SUFFOLK, Va., July 24, 2024 (GLOBE NEWSWIRE) -- TowneBank (the "Company" or "Towne") (NASDAQ:TOWN) today reported earnings for the quarter ended June 30, 2024 of $42.86 million, or $0.57 per diluted share, compared to $41.72 million, or $0.56 per diluted share, for the quarter ended June 30, 2023. Excluding certain items affecting comparability, core earnings (non-GAAP) were $42.56 million, or $0.57 per diluted share, in the current quarter, an increase of 10.10% compared to $38.66 million, or $0.52 per diluted share, for the quarter ended June 30, 2023.

"TowneBank delivered another solid quarter of performance, reflective of the strength of our diversified operating model and conservative approach to balance sheet management. It was encouraging to report quarterly sequential growth in tax-equivalent net interest margin and noninterest-bearing demand deposit balances for the first time since 2022 signaling momentum heading into the back half of the year. Lastly, our strategy of continuing to expand our noninterest income sources, resulted in one of the strongest quarters we have seen in recent years. On a personal note, I am grateful for the contributions of our entire TowneBank family as we celebrated our 25th anniversary of Serving Others and Enriching Lives," said G. Robert Aston, Jr., Executive Chairman.

Highlights for Second Quarter 2024:

Total revenues were $174.97 million, a decrease of $6.60 million, or 3.63%, compared to second quarter 2023. Net interest income declined $4.56 million, driven by the impact of higher rates on deposit costs and continued migration to higher yielding deposit products. Additionally, noninterest income decreased $2.04 million due to a second quarter 2023 gain of $8.83 million related to the sale of BHHS Towne Realty.
Total deposits were $14.27 billion, an increase of $505.93 million, or 3.68%, compared to second quarter 2023. Total deposits increased 1.04%, or $146.51 million, in comparison to March 31, 2024, 4.17% on an annualized basis.
Noninterest-bearing deposits decreased 9.87%, to $4.30 billion, compared to second quarter 2023 and represented 30.15% of total deposits. Compared to the linked quarter, noninterest-bearing deposits increased 2.61%, or 10.51% on an annualized basis. This represents the first quarterly sequential increase in noninterest-bearing deposits since June 2022.
Loans held for investment were $11.45 billion, an increase of $243.73 million, or 2.17%, compared to June 30, 2023, and a decrease of $0.60 million, or 0.01%, compared to March 31, 2024.
Annualized return on common shareholders' equity was 8.49% compared to 8.52% in second quarter 2023. Annualized return on average tangible common shareholders' equity (non-GAAP) was 12.16% compared to 12.48% in second quarter 2023.
Net interest margin was 2.86% for the quarter and tax-equivalent net interest margin (non-GAAP) was 2.89%, including purchase accounting accretion of 5 basis points, compared to the prior year quarter net interest margin of 2.98% and tax-equivalent net interest margin (non-GAAP) of 3.01%, including purchase accounting accretion of 4 basis points.
Net interest margin increased 14 bp and spread increased 13 bp, compared to the linked quarter.
The effective tax rate was 15.93% in the quarter compared to 18.41% in second quarter 2023 and 17.31% in the linked quarter. The lower tax rate in the current quarter was due to increases in tax-advantaged income investments and investments in Low Income Housing Tax Credits.

"Importantly, we continued to report strong asset quality metrics and healthy capital levels reflective of our conservative approach to Main Street banking. We continuously evaluate investments in people, process and technologies to help improve efficiencies across all lines of business," stated William I. Foster III, President and Chief Executive Officer.

Quarterly Net Interest Income:

Net interest income was $109.05 million compared to $113.61 million for the quarter ended June 30, 2023. The decrease was driven by increased deposit costs, partially offset by higher yields on earning assets.
On an average basis, loans held for investment, with a yield of 5.45%, represented 74.76% of earning assets at June 30, 2024 compared to a yield of 5.00% and 73.24% of earning assets in the second quarter of 2023.
The cost of interest-bearing deposits was 3.32% for the quarter ended June 30, 2024, compared to 2.28% in second quarter 2023. Interest expense on deposits increased $33.35 million, or 68.53%, over the prior year quarter driven by the increase in rate.
Our total cost of deposits increased to 2.32% from 1.46% for the quarter ended June 30, 2023 due to higher interest-bearing deposit balances coupled with higher rates.
Average interest-earning assets totaled $15.34 billion at June 30, 2024 compared to $15.31 billion at June 30, 2023, an increase of 0.26%. The Company anticipates approximately $495 million of cash flows from its securities portfolio to be available for reinvestment in the next two years.
Average interest-bearing liabilities totaled $10.29 billion, an increase of $0.61 billion, or 6.27%, from prior year, primarily related to deposit growth. Average short term FHLB borrowings were $65.93 million during the quarter compared to $802.75 million one year prior.

