--- title: "TowneBank Reports Second Quarter 2026 Earnings | TOWN Stock News" type: "News" locale: "en" url: "https://longbridge.com/en/news/293541503.md" description: "TowneBank reported Q2 2026 earnings of $193.19 million ($2.09 per diluted share), up from $40.89 million in Q2 2025. The surge was driven by a nearly $200 million gain from selling its Resort Property Management segment. Total revenues reached $444.27 million, with net interest income rising to $185.12 million. Core non-GAAP earnings were $72.01 million. The bank also paid a special dividend of $0.70 per share and highlighted growth in deposits and strategic expansion in the Carolinas." datetime: "2026-07-22T17:18:00.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/293541503.md) - [en](https://longbridge.com/en/news/293541503.md) - [zh-HK](https://longbridge.com/zh-HK/news/293541503.md) --- # TowneBank Reports Second Quarter 2026 Earnings | TOWN Stock News See more from StockTitan in Google Search and AI answers.Adds StockTitan as a preferred source · opens Google Add on Google SUFFOLK, Va., July 22, 2026 (GLOBE NEWSWIRE) -- TowneBank (the "Company" or "Towne") (NASDAQ: TOWN) today reported earnings for the quarter ended June 30, 2026 of $193.19 million, or $2.09 per diluted share, compared to $40.89 million, or $0.54 per diluted share, for the quarter ended June 30, 2025. Excluding certain items affecting comparability, core earnings (non-GAAP) were $72.01 million, or $0.78 per diluted share, in the current quarter compared to $63.39 million, or $0.84 per diluted share, for the quarter ended June 30, 2025. "Our second quarter results demonstrate the strength and resilience of our Main Street Banking model. We continued to expand margin, increase noninterest-bearing deposit balances, and uphold our disciplined approach to credit risk management. Additionally, the sale of Towne Vacations generated a gain of nearly $200 million, significantly enhancing our capital levels and tangible book value. We are pleased by the early results of our strategic growth initiatives in the Carolinas and remain focused on expanding our Insurance business through both organic growth and selective acquisition opportunities," said G. Robert Aston, Jr., Executive Chairman. **Highlights for Second Quarter 2026:** - Total deposits were $18.71 billion, an increase of 1.26%, or $233.17 million, compared to March 31, 2026. - Noninterest-bearing deposits increased $245.55 million, or 4.39%, compared to the linked quarter driven by growth in commercial deposits. - Loans held for investment were $15.17 billion, a decrease of $91.49 million, or 0.60%, compared to March 31, 2026. - Total revenues were $444.27 million, an increase of $234.17 million, or 111.46%, compared to second quarter 2025. Noninterest income increased $186.27 million, driven by a $198.55 million gain on the sale of our Resort Property Management segment. Net interest income increased $47.90 million, as higher loan volumes and loan yields drove an improvement in interest income while cost of deposits decreased by 25 basis points. - Annualized return on common shareholders' equity was 25.72% compared to 7.54% in second quarter 2025. Excluding certain items affecting comparability, annualized return on common shareholders' equity (non-GAAP) was 9.59% compared to 11.69% in second quarter 2025. - Annualized return on average tangible common shareholders' equity (non-GAAP) was 37.76% compared to 10.99% in second quarter 2025. Excluding certain items affecting comparability, annualized return on average tangible common shareholders' equity (non-GAAP) was 14.63% compared to 16.61% in second quarter 2025. - Net interest margin was 3.68% for the quarter and tax-equivalent net interest margin (non-GAAP) was 3.70%, including purchase accounting accretion of 11 basis points, compared to the prior year quarter net interest margin of 3.38% and tax-equivalent net interest margin (non-GAAP) of 3.40%, including purchase accounting accretion of 6 basis points. - Certain events related to the sale of our Resort Property Management segment impacted earnings and earnings-related ratios in the quarter. These events consisted of a pre-tax gain on the sale for $198.55 million, a special charitable foundation contribution of $25.00 million, and merger and acquisition related expenses of $8.68 million. Additionally, TowneBank paid a special dividend of $0.70 per common share, representing approximately 32% of the gain on the sale of the Resort Property Management segment before taxes and deal costs. - We expect net interest income to be impacted by net purchase accounting accretion income of $6.56 million and $10.31 million in the remainder of 2026 and 2027, respectively. - The effective tax rate was 23.72% in the quarter compared to 22.25% in second quarter 2025 and 18.19% in the linked quarter. The change in the effective rate from second quarter 2026 compared to 2025 and the linked quarter was due to the increase in state tax expense related to the sale of the Resort Property Management business. "I’m highly encouraged with the early success of our talent acquisition strategy across the Carolinas. Since the beginning of the year, we have added 24 experienced Towne Bankers, including four market executives, eight private and commercial bankers, and two treasury sales officers. These strategic hires are helping us build meaningful momentum and deepen our presence in some of the nation's most dynamic and attractive banking markets," stated William I. Foster III, President and Chief Executive Officer. **Quarterly Net Interest Income:** - Net interest income was $185.12 million in second quarter 2026 compared to $137.21 million for the quarter ended June 30, 2025, driven by a combination of volume increases and improvement in rates. - Average interest-earning assets totaled $20.19 billion at June 30, 2026, compared to $19.61 billion in the linked quarter, an increase of 2.94%. - On an average basis, loans held for investment, with a yield of 5.69%, represented 75.50% of earning assets at June 30, 2026 compared to 5.67% and 76.65% in the linked