TowneBank Reports Full Year and Fourth Quarter financial Results for 2019

20th Consecutive Year of Earnings Improvement

SUFFOLK, Va., Jan. 23, 2020 (GLOBE NEWSWIRE) -- TowneBank (the “Company”) (Nasdaq: TOWN) today reported financial results for the full year and the fourth quarter ended December 31, 2019.  For the year ended December 31, 2019, earnings were $138.78 million, or $1.92 per diluted share, compared to $133.79 million, or $1.88 per diluted share for the year ended December 31, 2018.  Earnings in the fourth quarter of 2019 were $35.08 million, or $0.49 per diluted share, compared to fourth quarter 2018 earnings of $35.99 million, or $0.50 per diluted share.

“In spite of downward pressure on interest rates our Company grew total revenues by 6% climbing to a record $564 million.  Our continued focus on attracting noninterest bearing deposits produced an increase of 13% or $328 million during the year and represents approximately 32% of our total deposits.  We are excited about the momentum we are building in North Carolina with our newest office in Greensboro recently opened and several new sites planned for the Charlotte market in 2020,” said G. Robert Aston, Jr., Executive Chairman.

Highlights for the Fourth Quarter of 2019 Compared to the Fourth Quarter of 2018:

• Total revenues were $139.67 million, an increase of $8.25 million, or 6.28%.
• Loans held for investment increased $401.06 million, or 5.00%, from December 31, 2018, and $236.46 million, or 2.89%, from September 30, 2019, or 11.46% on an annualized basis.
• Total deposits were $9.27 billion, an increase of $0.90 billion, or 10.76%, compared to prior year but a decrease, due to expected runoff and seasonality, of $0.17 billion, or 1.77%, from September 30, 2019, or a decline of 7.02% on an annualized basis.
• Noninterest bearing deposits increased by 12.52%, to $2.95 billion, representing 31.83% of total deposits.  Compared to the linked quarter, noninterest bearing deposits decreased 2.62%, or 10.38% on an annualized basis.
• In the quarter comparison, annualized return on average common shareholders' equity was 8.51% and annualized return on average tangible common shareholders' equity was 13.12% (non-GAAP).  For the full 12 months, return on average common shareholders' equity was 8.75% and return on average tangible common shareholders' equity was 13.73% (non-GAAP).
• Net interest margin of 3.33% and taxable equivalent net interest margin of 3.35% (non-GAAP).
• Effective tax rate of 18.17% compared to 22.33% at December 31, 2018.

“We ended 2019 on a positive note with a strong loan growth across our footprint.  We are excited about the planned expansion in North Carolina and opportunities to add Banking, Wealth Management, Mortgage and Insurance talent in each of the markets we serve.  2020 will be an exciting year as we implement a state of the art banking platform to better serve the needs of our members,” said J. Morgan Davis, President and Chief Executive Officer.

Quarterly Net Interest Income Compared to the Fourth Quarter of 2018:

• Net interest income was $89.96 million compared to $89.21 million for the quarter ended December 31, 2018.
• Taxable equivalent net interest margin was 3.35%, including accretion of 9 basis points, compared to 3.55%, including accretion of 12 basis points, for 2018.
• Average loans held for investment, with an average yield of 4.81%, represented 77.25% of average earning assets in the fourth quarter of 2019 compared to an average yield of 5.00% and 79.04% of average earning assets in the fourth quarter of 2018.
• Total cost of deposits increased to 0.92% from 0.83% at December 31, 2018.
• Average interest-earning assets totaled $10.72 billion at December 31, 2019 compared to $10.02 billion at December 31, 2018, an increase of 6.96%.
• Average interest-bearing liabilities totaled $7.06 billion, an increase of $0.23 billion from the prior year.
• Total interest expense increased 5.65%, to $26.52 million in fourth quarter 2019 compared to $25.10 million in fourth quarter 2018, but decreased $2.02 million, or 7.07%, compared to the linked quarter.  The average cost of deposits declined in fourth quarter 2019 after peaking in the third quarter.

Quarterly Provision for Loan Losses:

• Recorded a provision for loan losses of $3.60 million compared to $2.29 million one year ago and $1.51 million in the linked quarter, driven by strong fourth quarter 2019 growth.
• Net charge-offs were $0.80 million compared to $0.43 million one year prior.  The ratio of net charge-offs to average loans on an annualized basis was 0.04% compared to 0.03% in the prior quarter and 0.02% for the fourth quarter of 2018.
• The allowance for loan losses represented 0.69% of total loans compared to 0.68% at September 30, 2019 and 0.65% at December 31, 2018.  Loan loss reserve as a percentage of total loans, excluding purchased loans, remained unchanged at 0.81%, from September 30, 2019, and decreased from 0.82% at December 31, 2018.  The allowance for loan losses was 3.34 times nonperforming loans compared to 3.95 times at September 30, 2019 and 10.97 times at December 31, 2018.

Quarterly Noninterest Income Compared to the Fourth Quarter of 2018:

• Total noninterest income was $49.71 million compared to $42.21 million in 2018, an increase of $7.50 million, or 17.78%.  Residential mortgage brokerage income increased $2.93 million, insurance commissions increased $1.79 million, and real estate brokerage and property management income increased $0.76 million.
• Residential mortgage banking income was $15.88 million compared to $12.95 million in fourth quarter 2018.  Loan volume in the current quarter was $860.16 million, with purchase activity comprising 70.32%.  Loan volume in fourth quarter 2018 was $600.07 million, with purchase activity of 88.64%.  Loan volume in the linked quarter was $963.66 million with purchase activity of 68.83%.
• Total Insurance segment revenue increased $3.96 million, or 24.88%, to $19.88 million in the fourth quarter of 2019.  Revenue generated by insurance agencies acquired in January 2019 and September 2019 totaled $1.40 million in the fourth quarter of 2019.
• Property management fee revenue increased 10.21%, or $0.39 million, as compared to fourth quarter 2018 due to increases in reservation levels.
• Bank owned life insurance and other noninterest income increased $2.62 million, or 44.84%, as compared to fourth quarter 2018 due to proceeds from life insurance policies and investment commission income.

Quarterly Noninterest Expense Compared to the Fourth Quarter of 2018:

• Total noninterest expense was $92.34 million compared to $82.34 million, an increase of $10.00 million, or 12.14%.  This reflects increases of $5.78 million in salary and benefits expense, $0.96 million in professional fees expense, and $0.29 million in advertising and marketing expenses.
• The Bank recorded small bank assessment credits from the FDIC of $1.66 million in the fourth quarter of 2019.
• In addition to growth in production related expenses, changing industry standards and increased regulatory expectations related to exceeding $10 billion in assets, have resulted in enhancements to Company infrastructure, resulting in increased salary and benefits expense and professional fees. Areas of enhancement include: information technology, risk and compliance, accounting, and internal audit.

Quarterly Income Taxes Compared to the Fourth Quarter of 2018:

• Income tax expense was $7.79 million compared to $10.35 million, one year prior.  This represents an effective tax rate of 18.17% compared to 22.33% in the fourth quarter of 2018.