Quarterly Provision for Credit Losses:

The quarterly provision for credit losses was a benefit of $177 thousand compared to an expense of $3.56 million in the prior year quarter and a benefit of $0.88 million in the linked quarter.
The allowance for credit losses on loans decreased $283 thousand in second quarter 2024, compared to the linked quarter. The decrease in the allowance was driven by net recoveries during the quarter, continued strength in credit quality, and a continuation of improvements in macroeconomic forecast scenarios utilized in our model.
Net loan recoveries were $19 thousand in the quarter compared to net charge-offs of $9 thousand in the prior year quarter and $520 thousand in the linked quarter.
The ratio of net charge-offs to average loans on an annualized basis was 0.00% in second quarter 2024 and 2023, compared to 0.02% in the linked quarter.
The allowance for credit losses on loans represented 1.10% of total loans at each of June 30, 2024, June 30, 2023, and March 31, 2024. The allowance for credit losses on loans was 19.08 times nonperforming loans compared to 18.09 times at June 30, 2023 and 18.01 times at March 31, 2024.

Quarterly Noninterest Income:

Total noninterest income was $65.92 million compared to $67.96 million in 2023, a decrease of $2.04 million, or 2.99%. Excluding a gain of $8.83 million on the sale of BHHS TowneRealty in second quarter 2023, total noninterest income increased $6.80 million compared to second quarter 2023, or 11.50%.
Residential mortgage banking income was $13.42 million compared to $11.36 million in second quarter 2023. Loan volume increased to $0.63 billion in second quarter 2024 from $0.62 billion in second quarter 2023. The number of loans originated was lower than second quarter 2023, but higher per-loan average balances resulted in higher production volume. Residential purchase activity comprised 94.85% of production volume in the second quarter of 2024 compared to 96.32% in the prior year quarter.
Gross margins on residential mortgage sales increased 32 basis points to 3.28% in the current quarter from 2.96% in second quarter 2023.
Total net insurance commissions increased $1.53 million, or 6.81%, to $24.03 million in second quarter 2024 compared to 2023. This increase was attributable to increases in property and casualty commissions, which were driven by organic growth.
Property management fee revenue increased 18.30%, or $2.21 million, to $14.31 million in second quarter 2024 compared to 2023. Reservation income increased compared to the prior year due to an acquisition in March 2024.

Quarterly Noninterest Expense:

Total noninterest expense was $123.98 million compared to $125.23 million in 2023, a decrease of $1.24 million, or 0.99%. Decreases in FDIC and other insurance of $1.57 million, acquisition expenses of $2.98 million, and various expense line items were partially offset by an increase in salaries and employee benefits of $3.90 million, software expense of $0.89 million, and data processing expense of $0.60 million.
Salaries and benefits expense increases were driven by annual base salary adjustments effective third quarter 2023, production incentives, and higher health insurance costs.
Software increased due to higher core system costs while data processing increased due to seasonal merchant fee increases and core conversion expenses in our property management line of business.

Consolidated Balance Sheet Highlights:

Management is focused on strategic balance sheet management with a concentration on controlled loan growth and maintaining strong levels of liquidity.
Total assets were $17.07 billion for the quarter ended June 30, 2024, a $184.61 million increase compared to $16.88 billion at March 31, 2024. Total assets decreased $156.23 million, or 0.91%, from $17.23 billion at June 30, 2023.
Loans held for investment increased $243.73 million, or 2.17%, compared to prior year but declined $0.60 million, or 0.01%, compared to the linked quarter.
Mortgage loans held for sale decreased $28.74 million, or 12.52%, compared to prior year but increased $50.04 million, or 33.20%, compared to the linked quarter.
Total deposits increased $505.93 million, or 3.68%, primarily in interest-bearing demand and time deposits, compared to prior year. In the linked quarter comparison, total deposits increased $146.51 million, or 4.17% on an annualized basis.
Noninterest-bearing deposits decreased $471.06 million or 9.87%, compared to prior year, but increased $109.64 million, or 2.61%, compared to the linked quarter. This linked quarter increase is the first quarter-end increase in balances since June 30, 2022.
Total borrowings decreased $764.41 million, or 72.14%, compared to second quarter 2023 and increased $4.19 million, or 1.44%, compared to the linked quarter. Short-term FHLB advances decreased in the current quarter compared to both the prior year quarter and the linked quarter.

