• TowneBank Reports Full Year and Fourth Quarter Financial Results For 2023

    Source: Nasdaq GlobeNewswire / 24 Jan 2024 17:00:02   America/New_York

    SUFFOLK, Va., Jan. 24, 2024 (GLOBE NEWSWIRE) -- TowneBank (the "Company" or "Towne") (Nasdaq: TOWN) today reported financial results for the full year and fourth quarter ended December 31, 2023. For the year ended December 31, 2023, earnings were $153.72 million, or $2.06 per diluted share, compared to $188.99 million, or $2.60 per diluted share, for the year ended December 31, 2022. Excluding acquisition-related items, an FDIC special assessment, and certain notable items, adjusted earnings (non-GAAP) for 2023 were $160.94 million, or $2.16 per diluted share, compared to $190.01 million, or $2.62 per diluted share, for 2022. Earnings in the fourth quarter of 2023 were $28.80 million, or $0.39 per diluted share, compared to fourth quarter 2022 earnings of $46.69 million, or $0.64 per diluted share. Excluding acquisition-related items, the FDIC special assessment, and other notable items, adjusted earnings (non-GAAP) for fourth quarter 2023 were $31.10 million, or $0.42 per diluted share, compared to $47.01 million, or $0.65 per diluted share, for fourth quarter 2022.

    “The banking industry operated in a challenging environment in 2023 driven by rising interest rates, inflationary impact on expenses and the failure of three somewhat unusual banks in California and New York whose business models carried significantly more risk than most Main Street banks like Towne. Our conservative approach on maintaining strong liquidity, prudent growth rates and robust capital served us well during this period of economic uncertainty. Standing by our members during difficult periods while protecting the interests of our shareholders, employees, and our communities continues to be the hallmark of our success," said G. Robert Aston, Jr., Executive Chairman.

    Annual Highlights for 2023 Compared to 2022:

    • Total revenues increased $7.19 million, or 1.05%, to $694.12 million, compared to prior year. Noninterest income increased $10.77 million, driven by an $8.83 million gross gain on the sale of Berkshire Hathaway HomeSale ("BHHS") Towne Realty. The increase in noninterest income was partially offset by a decline in net interest income of $3.59 million, driven by increases in interest costs.
    • On an annual basis the insurance segment's gross revenue exceeded its targeted $100 million in 2023 with gross revenues of $109.46 million.
    • Towne successfully completed the acquisition of Farmers Bankshares, Inc. and its wholly owned subsidiary Farmers Bank ("Farmers") in January 2023. Included in the acquisition were $277.89 million in loans, $244.89 million in securities, and $514.57 million in deposits.
    • Loans held for investment increased $534.42 million, or 4.95%, from December 31, 2022.
    • Including acquired deposits from the Farmers Bank acquisition, total deposits were $13.89 billion, an increase of $598.98 million, or 4.51%, compared to prior year.
    • Noninterest-bearing deposits declined 17.52% to $4.34 billion driven significantly by movement into interest-bearing accounts coupled with lower balances in real estate escrow accounts. Noninterest-bearing deposits represented 31.26% of total deposits at December 31, 2023.
    • Return on average common shareholders' equity was 7.85%, and return on average tangible common shareholders' equity (non-GAAP) was 11.50%.
    • Net interest margin was 3.03% and taxable equivalent net interest margin (non-GAAP) was 3.06% compared to a prior year net interest margin of 3.08% and taxable equivalent net interest margin (non-GAAP) of 3.10%.
    • Effective tax rate of 16.82% compared to 19.77% in 2022. The decline in effective tax rate was related to changes in state taxes between years, increases in tax-advantaged income investments, and deferred taxes related to the sale of BHHS, Towne Realty.

    Highlights for Fourth Quarter 2023:

    • Total revenues were $155.55 million in fourth quarter 2023, a decrease of $19.76 million, or 11.27% from the prior year quarter. This decrease was attributable to the decline in net interest income of $21.05 million, or 16.35%, due to margin compression. Noninterest income increased $1.29 million, or 2.77%, in the quarterly comparison.
    • Loans held for investment increased $156.05 million, or 5.54% on an annualized basis, from September 30, 2023.
    • Total deposits were relatively flat compared to September 30, 2023, increasing $12.40 million, or 0.35% on an annualized basis.
    • Noninterest-bearing deposits decreased $102.16 million, or 9.12%, on an annualized basis compared to the linked quarter.
    • In the quarter ended December 31, 2023, annualized return on average common shareholders' equity was 5.79% and annualized return on average tangible common shareholders' equity (non-GAAP) was 8.62%.
    • Net interest margin was 2.83% and taxable equivalent net interest margin (non-GAAP) was 2.86% compared to the prior year quarter net interest margin of 3.51% and taxable equivalent net interest margin (non-GAAP) of 3.53%.
    • Effective tax rate of 8.46% compared to 19.90% in fourth quarter 2022 and 17.34% in the linked quarter. A decrease in state tax expense in fourth quarter 2023 and an adjustment to deferred taxes related to the sale of BHHS were the primary drivers of the decline in effective tax rates.

    “2023 was a watershed year for our Towne Insurance team as revenue crossed over the $100 million mark to end the year at $109 million, while continuing to create significant intrinsic value for our shareholders," said William I. Foster III, President and Chief Executive Officer. "Looking ahead, we will continue to seek new investment opportunities to provide new and exciting products for our members."

    Quarterly Net Interest Income:

    • Net interest income was $107.73 million compared to $128.78 million for the quarter ended December 31, 2022. This decrease was driven by higher costs on deposits outpacing increases in loan and investment securities interest income.
    • Taxable equivalent net interest margin (non-GAAP) was 2.86%, including purchase accounting accretion of 4 basis points, compared to 3.53%, including purchase accounting accretion of 1 basis point, for fourth quarter 2022.
    • On an average basis, loans held for investment had a yield of 5.22%, which represented 74.39% of earning assets in the fourth quarter of 2023, compared to a yield of 4.60%, which represented 73.41% of earning assets in the fourth quarter of 2022.
    • Total cost of deposits increased to 2.09% from 1.84% in the linked quarter and 0.60% in the quarter ended December 31, 2022.
    • Average interest-earning assets totaled $15.10 billion at December 31, 2023 compared to $14.58 billion at December 31, 2022, an increase of 3.55%.
    • Average interest-bearing liabilities totaled $9.87 billion, an increase of $1.62 billion, or 19.58%, compared to the prior year.

    Quarterly Provision for Credit Losses:

    • The provision for credit losses was an expense of $2.45 million in the current quarter and $1.01 million in the linked quarter, compared to $6.07 million one year ago.
    • The allowance for credit losses on loans increased $1.30 million, compared to the linked quarter. The increase in the allowance was driven by a combination of modest loan growth and changes in our portfolio composition, partially offset by improvements to the macroeconomic forecast scenarios utilized in our models.
    • Net charge-offs (recoveries) were $68 thousand compared to $2.90 million one year prior and $(1.07) million in the linked quarter. The ratio of net charge-offs (recoveries) to average loans on an annualized basis was 0.00% in fourth quarter 2023, 0.11% in fourth quarter 2022, and (0.04)% in the linked quarter.
    • The allowance for credit losses on loans represented 1.12% of total loans at both December 31, 2023 and September 30, 2023, compared to 1.03% at December 31, 2022. The allowance for credit losses on loans was 18.48 times nonperforming loans compared to 17.60 times at September 30, 2023 and 17.67 times at December 31, 2022.