Consolidated Balance Sheet December 31, 2019 Compared to December 31, 2018

• Total assets were $11.95 billion for the quarter ended December 31, 2019, an increase of 7.03%, compared to $11.16 billion at December 31, 2018.  This increase was driven primarily by growth in available for sale securities, mortgage loans held for sale, and loans held for investment.  Year-over-year, other assets increased $47.52 million due to the adoption of the leasing standard.
• Loans held for investment increased $0.40 billion, or 5.00% compared to year end 2018.
• Total deposits increased $0.90 billion, or 10.76%, over December 31, 2018.
• Total borrowings declined $0.32 billion, or 29.41%, from December 31, 2018.

Investment Securities:

• Total investment securities were $1.52 billion compared to $1.41 billion at September 30, 2019 and $1.19 billion at December 31, 2018.  The weighted average duration of the portfolio at December 31, 2019 was 3.90 years.

Loans and Asset Quality:

• Total loans held for investment were $8.42 billion at December 31, 2019 compared to $8.18 billion at September 30, 2019 and $8.02 billion at December 31, 2018.
• Nonperforming assets were $32.80 million, or 0.27% of total assets, compared to $24.17 million, or 0.22% of total assets, at December 31, 2018.
• Nonperforming loans were 0.21% of period end loans.
• Foreclosed property decreased to $13.84 million from $17.16 million at December 31, 2018.

Deposits and Borrowings:

• Total deposits were $9.27 billion compared to $9.44 billion at September 30, 2019 and $8.37 billion at December 31, 2018.
• Total loans to total deposits were 90.81% compared to 86.70% at September 30, 2019 and 95.79% at December 31, 2018.
• Non-interest bearing deposits were 31.83% of total deposits at December 31, 2019 compared to 32.11% at September 30, 2019 and 31.33% at December 31, 2018.  Non-interest bearing deposits experienced typical seasonality during the fourth quarter.
• Total borrowings were $0.77 billion compared to $0.67 billion and $1.09 billion at September 30, 2019 and December 31, 2018, respectively.

Capital:

• Common equity tier 1 capital ratio of 11.45%.
• Tier 1 leverage capital ratio of 9.95%.
• Tier 1 risk-based capital ratio of 11.49%.
• Total risk-based capital ratio of 14.58%.
• Book value was $22.58 compared to $22.38 at September 30, 2019 and $21.05 at December 31, 2018.
• Tangible book value was $15.69 compared to $15.44 at September 30, 2019 and $14.26 at December 31, 2018.

Current Expected Credit Losses ("CECL"):
Effective January 1, 2020, we adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments.  We currently estimate our loss reserves may increase up to 10% upon the finalization of our adoption of the new ASU.

This increase is driven by:

• The change in the timing of potential loss recognition from an incurred loss methodology to an expected loss methodology on loans and off-balance sheet commitments,
• the establishment of life-of-asset loss reserves,
• the change in accounting for purchased assets,
• utilization of reasonable and supportable forecasts.

Outlook:
Management reforecasts on a quarterly basis and anticipates:

• Annual loan growth to be in the mid-single digits in 2020.
• Our quarterly noninterest expense run rate will range between $94 - $97 million for 2020.

Annual Meeting of Shareholders:
TowneBank will hold its 2020 Annual Meeting of Shareholders at 11:30 a.m. on Wednesday, May 20, 2020 at the Virginia Beach Convention Center, 1000 19th Street in Virginia Beach, Virginia.

About TowneBank:
As one of the top community banks in Virginia and North Carolina, TowneBank operates 42 banking offices serving Chesapeake, Chesterfield County, Glen Allen, Hampton, James City County, Mechanicsville, Newport News, Norfolk, Portsmouth, Richmond, Suffolk, Virginia Beach, Williamsburg, and York County in Virginia, along with Raleigh, Cary, Charlotte, Greensboro, Greenville, Moyock, Grandy, Camden County, Southern Shores, Corolla and Nags Head in North Carolina.  TowneBank also offers a full range of financial services 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. Local decision-making is a hallmark of its hometown banking strategy that is delivered through the leadership of each group’s President and Board of Directors.  With total assets of $11.95 billion as of December 31, 2019, TowneBank is one of the largest banks headquartered in Virginia.

Non-GAAP Financial Measures:

This press release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America ("GAAP").  The Company's management uses these non-GAAP financial measures in their analysis of the Company's performance.  These measures typically adjust GAAP performance measures to exclude the effects of the amortization of intangibles and include the tax benefit associated with revenue items that are tax-exempt, as well as adjust income available to common shareholders for certain significant activities or transactions that are infrequent in nature.  Since the presentation of these GAAP performance measures and their impact differ between companies, management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of the Company’s core businesses.  These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of GAAP to non-GAAP disclosures are included as tables at the end of this release.

Forward-Looking Statements:
Certain statements contained in this release constitute forward-looking statements within the meaning of U.S. federal securities laws. These forward-looking statements speak only as of the date of this release, are based on current expectations, and involve a number of assumptions. These include statements regarding TowneBank’s future economic performance, financial condition, prospects, growth, strategies and expectations, and objectives of management, and are generally identified by the use of words such as “believe,” “expect,” “intend,” “anticipate,” “estimate,” or “project” or similar expressions. TowneBank intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is including this statement for purposes of these safe harbor provisions. You should not place undue reliance on forward-looking statements, which are subject to assumptions that are subject to change. TowneBank’s ability to predict results, or the actual effect of future plans or strategies, is inherently uncertain. These forward-looking statements are subject to a number of factors and uncertainties that could cause actual results to differ from those indicated or implied in the forward-looking statements and such differences may be material. Factors which could have a material effect on the operations and future prospects of TowneBank include but are not limited to: changes in interest rates, general economic and business conditions; legislative/regulatory changes; the monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System; the quality and composition of TowneBank’s loan and securities portfolios; demand for loan products; deposit flows; competition; demand for financial services in TowneBank’s market areas; implementation of new technologies and the ability to develop and maintain secure and reliable electronic systems; changes in the securities markets; changes in accounting principles, policies and guidelines; and other risk factors detailed from time to time in filings made by TowneBank with the Federal Deposit Insurance Corporation. TowneBank undertakes no obligation to update or clarify these forward-looking statements, whether as a result of new information, future events or otherwise.

