TowneBank : Investor Presentation - Earnings Release First Quarter 2021

First Quarter 2021 Earnings Presentation	1

CAUTIONARY STATEMENTS

Forward-Looking Statements

This presentation contains certain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts, but instead represent only the beliefs, expectations, or opinions of TowneBank and its management regarding future events, many of which, by their nature, are inherently uncertain. Forward-looking statements may be identified by the use of such words as: "believe," "expect," "anticipate," "intend," "plan," "estimate," or words of similar meaning, or future or conditional terms, such as "will," "would," "should," "could," "may," "likely," "probably," or "possibly." These statements may address issues that involve significant risks, uncertainties, estimates, and assumptions made by management. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include the impacts of the ongoing coronavirus (COVID-19) pandemic; competitive pressures in the banking industry that may increase significantly; changes in the interest rate environment that may reduce margins and/or the volumes and values of loans made or held as well as the value of other financial assets held; changes in the creditworthiness of customers and the possible impairment of the collectability of loans; general economic conditions, either nationally or regionally, that may be less favorable than expected, resulting in, among other things, a deterioration in credit quality and/or a reduced demand for credit or other services; 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 our Annual Report on Form 10-K for the year ended December 31, 2020 and related disclosures in other filings that have been, or will be, filed by TowneBank with the Federal Deposit Insurance Corporation.

Non-GAAP Financial Measures

This presentation 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.

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PERFORMANCE HIGHLIGHTS

Dollars in millions, except per share data					QTD							YTD
	1Q21		4Q20	Change		1Q20	Change			1Q21		1Q20	Change
Net Interest Income	$	99.99	$	100.61	(0.6%)	$	89.50	11.7%		$	99.99		89.50	11.7%
Noninterest Income		82.52		71.23	15.8%		48.20	71.2%			82.52		48.20	71.2%
Total Revenue		182.51		171.85	6.2%		137.70	32.5%			182.51		137.70	32.5%
Noninterest Expense		97.33		105.93	(8.1%)		96.89	0.5%			97.33		96.89	0.5%
Net Income		69.00		50.08	37.8%		26.38	161.5%			69.00		26.38	161.5%
Diluted Earnings Per Share	$	0.95		0.69	37.7%	$	0.36	163.9%		$	0.95	$	1.92	(50.5%)
Dividends Declared Per Share		0.18		0.18	0.0%		0.18	0.0%			0.18		0.70	(74.3%)
Tangible Book Value Per Share		17.94		17.46	2.7%		15.91	12.8%			17.94		15.69	14.3%
Total Assets	$	15,079	$	14,626	3.1%	$	12,624	19.5%		$	15,079	$	11,948	26.2%
Total Loans		9,735		9,629	1.1%		8,784	10.8%			9,735		8,419	15.6%
Total Deposits		12,140		11,573	4.9%		9,308	30.4%			12,140		9,271	30.9%
Return on Average Assets		1.92%		1.35%	0.6%		0.88%	1.0%			1.92%		1.19%	61.1%
Return on Average Tangible Common Equity		22.45%		16.48%	6.0%		10.01%	12.4%			22.45%		13.73%	63.5%
Net Interest Margin (TE)		3.06%		2.98%	0.1%		3.37%	(0.3%)			3.06%		3.46% (11.6%)
Nonperforming Assets / Total Assets		0.11%		0.11%	0.0%		0.24%	(0.1%)			0.11%		0.27% (59.3%)
Allowance for Loan Losses / Total Loans		1.19%		1.25%	(0.1%)		0.73%	0.5%			1.19%		0.69%	72.8%
Net Loan Charge-offs / Average Loans		0.03%		0.00%	0.0%		0.03%	(0.0%)			0.03%		0.04%	N/M
Common Equity Tier 1 Ratio		12.15%		11.87%	0.3%		11.23%	0.9%			12.15%		11.46%	6.0%

a

Highlights

• Net income was $69.0 million, or $0.95 per share in 1Q21 versus $26.38 million, or $0.36 per share in 1Q20
• Total revenue of $182.51 million, an increase of $44.81 million versus the same period of 2020
• Allowance for credit losses on loans to total loans is 1.19%, excluding PPP loans is 1.31%
• Margin of 3.06% included purchase accounting accretion of 5bp and PPP interest and fees of 12bps
• Strong mortgage origination volumes of $1.60 billion