    Quarterly Noninterest Income:

    • Total noninterest income was $47.81 million compared to $46.52 million in 2022, an increase of $1.29 million, or 2.77%.
    • Residential mortgage banking income was $8.04 million compared to $7.37 million in fourth quarter 2022. Loan volume in the current quarter was $428.95 million, with purchase activity comprising 95.06%. Loan volume in fourth quarter 2022 was $456.81 million, with purchase activity of 95.08%. Sustained levels of increased mortgage rates and limited housing inventory have contributed to a decline in production.
    • Gross margins on residential mortgages increased 13 basis points from 2.93% in fourth quarter 2022 to 3.06% in the current quarter. Compared to the linked quarter, gross margins declined 11 basis points from 3.17%.
    • Property management fee revenue decreased 5.13%, or $398 thousand, in comparison to fourth quarter 2022 driven by lower reservation levels.
    • Total insurance commissions and other income increased $3.88 million, or 22.41%, to $21.21 million in the fourth quarter of 2023 due to organic growth and additional commissions from two acquisitions.

    Quarterly Noninterest Expense:

    • Total noninterest expense was $121.90 million compared to $111.14 million, an increase of $10.75 million, or 9.68%. This reflects increases in FDIC and other insurance of $6.24 million, salary and benefits expense of $4.73 million, software expenses of $1.63 million, and amortization of intangibles of $0.94 million.
    • Salaries and benefits expense increases were driven by annual base salary adjustments that went into effect July 2023 and an increase in the year-over-year number of employees, primarily related to the Farmers acquisition.
    • FDIC and other insurance increased primarily due to an accrued expense of $5.17 million before taxes, pursuant to the FDIC special assessment on certain banks to recover losses to the Deposit Insurance Funds associated with the protection of uninsured depositors in several bank failures that occurred in early 2023.
    • Software expense increased due to growth related cost increases and a number of ongoing projects throughout the Company.
    • The increase in amortization expense relates to core deposit intangible assets recognized from the recent Farmers acquisition.

    Consolidated Balance Sheet Highlights:

    • Total assets were $16.84 billion at December 31, 2023, an increase of 6.25%, compared to $15.85 billion at December 31, 2022. The increase was driven by modest growth in loans and investment securities in addition to assets acquired with the purchase of Farmers.
    • Loans held for investment increased $534.42 million, or 4.95%, compared to year end 2022 and $156.05 million compared to the linked quarter. Management has focused on controlling loan growth in 2023 through pricing.
    • Mortgage loans held for sale increased $47.65 million, or 46.56%, compared to prior year but declined $38.06 million, or 20.24%, compared to the linked quarter.
    • Total deposits increased $598.98 million, or 4.51%, compared to December 31, 2022 and $12.40 million, or 0.09%, compared to the linked quarter.
    • Noninterest-bearing deposits decreased $922.49 million, or 17.52%, compared to prior year, and $102.16 million, or 2.30%, compared to the linked quarter.
    • Total loans held for investment to total deposits were 81.54% compared to 80.49% at September 30, 2023 and 81.20% at December 31, 2022.
    • Total borrowings increased $174.57 million, or 54.89%, from prior year.

    Investment Securities:

    • Total investment securities were $2.64 billion compared to $2.54 billion at September 30, 2023 and $2.41 billion at December 31, 2022. The weighted average duration of the portfolio at December 31, 2023 was 3.2 years. The carrying value of the AFS debt securities portfolio included $162.12 million in net unrealized losses, related to rising rates, at December 31, 2023 compared to $191.05 million in net unrealized losses at December 31, 2022.

    Loans and Asset Quality:

    • Total loans held for investment were $11.33 billion at December 31, 2023 compared to $11.17 billion at September 30, 2023 and $10.79 billion at December 31, 2022.
    • Nonperforming assets were $7.75 million, or 0.05% of total assets, compared to $6.83 million, or 0.04% of total assets, at December 31, 2022.
    • Nonperforming loans were 0.06% of period end loans at both December 31, 2023 and 2022.
    • Foreclosed property increased marginally, to $0.91 million from $0.56 million at December 31, 2022.

    Deposits and Borrowings:

    • Total deposits were $13.89 billion compared to $13.88 billion at September 30, 2023 and $13.29 billion at December 31, 2022.
    • Noninterest-bearing deposits were 31.26% of total deposits at December 31, 2023 compared to 32.02% at September 30, 2023 and 39.61% at December 31, 2022. Noninterest-bearing deposits have been declining in 2023 driven by declines in noninterest-bearing commercial and escrow balances, a portion of which have moved to interest-bearing deposits.
    • Total borrowings were $492.58 million compared to $407.03 million at September 30, 2023 and $318.01 million at December 31, 2022.

    Capital:

    • Common equity tier 1 capital ratio of 12.18% (1).
    • Tier 1 leverage capital ratio of 10.17% (1).
    • Tier 1 risk-based capital ratio of 12.29% (1).
    • Total risk-based capital ratio of 15.06% (1).
    • Book value per share was $27.24 compared to $26.28 at September 30, 2023 and $25.73 at December 31, 2022.
    • Tangible book value per share (non-GAAP) was $20.28 compared to $19.28 at September 30, 2023 and $18.84 at December 31, 2022.

    (1) Preliminary.

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

    Now celebrating 25 years, TowneBank operates 50 banking offices throughout Hampton Roads and Central Virginia, as well as Northeastern and Central North Carolina – serving as a local leader in promoting the social, cultural, and economic growth in each community. Towne offers a competitive array of business and personal banking solutions, delivered with only the highest ethical standards. Experienced local bankers providing a higher level of expertise and personal attention with local decision-making are key to the TowneBank strategy. TowneBank has grown its capabilities beyond banking to provide expertise through its affiliated companies that include Towne Wealth Management, Towne Insurance Agency, Towne Benefits, TowneBank Mortgage, TowneBank Commercial Mortgage, Berkshire Hathaway HomeServices, RW Towne Realty, Towne 1031 Exchange, LLC, and Towne Vacations. With total assets of $16.84 billion as of December 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: core operating earnings, fully tax-equivalent net interest margin, tangible book value per common share, total risk-based capital ratio, tier one leverage ratio, tier one capital ratio, and the tangible common equity to tangible assets ratio. Management uses these non-GAAP financial measures to assess the performance of TowneBank’s core business and the strength of its capital position. Management believes that these non-GAAP financial measures provide meaningful additional information about TowneBank to assist investors in evaluating operating results, financial strength, and capitalization. The non-GAAP financial measures should be considered as additional views of the way our financial measures are affected by significant charges for credit costs and other factors. These non-GAAP financial measures should not be considered as a substitute for operating results determined in accordance with GAAP and may not be comparable to other similarly titled measures of other companies. The computations of the non-GAAP financial measures used in this presentation are referenced in a footnote or in the appendix to this presentation.