Media contact:
G. Robert Aston, Jr., Executive Chairman, 757-638-6780
J. Morgan Davis, President and 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,
		2019				2019				2019				2019				2018
Income and Performance Ratios:
	Total Revenue	$	139,671			$	145,879			$	144,537			$	133,854			$	131,417
	Net income	35,948				39,400				36,242				32,082				36,440
	Net income attributable to TowneBank	35,075				37,659				34,638				31,409				35,990
	Net income per common share - diluted	0.49				0.52				0.48				0.44				0.50
	Book value per common share	22.58				22.38				21.95				21.40				21.05
	Book value per share - tangible (non-GAAP)	15.69				15.44				15.05				14.46				14.26
	Return on average assets	1.16		%		1.26		%		1.20		%		1.14		%		1.28		%
	Return on average assets - tangible (non-GAAP)	1.30		%		1.40		%		1.35		%		1.29		%		1.43		%
	Return on average equity	8.44		%		9.22		%		8.83		%		8.24		%		9.44		%
	Return on average equity - tangible (non-GAAP)	12.97		%		14.20		%		13.90		%		13.24		%		14.91		%
	Return on average common equity	8.51		%		9.29		%		8.89		%		8.30		%		9.53		%
	Return on average common equity - tangible (non-GAAP)	13.12		%		14.36		%		14.05		%		13.39		%		15.11		%
	Noninterest income as a percentage of total revenue	35.59		%		37.55		%		37.86		%		34.65		%		32.12		%
Regulatory Capital Ratios (1):
	Common equity tier 1	11.45		%		11.52		%		11.58		%		11.49		%		11.51		%
	Tier 1	11.49		%		11.55		%		11.62		%		11.52		%		11.54		%
	Total	14.58		%		14.70		%		14.85		%		14.79		%		14.83		%
	Tier 1 leverage ratio	9.95		%		9.84		%		9.86		%		9.92		%		9.87		%
Asset Quality:
	Allowance for loan losses to nonperforming loans		3.34	x			3.95	x			3.00	x			9.36	x			10.97	x
	Allowance for loan losses to period end loans	0.69		%		0.68		%		0.67		%		0.66		%		0.65		%
	Allowance for loan losses to period end loans excluding purchased loans	0.81		%		0.81		%		0.81		%		0.81		%		0.82		%
	Nonperforming loans to period end loans	0.21		%		0.17		%		0.22		%		0.07		%		0.06		%
	Nonperforming assets to period end assets	0.27		%		0.26		%		0.29		%		0.22		%		0.22		%
	Net charge-offs to average loans (annualized)	0.04		%		0.03		%		0.08		%		0.01		%		0.02		%
	Nonperforming loans	$	17,437			$	14,016			$	18,202			$	5,696			$	4,749
	Former bank premises	1,521				1,510				1,510				2,223				2,253
	Foreclosed property	13,839				15,517				14,517				17,071				17,163
	Total nonperforming assets	$	32,797			$	31,043			$	34,229			$	24,990			$	24,165
	Loans past due 90 days and still accruing interest	$	309			$	636			$	415			$	117			$	394
	Allowance for loan losses	$	58,234			$	55,428			$	54,527			$	53,303			$	52,094
Mortgage Banking:
	Loans originated, mortgage	$	628,279			$	703,922			$	574,638			$	366,643			$	407,787
	Loans originated, joint venture	231,879				259,742				246,491				146,884				192,280
	Total loans originated	$	860,158			$	963,664			$	821,129			$	513,527			$	600,067
	Number of loans originated	2,984				3,360				3,121				1,977				2,304
	Number of originators	228				225				229				240				293
	Purchase %	70.32		%		68.83		%		84.97		%		86.08		%		88.64		%
	Loans sold	$	879,910			$	925,058			$	694,832			$	473,068			$	694,341
	Gross realized gain on sales and fees as a % of loans originated	3.38		%		3.45		%		3.43		%		3.58		%		3.37		%
Other Ratios:
	Net interest margin	3.33		%		3.41		%		3.49		%		3.54		%		3.53		%
	Net interest margin-fully tax equivalent (non-GAAP)	3.35		%		3.43		%		3.52		%		3.57		%		3.55		%
	Average earning assets/total average assets	89.57		%		89.53		%		89.46		%		89.50		%		89.91		%
	Average loans/average deposits	88.41		%		87.63		%		91.60		%		95.83		%		95.32		%
	Average noninterest deposits/total average deposits	32.14		%		31.82		%		31.63		%		31.39		%		31.90		%
	Period end equity/period end total assets	13.84		%		13.63		%		13.45		%		13.53		%		13.78		%
	Efficiency ratio	66.11		%		66.66		%		66.80		%		68.43		%		62.65		%
	(1) Current reporting period regulatory capital ratios are preliminary.

TOWNEBANK
Selected Data (unaudited)
(dollars in thousands)
Investment Securities													% Change
	Q4				Q4				Q3				Q4 19 vs.			Q4 19 vs.
Available-for-sale securities, at fair value	2019				2018				2019				Q4 18			Q3 19
U.S. agency securities	$	129,038			$	358,542			$	152,581			(64.01	)%		(15.43	)%
U.S. Treasury notes	1,000				1,246				999				(19.74	)%		0.10	%
Municipal securities	223,106				87,308				173,519				155.54	%		28.58	%
Trust preferred and other corporate securities	53,367				30,992				52,006				72.20	%		2.62	%
Mortgage-backed securities issued by GSE and GNMA	1,034,797				617,251				958,290				67.65	%		7.98	%
Total	$	1,441,308			$	1,095,339			$	1,337,395			31.59	%		7.77	%
Gross unrealized gains (losses) reflected in financial statements
Total gross unrealized gains	$	23,950			$	3,423			$	28,114			599.68	%		(14.81	)%
Total gross unrealized losses	(4,215		)		(15,333		)		(2,046		)		(72.51	)%		106.01	%
Net unrealized gain (loss) on AFS securities	$	19,735			$	(11,910	)		$	26,068			(265.70	)%		(24.29	)%
Held-to-maturity securities, at amortized cost
Municipal securities	$	29,167			$	34,488			$	29,166			(15.43	)%		—	%
Trust preferred corporate securities	2,369				500				2,381				373.80	%		(0.50	)%
Mortgage-backed securities issued by GSE and GNMA	12,152				15,610				12,947				(22.15	)%		(6.14	)%
Total	$	43,688			$	50,598			$	44,494			(13.66	)%		(1.81	)%
Gross unrealized gains (losses) not reflected in financial statements
Total gross unrealized gains	$	1,520			$	1,271			$	1,688			19.59	%		(9.95	)%
Total gross unrealized losses	(37		)		(601		)		(5		)		(93.84	)%		640.00	%
Net unrealized gain (loss) on HTM securities	$	1,483			$	670			$	1,683			121.34	%		(11.88	)%
Loans Held For Investment													% Change
	Q4				Q4				Q3				Q4 19 vs.			Q4 19 vs.
	2019				2018				2019				Q4 18			Q3 19
Real estate - construction and development	$	1,120,533			$	1,067,239			$	1,142,225			4.99	%		(1.90	)%
Commercial real estate - investment related properties	2,183,232				1,978,592				2,070,317				10.34	%		5.45	%
Commercial real estate - owner occupied	1,329,144				1,262,748				1,286,137				5.26	%		3.34	%
Real estate - multifamily	243,041				260,987				219,901				(6.88	)%		10.52	%
Real estate - residential 1-4 family	1,653,084				1,626,896				1,621,175				1.61	%		1.97	%
Commercial and industrial business	1,574,275				1,510,364				1,527,515				4.23	%		3.06	%
Consumer and other loans	315,979				311,407				315,559				1.47	%		0.13	%
Total	$	8,419,288			$	8,018,233			$	8,182,829			5.00	%		2.89	%
Deposits													% Change
	Q4				Q4				Q3				Q4 19 vs.			Q4 19 vs.
	2019				2018				2019				Q4 18			Q3 19
Noninterest-bearing demand	$	2,951,225			$	2,622,761			$	3,030,505			12.52	%		(2.62	)%
Interest-bearing:
Demand and money market accounts	3,586,364				3,223,215				3,534,252				11.27	%		1.47	%
Savings	276,205				286,684				280,552				(3.66	)%		(1.55	)%
Certificates of deposits	2,457,123				2,237,762				2,592,705				9.80	%		(5.23	)%
Total	$	9,270,917			$	8,370,422			$	9,438,014			10.76	%		(1.77	)%