Investment Securities:

Total investment securities were $2.49 billion compared to $2.54 billion at March 31, 2024 and $2.61 billion at June 30, 2023. The weighted average duration of the portfolio at June 30, 2024 was 3.4 years. The carrying value of the available for sale debt securities portfolio included net unrealized losses of $172.93 million at June 30, 2024, compared to $170.84 million at March 31, 2024 and $195.98 million at June 30, 2023, with the changes related to market valuation adjustments due to changing interest rates.

Loans and Asset Quality:

Total loans held for investment were $11.45 billion at both June 30, 2024 and March 31, 2024, and $11.21 billion at June 30, 2023.
Nonperforming assets were $7.16 million, or 0.04% of total assets, compared to $9.35 million, or 0.05%, at June 30, 2023, and $7.77 million, or 0.05%, in the linked quarter end.
Nonperforming loans were 0.06% of period end loans at June 30, 2024, June 30, 2023, and the linked quarter end.
Foreclosed property decreased to $581 thousand from $738 thousand at June 30, 2023.

Deposits and Borrowings:

Total deposits were $14.27 billion compared to $14.13 billion at March 31, 2024 and $13.77 billion at June 30, 2023.
The ratio of period end loans held for investment to deposits was 80.24% compared to 81.07% at March 31, 2024 and 81.41% at June 30, 2023.
Noninterest-bearing deposits were 30.15% of total deposits at June 30, 2024 compared to 29.69% at March 31, 2024 and 34.68% at June 30, 2023. Noninterest-bearing deposits declined $471.06 million, or 9.87%, compared to June 30, 2023, but increased 109.64 million, or 2.61%, compared to the linked quarter.
Total borrowings were $295.17 million compared to $290.98 million at March 31, 2024 and $1.06 billion at June 30, 2023.

Capital:

Common equity tier 1 capital ratio of 12.43%⁽¹⁾.
Tier 1 leverage capital ratio of 10.25%⁽¹⁾.
Tier 1 risk-based capital ratio of 12.55%⁽¹⁾.
Total risk-based capital ratio of 15.34%⁽¹⁾ .
Book value per common share was $27.62 compared to $27.33 at March 31, 2024 and $26.36 at June 30, 2023.
Tangible book value per common share (non-GAAP) was $20.65 compared to $20.31 at March 31, 2024 and $19.31 at June 30, 2023.

⁽¹⁾ Preliminary.

About TowneBank:

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

Now celebrating 25 years, TowneBank operates 50 banking offices throughout Hampton Roads and Central Virginia, as well as Northeastern and Central North Carolina – serving as a local leader in promoting the social, cultural, and economic growth in each community. Towne offers a competitive array of business and personal banking solutions, delivered with only the highest ethical standards. Experienced local bankers providing a higher level of expertise and personal attention with local decision-making are key to the TowneBank strategy. TowneBank has grown its capabilities beyond banking to provide expertise through its affiliated companies that include Towne Wealth Management, Towne Insurance Agency, Towne Benefits, TowneBank Mortgage, TowneBank Commercial Mortgage, Berkshire Hathaway HomeServices RW Towne Realty, Towne 1031 Exchange, LLC, and Towne Vacations. With total assets of $17.07 billion as of June 30, 2024, TowneBank is one of the largest banks headquartered in Virginia.

Non-GAAP Financial Measures:

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

Forward-Looking Statements:

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

Media contact:

G. Robert Aston, Jr., Executive Chairman, 757-638-6780

William I. Foster III, President and Chief Executive Officer, 757-417-6482

Investor contact:

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

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

		Three Months Ended
		June 30,			March 31,			December 31,			September 30,			June 30,
			2024			2024			2023			2023			2023
Income and Performance Ratios:
	Total revenue	$	174,970		$	167,102		$	155,546		$	172,864		$	181,568
	Net income		43,039			35,127			28,545			44,745			43,368
	Net income available to common shareholders		42,856			34,687			28,804			44,862			41,716
	Net income per common share - diluted		0.57			0.46			0.39			0.60			0.56
	Book value per common share		27.62			27.33			27.24			26.28			26.36
	Book value per common share - tangible^(non-GAAP)		20.65			20.31			20.28			19.28			19.31
	Return on average assets		1.01	%		0.83	%		0.68	%		1.06	%		0.99	%
	Return on average assets - tangible^(non-GAAP)		1.11	%		0.92	%		0.77	%		1.17	%		1.10	%
	Return on average equity		8.43	%		6.84	%		5.75	%		8.96	%		8.46	%
	Return on average equity - tangible^(non-GAAP)		12.03	%		9.87	%		8.53	%		12.97	%		12.35	%
	Return on average common equity		8.49	%		6.89	%		5.79	%		9.04	%		8.52	%
	Return on average common equity - tangible^(non-GAAP)		12.16	%		9.98	%		8.62	%		13.11	%		12.48	%
	Noninterest income as a percentage of total revenue		37.68	%		38.23	%		30.74	%		34.60	%		37.43	%
Regulatory Capital Ratios (1):
	Common equity tier 1		12.43	%		12.20	%		12.18	%		12.19	%		11.99	%
	Tier 1		12.55	%		12.32	%		12.29	%		12.31	%		12.11	%
	Total		15.34	%		15.10	%		15.06	%		15.09	%		14.88	%
	Tier 1 leverage ratio		10.25	%		10.15	%		10.17	%		10.06	%		9.85	%
Asset Quality:
	Allowance for credit losses on loans to nonperforming loans	19.08x			18.01x			18.48x			17.60x			18.09x
	Allowance for credit losses on loans to period end loans		1.10	%		1.10	%		1.12	%		1.12	%		1.10	%
	Nonperforming loans to period end loans		0.06	%		0.06	%		0.06	%		0.06	%		0.06	%
	Nonperforming assets to period end assets		0.04	%		0.05	%		0.05	%		0.05	%		0.05	%
	Net charge-offs (recoveries) to average loans (annualized)		—	%		0.02	%		—	%	(0.04)%				—	%
	Net charge-offs (recoveries)	$	(19	)	$	520		$	68		$	(1,074	)	$	9

	Nonperforming loans	$	6,582		$	6,987		$	6,843		$	7,110		$	6,827
	Former bank premises		—			—			—			—			1,782
	Foreclosed property		581			780			908			766			738
	Total nonperforming assets	$	7,163		$	7,767		$	7,751		$	7,876		$	9,347
	Loans past due 90 days and still accruing interest	$	368		$	323		$	735		$	970		$	360
	Allowance for credit losses on loans	$	125,552		$	125,835		$	126,461		$	125,159		$	123,513
Mortgage Banking:
	Loans originated, mortgage	$	430,398		$	289,191		$	302,616		$	348,387		$	409,050
	Loans originated, joint venture		196,583			135,197			126,332			172,021			207,450
	Total loans originated	$	626,981		$	424,388		$	428,948		$	520,408		$	616,500
	Number of loans originated		1,700			1,247			1,237			1,487			1,715
	Number of originators		169			176			181			192			196
	Purchase %		94.85	%		95.66	%		95.06	%		95.96	%		96.32	%
	Loans sold	$	605,134		$	410,895		$	468,014		$	567,291		$	525,078
	Rate lock asset	$	1,930		$	1,681		$	895		$	1,348		$	1,551
	Gross realized gain on sales and fees as a % of loans originated		3.28	%		3.34	%		3.06	%		3.17	%		2.96	%
Other Ratios:
	Net interest margin		2.86	%		2.72	%		2.83	%		2.95	%		2.98	%
	Net interest margin-fully tax-equivalent^(non-GAAP)		2.89	%		2.75	%		2.86	%		2.98	%		3.01	%
	Average earning assets/total average assets		90.36	%		90.52	%		90.48	%		90.73	%		90.96	%
	Average loans/average deposits		80.80	%		81.48	%		80.72	%		80.75	%		83.72	%
	Average noninterest deposits/total average deposits		30.06	%		30.25	%		31.69	%		33.50	%		36.07	%
	Period end equity/period end total assets		12.24	%		12.24	%		12.21	%		11.90	%		11.56	%
	Efficiency ratio^(non-GAAP)		68.98	%		73.25	%		76.17	%		66.21	%		70.41	%
	(1) Current reporting period regulatory capital ratios are preliminary.