    Forward-Looking Statements:
    This press release contains certain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts, but instead represent only the beliefs, expectations, or opinions of TowneBank and its management regarding future events, many of which, by their nature, are inherently uncertain. Forward-looking statements may be identified by the use of such words as: "believe," "expect," "anticipate," "intend," "plan," "estimate," or words of similar meaning, or future or conditional terms, such as "will," "would," "should," "could," "may," "likely," "probably," or "possibly." These statements may address issues that involve significant risks, uncertainties, estimates, and assumptions made by management. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include 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; 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, 757-638-6780
    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
      December 31, September 30, June 30, March 31, December 31,
      2023   2023   2023   2023   2022 
    Income and Performance Ratios:         
     Total revenue$155,546  $172,864  $181,568  $184,144  $175,307 
     Net income 28,545   44,745   43,368   38,478   46,494 
     Net income available to common shareholders 28,804   44,862   41,716   38,333   46,685 
     Net income per common share - diluted 0.39   0.60   0.56   0.52   0.64 
     Book value per common share 27.24   26.28   26.36   26.40   25.73 
     Book value per share - tangible(non-GAAP) 20.28   19.28   19.31   19.04   18.84 
     Return on average assets 0.68%  1.06%  0.99%  0.95%  1.16%
     Return on average assets - tangible(non-GAAP) 0.77%  1.17%  1.10%  1.05%  1.25%
     Return on average equity 5.75%  8.96%  8.46%  7.99%  9.98%
     Return on average equity - tangible(non-GAAP) 8.53%  12.97%  12.35%  11.71%  14.26%
     Return on average common equity 5.79%  9.04%  8.52%  8.05%  10.07%
     Return on average common equity - tangible(non-GAAP) 8.62%  13.11%  12.48%  11.83%  14.44%
     Noninterest income as a percentage of total revenue 30.74%  34.60%  37.43%  33.00%  26.54%
    Regulatory Capital Ratios (1)         
     Common equity tier 1 12.18%  12.19%  11.99%  11.68%  11.92%
     Tier 1 12.29%  12.31%  12.11%  11.80%  12.04%
     Total 15.06%  15.09%  14.88%  14.55%  14.80%
     Tier 1 leverage ratio 10.17%  10.06%  9.85%  9.86%  9.87%
    Asset Quality:         
     Allowance for credit losses on loans to nonperforming loans18.48x 17.60x 18.09x 12.87x 17.67x
     Allowance for credit losses on loans to period end loans 1.12%  1.12%  1.10%  1.07%  1.03%
     Nonperforming loans to period end loans 0.06%  0.06%  0.06%  0.08%  0.06%
     Nonperforming assets to period end assets 0.05%  0.05%  0.05%  0.06%  0.04%
     Net charge-offs (recoveries) to average loans (annualized) % (0.04)%  %  0.14%  0.11%
     Net charge-offs (recoveries)$68  $(1,074) $9  $3,874  $2,904 
               
     Nonperforming loans$6,843  $7,110  $6,827  $9,322  $6,273 
     Former bank premises       1,782       
     Foreclosed property 908   766   738   564   560 
     Total nonperforming assets$7,751  $7,876  $9,347  $9,886  $6,833 
     Loans past due 90 days and still accruing interest$735  $970  $360  $206  $324 
     Allowance for credit losses on loans$126,461  $125,159  $123,513  $120,002  $110,816 
    Mortgage Banking:         
     Loans originated, mortgage$302,616  $348,387  $409,050  $280,401  $299,298 
     Loans originated, joint venture 126,332   172,021   207,450   135,818   157,511 
     Total loans originated$428,948  $520,408  $616,500  $416,219  $456,809 
     Number of loans originated 1,237   1,487   1,715   1,249   1,355 
     Number of originators 181   192   196   194   186 
     Purchase % 95.06%  95.96%  96.32%  94.99%  95.08%
     Loans sold$468,014  $567,291  $525,078  $346,288  $483,254 
     Rate lock asset$895  $1,348  $1,551  $1,435  $482 
     Gross realized gain on sales and fees as a % of loans originated 3.06%  3.17%  2.96%  3.11%  2.93%
    Other Ratios:         
     Net interest margin 2.83%  2.95%  2.98%  3.36%  3.51%
     Net interest margin-fully tax equivalent(non-GAAP) 2.86%  2.98%  3.01%  3.39%  3.53%
     Average earning assets/total average assets 90.48%  90.73%  90.96%  90.98%  91.51%
     Average loans/average deposits 80.72%  80.75%  83.72%  82.40%  80.14%
     Average noninterest deposits/total average deposits 31.69%  33.50%  36.07%  38.35%  41.07%
     Period end equity/period end total assets 12.21%  11.90%  11.56%  11.89%  11.92%
     Efficiency ratio(non-GAAP) 76.17%  66.21%  70.41%  65.64%  61.99%
     (1) Current reporting period regulatory capital ratios are preliminary.      


    TOWNEBANK
    Selected Data (unaudited)
    (dollars in thousands)
     
              
    Investment Securities      % Change
     Q4 Q4 Q3 Q4 23 vs. Q4 23 vs.
    Available-for-sale securities, at fair value 2023   2022   2023  Q4 22 Q3 23
    U.S. agency securities$306,386  $293,894  $300,161  4.25% 2.07%
    U.S. Treasury notes 27,684   26,693   26,721  3.71% 3.60%
    Municipal securities 510,134   431,299   484,587  18.28% 5.27%
    Trust preferred and other corporate securities 86,011   78,436   74,024  9.66% 16.19%
    Mortgage-backed securities issued by GSE 1,200,625   1,011,666   1,079,303  18.68% 11.24%
    Allowance for credit losses (1,498)  (1,086)  (1,343) 37.94% 11.54%
    Total$2,129,342  $1,840,902  $1,963,453  15.67% 8.45%
    Gross unrealized gains (losses) reflected in financial statements         
    Total gross unrealized gains$3,740  $1,111  $475  236.63% 687.37%
    Total gross unrealized losses (165,863)  (192,163)  (238,993) (13.69)% (30.60)%
    Net unrealized gains (losses) and other adjustments on AFS securities$(162,123) $(191,052) $(238,518) (15.14)% (32.03)%
              
    Held-to-maturity securities, at amortized cost         
    U.S. agency securities$101,850  $101,092  $101,659  0.75% 0.19%
    U.S. Treasury notes 362,593   433,866   433,015  (16.43)% (16.26)%
    Municipal securities 5,272   5,181   5,249  1.76% 0.44%
    Trust preferred corporate securities 2,172   2,223   2,185  (2.29)% (0.59)%
    Mortgage-backed securities issued by GSE 5,705   6,113   5,746  (6.67)% (0.71)%
    Allowance for credit losses (84)  (83)  (85) 1.20% (1.18)%
    Total$477,508  $548,392  $547,769  (12.93)% (12.83)%
    Total gross unrealized gains$380  $320  $82  18.75% 363.41%
    Total gross unrealized losses (15,316)  (29,802)  (23,505) N/M (34.84)%
    Net unrealized gains (losses) on HTM securities$(14,936) $(29,482) $(23,423) (49.34)% (36.23)%
    Total unrealized (losses) gains on AFS and HTM securities$(177,059) $(220,534) $(261,941) (19.71)% (32.41)%
              