TOWNEBANK
Average Balances, Yields and Rate Paid (unaudited)
(dollars in thousands)
	Three Months Ended											Three Months Ended											Three Months Ended
	December 31, 2019											September 30, 2019											December 31, 2018
					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	$	8,283,388			$	100,504			4.81	%		$	8,096,908			$	102,495			5.02	%		$	7,923,978			$	99,895			5.00	%
Taxable investment securities	1,331,175				9,179				2.76	%		1,266,447				9,087				2.87	%		1,101,892				7,515				2.73	%
Tax-exempt investment securities	118,298				908				3.07	%		121,738				997				3.28	%		80,656				747				3.70	%
Total securities	1,449,473				10,087				2.78	%		1,388,185				10,084				2.91	%		1,182,548				8,262				2.79	%
Interest-bearing deposits	519,737				2,067				1.58	%		711,030				3,745				2.09	%		652,131				3,559				2.17	%
Loans held for sale	469,725				4,413				3.76	%		408,377				3,956				3.87	%		266,058				3,176				4.77	%
Total earning assets	10,722,323				117,071				4.33	%		10,604,500				120,280				4.50	%		10,024,715				114,892				4.55	%
Less: allowance for loan losses	(56,766		)									(54,858		)									(50,792		)
Total nonearning assets	1,305,036											1,295,640											1,176,037
Total assets	$	11,970,593										$	11,845,282										$	11,149,960
Liabilities and Equity:
Interest-bearing deposits
Demand and money market	$	3,533,912			$	6,421			0.72	%		$	3,379,888			$	7,223			0.85	%		$	3,122,973			$	5,670			0.72	%
Savings	278,910				638				0.91	%		278,048				702				1.00	%		293,135				1,022				1.38	%
Certificates of deposit	2,544,845				14,685				2.29	%		2,641,681				15,627				2.35	%		2,245,039				10,803				1.91	%
Total interest-bearing deposits	6,357,667				21,744				1.36	%		6,299,617				23,552				1.48	%		5,661,147				17,495				1.23	%
Borrowings	454,621				1,810				1.56	%		486,644				2,020				1.62	%		920,389				4,643				1.97	%
Subordinated debt, net	248,361				2,962				4.77	%		248,210				2,962				4.77	%		247,769				2,961				4.78	%
Total interest-bearing liabilities	7,060,649				26,516				1.49	%		7,034,471				28,534				1.61	%		6,829,305				25,099				1.46	%
Demand deposits	3,011,688											2,940,370											2,651,495
Other noninterest-bearing liabilities	250,327											250,371											157,238
Total liabilities	10,322,664											10,225,212											9,638,038
Shareholders’ equity	1,647,929											1,620,070											1,511,922
Total liabilities and equity	$	11,970,593										$	11,845,282										$	11,149,960
Net interest income (tax-equivalent basis)					$	90,555										$	91,746										$	89,793
Reconcilement of Non-GAAP Financial Measures
Tax-equivalent basis adjustment					(596		)									(643		)									(585		)
Net interest income (GAAP)					$	89,959										$	91,103										$	89,208
Interest rate spread (1)(3)									2.84	%										2.89	%										3.09	%
Interest expense as a percent of average earning assets									0.98	%										1.07	%										0.99	%
Net interest margin (tax equivalent basis) (2)(3)									3.35	%										3.43	%										3.55	%
Total cost of deposits									0.92	%										1.01	%										0.83	%
(1) Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities.  Fully tax equivalent.
(2) Net interest margin is net interest income expressed as a percentage of average earning assets.  Fully tax equivalent.
(3) Non-GAAP.

TOWNEBANK
Average Balances, Yields and Rate Paid (unaudited)
(dollars in thousands)
	Year Ended December 31,
	2019											2018											2017
					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	$	8,122,210			$	405,511			4.99	%		$	7,567,570			$	373,057			4.93	%		$	5,901,797			$	276,747			4.69	%
Taxable investment securities	1,202,107				34,141				2.84	%		1,004,080				24,729				2.46	%		600,080				11,597				1.93	%
Tax-exempt investment securities	102,731				3,426				3.34	%		79,720				2,920				3.66	%		48,228				1,590				3.28	%
Total securities	1,304,838				37,567				2.88	%		1,083,800				27,649				2.55	%		648,308				13,187				2.03	%
Interest-bearing deposits	665,903				13,825				2.08	%		560,368				10,229				1.83	%		696,507				7,480				1.07	%
Mortgage loans held for sale	335,588				13,379				3.99	%		293,017				13,124				4.48	%		271,281				10,561				3.89	%
Total earning assets	10,428,539				470,282				4.51	%		9,504,755				424,059				4.46	%		7,517,893				307,975				4.10	%
Less: allowance for loan losses	(54,476		)									(48,737		)									(43,760		)
Total nonearning assets	1,264,363											1,143,167											860,866
Total assets	$	11,638,426										$	10,599,185										$	8,334,999
Liabilities and Equity:
Interest-bearing deposits
Demand and money market	$	3,351,135			$	26,909			0.80	%		$	2,951,038			$	16,458			0.56	%		$	2,260,378			$	8,020			0.35	%
Savings	280,894				3,296				1.17	%		302,435				3,824				1.26	%		319,940				3,305				1.03	%
Certificates of deposit	2,478,663				56,050				2.26	%		2,060,587				32,859				1.59	%		1,668,252				17,467				1.05	%
Total interest-bearing deposits	6,110,692				86,255				1.41	%		5,314,060				53,141				1.00	%		4,248,570				28,792				0.68	%
Borrowings	609,142				11,368				1.84	%		897,574				15,542				1.71	%		617,720				9,942				1.61	%
Subordinated debt, net	248,139				11,847				4.77	%		251,097				12,067				4.81	%		113,752				5,249				4.61	%
Total interest-bearing liabilities	6,967,973				109,470				1.57	%		6,462,731				80,750				1.25	%		4,980,042				43,983				0.88	%
Demand deposits	2,844,178											2,517,173											2,094,753
Other noninterest-bearing liabilities	228,994											164,486											136,616
Total liabilities	10,041,145											9,144,390											7,211,411
Shareholders' equity	1,597,281											1,454,795											1,123,588
Total liabilities and equity	$	11,638,426										$	10,599,185										$	8,334,999
Net interest income (tax-equivalent basis)					$	360,812										$	343,309										$	263,992
Reconcilement of Non-GAAP Financial Measures
Tax-equivalent basis adjustment					(2,457		)									(2,236		)									(2,871		)
Net interest income (GAAP)					$	358,355										$	341,073										$	261,121
Interest rate spread  (1)(3)									2.94	%										3.21	%										3.22	%
Interest expense as a percent of average earning assets									1.05	%										0.85	%										0.59	%
Net interest margin (tax-equivalent basis) (2)(3)									3.46	%										3.61	%										3.51	%
Total cost of deposits									0.96	%										0.68	%										0.45	%
(1) Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities.  Fully tax equivalent.
(2) Net interest margin is net interest income expressed as a percentage of average earning assets.  Fully tax equivalent.
(3) Non-GAAP.

