	%
Efficiency ratio (non-GAAP)		60.27	%			64.48	%			74.76	%			(4.21)	%		(6.53)	%

TOWNEBANK
Reconciliation of Non-GAAP Financial Measures
(dollars in thousands)
	Three Months Ended
	March 31,				March 31,				December 31,
		2023				2022				2022
Return on average assets (GAAP)		0.95	%			1.13	%			1.16	%
Impact of excluding average goodwill and otherintangibles and amortization		0.10	%			0.10	%			0.09	%
Return on average tangible assets (non-GAAP)		1.05	%			1.23	%			1.25	%
Return on average equity (GAAP)		7.99	%			9.73	%			9.98	%
Impact of excluding average goodwill and otherintangibles and amortization		3.72	%			4.18	%			4.28	%
Return on average tangible equity (non-GAAP)		11.71	%			13.91	%			14.26	%
Return on average common equity (GAAP)		8.05	%			9.81	%			10.07	%
Impact of excluding average goodwill and otherintangibles and amortization		3.78	%			4.27	%			4.37	%
Return on average tangible common equity(non-GAAP)		11.83	%			14.08	%			14.44	%
Book value (GAAP)	$	26.40			$	25.61			$	25.73
Impact of excluding average goodwill and otherintangibles and amortization		(7.36	)			(6.94	)			(6.89	)
Tangible book value (non-GAAP)	$	19.04			$	18.67			$	18.84
Efficiency ratio (GAAP)		67.55	%			66.13	%			63.40	%
Impact of exclusions		(1.91)	%			(1.71)	%			(1.41)	%
Efficiency ratio (non-GAAP)		65.64	%			64.42	%			61.99	%
Average assets (GAAP)	$	16,349,040			$	16,311,998			$	15,929,756
Less: average goodwill and intangible assets		521,972				506,496				502,539
Average tangible assets (non-GAAP)	$	15,827,068			$	15,805,502			$	15,427,217
Average equity (GAAP)	$	1,946,002			$	1,900,267			$	1,855,430
Less: average goodwill and intangible assets		521,972				506,496				502,539
Average tangible equity (non-GAAP)	$	1,424,030			$	1,393,771			$	1,352,891
Average common equity (GAAP)	$	1,931,063			$	1,884,101			$	1,838,895
Less: average goodwill and intangible assets		521,972				506,496				502,539
Average tangible common equity (non-GAAP)	$	1,409,091			$	1,377,605			$	1,336,356
Net income (GAAP)	$	38,333			$	45,586			$	46,685
Amortization of intangibles, net of tax		2,784				2,225				1,955
Tangible net income (non-GAAP)	$	41,117			$	47,811			$	48,640
Net income (GAAP)	$	38,333			$	45,586			$	46,685
Provision for credit losses		11,670				(1,449	)			6,074
Provision for income tax		9,599				11,232				11,598
Other nonrecurring (income) loss		—				—				—
Pre-provision, pre-tax net revenues (non-GAAP)	$	59,602			$	55,369			$	64,357
Noninterest expense (GAAP)	$	124,397			$	109,379			$	111,141
Less: amortization of intangibles		3,524				2,817				2,475
Noninterest expense net of amortization (non-GAAP)	$	120,873			$	106,562			$	108,666

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,
			2023				2022				2022				2022				2022
Net income (GAAP)		$	38,333			$	46,685			$	50,169			$	46,547			$	45,586
Acquisition-related items
Merger expenses			5,964				339				616				51				59
Initial provision for credit losses			4,008				—				—				—				—
Income tax expense (benefit)			(2,003	)			(19	)			(6	)			(1	)			(12	)
Total charges, net of taxes			7,969				320				610				50				47
Core operating earnings, excluding certain items affecting comparability (non-GAAP)		$	46,302			$	47,005			$	50,779			$	46,597			$	45,633
Weighted average diluted shares			74,390,614				72,724,189				72,594,474				72,568,886				72,562,122
Diluted EPS (GAAP)		$	0.52			$	0.64			$	0.69			$	0.64			$	0.63
Diluted EPS, excluding certain items affectingcomparability (non-GAAP)		$	0.62			$	0.65			$	0.70			$	0.64			$	0.63
Average assets		$	16,349,040			$	15,929,756			$	16,304,294			$	16,529,810			$	16,311,998
Average tangible equity		$	1,424,030			$	1,352,891				1,374,574			$	1,374,683			$	1,393,771
Average common tangible equity		$	1,409,091			$	1,336,356			$	1,357,845			$	1,357,957			$	1,377,605
Return on average assets, excluding certain itemsaffecting comparability (non-GAAP)			1.15	%			1.17	%			1.24	%			1.13	%			1.13	%
Return on average tangible equity, excluding certain items affecting comparability (non-GAAP)			13.98	%			14.36	%			15.26	%			14.21	%			13.93	%
Return on average common tangible equity, excluding certain items affecting comparability (non-GAAP)			14.13	%			14.54	%			15.45	%			14.39	%			14.09	%
Efficiency ratio, excluding certain items affectingcomparability (non-GAAP)			64.32	%			63.20	%			62.16	%			65.08	%			66.09	%