           % Change
    Loans Held For InvestmentQ4 Q4 Q3 Q4 23 vs. Q4 23 vs.
      2023   2022   2023  Q4 22 Q3 23
    Real estate - construction and development$1,249,735  $1,428,376  $1,325,976  (12.51)% (5.75)%
    Commercial real estate - owner occupied 1,699,386   1,580,099   1,686,888  7.55% 0.74%
    Commercial real estate - non owner occupied 3,117,071   2,830,620   3,025,985  10.12% 3.01%
    Real estate - multifamily 583,209   496,190   542,611  17.54% 7.48%
    Residential 1-4 family 1,852,891   1,634,062   1,818,843  13.39% 1.87%
    HELOC 382,979   395,526   371,861  (3.17)% 2.99%
    Commercial and industrial business (C&I) 1,265,169   1,256,697   1,237,524  0.67% 2.23%
    Government 525,261   512,265   523,456  2.54% 0.34%
    Indirect 558,789   568,190   548,621  (1.65)% 1.85%
    Consumer loans and other 94,531   92,577   91,206  2.11% 3.65%
    Total$11,329,021  $10,794,602  $11,172,971  4.95% 1.40%
              
           % Change
    DepositsQ4 Q4 Q3 Q4 23 vs. Q4 23 vs.
      2023   2022   2023  Q4 22 Q3 23
    Noninterest-bearing demand$4,342,701  $5,265,186  $4,444,861  (17.52)% (2.30)%
    Interest-bearing:         
    Demand and money market accounts 6,757,619   6,185,075   6,764,415  9.26% (0.10)%
    Savings 336,492   374,987   350,031  (10.27)% (3.87)%
    Certificates of deposits 2,456,394   1,468,975   2,321,498  67.22% 5.81%
    Total$13,893,206  $13,294,223  $13,880,805  4.51% 0.09%
              


    TOWNEBANK
    Average Balances, Yields and Rate Paid (unaudited)
    (dollars in thousands)
     
     Three Months Ended Three Months Ended Three Months Ended
     December 31, 2023 September 30, 2023 December 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)
    $11,229,965  $147,647  5.22% $11,169,924  $144,457  5.13% $10,701,612  $124,064  4.60%
    Taxable investment securities 2,365,928   18,820  3.18%  2,373,731   18,645  3.14%  2,288,344   14,251  2.49%
    Tax-exempt investment securities 195,603   1,989  4.07%  206,639   1,993  3.86%  140,108   1,262  3.60%
    Total securities 2,561,531   20,809  3.25%  2,580,370   20,638  3.20%  2,428,452   15,513  2.56%
    Interest-bearing deposits 1,141,086   13,967  4.86%  1,230,582   15,031  4.85%  1,321,964   11,387  3.42%
    Loans held for sale 162,543   2,886  7.10%  227,426   3,928  6.91%  124,949   1,842  5.90%
    Total earning assets 15,095,125   185,309  4.87%  15,208,302   184,054  4.80%  14,576,977   152,806  4.16%
    Less: allowance for credit losses (126,205)      (125,553)      (108,288)    
    Total nonearning assets 1,714,122       1,680,110       1,461,067     
    Total assets$16,683,042      $16,762,859      $15,929,756     
    Liabilities and Equity:                 
    Interest-bearing deposits                 
    Demand and money market$6,786,850  $46,833  2.74% $6,605,853  $41,381  2.49% $6,022,582  $13,903  0.92%
    Savings 345,172   962  1.11%  356,116   938  1.05%  378,816   763  0.80%
    Certificates of deposit 2,370,723   25,405  4.25%  2,236,102   21,852  3.88%  1,468,589   5,452  1.47%
    Total interest-bearing deposits 9,502,745   73,200  3.06%  9,198,071   64,171  2.77%  7,869,987   20,118  1.01%
    Borrowings 114,151   958  3.28%  299,105   3,382  4.42%  138,510   909  2.57%
    Subordinated debt, net 255,663   2,236  3.50%  255,446   2,245  3.52%  247,319   2,108  3.41%
    Total interest-bearing liabilities 9,872,559   76,394  3.07%  9,752,622   69,798  2.84%  8,255,816   23,135  1.11%
    Demand deposits 4,408,712       4,633,856       5,484,477     
    Other noninterest-bearing liabilities 413,469       389,912       334,033     
    Total liabilities 14,694,740       14,776,390       14,074,326     
    Shareholders’ equity 1,988,302       1,986,469       1,855,430     
    Total liabilities and equity$16,683,042      $16,762,859      $15,929,756     
    Net interest income (tax-equivalent basis) (4)  $108,915      $114,256      $129,671   
    Reconciliation of Non-GAAP Financial Measures                
    Tax-equivalent basis adjustment   (1,182)      (1,198)      (888)  
    Net interest income (GAAP)  $107,733      $113,058      $128,783   
    Interest rate spread (2)(4)    1.80%     1.96%     3.05%
    Interest expense as a percent of average earning assets   2.01%     1.82%     0.63%
    Net interest margin (tax equivalent basis) (3)(4)   2.86%     2.98%     3.53%
    Total cost of deposits    2.09%     1.84%     0.60%
                      

    (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
    Average Balances, Yields and Rate Paid (unaudited)
    (dollars in thousands)
     
     Year Ended December 31,
      2023   2022 
       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)$11,177,132  $565,453  5.06% $10,262,095  $433,350  4.22%
    Taxable investment securities 2,406,845   71,476  2.97%  2,267,099   47,594  2.10%
    Tax-exempt investment securities 200,040   7,872  3.94%  132,694   4,351  3.28%
    Total securities 2,606,885   79,348  3.04%  2,399,793   51,945  2.16%
    Interest-bearing deposits 1,170,156   54,135  4.63%  2,099,970   26,859  1.28%
    Loans held for sale 167,240   10,965  6.56%  200,363   8,880  4.43%
    Total earning assets 15,121,413   709,901  4.69%  14,962,221   521,034  3.48%
    Less: allowance for credit losses (121,878)      (105,629)    
    Total nonearning assets 1,657,151       1,411,422     
    Total assets$16,656,686      $16,268,014     
    Liabilities and Equity:           
    Interest-bearing deposits           
    Demand and money market$6,459,679  $143,574  2.22% $6,158,190  $25,802  0.42%
    Savings 368,440   3,639  0.99%  385,154   2,427  0.63%
    Certificates of deposit 2,067,053   72,763  3.52%  1,447,701   12,586  0.87%
    Total interest-bearing deposits 8,895,172   219,976  2.47%  7,991,045   40,815  0.51%
    Borrowings 407,125   18,600  4.51%  124,168   1,320  1.05%
    Subordinated debt, net 254,129   8,886  3.50%  362,410   14,436  3.98%
    Total interest-bearing liabilities 9,556,426   247,462  2.59%  8,477,623   56,571  0.67%
    Demand deposits 4,756,681       5,547,835     
    Other noninterest-bearing liabilities 368,585       364,520     
    Total liabilities 14,681,692       14,389,978     
    Shareholders' equity 1,974,994       1,878,036     
    Total liabilities and equity$16,656,686      $16,268,014     
    Net interest income (tax-equivalent basis) (4) $462,439      $464,463   
    Reconciliation of Non-GAAP Financial Measures          
    Tax-equivalent basis adjustment  (4,659)      (3,098)  
    Net interest income (GAAP) $457,780      $461,365   
    Interest rate spread (2)(4)   2.10%     2.81%
    Interest expense as a percent of average earning assets   1.64%     0.38%
    Net interest margin (tax-equivalent basis) (3)(4)   3.06%     3.10%
    Total cost of deposits   1.61%     0.30%
                