quarter. Average loans held for investment had a yield of 5.56% and represented 75.52% of earning assets at June 30, 2025. - The cost of interest-bearing deposits was 2.24% for the quarter ended June 30, 2026, compared to 2.33% in the linked quarter and 2.61% in second quarter 2025. Interest expense on deposits increased $3.33 million, or 4.88%, from the prior year quarter as higher volume outpaced decreases in rate. - Our total cost of deposits decreased to 1.55% from 1.63% for the linked quarter and 1.80% for the quarter ended June 30, 2025 due to lower interest-bearing deposit rates. - Average interest-bearing liabilities totaled $13.26 billion, an increase of $105.95 million, or 0.81%, from the linked quarter. Total borrowings decreased $62.24 million compared to the linked quarter, due to repayment of a portion of debt assumed in the Dogwood State Bank ("Dogwood") acquisition. **Quarterly Provision for Credit Losses:** - The quarterly provision for credit losses was $625 thousand compared to $6.41 million in the prior year quarter and $344 thousand in the linked quarter. - The allowance for credit losses on loans increased $651 thousand in second quarter 2026, compared to the linked quarter. - Net loan charge-offs were $5.76 million in the quarter, $1.69 million in the linked quarter, and $19 thousand in the prior year quarter. The increase in charge-offs was driven primarily by acquired indirect and SBA loans. - The ratio of net charge-offs to average loans on an annualized basis was 0.15% in second quarter 2026, 0.05% in the linked quarter, and less than 0.01% in second quarter 2025. - The allowance for credit losses on loans represented 1.32% of total loans at June 30, 2026, compared to 1.31% at March 31, 2026, and 1.09% at June 30, 2025. Our June 30, 2026 allowance for credit losses is further broken down into community banking which represented 1.20% of total loans and government guaranteed lending which represented 0.12% of total loans. - The allowance for credit losses on loans was 6.16 times nonperforming loans compared to 16.81 times at June 30, 2025 and 6.08 times at March 31, 2026. **Quarterly Noninterest Income:** - Total noninterest income was $259.15 million compared to $72.88 million in 2025, an increase of $186.27 million, or 255.58%. - The gain on sale of our Resort Property Management segment included in noninterest income was $198.55 million. As a result of the sale, there was no operating income to report from this segment in second quarter 2026 compared to second quarter 2025 income of $18.21 million. - Government guaranteed lending income, net was $1.99 million in second quarter 2026 and represented a new noninterest income source in 2026 related to the acquisition of Dogwood. - Residential mortgage banking income was $12.54 million compared to $13.56 million in second quarter 2025 driven by margin compression. Loan volume increased to $734.65 million in second quarter 2026 from $671.47 million in second quarter 2025. Residential purchase activity was 91.58% of production volume in second quarter 2026 compared to 92.37% in second quarter 2025. - Gross margins on residential mortgage sales were 2.97%, a decrease of 12 basis points from 3.09% in the linked quarter and 16 basis points from 3.13% in second quarter 2025. **Qua****rterly Noninterest Expense:** - Total noninterest expense was $189.94 million compared to $150.67 million in 2025, an increase of $39.28 million, or 26.07%. This increase was primarily attributable to a special charitable foundation contribution and growth in salaries and employee benefits. - An increase in banking personnel related to the Dogwood and Old Point Financial Corporation acquisitions represented $8.62 million of the $10.37 million increase in salaries and benefits expenses, compared to the prior year quarter. Additional contributing factors were annual base salary adjustments that went into effect mid-September 2025 and performance-based incentives. **Consolidated Balance Sheet Highlights:** - Total assets were $22.62 billion for the quarter ended June 30, 2026, a $258.25 million increase compared to $22.36 billion at March 31, 2026. - Loans held for investment decreased $91.49 million, or 0.60%, compared to the linked quarter, but increased $218 million in our Carolina markets. - Mortgage loans held for sale increased $36.86 million, or 15.44%, compared to prior year and $103.87 million, or 60.48%, compared to the linked quarter, driven by higher production volume. - Government guaranteed loans held for sale increased $28.42 million over the linked quarter. This loan activity was included in the acquisition of Dogwood and is new to TowneBank in 2026. - Total deposits increased $233.17 million, or 1.26%, compared to the linked quarter, driven by demand deposit growth. - Noninterest-bearing deposits increased $245.55 million, or 4.39%, compared to the linked quarter. - The Company repaid a portion of acquired FHLB borrowings in the quarter, contributing to a $62.24 million, or 12.15%, decrease in borrowings compared to the linked quarter. **Investment Securities:** - Total investment securities were $3.10 billion compared to $3.03 billion at March 31, 2026 and $2.78 billion at June 30, 2025. The weighted average duration of the portfolio at June 30, 2026 was 3.6 years. The carrying value of the available-for-sale debt securities portfolio included net unrealized losses of $85.14 million at June 30, 2026, compared to $81.40 million at March 31, 2026 and $113.14 million at June 30, 2025, with the changes in fair value marks due to the change in interest rates. **Loans and Asset Quality:** - Total loans held for investment were $15.17 billion at June 30, 2026 and $15.26 billion at March 31, 2026. - Nonperforming assets, which consists of nonperforming loans, foreclosed property, and former bank premises, were $48.31 million, or 0.21% of total assets, compared to $51.11 million, or 0.23%, at the linked quarter end, and $9.29 million, or 0.05%, at June 30, 2025. Former bank premises of $10.57 million have executed purchase agreements or purchase agreements under review that are expected