TOWNEBANK
Selected Data (unaudited)
(dollars in thousands)

Investment Securities										% Change
	Q2			Q2			Q1			Q2 24 vs.		Q2 24 vs.
*Available-for-sale securities, at fair value*		2024			2023			2024		Q2 23		Q1 24
U.S. agency securities	$	281,934		$	318,354		$	294,723		(11.44)%		(4.34)%
U.S. Treasury notes		27,701			26,874			27,534		3.08	%	0.61	%
Municipal securities		442,474			503,792			447,323		(12.17)%		(1.08)%
Trust preferred and other corporate securities		88,228			71,116			87,983		24.06	%	0.28	%
Mortgage-backed securities issued by GSEs and GNMA		1,411,883			1,086,947			1,347,920		29.89	%	4.75	%
Allowance for credit losses		(1,541	)		(1,232	)		(1,382	)	25.08	%	11.51	%
Total	$	2,250,679		$	2,005,851		$	2,204,101		12.21	%	2.11	%
*Gross unrealized gains (losses) reflected in financial statements*
Total gross unrealized gains	$	1,983		$	975		$	1,868		103.38	%	6.16	%
Total gross unrealized losses		(174,911	)		(196,954	)		(172,708	)	(11.19)%		1.28	%
Net unrealized gains (losses) and other adjustments on AFS securities	$	(172,928	)	$	(195,979	)	$	(170,840	)	(11.76)%		1.22	%
*Held-to-maturity securities, at amortized cost*
U.S. agency securities	$	102,234		$	101,469		$	102,042		0.75	%	0.19	%
U.S. Treasury notes		97,171			433,298			197,356		(77.57)%		(50.76)%
Municipal securities		5,318			5,226			5,294		1.76	%	0.45	%
Trust preferred corporate securities		2,147			2,198			2,159		(2.32)%		(0.56)%
Mortgage-backed securities issued by GSEs		5,618			5,826			5,659		(3.57)%		(0.72)%
Allowance for credit losses		(79	)		(87	)		(82	)	(9.20)%		(3.66)%
Total	$	212,409		$	547,930		$	312,428		(61.23)%		(32.01)%

Total gross unrealized gains	$	175		$	272		$	265		(35.66)%		(33.96)%
Total gross unrealized losses		(12,880	)		(25,914	)		(14,262	)	(50.30)%		(9.69)%
Net unrealized gains (losses) in HTM securities	$	(12,705	)	$	(25,642	)	$	(13,997	)	(50.45)%		(9.23)%
Total unrealized gains (losses) on AFS and HTM securities	$	(185,633	)	$	(221,621	)	$	(184,837	)	(16.24)%		0.43	%
										% Change
Loans Held For Investment	Q2			Q2			Q1			Q2 24 vs.		Q2 24 vs.
		2024			2023			2024		Q2 23		Q1 24
Real estate - construction and development	$	1,190,768		$	1,364,575		$	1,255,741		(12.74)%		(5.17)%
Commercial real estate - owner occupied		1,673,582			1,687,261			1,700,753		(0.81)%		(1.60)%
Commercial real estate - non owner occupied		3,155,958			3,034,548			3,178,947		4.00	%	(0.72)%
Real estate - multifamily		682,537			520,464			595,075		31.14	%	14.70	%
Residential 1-4 family		1,887,420			1,790,225			1,882,296		5.43	%	0.27	%
HELOC		408,273			380,501			386,361		7.30	%	5.67	%
Commercial and industrial business (C&I)		1,297,538			1,259,743			1,291,201		3.00	%	0.49	%
Government		517,954			520,994			528,341		(0.58)%		(1.97)%
Indirect		558,216			562,161			555,482		(0.70)%		0.49	%
Consumer loans and other		79,501			87,542			78,146		(9.19) %		1.73	%
Total	$	11,451,747		$	11,208,014		$	11,452,343		2.17	%	(0.01)%

										% Change
Deposits	Q2			Q2			Q1			Q2 24 vs.		Q2 24 vs.
		2024			2023			2024		Q2 23		Q1 24
Noninterest-bearing demand	$	4,303,773		$	4,774,830		$	4,194,132		(9.87)%		2.61	%
Interest-bearing:
Demand and money market accounts		6,940,086			6,529,336			6,916,701		6.29	%	0.34	%
Savings		312,881			361,891			326,179		(13.54)%		(4.08)%
Certificates of deposits		2,715,848			2,100,604			2,689,062		29.29	%	1.00	%
Total		14,272,588			13,766,661			14,126,074		3.68	%	1.04	%