    (1) Yields and interest income are presented on a taxable-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 per share data)
        
      2023   2022 
     (unaudited) (audited)
    ASSETS   
    Cash and due from banks$        85,584  $        55,381 
    Interest-bearing deposits at FRB - Richmond 939,356   1,000,205 
    Federal funds sold and interest-bearing deposits in financial institutions 103,417   97,244 
    Total Cash and Cash Equivalents 1,128,357   1,152,830 
    Securities available for sale, at fair value (amortized cost of $2,292,963 and $2,033,040, and allowance for credit losses of $1,498 and $1,086 at December 31, 2023 and December 31, 2022, respectively. 2,129,342   1,840,902 
    Securities held to maturity, at amortized cost (fair value $462,656 and $518,993 at December 31, 2023 and December 31, 2022, respectively. 477,592   548,475 
    Less: allowance for credit losses (84)  (83)
    Securities held to maturity, net of allowance for credit losses 477,508   548,392 
    Other equity securities 13,792   6,424 
    FHLB stock 21,372   9,617 
    Total Securities 2,642,014   2,405,335 
    Mortgage loans held for sale 149,987   102,339 
    Loans, net of unearned income and deferred costs 11,329,021   10,794,602 
    Less: allowance for credit losses (126,461)  (110,816)
    Net Loans 11,202,560   10,683,786 
    Premises and equipment, net 337,598   304,802 
    Goodwill 456,335   458,482 
    Other intangible assets, net 64,634   43,163 
    BOLI 277,445   258,069 
    Other assets 576,109   436,461 
    TOTAL ASSETS$16,835,039  $15,845,267 
    LIABILITIES AND EQUITY   
    Deposits:   
    Noninterest-bearing demand$4,342,701  $5,265,186 
    Interest-bearing:   
    Demand and money market accounts 6,757,619   6,185,075 
    Savings 336,492   374,987 
    Certificates of deposit 2,456,394   1,468,975 
    Total Deposits 13,893,206   13,294,223 
    Advances from the FHLB 203,958   29,674 
    Subordinated debt, net 255,796   247,420 
    Repurchase agreements and other borrowings 32,826   40,918 
    Total Borrowings 492,580   318,012 
    Other liabilities 393,375   344,275 
    TOTAL LIABILITIES 14,779,161   13,956,510 
    Preferred stock, authorized and unissued shares - 2,000,000     
    Common stock, $1.667 par: Authorized shares - 150,000,000   
    Issued and outstanding shares 74,893,462 in 2023 and 72,841,379 in 2022 124,847   121,426 
    Capital surplus 1,112,761   1,052,262 
    Retained earnings 921,126   840,777 
    Common stock issued to deferred compensation trust, at cost   
    1,004,717 shares in 2023 and 931,030 shares in 2022 20,813   18,974 
    Deferred compensation trust (20,813)  (18,974)
    Accumulated other comprehensive income (loss) (118,762)  (140,505)
    TOTAL SHAREHOLDERS’ EQUITY 2,039,972   1,873,960 
    Noncontrolling interest 15,906   14,797 
    TOTAL EQUITY 2,055,878   1,888,757 
                    TOTAL LIABILITIES AND EQUITY$16,835,039  $15,845,267 

         

    TOWNEBANK
    Consolidated Statements of Income
    (dollars in thousands, except per share data)
       
     Three Months Ended Twelve Months Ended
     December 31, December 31,
      2023   2022  2023   2022 
     (unaudited) (unaudited) (unaudited) (audited)
    INTEREST INCOME:       
    Loans, including fees$146,810  $123,395 $562,160  $430,990 
    Investment securities 20,464   15,294  77,982   51,207 
    Interest-bearing deposits in financial institutions and federal funds sold 13,967   11,387  54,135   26,859 
    Mortgage loans held for sale 2,886   1,842  10,965   8,880 
    Total interest income 184,127   151,918  705,242   517,936 
    INTEREST EXPENSE:       
    Deposits 73,200   20,118  219,976   40,815 
    Advances from the FHLB 917   665  17,754   926 
    Subordinated debt, net 2,236   2,108  8,886   14,436 
    Repurchase agreements and other borrowings 41   244  846   394 
    Total interest expense 76,394   23,135  247,462   56,571 
    Net interest income 107,733   128,783  457,780   461,365 
    PROVISION FOR CREDIT LOSSES 2,446   6,074  18,679   8,606 
    Net interest income after provision for credit losses 105,287   122,709  439,101   452,759 
    NONINTEREST INCOME:       
    Residential mortgage banking income, net 8,035   7,368  39,415   47,150 
    Insurance commissions and other income, net 21,207   17,324  90,305   75,579 
    Property management income, net 7,358   7,756  47,791   44,246 
    Real estate brokerage (loss) income, net (32)  2,355  3,530   11,253 
    Service charges on deposit accounts 3,035   2,655  11,706   10,130 
    Credit card merchant fees, net 1,476   1,653  6,709   6,592 
    BOLI 2,206   1,985  7,402   7,140 
    Gain (loss) on sale of equity investment (10)    9,377    
    Other income 4,538   5,428  20,107   23,480 
    Total noninterest income 47,813   46,524  236,342   225,570 
    NONINTEREST EXPENSE:       
    Salaries and employee benefits 66,035   61,307  270,158   255,625 
    Occupancy 9,308   9,252  36,886   34,669 
    Furniture and equipment 4,445   3,983  17,178   15,080 
    Amortization - intangibles 3,411   2,475  14,155   10,620 
    Software expense 6,743   5,111  24,666   18,959 
    Data processing 3,529   3,096  15,033   13,874 
    Professional fees 3,339   3,605  12,286   10,020 
    Advertising and marketing 3,377   3,489  15,390   15,997 
    Other expenses 21,708   18,823  83,470   66,435 
    Total noninterest expense 121,895   111,141  489,222   441,279 
    Income before income tax expense and noncontrolling interest 31,205   58,092  186,221   237,050 
    Provision for income tax expense 2,660   11,598  31,085   46,581 
    Net income$28,545  $46,494 $155,136  $190,469 
    Net (income) loss attributable to noncontrolling interest 259   191  (1,421)  (1,482)
    Net income attributable to TowneBank$28,804  $46,685 $153,715  $188,987 
            
    Per common share information       
    Basic earnings$0.39  $0.64 $2.06  $2.60 
    Diluted earnings$0.39  $0.64 $2.06  $2.60 
    Cash dividends declared$0.25  $0.23 $0.98  $0.89 
                   


    TOWNEBANK
    Consolidated Balance Sheets - Five Quarter Trend
    (dollars in thousands, except per share data)
     