to close by November 2026. - Nonperforming loans were 0.21% of period end loans at June 30, 2026, and in the linked quarter, compared to 0.06% at June 30, 2025. The increase over prior year was primarily driven by loans acquired in the Dogwood transaction. - Foreclosed property and former bank premises totaled $15.88 million at June 30, 2026, and consisted of $505 thousand in other real estate owned, $1.32 million in repossessed autos, and $14.06 million in acquisition-related former bank premises. Foreclosed property and former bank premises totaled $18.36 million at March 31, 2026, and consisted of $505 thousand in other real estate owned, $1.53 million in repossessed autos, and $16.32 million in acquisition-related former bank premises. **Deposits and Borrowings:** - Total deposits were $18.71 billion compared to $18.48 billion at March 31, 2026, an increase of $233.17 million, or 5.06% on an annualized basis from the linked quarter. - The ratio of period end loans held for investment to deposits was 81.06% compared to 82.58% at March 31, 2026, and 80.63% at June 30, 2025. - Noninterest-bearing deposits were 31.22% of total deposits at June 30, 2026 compared to 30.29% at March 31, 2026 and 31.02% at June 30, 2025. Noninterest-bearing deposits increased $245.55 million, or 4.39%, compared to the linked quarter. - Total borrowings were $450.24 million compared to $512.48 million at March 31, 2026, a decrease of $62.24 million, or 12.15%. **Capital:** - Book value per common share was $32.40 compared to $31.31 at March 31, 2026 and $29.41 at June 30, 2025. - Tangible book value per common share (non-GAAP) was $22.60 compared to $21.49 at March 31, 2026 and $21.80 at June 30, 2025. **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. Today, TowneBank operates over 70 banking offices throughout Hampton Roads and Central Virginia, Eastern and Central North Carolina, the Greenville and upstate region of South Carolina, and Charleston, South 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, and Towne Trust Company, N.A. With total assets of $22.62 billion as of June 30, 2026, 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 2023 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, trade restrictions and tariffs, 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 and changes impacting the rulemaking, supervision, examination and enforcement priorities of the federal banking agencies, that may adversely affect our business; our ability to successfully integrate the businesses from recently completed acquisitions, including our mergers with Old Point Financial Corporation and Dogwood State Bank, to the extent that that process may take longer or be more difficult, time-consuming, or costly to accomplish than expected; deposit attrition, operating costs, customer losses, and business disruption associated with recently completed acquisitions, including reputational risk and adverse effects on relationships with employees, customers or other business partners, that may be greater than expected; costs or difficulties related to the integration of the businesses that we have acquired that may be greater than expected; expected growth opportunities or cost savings associated with recently completed acquisitions that may not be fully realized or realized within the expected time frame; the diversion of management's attention and time from ongoing business operations and opportunities on merger and integration related matters; the introduction of new lines of business or new products and services; 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; competitors that 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, including any adverse impact of actual and proposed cuts to federal spending, including defense, security and military spending, on the economy. 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, 2025 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,** **2026** **2026** **2025** **2025** **2025** **Income and Performance Ratios:** Total revenue $ 444,266 $ 246,447 $ 219,943 $ 222,584 $ 210,093 Net income 193,618 41,101 40,850 44,612 41,319 Net income available to common shareholders 193,186 40,993 40,630 44,295 40,887 Net income per common share - diluted 2.09 0.45 0.51 0.58 0.54 Book value per common share 32.40 31.31 30.67 30.27 29.41 Book value per common share - tangible(non-GAAP) 22.60 21.49 21.93 21.49 21.80 Return on average assets 3.45 % 0.76 % 0.82 % 0.94 % 0.91 % Return on average assets - tangible(non-GAAP) 3.68 % 0.89 % 0.94 % 1.05 % 1.01 % Return on average equity 25.66 % 5.84 % 6.67 % 7.72 % 7.52 % Return on average equity - tangible(non-GAAP) 37.63 % 9.55 % 10.32 % 11.39 % 10.94 % Return on average common equity 25.72 % 5.85 % 6.69 % 7.75 % 7.54 % Return on average common equity - tangible(non-GAAP) 37.76 % 9.58 % 10.36 % 11.45 % 10.99 % Noninterest income as a percentage of total revenue 58.33 % 29.83 % 27.73 % 33.98 % 34.69 % **Regulatory Capital Ratios (1):** Common equity tier 1 12.16 % 11.43 % 11.34 % 11.18 % 11.77 % Tier 1 12.20 % 11.47 % 11.39 % 11.23 % 11.82 % Total 14.58 % 13.87 % 14.14 % 13.98 % 14.49 % Tier 1 leverage ratio 10.00 % 9.75 % 9.36 % 9.84 % 9.93 % **Asset Quality:** Allowance for credit losses on loans to nonperforming loans 6.16 x 6.08 x 12.57 x 19.38 x 16.81 x Allowance for credit losses on loans to period end loans 1.32 % 1.31 % 1.10 % 1.11 % 1.09 % Nonperforming loans to period end loans 0.21 % 0.21 % 0.09 % 0.06 % 0.06 % Nonperforming assets to period end assets 0.21 % 0.23 % 0.07 % 0.05 % 0.05 % Net charge-offs (recoveries) to average loans (annualized) 0.15 % 0.05 % 0.06 % 0.01 % — % Net charge-offs (recoveries) $ 5,756 $ 1,690 $ 1,948 $ 255 $ 19 Nonperforming loans $ 32,430 $ 32,751 $ 11,726 $ 7,698 $ 7,982 Former bank premises 14,061 16,323 879 885 — Foreclosed property 1,823 2,037 1,754 1,798 1,306 Total nonperforming assets $ 48,314 $ 51,111 $ 14,359 $ 10,381 $ 9,288 Loans past due 90 days and still accruing interest $ 1,095 $ 2,487 $ 890 $ 1,863 $ 210 Allowance for credit losses on loans $ 199,918 $ 199,267 $ 147,343 $ 149,175 $ 134,187 **Mortgage