I NVESTOR P RESENTATION - F IRST Q UARTER 2016
Welcome to TowneBank (TOWN) The � Towne � story � began � in � my � home � garage � in � the � summer � of � 1998 � when � a � small � group � of � long � time � friends � and � banking � associates � came � together � to � lay � the � foundation � for � what � was � to � become � TowneBank. � With � caring � as � a � specific � business � strategy � and � a � deep � rooted � passion � for � service � to � others, � our � defined � culture � for � Towne � set � us � on � a � course � to � begin � building � a � great � community � asset � for � our � hometown � community � in � the � Hampton � Roads � Region � of � Virginia. Our � initial � stock � offering � was � substantially � oversubscribed � as � over � 4,000 � community � shareholders � invested � over � $50 � million � in � what � was � the � largest � capitalization � of � a � new � bank � in � Virginia � history. �� In � another � first, � we � actually � returned � $13 � million � to � our � subscribers � and � limited � any � one � shareholder � to � a � maximum � investment � of � $250,000. � This � extraordinary � level � of � capital � coupled � with � the � reputation � our � bankers � enjoyed � with � the � banking � regulators � allowed � the � bank � to � open � with � 90 � hometown � bankers � and � three � banking � centers � located � in � the � cities � of � Virginia � Beach, � Chesapeake � and � Portsmouth. � More � than � a � bank, � Towne � has � emerged � as � a � family � of � companies � providing � wealth � management, � insurance, � real � estate � brokerage, � residential � and � vacation � property � management � along � with � commercial � and � residential � mortgage � services. As � a � tribute � to � our � early � investors � and � community � supporters, � Towne � now � has � assets � exceeding � $6 � billion, � an � enviable � record � of � 16 � consecutive � years � of � increased � earnings, � and � has � returned � over � $122 � million � in � common � dividends � since � our � opening � on � April � 8, � 1999. As � you � review � the � information � contained � in � this � Investor � Presentation, � please � know � that � we � welcome � you � to � join � our � TowneBank � family � of � investors � and � supporters � as � we � embark � on � a � new � and � continued � journey � as � a � growth � company. Sincerely, G. � Robert � Aston, � Jr. Chairman � and � Chief � Executive � Officer 2
The Towne Model Caring as the Foundation for our Company � Culture and as a Specific Marketing Strategy Deep Commitment to Community Engagement � 8 Banking Regions with Local Decision � Making and the “Best Bankers” “HomeTowne Banker” Approach to Delivering � Exquisite Service $100 Million Branch Strategy � Diversified Financial Services driving � Noninterest Income 3
4 Towne Family of Companies
Total Assets � $7,000 $6,297 � $6,365 � 12% � compounded � annual � � $6,000 growth � rate � during � credit � cycle � (‘07 � ’12) $4,982 � � $5,000 $4,673 � $4,406 � $4,082 � $3,871 � � $4,000 $3,606 � $3,134 � � $3,000 $2,501 � $2,195 � $1,803 � � $2,000 $1,448 � $932 � $203 � $385 � $560 � $764 � � $1,000 � $ � 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 (Dollars � in � millions) 5
Net Income � $70.0 28% � compounded � � $60.0 annual � growth � rate � for � the � past � 16 � years � $50.0 � $40.0 � $30.0 � $20.0 � $10.0 � $ � � $(10.0) 6 (Dollars � in � millions)
2016 Performance Highlights Financial Highlights 2016 YTD 2015 2014 Financial Highlights 2016 YTD 2015 2014 Noninterest � Income¹ $ ���������� 32,415 $ �������� 116,379 $ ������� 96,744 • YTD Earnings of $17.8 Million; Net � Income $ ���������� 17,819 $ ���������� 62,382 $ ������� 42,169 an increase of 22.57% Y/Y Diluted � Earnings � per � Share $ ��������������� 0.35 $ ��������������� 1.22 $ ������������ 1.18 Dividends � Declared � per � Share $ ��������������� 0.12 $ ��������������� 0.47 $ ������������ 0.43 • YTD Total Revenues climbed 8.81% to $78.8 Million Total � Assets $ ���� 6,365,169 $ ���� 6,296,574 $ � 4,982,485 Total � Loans $ ���� 4,552,260 $ ���� 4,519,393 $ � 3,564,389 • Continued build out of Richmond Total � Deposits � $ ���� 4,955,126 $ ���� 4,914,027 $ � 3,846,602 platform including Insurance M&A activity Return � on � Average � Assets 1.14% 1.03% 0.87% Return � on � Average � Tangible � Common � Equity � 11.72% 10.51% 10.95% Net � Interest � Margin � ² 3.37% 3.45% 3.38% Nonperforming � Assets/Total � Assets 0.59% 0.68% 0.84% Allowance � for � Loan � and � Losses/Total � Loans 0.83% 0.85% 1.01% Net � Loan � Charge � offs/Average � loans 0.03% 0.01% 0.09% Common � Equity � Tier � I 12.66% 12.59% (1) � Excludes � gain(loss) � on � investment � securities. 7 (2) � Non � GAAP � financial � measure. � See � appendix � for � reconciliation.
Summary 2016 Earnings Three � Months � Ended Three � Months � Ended March � 31, Y/Y December � 31, Linked � Quarter � � 2016 2015 2015 Dollars � in � Thousands Net � Interest � Income $46,336 $43,556 6% $46,331 0% Provision � for � Loan � Losses (259) 323 (180%) 852 (130%) Total � Noninterest � Income 1 32,415 28,767 13% 25,079 29% Realized � Gain � on � Securities �������������������� � 49 (100%) �������������������� � �������������������������� � Merger � and � Acquisition � Expense 414 �������������� 415 (0%) 285 45% Other � Noninterest � Expense 51,747 50,025 3% 52,458 (1%) Net � Income � before � Taxes � and � NCI 26,849 21,609 24% 17,815 51% Tax � Provision 8,188 6,385 28% 4,846 69% Effective � Tax � Rate � (%) 31.48% 30.52% 3% 27.99% 12% Net � Income 18,661 15,224 23% 12,969 44% Noncontrolling � Interest 842 686 23% 503 67% Preferred � Dividends ��������������� � 13 (100%) ��������������� � �������������������������� � Net � Income � Avail � to � Common $ ������ 17,819 $ ������ 14,525 23% $ ������ 12,466 43% Diluted � EPS $0.35 $0.29 21% $0.24 46% Common � Dividend $0.12 $0.11 9% $0.12 �������������������������� � NIM ��� fully � tax � equivalent 2 3.37% 3.52% (15bps) 3.36% 1bp ROA 1.14% 1.01% 13% 0.78% 46% (1) � Excludes � gain(loss) � on � investment � securities. 8 (2) � Non � GAAP � financial � measure. �� See � Appendix � for � reconciliation.
Towne Mortgage Origination Volume * Mortgage Highlights : • Solid Q1 volume; Strong pipeline � $1,800 $1,573 � • Historically strong purchase � $1,600 $1,434 � $1,327 � money volumes driven by Real � $1,400 $1,222 � Estate companies � $1,200 $948 � � $1,000 $771 � • Aggressive efforts to scale � $800 operations consistent with � $600 production $313 � � $400 � $200 • Disciplined underwriting; No � $ � material losses through cycle 2010 2011 2012 2013 2014 2015 2016 (Dollars � in � millions) 9 *includes � Joint � Venture � volumes
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