              
     December 31, September 30, June 30, March 31, December 31,
      2023   2023   2023   2023   2022 
     (unaudited) (unaudited) (unaudited) (unaudited) (audited)
    ASSETS         
    Cash and due from banks$85,584  $83,949  $106,994  $97,502  $55,381 
    Interest-bearing deposits at FRB - Richmond 939,356   1,029,276   1,427,044   1,040,112   1,000,205 
    Federal funds sold and interest-bearing deposits in financial institutions 103,417   102,527   102,231   104,924   97,244 
    Total Cash and Cash Equivalents 1,128,357   1,215,752   1,636,269   1,242,538   1,152,830 
    Securities available for sale 2,129,342   1,963,453   2,005,851   2,078,483   1,840,902 
    Securities held to maturity 477,592   547,854   548,017   548,226   548,475 
    Less: allowance for credit losses (84)  (85)  (87)  (88)  (83)
    Securities held to maturity, net of allowance for credit losses 477,508   547,769   547,930   548,138   548,392 
    Other equity securities 13,792   14,062   13,798   13,341   6,424 
    FHLB stock 21,372   16,634   40,454   29,837   9,617 
    Total Securities 2,642,014   2,541,918   2,608,033   2,669,799   2,405,335 
    Mortgage loans held for sale 149,987   188,048   229,502   157,161   102,339 
    Loans, net of unearned income and deferred costs 11,329,021   11,172,971   11,208,014   11,173,785   10,794,602 
    Less: allowance for credit losses (126,461)  (125,159)  (123,513)  (120,002)  (110,816)
    Net Loans 11,202,560   11,047,812   11,084,501   11,053,783   10,683,786 
    Premises and equipment, net 337,598   335,522   326,686   321,944   304,802 
    Goodwill 456,335   456,684   456,695   477,234   458,482 
    Other intangible assets, net 64,634   67,496   71,106   73,238   43,163 
    BOLI 277,445   275,240   273,435   271,704   258,069 
    Other assets 576,109   551,884   538,848   463,076   436,461 
    TOTAL ASSETS$16,835,039  $16,680,356  $17,225,075  $16,730,477  $15,845,267 
    LIABILITIES AND EQUITY         
    Deposits:         
    Noninterest-bearing demand$4,342,701  $4,444,861  $4,774,830  $5,069,363  $5,265,186 
    Interest-bearing:         
    Demand and money market accounts 6,757,619   6,764,415   6,529,336   6,284,184   6,185,075 
    Savings 336,492   350,031   361,891   389,173   374,987 
    Certificates of deposit 2,456,394   2,321,498   2,100,604   1,855,411   1,468,975 
    Total Deposits 13,893,206   13,880,805   13,766,661   13,598,131   13,294,223 
    Advances from the FHLB 203,958   104,139   754,319   504,497   29,674 
    Subordinated debt, net 255,796   255,580   255,365   255,151   247,420 
    Repurchase agreements and other borrowings 32,826   47,315   49,898   46,602   40,918 
    Total Borrowings 492,580   407,034   1,059,582   806,250   318,012 
    Other liabilities 393,375   408,305   408,333   336,201   344,275 
    TOTAL LIABILITIES 14,779,161   14,696,144   15,234,576   14,740,582   13,956,510 
              
    Preferred stock              
    Common stock, $1.667 par value 124,847   124,837   124,805   124,682   121,426 
    Capital surplus 1,112,761   1,111,152   1,109,526   1,109,387   1,052,262 
    Retained earnings 921,126   911,042   884,901   861,905   840,777 
    Common stock issued to deferred compensation trust, at cost (20,813)  (20,740)  (20,134)  (18,839)  (18,974)
    Deferred compensation trust 20,813   20,740   20,134   18,839   18,974 
    Accumulated other comprehensive income (loss) (118,762)  (179,043)  (145,392)  (121,297)  (140,505)
    TOTAL SHAREHOLDERS’ EQUITY 2,039,972   1,967,988   1,973,840   1,974,677   1,873,960 
    Noncontrolling interest 15,906   16,224   16,659   15,218   14,797 
    TOTAL EQUITY 2,055,878   1,984,212   1,990,499   1,989,895   1,888,757 
    TOTAL LIABILITIES AND EQUITY$16,835,039  $16,680,356  $17,225,075  $16,730,477  $15,845,267 


    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,
      2023   2023   2023   2023  2022
    INTEREST INCOME:         
    Loans, including fees$146,810  $143,605  $138,977  $132,768  $123,395
    Investment securities 20,464   20,292   18,851   18,375   15,294
    Interest-bearing deposits in financial institutions and federal funds sold 13,967   15,031   14,488   10,649   11,387
    Mortgage loans held for sale 2,886   3,928   2,547   1,604   1,842
    Total interest income 184,127   182,856   174,863   163,396   151,918
    INTEREST EXPENSE:         
    Deposits 73,200   64,171   48,671   33,934   20,118
    Advances from the FHLB 917   3,438   10,407   2,992   665
    Subordinated debt, net 2,236   2,245   2,236   2,169   2,108
    Repurchase agreements and other borrowings 41   (56)  (62)  923   244
    Total interest expense 76,394   69,798   61,252   40,018   23,135
    Net interest income 107,733   113,058   113,611   123,378   128,783
    PROVISION FOR CREDIT LOSSES 2,446   1,007   3,556   11,670   6,074
    Net interest income after provision for credit losses 105,287   112,051   110,055   111,708   122,709
    NONINTEREST INCOME:         
    Residential mortgage banking income, net 8,035   10,648   11,360   9,372   7,368
    Insurance commissions and other income, net 21,207   23,777   22,498   22,823   17,324
    Property management income, net 7,358   12,800   12,098   15,535   7,756
    Real estate brokerage (loss) income, net (32)  (63)  1,834   1,791   2,355
    Service charges on deposit accounts 3,035   2,802   3,018   2,851   2,655
    Credit card merchant fees, net 1,476   2,006   1,682   1,545   1,653
    BOLI 2,206   1,814   1,710   1,672   1,985
    Other income 4,528   6,022   13,757   5,177   5,428
    Total noninterest income 47,813   59,806   67,957   60,766   46,524
    NONINTEREST EXPENSE:         
    Salaries and employee benefits 66,035   67,258   67,445   69,420   61,307
    Occupancy 9,308   9,027   9,487   9,064   9,252
    Furniture and equipment 4,445   4,100   4,389   4,244   3,983
    Amortization - intangibles 3,411   3,610   3,610   3,524   2,475
    Software 6,743   6,130   6,169   5,624   5,111
    Data processing 3,529   4,140   4,011   3,353   3,096
    Professional fees 3,339   2,770   3,166   3,011   3,605
    Advertising and marketing 3,377   3,653   3,959   4,401   3,489
    Other expenses 21,708   17,014   22,992   21,756   18,823
    Total noninterest expense 121,895   117,702   125,228   124,397   111,141
    Income before income tax expense and noncontrolling interest 31,205   54,155   52,784   48,077   58,092
    Provision for income tax expense 2,660   9,410   9,416   9,599   11,598
    Net income$28,545  $44,745  $43,368  $38,478  $46,494
    Net (income) loss attributable to noncontrolling interest 259   117   (1,652)  (145)  191
    Net income attributable to TowneBank$28,804  $44,862  $41,716  $38,333  $46,685
    Per common share information         
    Basic earnings$0.39  $0.60  $0.56  $0.52  $0.64
    Diluted earnings$0.39  $0.60  $0.56  $0.52  $0.64
    Basic weighted average shares outstanding 74,773,335   74,750,294   74,691,121   74,363,222   72,686,303
    Diluted weighted average shares outstanding 74,793,557   74,765,515   74,699,810   74,390,614   72,724,189
    Cash dividends declared$0.25  $0.25  $0.25  $0.23  $0.23
                       


    TOWNEBANK
    Banking Segment Financial Information
    (dollars in thousands)
     