Banking:** Loans originated, mortgage $ 597,622 $ 469,323 $ 504,732 $ 491,921 $ 494,108 Loans originated, joint venture 137,028 106,027 118,597 144,440 177,359 Total loans originated $ 734,651 $ 575,350 $ 623,329 $ 636,361 $ 671,467 Number of loans originated 1,827 1,423 1,551 1,679 1,750 Number of originators 168 162 161 169 166 Purchase % 91.58 % 77.57 % 82.23 % 91.84 % 92.37 % Loans sold $ 597,947 $ 527,428 $ 652,853 $ 657,822 $ 596,009 Rate lock asset $ 1,831 $ 2,003 $ 1,145 $ 2,213 $ 2,186 Gross realized gain on sales and fees as a % of loans originated 2.97 % 3.09 % 3.19 % 3.32 % 3.13 % **Other Ratios:** Net interest margin 3.68 % 3.58 % 3.56 % 3.48 % 3.38 % Net interest margin-fully tax-equivalent(non-GAAP) 3.70 % 3.60 % 3.58 % 3.50 % 3.40 % Average earning assets/total average assets 89.78 % 89.60 % 89.96 % 90.03 % 90.23 % Average loans/average deposits 82.40 % 83.22 % 80.57 % 80.92 % 81.09 % Average noninterest deposits/total average deposits 30.78 % 30.24 % 31.28 % 31.30 % 30.88 % Period end equity/period end total assets 13.27 % 12.96 % 12.34 % 12.18 % 12.19 % Efficiency ratio(non-GAAP) 74.91 % 76.96 % 73.37 % 67.08 % 69.82 % (1) Current reporting period regulatory capital ratios are preliminary. **TOWNEBANK** **Selected Data (unaudited)** **(dollars in thousands)** **Investment Securities** **% Change** **Q2** **Q2** **Q1** **Q2 26 vs.** **Q2 26 vs.** **_Available-for-sale securities, at fair value_** **2026** **2025** **2026** **Q2 25** **Q1 26** U.S. agency securities $ 402,738 $ 345,808 $ 386,157 16.46 % 4.29 % U.S. Treasury notes 176,393 78,746 83,396 124.00 % 111.51 % Municipal securities 540,924 438,490 535,652 23.36 % 0.98 % Trust preferred and other corporate securities 164,040 115,126 161,453 42.49 % 1.60 % Mortgage-backed securities issued by GSEs and GNMA 1,657,895 1,577,325 1,697,124 5.11 % (2.31 )% Allowance for credit losses (1,028 ) (1,520 ) (1,355 ) (32.37 )% (24.13 )% Total $ 2,940,962 $ 2,553,975 $ 2,862,427 15.15 % 2.74 % **_Gross unrealized gains (losses) reflected in financial statements_** Total gross unrealized gains $ 9,072 $ 6,048 $ 9,894 50.00 % (8.31 )% Total gross unrealized losses (94,212 ) (119,186 ) (91,293 ) (20.95 )% 3.20 % Net unrealized gains (losses) and other adjustments on AFS securities $ (85,140 ) $ (113,138 ) $ (81,399 ) (24.75 )% 4.60 % **_Held-to-maturity securities, at amortized cost_** U.S. agency securities $ 18,403 $ 92,973 $ 18,339 (80.21 )% 0.35 % U.S. Treasury notes 95,317 96,250 95,551 (0.97 )% (0.24 )% Municipal securities 5,515 5,414 5,490 1.87 % 0.46 % Trust preferred corporate securities 2,041 2,094 2,054 (2.53 )% (0.63 )% Mortgage-backed securities issued by GSEs 5,057 5,201 5,093 (2.77 )% (0.71 )% Allowance for credit losses (32 ) (67 ) (33 ) (52.24 )% (3.03 )% Total $ 126,301 $ 201,865 $ 126,494 (37.43 )% (0.15 )% Total gross unrealized gains $ 195 $ 214 $ 196 (8.88 )% (0.51 )% Total gross unrealized losses (1,931 ) (5,148 ) (2,314 ) (62.49 )% (16.55 )% Net unrealized gains (losses) in HTM securities $ (1,736 ) $ (4,934 ) $ (2,118 ) (64.82 )% (18.04 )% Total unrealized gains (losses) on AFS and HTM securities $ (86,876 ) $ (118,072 ) $ (83,517 ) (26.42 )% 4.02 % **% Change** **Loans Held For Investment** **Q2** **Q2** **Q1** **Q2 26 vs.** **Q2 26 vs.** **Community Banking:** **2026** **2025** **2026** **Q2 25** **Q1 26** CRE - construction and development $ 1,308,080 $ 1,072,625 $ 1,450,284 21.95 % (9.81 )% CRE - owner occupied 2,401,402 1,815,900 2,359,542 32.24 % 1.77 % CRE - non-owner occupied 4,317,091 3,557,175 4,284,890 21.36 % 0.75 % CRE - multifamily 865,154 887,083 894,653 (2.47 )% (3.30 )% Residential 1-4 family 2,326,019 1,997,395 2,334,199 16.45 % (0.35 )% HELOC 682,941 480,610 674,293 42.10 % 1.28 % Commercial and industrial business (C&I) 1,615,241 1,370,564 1,619,980 17.85 % (0.29 )% Government 524,444 510,902 499,769 2.65 % 4.94 % Indirect 690,321 579,041 693,811 19.22 % (0.50 )% Consumer loans and other 222,970 88,378 219,057 152.29 % 1.79 % **Total Community Banking** $ 14,953,663 $ 12,359,673 $ 15,030,478 20.99 % (0.51 )% **Government Guaranteed Lending:** Real estate - construction and development 12,846 — 28,840 N/M (55.46 )% Commercial real estate - owner occupied 94,943 — 88,072 N/M 7.80 % Commercial and industrial business (C&I) 108,216 — 113,770 N/M (4.88 )% Consumer loans and other 7 — — N/M N/M **Total Government Guaranteed Lending** $ 216,012 $ — $ 230,682 N/M (6.36 )% **Total Loans Held for Investment** $ 15,169,675 $ 12,359,673 $ 15,261,160 22.74 % (0.60 )% **TOWNEBANK** **Selected Data (unaudited)** **(dollars in thousands)** **% Change** **Deposits** **Q2** **Q2** **Q1** **Q2 26 vs.** **Q2 26 vs.** **2026** **2025** **2026** **Q2 25** **Q1 26** Noninterest-bearing demand deposits $ 5,842,944 $ 4,754,340 $ 5,597,395 22.90 % 4.39 % Interest-bearing: Demand and money market accounts 9,468,690 7,654,317 9,293,443 23.70 % 1.89 % Savings 436,751 332,108 457,028 31.51 % (4.44 )% Certificates of deposits 2,965,060 2,587,951 3,132,406 14.57 % (5.34 )% Total 18,713,445 15,328,716 18,480,272 22.08 % 1.26 % **Acquisition Summary - Day 1 Balances** **Total Acquired** **2026** **2025** **2025-2026** **Dogwood (1)** **Old Point (2)** **Village (3)** Total securities $ 478,408 $ 190,976 $ 211,877 $ 75,555 Loans held for sale 40,596 36,981 — 3,615 Loans held for investment 3,438,268 1,905,599 956,429 576,240 Core deposit intangibles 82,900 30,490 31,390 21,020 Total assets 4,492,136 2,343,049 1,403,159 745,928 Noninterest-bearing demand deposits 1,089,093 544,484 306,066 238,543 Interest-bearing deposits 2,690,894 1,387,029 904,915 398,950 Total deposits 3,779,987 1,931,513 1,210,981 637,493 Advances from the FHLB 205,000 155,000 40,000 10,000 Subordinated debt, net 39,693 — 25,274 14,419 Total liabilities 4,071,303 2,118,357 1,284,531 668,415 Goodwill $ 368,990 $ 233,269 $ 92,729 $ 42,992 Initial allowance for credit losses on loans held for investment 65,406 59,492 4,223 1,691 Initial provision for credit losses (4) 17,504 — 11,449 6,055 (1) Dogwood State Bank was acquired January 12, 2026. (2) Old Point Financial Corporation was acquired