TOWNEBANK
Consolidated Balance Sheets
(dollars in thousands, except per share data)
	2019				2018
	(unaudited)				(audited)
ASSETS
Cash and due from banks	$	97,593			$	94,604
Interest-bearing deposits at Federal Reserve Bank	322,505				570,425
Interest-bearing deposits in financial institutions	22,518				21,667
Total Cash and Cash Equivalents	442,616				686,696
Securities available for sale, at fair value	1,441,308				1,095,339
Securities held to maturity, at amortized cost	43,688				50,598
Other equity securities	6,462				4,797
Federal Home Loan Bank stock	30,094				43,229
Total Securities	1,521,552				1,193,963
Mortgage loans held for sale	419,233				220,986
Loans, net of unearned income and deferred costs	8,419,288				8,018,233
Less: allowance for loan losses	(58,234		)		(52,094		)
Net Loans	8,361,054				7,966,139
Premises and equipment, net	231,806				211,796
Goodwill	446,816				433,658
Other intangible assets, net	54,399				58,752
Bank-owned life insurance policies	243,062				237,371
Other assets	227,125				153,669
TOTAL ASSETS	$	11,947,663			$	11,163,030
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand	$	2,951,225			$	2,622,761
Interest-bearing:
Demand and money market accounts	3,586,364				3,223,215
Savings	276,205				286,684
Certificates of deposit	2,457,123				2,237,762
Total Deposits	9,270,917				8,370,422
Advances from the Federal Home Loan Bank	471,687				799,315
Subordinated debt, net	248,458				247,861
Repurchase agreements and other borrowings	52,391				47,156
Total Borrowings	772,536				1,094,332
Other liabilities	250,516				159,856
TOTAL LIABILITIES	10,293,969				9,624,610
Preferred stock
Authorized and unissued shares - 2,000,000	—				—
Common stock, $1.667 par: Authorized shares - 150,000,000
Issued and outstanding shares 72,649,682 in 2019 and 72,465,923 in 2018	121,107				120,801
Capital surplus	1,041,160				1,034,676
Retained earnings	467,186				379,239
Common stock issued to deferred compensation trust, at cost
818,578 shares in 2019 and 769,200 shares in 2018	(15,555		)		(13,955		)
Deferred compensation trust	15,555				13,955
Accumulated other comprehensive income (loss)	11,302				(9,190		)
TOTAL SHAREHOLDERS’ EQUITY	1,640,755				1,525,526
Noncontrolling interest	12,939				12,894
TOTAL EQUITY	1,653,694				1,538,420
TOTAL LIABILITIES AND EQUITY	$	11,947,663			$	11,163,030

TOWNEBANK
Consolidated Statements of Income
(dollars in thousands, except per share data)
	Three Months Ended								Twelve Months Ended
	December 31,								December 31,
	2019				2018				2019				2018
	(unaudited)				(unaudited)				(unaudited)				(audited)
INTEREST INCOME:
Loans, including fees	$	100,059			$	99,446			$	403,675			$	371,343
Investment securities	9,936				8,126				36,946				27,127
Interest-bearing deposits in financial institutions and federal funds sold	2,067				3,559				13,825				10,229
Mortgage loans held for sale	4,413				3,176				13,379				13,124
Total interest income	116,475				114,307				467,825				421,823
INTEREST EXPENSE:
Deposits	21,744				17,495				86,255				53,141
Advances from the Federal Home Loan Bank	1,730				4,585				11,018				15,340
Subordinated debt, net	2,962				2,961				11,847				12,067
Repurchase agreements and other borrowings	80				58				350				202
Total interest expense	26,516				25,099				109,470				80,750
Net interest income	89,959				89,208				358,355				341,073
PROVISION FOR LOAN LOSSES	3,601				2,292				9,371				8,541
Net interest income after provision for loan losses	86,358				86,916				348,984				332,532
NONINTEREST INCOME:
Residential mortgage banking income, net	15,884				12,951				66,812				65,104
Insurance commissions and other title fees and income, net	15,001				13,212				64,478				56,164
Real estate brokerage and property management income, net	6,737				5,982				34,292				31,863
Service charges on deposit accounts	2,245				2,928				10,544				11,808
Credit card merchant fees, net	1,389				1,298				4,746				5,472
Bank owned life insurance	3,865				2,014				9,215				6,836
Other income	4,591				3,824				16,346				14,343
Gain (loss) on investment securities	—				—				(845		)		3
Total noninterest income	49,712				42,209				205,588				191,593
NONINTEREST EXPENSE:
Salaries and employee benefits	56,013				50,233				218,920				201,838
Occupancy	7,516				7,352				31,381				27,644
Furniture and equipment	3,598				3,587				14,351				14,477
Amortization - intangibles	3,005				3,123				12,370				11,710
Software expense	2,976				2,694				11,717				10,621
Data processing	2,510				2,466				11,825				10,364
Professional fees	2,990				2,028				12,943				8,323
Advertising and marketing	2,839				2,546				12,279				11,194
Other expenses	10,889				8,308				52,516				55,953
Total noninterest expense	92,336				82,337				378,302				352,124
Income before income tax expense & noncontrolling interest	43,734				46,788				176,270				172,001
Provision for income tax expense	7,786				10,348				32,596				34,227
Net income	$	35,948			$	36,440			$	143,674			$	137,774
Net income attributable to noncontrolling interest	(873		)		(450		)		(4,891		)		(3,981		)
Net income attributable to TowneBank	$	35,075			$	35,990			$	138,783			$	133,793
Per common share information
Basic earnings	$	0.49			$	0.50			$	1.93			$	1.88
Diluted earnings	$	0.49			$	0.50			$	1.92			$	1.88
Cash dividends declared	$	0.18			$	0.16			$	0.70			$	0.62