        
     Three Months Ended Year Ended Increase/(Decrease)
     December 31, September 30, 2023
     December 31, 2023 over 2022
      2023   2022    2023   2022  Amount Percent
    Revenue             
    Net interest income$106,906  $128,655  $112,189  $456,071  $455,881  $190  0.04%
                  
    Service charges on deposit accounts 3,035   2,656   2,802   11,706   10,130   1,576  15.56%
    Credit card merchant fees 1,476   1,653   2,006   6,709   6,592   117  1.77%
    Other income 6,544   5,799 3 6,608   25,043   22,883   2,160  9.44%
    Total noninterest income 11,055   10,108   11,416   43,458   39,605   3,853  9.73%
    Total revenue 117,961   138,763   123,605   499,529   495,486   4,043  0.82%
                  
    Provision for credit losses 2,831   6,312   1,206   19,273   8,559   10,714  125.18%
                  
    Expenses             
    Salaries and employee benefits 42,573   37,788   42,727   170,733   152,870   17,863  11.69%
    Occupancy 6,981   6,500   6,637   26,698   23,901   2,797  11.70%
    Furniture and equipment 3,621   3,061   3,273   13,771   11,320   2,451  21.65%
    Amortization of intangible assets 1,236   676   1,296   5,154   3,006   2,148  71.46%
    Other expenses 29,602   24,141   22,595   109,819   81,299   28,520  35.08%
    Total expenses 84,013   72,166   76,528   326,175   272,396   53,779  19.74%
    Income before income tax, corporate allocation and noncontrolling interest 31,117   60,285   45,871   154,081   214,531   (60,450) (28.18)%
    Corporate allocation 1,054   861   1,291   4,817   4,381   436  9.95%
    Income before income tax provision and noncontrolling interest 32,171   61,146   47,162   158,898   218,912   (60,014) (27.41)%
    Provision for income tax expense 2,661   12,162   7,440   23,866   41,944   (18,078) (43.10)%
    Net income 29,510   48,984   39,722   135,032   176,968   (41,936) (23.70)%
    Noncontrolling interest                  n/m
    Net income attributable to TowneBank$29,510  $48,984  $39,722  $135,032  $176,968  $(41,936) (23.70)%
                  
    Efficiency ratio(non-GAAP) 70.17%  51.52%  60.86%  64.26%  54.37%    
                            


    TOWNEBANK
    Realty Segment Financial Information
    (dollars in thousands)
     
        
     Three Months Ended Year Ended Increase/(Decrease)
     December 31, September 30,  December 31, 2023 over 2022
      2023   2022   2023   2023   2022  Amount Percent
    Revenue             
    Residential mortgage banking
    income, net
    $8,322  $8,292  $10,955  $41,287  $51,783  $(10,496) (20.27)%
    Real estate brokerage (loss) income, net (32)  2,354   (63)  3,530   11,253   (7,723) (68.63)%
    Title insurance and settlement fees    391      443   1,981   (1,538) (77.64)%
    Property management fees, net 7,358   7,757   12,800   47,791   44,246   3,545  8.01%
    (Loss) income from unconsolidated
    subsidiary
     (425)  10   (63)  (1,309)  368   (1,677) (455.71)%
    Gain on sale of equity investment          8,833      8,833  100.00%
    Net interest and other income 1,111   626   1,163   3,095   7,478   (4,383) (58.61)%
    Total revenue 16,334   19,430   24,792   103,670   117,109   (13,439) (11.48)%
                  
    Provision for credit losses (385)  (238)  (199)  (594)  47  $(641) n/m
                  
    Expenses             
    Salaries and employee benefits$11,288  $13,617  $12,881  $52,958  $63,263  $(10,305) (16.29)%
    Occupancy 1,600   1,970   1,669   7,158   7,784   (626) (8.04)%
    Furniture and equipment 611   738   600   2,544   2,970   (426) (14.34)%
    Amortization of intangible assets 737   653   742   2,903   3,102   (199) (6.42)%
    Other expenses 7,240   8,056   9,544   34,559   37,527   (2,968) (7.91)%
    Total expenses 21,476   25,034   25,436   100,122   114,646   (14,524) (12.67)%
                  
    Income (loss) before income tax, corporate allocation, and noncontrolling interest (4,757)  (5,366)  (445)  4,142   2,416   1,726  71.44%
    Corporate allocation (352)  (600)  (600)  (2,152)  (3,202)  1,050  (32.79)%
    Income (loss) before income tax provision and noncontrolling interest (5,109)  (5,966)  (1,045)  1,990   (786)  2,776  (353.18)%
    Provision for income tax (1,072)  (1,296)  (99)  698   (186)  884  (475.27)%
    Net income (loss) (4,037)  (4,670)  (946)  1,292   (600)  1,892  (315.33)%
    Noncontrolling interest 259   191   117   (1,421)  (1,482)  61  (4.12)%
    Net income (loss) attributable to TowneBank$(3,778) $(4,479) $(829) $(129) $(2,082) $1,953  (93.80)%
                  
    Efficiency ratio (non-GAAP) 126.97%  125.48%  99.61%  102.51%  95.25%    
                            


    TOWNEBANK
    Insurance Segment Financial Information
    (dollars in thousands)
     
                  
     Three Months Ended Year Ended Increase/(Decrease)
     December 31, September 30, December 31, 2023 over 2022
      2023   2022   2023   2023   2022  Amount Percent
    Commission and fee income             
    Property and casualty$19,795  $15,221  $22,103  $80,054  $64,672  $15,382  23.78%
    Employee benefits 4,332   3,949   4,245   17,726   16,054   1,672  10.41%
    Specialized benefit services 36   169   133   481   658   (177) (26.90)%
    Total commissions and fees 24,163   19,339   26,481   98,261   81,384   16,877  20.74%
    Contingency and bonus revenue 1,276   2,033   2,335   10,619   10,085   534  5.29%
    Other income 8   12   557   580   84   496  590.48%
    Total revenue 25,447   21,384   29,373   109,460   91,553   17,907  19.56%
    Employee commission expense 4,197   4,270   4,906   18,537   17,213   1,324  7.69%
    Revenue, net of commission expense 21,250   17,114   24,467   90,923   74,340   16,583  22.31%
                  
    Expenses             
    Salaries and employee benefits$12,174  $9,902  $11,650  $46,467  $39,492  $6,975  17.66%
    Occupancy 727   782   721   3,030   2,984   46  1.54%
    Furniture and equipment 213   184   227   863   790   73  9.24%
    Amortization of intangible assets 1,438   1,146   1,572   6,098   4,512   1,586  35.15%
    Other expenses 1,853   1,927   1,568   6,467   6,459   8  0.12%
    Total operating expenses 16,405   13,941   15,738   62,925   54,237   8,688  16.02%
    Income before income tax and noncontrolling interest 4,845   3,173   8,729   27,998   20,103   7,895  39.27%
    Corporate allocation (702)  (261)  (691)  (2,665)  (1,179)  (1,486) 126.04%
    Income (loss) before income tax, corporate allocation, and noncontrolling interest 4,143   2,912   8,038   25,333   18,924   6,409  33.87%
    Provision for income tax expense 1,071   732   2,069   6,521   4,823   1,698  35.21%
    Net income 3,072   2,180   5,969   18,812   14,101   4,711  33.41%
    Noncontrolling interest                  N/M
    Net income attributable to TowneBank$3,072  $2,180  $5,969  $18,812  $14,101  $4,711  33.41%
                  