September 1, 2025. (3) Village Bank and Trust Corp. was acquired April 1, 2025. (4) ASU 2025-08 Financial Instruments -_Credit Losses Measurement of Credit Losses on Financial Instruments - Purchased Loans,_was adopted January 1, 2026. **Three Months Ended** **June 30,** **March 31,** **December 31,** **September 30,** **June 30,** **Net charge-offs:** **2026 (1)** **2026** **2025** **2025** **2025** Community bank $ 451 $ (284 ) $ 1,159 $ (116 ) $ (418 ) Indirect 4,002 414 789 371 437 Government guaranteed lending 1,303 1,560 — — — **Total** $ 5,756 $ 1,690 $ 1,948 $ 255 $ 19 **Non-performing loans:** Community bank $ 24,616 $ 22,380 $ 10,275 $ 6,629 $ 6,912 Indirect 970 2,731 1,451 1,069 1,070 Government guaranteed lending 6,844 7,640 — — — **Total** $ 32,430 $ 32,751 $ 11,726 $ 7,698 $ 7,982 (1) Non-performing loans related to the Dogwood acquisition totaled approximately $18.59 million at June 30, 2026. **TOWNEBANK** **Average Balances, Yields and Rate Paid (unaudited)** **(dollars in thousands)** **Three Months Ended** **Three Months Ended** **Three Months Ended** **June 30, 2026** **March 31, 2026** **June 30, 2025** **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) $ 15,241,959 $ 216,044 5.69 % $ 15,032,919 $ 210,226 5.67 % $ 12,304,172 $ 170,520 5.56 % Taxable investment securities 2,808,164 25,687 3.66 % 2,805,229 25,181 3.59 % 2,598,093 23,361 3.60 % Tax-exempt investment securities 275,487 3,083 4.48 % 245,092 2,625 4.28 % 172,083 1,802 4.19 % Total securities 3,083,651 28,770 3.73 % 3,050,321 27,806 3.65 % 2,770,176 25,163 3.63 % Interest-bearing deposits 1,659,332 14,023 3.39 % 1,388,016 11,459 3.35 % 1,045,727 10,241 3.93 % Loans held for sale 203,978 3,076 6.03 % 140,438 2,077 5.92 % 172,102 2,770 6.44 % Total earning assets 20,188,920 261,913 5.20 % 19,611,694 251,568 5.20 % 16,292,177 208,694 5.14 % Less: allowance for loan losses (202,001 ) (179,029 ) (131,837 ) Total nonearning assets 2,499,032 2,455,700 1,896,640 Total assets $ 22,485,951 $ 21,888,365 $ 18,056,980 **Liabilities and Equity:** Interest-bearing deposits Demand and money market $ 9,279,980 $ 44,758 1.93 % $ 9,081,281 $ 44,822 2.00 % $ 7,590,290 $ 42,054 2.22 % Savings 446,151 619 0.56 % 421,240 613 0.59 % 337,807 704 0.84 % Certificates of deposit 3,076,803 26,104 3.40 % 3,097,422 27,073 3.54 % 2,560,313 25,394 3.98 % Total interest-bearing deposits 12,802,934 71,481 2.24 % 12,599,943 72,508 2.33 % 10,488,410 68,152 2.61 % Borrowings 175,152 1,309 2.96 % 272,569 2,199 3.23 % 34,799 (341 ) (3.88 )% Subordinated debt, net 284,404 2,736 3.85 % 284,025 2,750 3.87 % 272,448 2,609 3.83 % Total interest-bearing liabilities 13,262,490 75,526 2.28 % 13,156,537 77,457 2.39 % 10,795,657 70,420 2.62 % Demand deposits 5,693,724 5,463,137 4,685,835 Other noninterest-bearing liabilities 510,177 419,807 387,166 Total liabilities 19,466,391 19,039,481 15,868,658 Shareholders’ equity 3,019,560 2,848,884 2,188,322 Total liabilities and equity $ 22,485,951 $ 21,888,365 $ 18,056,980 Net interest income (tax-equivalent basis) (4) $ 186,387 $ 174,111 $ 138,274 **Reconciliation of Non-GAAP Financial Measures** Tax-equivalent basis adjustment (1,270 ) (1,169 ) (1,061 ) Net interest income (GAAP) $ 185,117 $ 172,942 $ 137,213 Interest rate spread (2)(4) 2.92 % 2.81 % 2.52 % Interest expense as a percent of average earning assets 1.50 % 1.60 % 1.73 % Net interest margin (tax-equivalent basis) (3)(4) 3.70 % 3.60 % 3.40 % Total cost of deposits 1.55 % 1.63 % 1.80 % (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, 2026** **June 30, 2025** **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) $ 15,138,015 $ 426,269 5.68 % $ 11,918,188 $ 323,586 5.48 % Taxable investment securities 2,806,705 50,869 3.62 % 2,538,402 44,662 3.52 % Tax-exempt investment securities 260,373 5,708 4.38 % 174,071 3,663 4.21 % Total securities 3,067,078 56,577 3.69 % 2,712,473 48,325 3.56 % Interest-bearing deposits 1,524,424 25,483 3.37 % 1,122,263 22,042 3.96 % Loans held for sale 172,384 5,153 5.98 % 168,251 5,423 6.45 % Total earning assets 19,901,901 513,482 5.20 % 15,921,175 399,376 5.06 % Less: allowance for loan losses (190,578 ) (128,072 ) Total nonearning assets 2,477,485 1,843,652 Total assets $ 22,188,808 $ 17,636,755 **Liabilities and Equity:** Interest-bearing deposits Demand and money market $ 9,181,179 $ 89,578 1.97 % $ 7,435,687 $ 82,659 2.24 % Savings 433,765 1,232 0.57 % 325,033 1,419 0.88 % Certificates of deposit 3,087,055 53,178 3.47 % 2,550,430 51,207 4.05 % Total interest-bearing deposits 12,701,999 143,988 2.29 % 10,311,150 135,285 2.65 % Borrowings 223,592 3,508 3.12 % 32,217 (642 ) (3.96 )% Subordinated debt, net 284,215 5,486 3.86 % 266,293 4,913 3.69 % Total interest-bearing liabilities 13,209,806 152,982 2.34 % 10,609,660 139,556 2.65 % Demand deposits 5,579,068 4,482,341 Other noninterest-bearing liabilities 465,240 370,508 Total liabilities 19,254,114 15,462,509 Shareholders’ equity 2,934,694 2,174,246 Total liabilities and equity $ 22,188,808 $ 17,636,755 Net interest income (tax-equivalent basis)(4) $ 360,500 $ 259,820 **Reconciliation of Non-GAAP Financial Measures** Tax-equivalent basis adjustment (2,440 ) (2,129 ) Net interest income (GAAP) $ 358,060 $ 257,691 Interest rate spread (2)(4) 2.86 % 2.41 % Interest expense as a percent of average earning assets 1.55 % 1.77 % Net interest margin (tax-equivalent basis) (3)(4) 3.65 % 3.29 % Total cost of deposits 1.59 % 1.84 % (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,** **2026** **2025** **ASSETS** (unaudited) (audited) Cash and due from banks $ 158,770 $ 129,941 Interest-bearing deposits at FRB 1,546,624 1,097,155 Interest-bearing deposits in financial institutions 110,086 123,553 **Total Cash and Cash Equivalents** 1,815,480 1,350,649 Securities available for sale, at fair value (amortized cost of $3,027,130 and $2,784,462, and allowance for credit losses of $1,028 and $1,207 at June 30, 2026 and December 31, 2025, respectively) 2,940,962 2,710,189 Securities held to maturity, at amortized cost (fair value of $124,597 and $154,269 at June 30, 2026 and December 31, 2025, respectively) 126,333 156,697 