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

	Three Months Ended								Three Months Ended								Three Months Ended
	June 30, 2024								March 31, 2024								June 30, 2023
				Interest			Average					Interest			Average					Interest			Average
	Average			Income/			Yield/		Average			Income/			Yield/		Average			Income/			Yield/
	Balance			Expense			Rate (1)		Balance			Expense			Rate (1)		Balance			Expense			Rate (1)
Assets:
Loans (net of unearned income and deferred costs)	$	11,471,669		$	155,374		5.45	%	$	11,379,323		$	151,811		5.37	%	$	11,209,641		$	139,814		5.00	%
Taxable investment securities		2,368,476			21,671		3.66	%		2,440,652			18,716		3.07	%		2,450,393			17,195		2.81	%
Tax-exempt investment securities		156,503			1,521		3.89	%		161,538			1,549		3.84	%		209,728			2,003		3.82	%
Total securities		2,524,979			23,192		3.67	%		2,602,190			20,265		3.12	%		2,660,121			19,198		2.89	%
Interest-bearing deposits		1,182,816			14,512		4.93	%		1,167,322			14,234		4.90	%		1,262,692			14,488		4.60	%
Mortgage loans held for sale		165,392			2,945		7.12	%		116,868			1,716		5.87	%		172,679			2,547		5.90	%
Total earning assets		15,344,856			196,023		5.14	%		15,265,703			188,026		4.95	%		15,305,133			176,047		4.61	%
Less: allowance for loan losses		(126,792	)							(127,413	)							(121,140	)
Total nonearning assets		1,764,418								1,725,945								1,642,972
Total assets	$	16,982,482							$	16,864,235							$	16,826,965
Liabilities and Equity:
Interest-bearing deposits
Demand and money market	$	6,896,176		$	48,161		2.81	%	$	6,828,053		$	47,985		2.83	%	$	6,220,394		$	32,058		2.07	%
Savings		317,774			845		1.07	%		329,036			881		1.08	%		371,455			895		0.97	%
Certificates of deposit		2,715,615			33,017		4.89	%		2,583,938			29,522		4.60	%		1,968,623			15,718		3.20	%
Total interest-bearing deposits		9,929,565			82,023		3.32	%		9,741,027			78,388		3.24	%		8,560,472			48,671		2.28	%
Borrowings		100,165			1,627		6.43	%		212,375			3,078		5.73	%		863,255			10,345		4.74	%
Subordinated debt, net		256,093			2,236		3.49	%		255,878			2,236		3.50	%		255,264			2,236		3.50	%
Total interest-bearing liabilities		10,285,823			85,886		3.36	%		10,209,280			83,702		3.30	%		9,678,991			61,252		2.54	%
Demand deposits		4,267,590								4,224,104								4,829,395
Other noninterest-bearing liabilities		383,447								390,576								339,966
Total liabilities		14,936,860								14,823,960								14,848,352
Shareholders' equity		2,045,622								2,040,275								1,978,613
Total liabilities and equity	$	16,982,482							$	16,864,235							$	16,826,965
Net interest income (tax-equivalent basis) (4)				$	110,137							$	104,324							$	114,795
Reconciliation of Non-GAAP Financial Measures
Tax-equivalent basis adjustment					(1,089	)							(1,106	)							(1,184	)
Net interest income (GAAP)				$	109,048							$	103,218							$	113,611

Interest rate spread (2)(4)							1.78	%							1.65	%							2.07	%
Interest expense as a percent of average earning assets							2.25	%							2.21	%							1.61	%
Net interest margin (tax-equivalent basis) (3)(4)							2.89	%							2.75	%							3.01	%
Total cost of deposits							2.32	%							2.26	%							1.46	%