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BALANCE SHEET SUMMARY

Amounts in millions		1Q21	4Q20	Q/Q Change		1Q20	Y/Y Change
	Actual	Actual	Amount	%		Actual	Amount	%
Cash and Cash Equivalents		$ 2,108.03	$ 1,864.29	$243.75	13%	$	886.14	$1,221.90	138%
Loans Held for Sale		582.91	540.80	42.11	8%		453.14	129.76	29%
Total Loans		9,734.58	9,629.07	105.52	1%		8,784.20	950.39	11%
Allowance for Credit Losses		(116.08)	(120.16)	4.08	-3%		(64.37)	(51.70)	80%
Total Loans, Net		9,618.51	9,508.91	109.60	1%		8,719.82	898.68	10%
Other Assets		2,769.95	2,712.45	57.50	2%		2,564.72	205.23	8%
Total Assets		15,079.40	14,626.44	452.95	3%		12,623.83	2,455.57	19%
Noninterest Bearing Deposits		4,840.68	4,374.57	466.11	11%		3,060.52	1,780.16	58%
Interest Bearing Deposits		7,298.97	7,198.60	100.37	1%		6,247.48	1,051.49	17%
Total Deposits		12,139.64	11,573.17	566.48	5%		9,307.99	2,831.65	30%
FHLB Advances and Other Borrowings		507.55	706.68	(199.13)	-28%		1,143.29	(635.74)	-56%
Subordinated Debt, Net		249.20	249.05	0.15	0%		248.61	0.60	0%
Other Liabilities		366.70	313.72	52.98	17%		258.30	108.39	42%
Total Liabilities		13,263.09	12,842.62	420.47	3%		10,958.19	2,304.90	21%
Shareholder Equity		1,800.21	1,766.85	33.37	2%		1,653.20	147.01	9%
Noncontrolling Interests		16.09	16.98	(0.89)	-5%		12.43	3.66	29%
Total Equity		1,816.31	1,783.83	32.48	2%		1,665.63	150.67	9%
Total Liabilities and Equity		15,079.40	14,626.44	452.95	3%		12,623.83	2,455.57	19%

a

Highlights:

• Loans held for investment up $0.95 billion compared to 1Q20
• PPP loans totaling $0.90 billion are included in total loans
• Average earning assets in 1Q21 were up $2.61 billion compared to 1Q20
• Noninterest deposits represent 39.87% of total deposits
• Securities portfolio with 4.3 year average duration

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INCOME STATEMENT SUMMARY

							QTD										YTD
Amounts in thousands except per share data			Q1-21		Q4-20		Q/Q Change		Q1-20		Y/Y Change			Q1-21		Q1-20		Y/Y Change
		Actual	Actual	Amount	%	Actual	Amount	%		Actual	Actual	Amount	%
Net Interest Income		$99,990	$100,614	$	(624)	-1%	$89,496	$ 10,494	12%		$	99,990	$	89,496	$ 10,494	12%
Provision for Credit Losses			(4,027)		1,617		(5,644)	-		7,016	(11,043) -157%			(4,027)		7,016	(11,043) -157%
Noninterest Income Excluding Securities Gain / (Loss)			81,519		71,233		10,286	14%		43,198		38,321	89%			81,519		43,198		38,322	89%
Gain / (Loss) on Securities			1,000		1		999	-		5,002		(4,002)	-80%			1,000		5,002		(4,002)	-80%
Noninterest Expense Excluding M&A / Restructuring			97,264	105,866		(8,602)	-8%		97,038		226	0%			97,264		97,037		227	0%
M&A / Restructuring			62		66		(4)	-6%		(150)		212	-141%			62		(150)		212	-142%
Net Income Before Taxes and Noncontrolling Interest			89,210		64,299		24,911	39%		33,792		55,418	164%			89,210		33,792		55,418	164%
Non-controlling Interests			3,636		3,809		(173)	-5%		1,221		2,415	198%			3,636		1,221		2,415	198%
Provision for Income Taxes			16,579		10,408		6,171	59%		6,187		10,392	168%			16,580		6,187		10,393	168%
Net Income		$68,995	$ 50,082	$18,913	38%	$26,384	$ 42,611	162%		$	68,995	$	26,385	$42,610	161%
M&A/Restructuring, Net of Taxes			54		66		(12)	-18%		(129)		183	-142%			54		(129)		182	-142%
Core Net Income(1)		$69,049	$ 50,148	$18,901	38%	$26,255	$42,794	163%		$	69,048	$	26,256	$42,792	163%
EPS - Fully Diluted		$	0.95	$	0.69	$	0.26	38%	$	0.36	$	0.59	164%		$	0.95	$	0.36	$	0.59	164%
Core EPS - Fully Diluted(1)		$	0.95	$	0.69	$	0.26	38%	$	0.36	$	0.59	164%		$	0.95	$	0.36	$	0.59	164%
Dividends		$	0.18	$	0.18	$	-	0%	$	0.18	$	-	0%		$	0.18	$	0.18	$	-	0%
Net Interest Margin (TE)			3.06%		2.98%		0.08%	3%		3.37%		-0.31%	-9%			3.06%		3.37%		-0.31%	-9%
(1) Core Earnings (Non-GAAP) excludes M&A expenses, net of tax

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