Less: allowance for credit losses (32 ) (65 ) Securities held to maturity, net of allowance for credit losses 126,301 156,632 Other equity securities 15,907 12,219 FHLB stock 21,550 16,341 **Total Securities** 3,104,720 2,895,381 Mortgage loans held for sale 275,602 154,444 Government guaranteed loans held for sale 33,915 — Loans, net of unearned income and deferred costs 15,169,675 13,335,804 Less: allowance for credit losses on loans (199,918 ) (147,343 ) **Net Loans** 14,969,757 13,188,461 Premises and equipment, net 444,807 430,987 Goodwill 808,644 594,080 Other intangible assets, net 96,765 96,528 BOLI 387,841 337,425 Other assets 679,428 639,386 **TOTAL ASSETS** $ 22,616,959 $ 19,687,341 **LIABILITIES AND EQUITY** Deposits: Noninterest-bearing demand $ 5,842,944 $ 5,073,157 Interest-bearing: Demand and money market accounts 9,468,690 8,390,884 Savings 436,751 332,752 Certificates of deposit 2,965,060 2,712,324 **Total Deposits** 18,713,445 16,509,117 Advances from the FHLB 127,060 52,452 Subordinated debt, net 284,207 283,870 Repurchase agreements and other borrowings 38,971 34,817 **Total Borrowings** 450,238 371,139 Other liabilities 451,756 378,076 **TOTAL LIABILITIES** 19,615,439 17,258,332 Preferred stock, authorized and unissued shares - 2,000,000 — — Common stock, $1.667 par value: 150,000,000 shares authorized; 92,433,645 and 78,964,038 shares issued at June 30, 2026 and December 31, 2025, respectively 154,087 131,633 Capital surplus 1,695,607 1,254,776 Retained earnings 1,206,036 1,087,343 Common stock issued to deferred compensation trust, at cost: 1,137,994 and 1,086,290 shares at June 30, 2026 and December 31, 2025, respectively (24,986 ) (23,293 ) Deferred compensation trust 24,986 23,293 Accumulated other comprehensive income (loss) (61,247 ) (51,685 ) **TOTAL SHAREHOLDERS’ EQUITY** 2,994,483 2,422,067 Noncontrolling interest 7,037 6,942 **TOTAL EQUITY** 3,001,520 2,429,009 **TOTAL LIABILITIES AND EQUITY** $ 22,616,959 $ 19,687,341 **TOWNEBANK** **Consolidated Statements of Income (unaudited)** **(dollars in thousands, except per share data)** **Three Months Ended** **Six Months Ended** **June 30,** **June 30,** **2026** **2025** **2026** **2025** **INTEREST INCOME:** Loans, including fees $ 215,308 $ 169,772 $ 424,820 $ 322,093 Investment securities 28,236 24,850 55,586 47,689 Interest-bearing deposits in financial institutions and federal funds sold 14,023 10,241 25,483 22,042 Mortgage loans held for sale 3,076 2,770 5,153 5,423 **Total interest income** 260,643 207,633 511,042 397,247 **INTEREST EXPENSE:** Deposits 71,481 68,152 143,988 135,285 Advances from the FHLB 1,671 124 4,096 149 Subordinated debt, net 2,736 2,609 5,486 4,913 Repurchase agreements and other borrowings (362 ) (465 ) (588 ) (791 ) **Total interest expense** 75,526 70,420 152,982 139,556 **Net interest income** 185,117 137,213 358,060 257,691 **PROVISION FOR CREDIT LOSSES** 625 6,410 969 8,830 **Net interest income after provision for credit losses** 184,492 130,803 357,091 248,861 **NONINTEREST INCOME:** Residential mortgage banking income, net 12,537 13,561 24,271 23,922 Insurance commissions and related income, net 25,294 25,677 51,328 52,102 Property management income, net — 18,207 12,440 28,759 Service charges on deposit accounts 4,747 3,642 9,389 6,969 Credit card merchant fees, net 2,145 1,794 4,064 3,491 Investment income, net 3,795 3,158 7,515 6,233 BOLI 2,760 1,992 5,779 3,864 Government guaranteed lending income, net 1,994 — 6,195 — Gain on sale of equity investment 198,550 — 198,550 2,000 Other income 7,327 4,849 12,997 8,158 Net gain on investment securities — — 126 — **Total noninterest income** 259,149 72,880 332,654 135,498 **NONINTEREST EXPENSE:** Salaries and employee benefits 88,730 78,362 181,909 153,440 Occupancy 11,793 9,791 23,798 19,124 Furniture and equipment 5,347 4,770 11,246 9,392 Amortization - intangibles 5,866 3,979 12,187 7,005 Software 7,475 6,835 15,873 13,128 Data processing 3,492 4,510 8,423 8,344 Professional fees 3,164 2,539 6,417 5,192 Advertising and marketing 3,210 3,228 8,887 7,701 FDIC and other insurance 4,285 3,032 7,179 5,893 Acquisition related expenses 11,212 18,737 42,897 19,157 Other expenses 45,369 14,882 67,013 32,825 **Total noninterest expense** 189,943 150,665 385,829 281,201 **Income before income tax expense and noncontrolling interest** 253,698 53,018 303,916 103,158 Provision for income tax expense 60,080 11,699 69,197 17,831 **Net Income** 193,618 41,319 234,719 85,327 Net income attributable to noncontrolling interest (432 ) (432 ) (540 ) (727 ) **Net income attributable to TowneBank** $ 193,186 $ 40,887 $ 234,179 $ 84,600 **Per common share information** Basic earnings $ 2.10 $ 0.54 $ 2.56 $ 1.13 Diluted earnings $ 2.09 $ 0.54 $ 2.56 $ 1.12 Cash dividends declared $ 0.98 $ 0.27 $ 1.25 $ 0.52 **TOWNEBANK** **Consolidated Balance Sheets - Five Quarter Trend** **(dollars in thousands, except share data)** **June 30,** **March 31,** **December 31,** **September 30,** **June 30,** **2026** **2026** **2025** **2025** **2025** **ASSETS** (unaudited) (unaudited) (audited) (unaudited) (unaudited) Cash and due from banks $ 158,770 $ 95,472 $ 129,941 $ 152,647 $ 149,462 Interest-bearing deposits at FRB 1,546,624 1,346,573 1,097,155 974,514 838,315 Interest-bearing deposits in financial institutions 110,086 119,922 123,553 122,819 123,911 **Total Cash and Cash Equivalents** 1,815,480 1,561,967 1,350,649 1,249,980 1,111,688 Securities available for sale 2,940,962 2,862,427 2,710,189 2,668,599 2,553,975 Securities held to maturity 126,333 126,527 156,697 176,843 201,932 Less: allowance for credit losses (32 ) (33 ) (65 ) (65 ) (67 ) Securities held to maturity, net of allowance for credit losses 126,301 126,494 156,632 176,778 201,865 Other equity securities 15,907 15,463 12,219 12,420 12,248 FHLB stock 21,550 24,985 16,341 16,341 13,428 **Total Securities** 3,104,720 3,029,369 2,895,381 2,874,138 2,781,516 Mortgage loans held for sale 275,602 171,735 154,444 212,507 238,742 Government guaranteed loans held for sale 33,915 5,498 — — — Loans, net of unearned income and deferred costs 