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

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

	Six Months Ended								Six Months Ended
	June 30, 2024								June 30, 2023
				Interest			Average					Interest			Average
	Average			Income/			Yield/		Average			Income/			Yield/
	Balance			Expense			Rate (1)		Balance			Expense			Rate (1)
Assets:
Loans (net of unearned income and deferred costs)	$	11,425,496		$	307,186		5.41	%	$	11,153,944		$	273,349		4.94	%
Taxable investment securities		2,404,564			40,385		3.36	%		2,444,474			34,011		2.78	%
Tax-exempt investment securities		159,021			3,071		3.86	%		198,940			3,891		3.91	%
Total securities		2,563,585			43,456		3.39	%		2,643,414			37,902		2.87	%
Interest-bearing deposits		1,175,069			28,746		4.92	%		1,154,218			25,137		4.39	%
Mortgage loans held for sale		141,130			4,661		6.61	%		139,035			4,151		5.97	%
Total earning assets		15,305,280			384,049		5.05	%		15,090,611			340,539		4.55	%
Less: allowance for loan losses		(127,102	)							(117,812	)
Total nonearning assets		1,745,180								1,616,524
Total assets	$	16,923,358							$	16,589,323
Liabilities and Equity:
Interest-bearing deposits
Demand and money market	$	6,862,115		$	96,146		2.82	%	$	6,219,081		$	55,360		1.80	%
Savings		323,405			1,726		1.07	%		386,532			1,739		0.91	%
Certificates of deposit		2,649,777			62,539		4.75	%		1,826,777			25,506		2.82	%
Total interest-bearing deposits		9,835,297			160,411		3.28	%		8,432,390			82,605		1.98	%
Borrowings		156,270			4,705		5.95	%		610,946			14,261		4.64	%
Subordinated debt, net		255,986			4,472		3.49	%		252,679			4,405		3.49	%
Total interest-bearing liabilities		10,247,553			169,588		3.33	%		9,296,015			101,271		2.20	%
Demand deposits		4,245,847								4,995,980
Other noninterest-bearing liabilities		387,010								334,930
Total liabilities		14,880,410								14,626,925
Shareholders' equity		2,042,948								1,962,398
Total liabilities and equity	$	16,923,358							$	16,589,323
Net interest income (tax-equivalent basis)(4)				$	214,461							$	239,268
Reconciliation of Non-GAAP Financial Measures
Tax-equivalent basis adjustment					(2,195	)							(2,280	)
Net interest income (GAAP)				$	212,266							$	236,988

Interest rate spread (2)(4)							1.72	%							2.35	%
Interest expense as a percent of average earning assets							2.23	%							1.35	%
Net interest margin (tax-equivalent basis) (3)(4)							2.82	%							3.20	%
Total cost of deposits							2.29	%							1.24	%

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

TOWNEBANK
Consolidated Balance Sheets
(dollars in thousands, except share data)


	June 30,			December 31,
		2024			2023
	(unaudited)			(audited)
ASSETS
Cash and due from banks	$	140,028		$	85,584
Interest-bearing deposits at FRB - Richmond		1,062,115			939,356
Federal funds sold and interest-bearing deposits in financial institutions		99,303			103,417
Total Cash and Cash Equivalents		1,301,446			1,128,357
Securities available for sale, at fair value (amortized cost of $2,425,148 and $2,292,963, and allowance for credit losses of $1,541 and $1,498 at June 30, 2024 and December 31, 2023, respectively)		2,250,679			2,129,342
Securities held to maturity, at amortized cost (fair value $199,783 and $462,656 at June 30, 2024 and December 31, 2023, respectively)		212,488			477,592
Less: Allowance for credit losses		(79	)		(84	)
Securities held to maturity, net of allowance for credit losses		212,409			477,508
Other equity securities		13,566			13,792
FHLB stock		12,134			21,372
Total Securities		2,488,788			2,642,014
Mortgage loans held for sale		200,762			149,987
Loans, net of unearned income and deferred costs		11,451,747			11,329,021
Less: allowance for credit losses		(125,552	)		(126,461	)
Net Loans		11,326,195			11,202,560
Premises and equipment, net		340,348			337,598
Goodwill		457,619			456,335
Other intangible assets, net		65,460			64,634
BOLI		277,434			277,445
Other assets		610,791			576,109
TOTAL ASSETS	$	17,068,843		$	16,835,039

LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing demand	$	4,303,773		$	4,342,701
Interest-bearing:
Demand and money market accounts		6,940,086			6,757,619
Savings		312,881			336,492
Certificates of deposit		2,715,848			2,456,394
Total Deposits		14,272,588			13,893,206
Advances from the FHLB		3,591			203,958
Subordinated debt, net		256,227			255,796
Repurchase agreements and other borrowings		35,351			32,826
Total Borrowings		295,169			492,580
Other liabilities		411,770			393,375
TOTAL LIABILITIES		14,979,527			14,779,161