TOWNEBANK
Consolidated Balance Sheets - Five Quarter Trend
(dollars in thousands, except per share data)
	December 31,				September 30,				June 30,				March 31,				December 31,
	2019				2019				2019				2019				2018
	(unaudited)				(unaudited)				(unaudited)				(unaudited)				(audited)
ASSETS
Cash and due from banks	$	97,593			$	124,439			$	110,580			$	104,091			$	94,604
Interest-bearing deposits at Federal Reserve Bank	322,505				675,288				834,505				775,208				570,425
Interest-bearing deposits in financial institutions	22,518				21,663				21,527				21,001				21,667
Total Cash and Cash Equivalents	442,616				821,390				966,612				900,300				686,696
Securities available for sale, at fair value	1,441,308				1,337,395				1,260,821				1,099,777				1,095,339
Securities held to maturity, at amortized cost	43,688				44,494				50,574				49,687				50,598
Other equity securities	6,462				5,697				5,396				5,022				4,797
Federal Home Loan Bank stock	30,094				26,282				32,657				41,464				43,229
Total Securities	1,521,552				1,413,868				1,349,448				1,195,950				1,193,963
Mortgage loans held for sale	419,233				456,719				362,773				247,021				220,986
Loans, net of unearned income and deferred costs	8,419,288				8,182,829				8,126,729				8,105,370				8,018,233
Less: allowance for loan losses	(58,234		)		(55,428		)		(54,527		)		(53,303		)		(52,094		)
Net Loans	8,361,054				8,127,401				8,072,202				8,052,067				7,966,139
Premises and equipment, net	231,806				231,060				230,177				227,458				211,796
Goodwill	446,816				446,423				442,881				442,881				433,658
Other intangible assets, net	54,399				57,404				58,391				61,333				58,752
Bank-owned life insurance policies	243,062				241,652				240,621				238,977				237,371
Other assets	227,125				225,374				219,375				202,276				153,669
TOTAL ASSETS	$	11,947,663			$	12,021,291			$	11,942,480			$	11,568,263			$	11,163,030
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand	$	2,951,225			$	3,030,505			$	2,950,615			$	2,813,857			$	2,622,761
Interest-bearing:
Demand and money market accounts	3,586,364				3,534,252				3,409,322				3,290,907				3,223,215
Savings	276,205				280,552				277,495				285,790				286,684
Certificates of deposit	2,457,123				2,592,705				2,631,386				2,341,134				2,237,762
Total Deposits	9,270,917				9,438,014				9,268,818				8,731,688				8,370,422
Advances from the Federal Home Loan Bank	471,687				381,846				532,004				739,160				799,315
Subordinated debt, net	248,458				248,309				248,160				248,010				247,861
Repurchase agreements and other borrowings	52,391				42,971				56,355				44,775				47,156
Total Borrowings	772,536				673,126				836,519				1,031,945				1,094,332
Other liabilities	250,516				271,617				230,691				238,974				159,856
TOTAL LIABILITIES	10,293,969				10,382,757				10,336,028				10,002,607				9,624,610
Preferred stock
Authorized shares - 2,000,000	—				—				—				—				—
Common stock, $1.667 par value	121,107				121,080				121,038				121,047				120,801
Capital surplus	1,041,160				1,039,156				1,036,982				1,035,563				1,034,676
Retained earnings	467,186				445,186				420,600				399,030				379,239
Common stock issued to deferred compensation trust, at cost	(15,555		)		(15,317		)		(15,160		)		(14,067		)		(13,955		)
Deferred compensation trust	15,555				15,317				15,160				14,067				13,955
Accumulated other comprehensive income (loss)	11,302				19,958				15,143				(1,792		)		(9,190		)
TOTAL SHAREHOLDERS’ EQUITY	1,640,755				1,625,380				1,593,763				1,553,848				1,525,526
Noncontrolling interest	12,939				13,154				12,689				11,808				12,894
TOTAL EQUITY	1,653,694				1,638,534				1,606,452				1,565,656				1,538,420
TOTAL LIABILITIES AND EQUITY	$	11,947,663			$	12,021,291			$	11,942,480			$	11,568,263			$	11,163,030

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,
	2019				2019				2019				2019				2018
INTEREST INCOME:
Loans, including fees	$	100,059			$	102,047			$	101,874			$	99,695			$	99,446
Investment securities	9,936				9,889				8,987				8,134				8,126
Interest-bearing deposits in financial institutions and federal funds sold	2,067				3,745				4,015				3,998				3,559
Mortgage loans held for sale	4,413				3,956				3,007				2,003				3,176
Total interest income	116,475				119,637				117,883				113,830				114,307
INTEREST EXPENSE:
Deposits	21,744				23,552				21,784				19,174				17,495
Advances from the Federal Home Loan Bank	1,730				1,935				3,201				4,153				4,585
Subordinated debt	2,962				2,962				2,962				2,962				2,961
Repurchase agreements and other borrowings	80				85				117				68				58
Total interest expense	26,516				28,534				28,064				26,357				25,099
Net interest income	89,959				91,103				89,819				87,473				89,208
PROVISION FOR LOAN LOSSES	3,601				1,508				2,824				1,438				2,292
Net interest income after provision for loan losses	86,358				89,595				86,995				86,035				86,916
NONINTEREST INCOME:
Residential mortgage banking income, net	15,884				18,855				18,565				13,508				12,951
Insurance commissions and other title fees and income, net	15,001				16,681				17,213				15,582				13,212
Real estate brokerage and property management income, net	6,737				9,444				8,843				9,268				5,982
Service charges on deposit accounts	2,245				2,253				3,185				2,861				2,928
Credit card merchant fees, net	1,389				1,514				660				1,183				1,298
Bank owned life insurance	3,865				2,117				1,635				1,598				2,014
Other income	4,591				3,981				4,617				3,157				3,824
Loss on investment securities	—				(69		)		—				(776		)		—
Total noninterest income	49,712				54,776				54,718				46,381				42,209
NONINTEREST EXPENSE:
Salaries and employee benefits	56,013				55,784				54,263				52,860				50,233
Occupancy expense	7,516				7,953				7,662				8,251				7,352
Furniture and equipment	3,598				3,805				3,578				3,371				3,587
Amortization - intangibles	3,005				3,059				3,113				3,192				3,123
Software expense	2,976				3,208				2,788				2,745				2,694
Data processing	2,510				2,533				3,616				3,166				2,466
Professional fees	2,990				3,566				3,707				2,679				2,028
Advertising and marketing	2,839				3,429				3,182				2,829				2,546
Other expenses	10,889				13,950				14,647				13,030				8,308
Total noninterest expense	92,336				97,287				96,556				92,123				82,337
Income before income tax expense and noncontrolling interest	43,734				47,084				45,157				40,293				46,788
Provision for income tax expense	7,786				7,684				8,915				8,211				10,348
Net income	35,948				39,400				36,242				32,082				36,440
Net income attributable to noncontrolling interest	(873		)		(1,741		)		(1,604		)		(673		)		(450		)
Net income attributable to TowneBank	$	35,075			$	37,659			$	34,638			$	31,409			$	35,990
Per common share information
Basic earnings	$	0.49			$	0.52			$	0.48			$	0.44			$	0.50
Diluted earnings (1)	$	0.49			$	0.52			$	0.48			$	0.44			$	0.50
Basic weighted average shares outstanding	72,132,041				72,091,221				72,044,817				71,992,330				71,905,956
Diluted weighted average shares outstanding	72,311,979				72,222,934				72,145,600				72,099,558				72,043,369
Cash dividends declared	$	0.18			$	0.18			$	0.18			$	0.16			$	0.16
(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,				December 31,								2019 over 2018
	2019				2018				2019				2019				2018				Amount				Percent
Revenue
Net interest income	$	87,637			$	86,433			$	89,490			$	351,969			$	329,584			$	22,385			6.79	%
Noninterest income
Service charges on deposit accounts	2,245				2,928				2,253				10,544				11,808				(1,264		)		(10.70	)%
Credit card merchant fees	1,389				1,298				1,514				4,746				5,472				(726		)		(13.27	)%
Other income	5,271				4,660				5,152				19,620				16,977				2,643				15.57	%
Subtotal	8,905				8,886				8,919				34,910				34,257				653				1.91	%
Gain (loss) on investment securities	—				—				(69		)		(845		)		3				(848		)		N/M
Total noninterest income	8,905				8,886				8,850				34,065				34,260				(195		)		(0.57	)%
Total revenue	96,542				95,319				98,340				386,034				363,844				22,190				6.10	%
Provision for loan losses	3,601				2,292				1,508				9,371				8,541				830				9.72	%
Expenses
Salaries and employee benefits	34,183				28,100				33,526				131,149				114,472				16,677				14.57	%
Occupancy expense	4,959				4,789				5,209				20,419				17,410				3,009				17.28	%
Furniture and equipment	2,577				2,426				2,779				10,240				9,912				328				3.31	%
Amortization of intangible assets	1,214				1,428				1,265				5,160				5,658				(498		)		(8.80	)%
Other expenses	14,078				9,759				17,098				66,295				60,697				5,598				9.22	%
Total expenses	57,011				46,502				59,877				233,263				208,149				25,114				12.07	%
Income before income tax, corporate allocation and noncontrolling interest	35,930				46,525				36,955				143,400				147,154				(3,754		)		(2.55	)%
Corporate allocation	627				367				384				2,011				1,736				275				15.84	%
Income before income tax provision and noncontrolling interest	36,557				46,892				37,339				145,411				148,890				(3,479		)		(2.34	)%
Provision for income tax expense	6,368				10,252				5,495				25,706				28,880				(3,174		)		(10.99	)%
Net income	30,189				36,640				31,844				119,705				120,010				(305		)		(0.25	)%
Noncontrolling interest	(1		)		4				—				2				(8		)		10				N/M
Net income attributable to TowneBank	$	30,188			$	36,644			$	31,844			$	119,707			$	120,002			$	(295	)		(0.25	)%
Efficiency ratio	59.05		%		48.79		%		60.85		%		60.43		%		57.21		%