15,169,675 15,261,160 13,335,804 13,379,033 12,359,673 Less: allowance for credit losses (199,918 ) (199,267 ) (147,343 ) (149,175 ) (134,187 ) **Net Loans** 14,969,757 15,061,893 13,188,461 13,229,858 12,225,486 Premises and equipment, net 444,807 438,792 430,987 422,134 392,056 Goodwill 808,644 804,143 594,080 591,691 499,709 Other intangible assets, net 96,765 102,631 96,528 101,875 74,186 BOLI 387,841 385,087 337,425 334,527 295,434 Other assets 679,428 694,197 639,386 657,731 632,382 Assets held for sale — 103,396 — — — **TOTAL ASSETS** $ 22,616,959 $ 22,358,708 $ 19,687,341 $ 19,674,441 $ 18,251,199 **LIABILITIES AND EQUITY** Deposits: Noninterest-bearing demand $ 5,842,944 $ 5,597,395 $ 5,073,157 $ 5,139,488 $ 4,754,340 Interest-bearing: Demand and money market accounts 9,468,690 9,293,443 8,390,884 8,273,987 7,654,317 Savings 436,751 457,028 332,752 331,168 332,108 Certificates of deposit 2,965,060 3,132,406 2,712,324 2,786,292 2,587,951 **Total Deposits** 18,713,445 18,480,272 16,509,117 16,530,935 15,328,716 Advances from the FHLB 127,060 197,257 52,452 52,646 12,838 Subordinated debt, net 284,207 284,236 283,870 283,847 260,430 Repurchase agreements and other borrowings 38,971 30,988 34,817 25,740 20,847 **Total Borrowings** 450,238 512,481 371,139 362,233 294,115 Other liabilities 451,756 414,979 378,076 384,321 402,823 Liabilities held for sale — 52,460 — — — **TOTAL LIABILITIES** 19,615,439 19,460,192 17,258,332 17,277,489 16,025,654 **TOTAL SHAREHOLDERS’ EQUITY** 2,994,483 2,891,688 2,422,067 2,389,448 2,217,948 Noncontrolling interest 7,037 6,828 6,942 7,504 7,597 **TOTAL EQUITY** 3,001,520 2,898,516 2,429,009 2,396,952 2,225,545 **TOTAL LIABILITIES AND EQUITY** $ 22,616,959 $ 22,358,708 $ 19,687,341 $ 19,674,441 $ 18,251,199 **TOWNEBANK** **Consolidated Statements of Income - Five Quarter Trend (unaudited)** **(dollars in thousands, except share data)** **Three Months Ended** **June 30,** **March 31,** **December 31,** **September 30,** **June 30,** **2026** **2026** **2025** **2025** **2025** **INTEREST INCOME:** Loans, including fees $ 215,308 $ 209,512 $ 189,824 $ 179,612 $ 169,772 Investment securities 28,236 27,351 26,226 24,784 24,850 Interest-bearing deposits in financial institutions and federal funds sold 14,023 11,459 11,825 10,597 10,241 Mortgage loans held for sale 3,076 2,077 2,794 3,351 2,770 **Total interest income** 260,643 250,399 230,669 218,344 207,633 **INTEREST EXPENSE:** Deposits 71,481 72,508 68,977 69,143 68,152 Advances from the FHLB 1,671 2,425 532 258 124 Subordinated debt, net 2,736 2,750 2,764 2,461 2,609 Repurchase agreements and other borrowings (362 ) (226 ) (568 ) (470 ) (465 ) **Total interest expense** 75,526 77,457 71,705 71,392 70,420 **Net interest income** 185,117 172,942 158,964 146,952 137,213 **PROVISION FOR CREDIT LOSSES** 625 344 (169 ) 15,276 6,410 **Net interest income after provision for credit losses** 184,492 172,598 159,133 131,676 130,803 **NONINTEREST INCOME:** Residential mortgage banking income, net 12,537 11,734 11,538 13,123 13,561 Insurance commissions and related income, net 25,294 26,034 23,120 25,791 25,677 Property management income, net — 12,440 8,412 20,449 18,207 Service charges on deposit accounts 4,747 4,642 4,638 4,056 3,642 Credit card merchant fees, net 2,145 1,919 1,808 1,909 1,794 Investment income, net 3,795 3,720 3,386 3,699 3,158 BOLI 2,760 3,019 2,898 2,157 1,992 Government guaranteed lending income, net 1,994 4,201 — — — Gain on sale of equity investment 198,550 — — — — Other income 7,327 5,670 5,166 4,456 4,849 Net gain (loss) on investment securities — 126 13 (7 ) — **Total noninterest income** 259,149 73,505 60,979 75,633 72,880 **NONINTEREST EXPENSE:** Salaries and employee benefits 88,730 93,179 85,088 78,964 78,362 Occupancy 11,793 12,005 11,367 9,988 9,791 Furniture and equipment 5,347 5,899 5,315 5,044 4,770 Amortization - intangibles 5,866 6,321 5,347 4,427 3,979 Software 7,475 8,398 6,986 7,518 6,835 Data processing 3,492 4,931 4,236 4,630 4,510 Professional fees 3,164 3,253 2,931 2,999 2,539 Advertising and marketing 3,210 5,677 3,668 3,759 3,228 Other expenses 60,866 56,223 41,688 36,409 36,651 **Total noninterest expense** 189,943 195,886 166,626 153,738 150,665 **Income before income tax expense and noncontrolling interest** 253,698 50,217 53,486 53,571 53,018 Provision for income tax expense 60,080 9,116 12,636 8,959 11,699 **Net Income** 193,618 41,101 40,850 44,612 41,319 Net income attributable to noncontrolling interest (432 ) (108 ) (220 ) (317 ) (432 ) **Net income attributable to TowneBank** $ 193,186 $ 40,993 $ 40,630 $ 44,295 $ 40,887 **Per common share information** Basic earnings $ 2.10 $ 0.45 $ 0.52 $ 0.58 $ 0.54 Diluted earnings $ 2.09 $ 0.45 $ 0.51 $ 0.58 $ 0.54 Basic weighted average shares outstanding 92,165,341 90,433,283 78,805,687 76,417,605 75,240,678 Diluted weighted average shares outstanding 92,463,558 90,775,117 79,109,745 76,763,640 75,540,822 Cash dividends declared $ 0.98 $ 0.27 $ 0.27 $ 0.27 $ 0.27 **TOWNEBANK** **Banking Segment Financial Information (unaudited)** **(dollars in thousands)** **Three Months Ended** **Six Months Ended** **Increase/(Decrease)** **June 30,** **March 31,** **June 30,** **YTD 2026 over 2025** **2026** **2025** **2026** **2026** **2025** **Amount** **Percent** Revenue Net interest income $ 183,847 $ 136,325 $ 171,988 $ 355,837 $ 255,909 $ 99,928 39.05 % Service charges on deposit accounts 4,747 3,642 4,642 9,389 6,969 2,420 34.73 % Credit card merchant fees 2,145 1,794 1,919 4,064 3,491 573 16.41 % Investment income, net 3,795 3,158 3,720 7,515 6,233 1,282 20.57 % Government guaranteed lending income, net 1,994 — 4,201 6,195 — 6,195 N/M Gain on sale of equity investment 198,550 — — 198,550 2,000 196,550 N/M Other income 8,334 5,750 7,393 15,727 10,244 5,483 53.52 % Subtotal 219,565 14,344 21,875 241,440 28,937 212,503 734.36 % Net gain/(loss) on investment securities — — 126 126 — 126 N/M Total noninterest income 219,565 14,344 22,001 241,566 28,937 212,629 734.80 % Total revenue 403,412 150,669 193,989 597,403 284,846 312,557 109.73 % Provision for credit losses 688 6,212 