    Provision for income taxes 1,071   732   2,069   6,521   4,823   1,698  35.21%
    Depreciation, amortization and interest expense 1,588   1,285   1,726   6,702   5,052   1,650  32.66%
    EBITDA(non-GAAP)$5,731  $4,197  $9,764  $32,035  $23,976  $8,059  33.61%
                  
    Efficiency ratio(non-GAAP) 70.43%  74.76%  59.21%  62.88%  66.89%    
     


    TOWNEBANK
    Reconciliation of Non-GAAP Financial Measures:
           
            
     Three Months Ended Twelve Months Ended
     December 31, September 30, December 31, December 31,
      2023   2023   2022   2023   2022 
              
    Return on average assets (GAAP) 0.68%  1.06%  1.16%  0.92%  1.16%
    Impact of excluding average goodwill and other intangibles and amortization 0.09%  0.11%  0.09%  0.10%  0.09%
    Return on average tangible assets (non-GAAP) 0.77%  1.17%  1.25%  1.02%  1.25%
              
    Return on average equity (GAAP) 5.75%  8.96%  9.98%  7.78%  10.06%
    Impact of excluding average goodwill and other intangibles and amortization 2.78%  4.01%  4.28%  3.60%  4.31%
    Return on average tangible equity (non-GAAP) 8.53%  12.97%  14.26%  11.38%  14.37%
              
    Return on average common equity (GAAP) 5.79%  9.04%  10.07%  7.85%  10.15%
    Impact of excluding average goodwill and other intangibles and amortization 2.83%  4.07%  4.37%  3.65%  4.39%
    Return on average tangible common equity (non-GAAP) 8.62%  13.11%  14.44%  11.50%  14.54%
              
    Book value (GAAP)$27.24  $26.28  $25.73  $27.24  $25.73 
    Impact of excluding average goodwill and other intangibles and amortization (6.96)  (7.00)  (6.89)  (6.96)  (6.89)
    Tangible book value (non-GAAP)$20.28  $19.28  $18.84  $20.28  $18.84 
              
    Efficiency ratio (GAAP) 78.36%  68.09%  63.40%  70.48%  64.24%
    Impact of exclusions(2.19)% (1.88) % (1.41)% (1.10)% (1.55)%
    Efficiency ratio (non-GAAP) 76.17%  66.21%  61.99%  69.38%  62.69%
              
    Average assets (GAAP)$16,683,041  $16,762,859  $15,929,756  $16,656,686  $16,268,014 
    Less: average goodwill and intangible assets 523,086   526,445   502,539   525,546   504,167 
    Average tangible assets (non-GAAP)$16,159,955  $16,236,414  $15,427,217  $16,131,140  $15,763,847 
              
    Average equity (GAAP)$1,988,302  $1,986,469  $1,855,430  $1,974,994  $1,878,036 
    Less: average goodwill and intangible assets 523,086   526,445   502,539   525,546   504,167 
    Average tangible equity (non-GAAP)$1,465,216  $1,460,024  $1,352,891  $1,449,448  $1,373,869 
              
    Average common equity (GAAP)$1,972,138  $1,969,898  $1,838,895  $1,959,208  $1,861,496 
    Less: average goodwill and intangible assets 523,086   526,445   502,539   525,546   504,167 
    Average tangible common equity (non-GAAP)$1,449,052  $1,443,453  $1,336,356  $1,433,662  $1,357,329 
              
    Net income (GAAP)$28,804  $44,862  $46,685  $153,715  $188,987 
    Amortization of intangibles, net of tax 2,695   2,852   1,955   11,182   8,390 
    Tangible net income (non-GAAP)$31,499  $47,714  $48,640  $164,897  $197,377 
              
    Noninterest expense (GAAP)$121,895  $117,702  $111,141  $489,222  $441,279 
    Less: Amortization of intangibles 3,411   3,610   2,475   14,155   10,620 
    Noninterest expense net of amortization (non-GAAP)$118,484  $114,092  $108,666  $475,067  $430,659 
                        


    TOWNEBANK
    Reconciliation 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,
       2023   2023   2023   2023   2022 
    Net income (GAAP) $28,804  $44,862  $41,716  $38,333  $46,685 
    Adjustments          
    Plus: Acquisition-related expenses, net of tax  56   458   2,457   4,803   320 
    Plus: Initial provision for acquired loans, net of tax           3,166    
    Plus: FDIC special assessment, net of tax  4,083             
    Less: Gain on sale of equity investments, net of noncontrolling interest  (1,846)  (438)  (5,513)      
    Core operating earnings, excluding certain items affecting
    comparability (non-GAAP)
     $31,097  $44,882  $38,660  $46,302  $47,005 
    Weighted average diluted shares  74,793,557   74,765,515   74,699,810   74,390,614   72,724,189 
    Diluted EPS (GAAP) $0.39  $0.60  $0.56  $0.52  $0.64 
    Diluted EPS, excluding certain items affecting
    comparability (non-GAAP)
     $0.42  $0.60  $0.52  $0.62  $0.65 
    Average assets $16,683,041  $16,762,859  $16,826,965  $16,349,040  $15,929,756 
    Average tangible equity $1,465,216  $1,460,024  $1,447,955  $1,424,030  $1,352,891 
    Average common tangible equity $1,449,052  $1,443,453  $1,432,506  $1,409,091  $1,336,356 
    Return on average assets, excluding certain items
    affecting comparability (non-GAAP)
      0.74%  1.06%  0.92%  1.15%  1.17%
    Return on average tangible equity, excluding certain
    items affecting comparability (non-GAAP)
      9.15%  12.97%  11.50%  13.98%  14.36%
    Return on average common tangible equity, excluding
    certain items affecting comparability (non-GAAP)
      9.25%  13.13%  11.62%  14.13%  14.54%
    Efficiency ratio, excluding certain items affecting
    comparability (non-GAAP)
      78.33%  67.76%  67.32%  64.32%  63.20%
               


    TOWNEBANK
    Reconciliation 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,
       2023   2022 
    Net income (GAAP) $153,715  $188,987 
         
    Plus: Acquisition-related expenses, net of tax  7,774   1,025 
    Plus: Initial provision for acquired loans, net of tax  3,166    
    Plus: FDIC special assessment, net of tax  4,083    
    Less: Gain on sale of equity investments, net of noncontrolling interest  (7,797)   
    Core operating earnings, excluding certain items affecting
    comparability (non-GAAP)
     $160,941  $190,012 
    Weighted average diluted shares  74,661,576   72,577,943 
    Diluted EPS (GAAP) $2.06  $2.60 
    Diluted EPS, excluding certain items affecting comparability (non-GAAP) $2.16  $2.62 
    Average assets $16,656,686  $16,268,014 
    Average tangible equity $1,449,448  $1,373,869 
    Average tangible common equity $1,433,662  $1,357,329 
    Return on average assets, excluding certain items affecting comparability (non-GAAP)  0.97%  1.17%
    Return on average tangible equity, excluding certain items affecting
    comparability (non-GAAP)
      11.88%  14.44%
    Return on average common tangible equity, excluding certain items affecting
    comparability (non-GAAP)
      12.01%  14.62%
    Efficiency ratio, excluding certain items affecting comparability (non-GAAP)  70.04%  64.08%
         

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