TOWNEBANK
Realty Segment Financial Information
(dollars in thousands)
	Three Months Ended												Year Ended								Increase/(Decrease)
	December 31,								September 30,				December 31,								2019 over 2018
	2019				2018				2019				2019				2018				Amount				Percent
Revenue
Residential mortgage brokerage income, net	$	16,617			$	13,472			$	19,171			$	68,443			$	66,696			$	1,747			2.62	%
Real estate brokerage income, net	2,550				2,183				2,882				9,865				9,458				407				4.30	%
Title insurance and settlement fees	531				458				617				2,111				1,877				234				12.47	%
Property management fees, net	4,187				3,799				6,562				24,427				22,405				2,022				9.02	%
Income from unconsolidated subsidiary	75				54				185				516				370				146				39.46	%
Net interest and other income	2,787				3,210				1,885				7,724				13,210				(5,486		)		(41.53	)%
Total revenue	26,747				23,176				31,302				113,086				114,016				(930		)		(0.82	)%
Expenses
Salaries and employee benefits	$	12,941			$	14,308			$	13,474			$	52,619			$	58,450			$	(5,831	)		(9.98	)%
Occupancy expense	1,857				1,928				2,055				8,285				7,871				414				5.26	%
Furniture and equipment	773				930				754				3,099				3,697				(598		)		(16.18	)%
Amortization of intangible assets	655				767				666				2,741				2,782				(41		)		(1.47	)%
Other expenses	7,030				6,419				7,478				27,982				28,416				(434		)		(1.53	)%
Total expenses	23,256				24,352				24,427				94,726				101,216				(6,490		)		(6.41	)%
Income (loss) before income tax, corporate allocation, and noncontrolling interest	3,491				(1,176		)		6,875				18,360				12,800				5,560				43.44	%
Corporate allocation	(362		)		(238		)		(208		)		(1,163		)		(1,091		)		(72		)		6.60	%
Income (loss) before income tax provision and noncontrolling interest	3,129				(1,414		)		6,667				17,197				11,709				5,488				46.87	%
Provision for income tax	416				(86		)		1,454				3,707				2,892				815				28.18	%
Net income (loss)	2,713				(1,328		)		5,213				13,490				8,817				4,673				53.00	%
Noncontrolling interest	(715		)		(130		)		(1,496		)		(3,711		)		(2,398		)		(1,313		)		54.75	%
Net income (loss) attributable to TowneBank	$	1,998			$	(1,458	)		$	3,717			$	9,779			$	6,419			$	3,360			52.34	%
Efficiency ratio	86.95		%		105.07		%		78.04		%		83.76		%		88.77		%

TOWNEBANK
Insurance Segment Financial Information
(dollars in thousands)
	Three Months Ended												Year Ended								Increase/(Decrease)
	December 31,								September 30,				December 31,								2019 over 2018
	2019				2018				2019				2019				2018				Amount				Percent
Commission and fee income
Property and casualty	$	11,957			$	9,770			$	13,481			$	50,380			$	40,948			$	9,432			23.03	%
Employee benefits	3,758				3,625				3,629				14,726				14,088				638				4.53	%
Travel insurance	794				1,095				834				4,085				5,123				(1,038		)		(20.26	)%
Specialized benefit services	173				168				166				672				673				(1		)		(0.15	)%
Total commissions and fees	16,682				14,658				18,110				69,863				60,832				9,031				14.85	%
Contingency and bonus revenue	1,396				1,185				1,431				6,307				4,888				1,419				29.03	%
Other income	1,805				79				74				2,032				295				1,737				588.81	%
Total revenue	19,883				15,922				19,615				78,202				66,015				12,187				18.46	%
Employee commission expense	3,501				3,000				3,378				13,379				11,209				2,170				19.36	%
Revenue, net of commission expense	16,382				12,922				16,237				64,823				54,806				10,017				18.28	%
Expenses
Salaries and employee benefits	$	8,889			$	7,825			$	8,784			$	35,152			$	28,916			$	6,236			21.57	%
Occupancy expense	700				635				689				2,677				2,363				314				13.29	%
Furniture and equipment	248				231				272				1,012				868				144				16.59	%
Amortization of intangible assets	1,136				928				1,128				4,469				3,269				1,200				36.71	%
Other expenses	1,096				1,865				2,110				7,003				7,343				(340		)		(4.63	)%
Total operating expenses	12,069				11,484				12,983				50,313				42,759				7,554				17.67	%
Income before income tax and noncontrolling interest	4,313				1,438				3,254				14,510				12,047				2,463				20.44	%
Corporate allocation	(265		)		(128		)		(176		)		(848		)		(645		)		(203		)		31.47	%
Income before income tax provision and noncontrolling interest	4,048				1,310				3,078				13,662				11,402				2,260				19.82	%
Provision for income tax expense	1,002				182				735				3,183				2,455				728				29.65	%
Net income	3,046				1,128				2,343				10,479				8,947				1,532				17.12	%
Noncontrolling interest	(157		)		(324		)		(245		)		(1,182		)		(1,575		)		393				(24.95	)%
Net income attributable to TowneBank	$	2,889			$	804			$	2,098			$	9,297			$	7,372			$	1,925			26.11	%
Provision for income taxes	1,002				182				735				3,183				2,455				728				29.65	%
Depreciation, amortization and interest expense	1,333				1,152				1,325				5,312				4,134				1,178				28.50	%
EBITDA (non-GAAP)	$	5,224			$	2,138			$	4,158			$	17,792			$	13,961			$	3,831			27.44	%
Efficiency ratio	73.67		%		88.87		%		79.96		%		77.62		%		78.02		%

TOWNEBANK
Reconcilement of Non-GAAP Financial Measures:
	Three Months Ended												Twelve Months Ended
	December 31,				September 30,				December 31,				December 31,
	2019				2019				2018				2019				2018
Return on average assets (GAAP)	1.16		%		1.26		%		1.28		%		1.19		%		1.26		%
Impact of excluding average goodwill and other intangibles and amortization	0.14		%		0.14		%		0.15		%		0.14		%		0.15		%
Return on average tangible assets (non-GAAP)	1.30		%		1.40		%		1.43		%		1.33		%		1.41		%
Return on average equity (GAAP)	8.44		%		9.22		%		9.44		%		8.69		%		9.20		%
Impact of excluding average goodwill and other intangibles and amortization	4.53		%		4.98		%		5.47		%		4.89		%		5.32		%
Return on average tangible equity (non-GAAP)	12.97		%		14.20		%		14.91		%		13.58		%		14.52		%
Return on average common equity (GAAP)	8.51		%		9.29		%		9.53		%		8.75		%		9.27		%
Impact of excluding average goodwill and other intangibles and amortization	4.61		%		5.07		%		5.58		%		4.98		%		5.43		%
Return on average tangible common equity (non-GAAP)	13.12		%		14.36		%		15.11		%		13.73		%		14.70		%
Book value (GAAP)	$	22.58			$	22.38			$	21.05			$	22.58			$	21.05
Impact of excluding average goodwill and other intangibles and amortization	(6.89		)		(6.94		)		(6.79		)		(6.89		)		(7.71		)
Tangible book value (non-GAAP)	$	15.69			$	15.44			$	14.26			$	15.69			13.34
Average assets (GAAP)	$	11,970,593			$	11,845,282			$	11,149,960			$	11,638,426			$	10,599,185
Less: average goodwill	446,428				442,919				429,931				443,781				411,827
Less: average intangible assets	56,339				57,327				59,009				59,327				57,694
Average tangible assets (non-GAAP)	$	11,467,826			$	11,345,036			$	10,661,020			$	11,135,318			$	10,129,664
Average equity (GAAP)	$	1,647,929			$	1,620,070			$	1,511,922			$	1,597,281			$	1,454,795
Less: average goodwill	446,428				442,919				429,931				443,781				411,827
Less: average intangible assets	56,339				57,327				59,009				59,327				57,694
Average tangible equity (non-GAAP)	$	1,145,162			$	1,119,824			$	1,022,982			$	1,094,173			$	985,274
Average common equity (GAAP)	$	1,635,394			$	1,607,853			$	1,498,594			$	1,585,238			$	1,442,642
Less: average goodwill	446,428				442,919				429,931				443,781				411,827
Less: average intangible assets	56,339				57,327				59,009				59,327				57,694
Average tangible common equity (non-GAAP)	$	1,132,627			$	1,107,607			$	1,009,654			$	1,082,130			$	973,121

TOWNEBANK
Reconcilement of Non-GAAP Financial Measures
(dollars in thousands, except per share data)
Reconcilement of GAAP Earnings to Operating Earnings Excluding Certain Items Affecting Comparability		Three Months Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
		2019				2019				2019				2019				2018
Net income (GAAP)		$	35,075			$	37,659			$	34,638			$	31,409			$	35,990
Acquisition-related expenses		19				207				20				411				(1,518		)
Income tax expense - tax reform legislation		—				—				—				—				696
Income tax expense (benefit) - other items		(3		)		(20		)		(3		)		(52		)		355
Total income tax expense (benefit)		(3		)		(20		)		(3		)		(52		)		1,051
Total charges, net of taxes		16				187				17				359				(467		)
Operating earnings, excluding certain items affecting comparability (non-GAAP)		$	35,091			$	37,846			$	34,655			$	31,768			$	35,523
Weighted average diluted shares		72,311,979				72,222,934				72,145,600				72,099,558				72,043,369
Diluted EPS (GAAP)		$	0.49			$	0.52			$	0.48			$	0.44			$	0.50
Diluted EPS, excluding certain items affecting comparability (non-GAAP)		$	0.49			$	0.52			$	0.48			$	0.44			$	0.49
Average assets		$	11,970,593			$	11,845,282			$	11,532,278			$	11,194,753			$	11,149,960
Average tangible equity		$	1,145,162			$	1,119,824			$	1,070,635			$	1,039,630			$	1,022,982
Return on average assets, excluding certain items affecting comparability (non-GAAP)		1.16		%		1.27		%		1.21		%		1.15		%		1.26		%
Return on average tangible equity, excluding certain items affecting comparability (non-GAAP)		12.98		%		14.26		%		13.90		%		13.38		%		14.73		%
Return on average common tangible equity, excluding certain items affecting comparability (non-GAAP)		13.12		%		14.42		%		14.06		%		13.53		%		14.93		%
Efficiency ratio, excluding certain items affecting comparability (non-GAAP)		66.10		%		66.52		%		66.79		%		68.12		%		63.81		%

TOWNEBANK
Reconcilement of Non-GAAP Financial Measures
(dollars in thousands, except per share data)
Reconcilement of GAAP Earnings to Operating Earnings Excluding Certain Items Affecting Comparability		Year Ended
		December 31,				December 31,
		2019				2018
Net income (GAAP)		$	138,783			$	133,793
Acquisition-related expenses		657				8,428
Income tax expense - tax reform legislation		—				696
Income tax expense (benefit) - other items		(78		)		(1,420		)
Total income tax expense (benefit)		(78		)		(724		)
Total charges, net of taxes		579				7,704
Operating earnings, excluding certain items affecting comparability (non-GAAP)		$	139,362			$	141,497
Weighted average diluted shares		72,172,635				71,293,129
Diluted EPS (GAAP)		$	1.92			$	1.88
Diluted EPS, excluding certain items affecting comparability (non-GAAP)		$	1.93			$	1.98
Average assets		$	11,638,426			$	10,599,185
Average tangible equity		$	1,094,173			$	985,274
Return on average assets, excluding certain items affecting comparability (non-GAAP)		1.20		%		1.33		%
Return on average tangible equity, excluding certain items affecting comparability (non-GAAP)		13.63		%		15.30		%
Return on average common tangible equity, excluding certain items affecting comparability (non-GAAP)		13.78		%		15.49		%
Efficiency ratio, excluding certain items affecting comparability (non-GAAP)		66.86		%		64.52		%