505 1,194 8,579 (7,385 ) (86.08 )% Expenses Salaries and employee benefits 67,192 52,850 66,135 133,327 102,534 30,793 30.03 % Occupancy 10,073 7,342 9,731 19,804 14,321 5,483 38.29 % Furniture and equipment 5,064 4,081 5,214 10,277 7,889 2,388 30.27 % Amortization of intangible assets 4,603 1,969 4,554 9,157 2,951 6,206 210.30 % Software 5,898 4,427 5,914 11,813 8,449 3,364 39.82 % Data processing 3,196 2,840 3,805 7,000 5,448 1,552 28.49 % Accounting and professional fees 2,727 1,934 2,764 5,491 3,944 1,547 39.22 % Advertising and marketing 2,636 1,883 4,236 6,872 4,780 2,092 43.77 % FDIC and other insurance 3,964 2,676 2,487 6,451 5,267 1,184 22.48 % Acquisition related 11,212 17,256 31,683 42,895 17,676 25,219 142.67 % Other expenses 41,916 11,276 18,150 60,066 23,246 36,820 158.39 % Total expenses 158,481 108,534 154,673 313,153 196,505 116,648 59.36 % Income before income tax, corporate allocation and noncontrolling interest 244,243 35,923 38,811 283,056 79,762 203,294 254.88 % Corporate allocation 1,136 1,535 1,431 2,567 2,931 (364 ) (12.42 )% Income before income tax provision and noncontrolling interest 245,379 37,458 40,242 285,623 82,693 202,930 245.40 % Provision for income tax expense 58,021 7,814 6,537 64,560 12,495 52,065 416.69 % Net income 187,358 29,644 33,705 221,063 70,198 150,865 214.91 % Noncontrolling interest (127 ) (124 ) 11 (116 ) (82 ) (34 ) 41.46 % Net income attributable to TowneBank $ 187,231 $ 29,520 $ 33,716 $ 220,947 $ 70,116 $ 150,831 215.12 % Efficiency ratio(non-GAAP) 38.14 % 70.73 % 77.44 % 50.90 % 67.95 % (17.05 )% (25.09 )% Efficiency ratio excluding gain on equity investment(non-GAAP) 75.11 % 70.73 % 77.44 % 76.24 % 68.43 % 7.81 % 11.41 % **TOWNEBANK** **Mortgage Segment Financial Information (unaudited)** **(dollars in thousands)** **Three Months Ended** **Six Months Ended** **Increase/(Decrease)** **June 30,** **March 31,** **June 30,** **YTD 2026 over 2025** **2026** **2025** **2026** **2026** **2025** **Amount** **Percent** Revenue Residential mortgage brokerage income, net $ 13,392 $ 14,083 $ 12,498 $ 25,890 $ 24,664 $ 1,226 4.97 % Income from unconsolidated subsidiary 119 83 34 152 125 27 21.60 % Net interest and other income 1,484 1,095 1,170 2,653 2,205 448 20.32 % Total revenue 14,995 15,261 13,702 28,695 26,994 1,701 6.30 % Provision for credit losses (63 ) 198 (161 ) (225 ) 251 (476 ) (189.64 )% Expenses Salaries and employee benefits 8,011 7,315 7,945 15,956 14,346 1,610 11.22 % Occupancy 950 1,098 866 1,815 2,036 (221 ) (10.85 )% Furniture and equipment 140 151 176 316 346 (30 ) (8.67 )% Software 754 790 786 1,540 1,517 23 1.52 % Data processing 169 198 144 314 360 (46 ) (12.78 )% Accounting and professional fees 166 157 133 298 383 (85 ) (22.19 )% Advertising and marketing 352 420 418 769 809 (40 ) (4.94 )% FDIC and other insurance 163 117 149 312 213 99 46.48 % Acquisition related — 1,481 — — 1,481 (1,481 ) 100.00 % Other expenses 2,700 2,728 2,330 5,031 5,191 (160 ) (3.08 )% Total expenses 13,405 14,455 12,947 26,351 26,682 (331 ) (1.24 )% Income before income tax, corporate allocation and noncontrolling interest 1,653 608 916 2,569 61 2,508 4,111.48 % Corporate allocation (531 ) (519 ) (416 ) (947 ) (869 ) (78 ) 8.98 % Income before income tax provision and noncontrolling interest 1,122 89 500 1,622 (808 ) 2,430 (300.74 )% Provision for income tax expense 226 (41 ) 87 312 (281 ) 593 (211.03 )% Net income 896 130 413 1,310 (527 ) 1,837 (348.58 )% Noncontrolling interest (305 ) (308 ) (119 ) (424 ) (425 ) 1 0.24 % Net income attributable to TowneBank $ 591 $ (178 ) $ 294 $ 886 $ (952 ) $ 1,838 (193.07 )% Efficiency ratio excluding gain on equity investment(non-GAAP) 89.40 % 94.72 % 94.49 % 91.83 % 98.84 % (7.01 )% (7.09 )% **TOWNEBANK** **Insurance Segment Financial Information (unaudited)** **(dollars in thousands)** **Three Months Ended** **Six Months Ended** **Increase/(Decrease)** **June 30,** **March 31,** **June 30,** **YTD 2026 over 2025** **2026** **2025** **2026** **2026** **2025** **Amount** **Percent** Commission and fee income Property and casualty $ 23,068 $ 23,306 $ 22,450 $ 45,519 $ 46,629 $ (1,110 ) (2.38 )% Employee benefits 4,940 4,596 4,876 9,815 9,320 495 5.31 % Total commissions and fees 28,008 27,902 27,326 55,334 55,949 (615 ) (1.10 )% Contingency and bonus revenue 2,828 3,034 3,730 6,559 6,654 (95 ) (1.43 )% Other income 5 4 12 17 8 9 112.50 % Total revenue 30,841 30,940 31,068 61,910 62,611 (701 ) (1.12 )% Employee commission expense 4,982 5,008 4,753 9,735 10,058 (323 ) (3.21 )% Revenue, net of commission expense 25,859 25,932 26,315 52,175 52,553 (378 ) (0.72 )% Salaries and employee benefits 13,527 12,947 14,018 27,545 25,862 1,683 6.51 % Occupancy 770 777 781 1,552 1,578 (26 ) (1.65 )% Furniture and equipment 143 153 174 318 366 (48 ) (13.11 )% Amortization of intangible assets 1,263 1,373 1,342 2,605 2,781 (176 ) (6.33 )% Software 823 741 850 1,672 1,426 246 17.25 % Data processing 127 133 105 231 253 (22 ) (8.70 )% Accounting and professional fees 271 212 246 518 503 15 2.98 % Advertising and marketing 222 175 202 425 471 (46 ) (9.77 )% FDIC and other insurance 158 126 140 298 233 65 27.90 % Other expenses 753 451 675 1,427 1,348 79 5.86 % Total operating expenses 18,057 17,088 18,533 36,591 34,821 1,770 5.08 % Income before income tax, corporate allocation and noncontrolling interest 7,802 8,844 7,782 15,584 17,732 (2,148 ) (12.11 )% Corporate allocation (605 ) (700 ) (725 ) (1,330 ) (1,426 ) 96 6.73 % Income before income tax provision and noncontrolling interest 7,197 8,144 7,057 14,254 16,306 (2,052 ) (12.58 )% Provision for income tax expense 1,833 2,098 1,811 3,644 4,229 (585 ) (13.83 )% Net income 5,364 6,046 5,246 10,610 12,077 (1,467 ) (12.15 )% Noncontrolling interest — — — — — — — % Net income attributable to TowneBank $ 5,364 $ 6,046 $ 5,246 $ 10,610 $ 12,077 $ (1,467 ) (12.15 )% Provision for income taxes 1,833 2,098 1,811 3,644 4,229 (585 ) (13.83 )% Depreciation, amortization and interest expense 1,342 1,489 1,429 2,771 3,016 (245 ) (8.12 )% EBITDA(non-GAAP) $ 8,539 $ 9,633 $ 8,486 $ 17,025 $ 19,322 $ (2,297 ) (11.89 )% Efficiency ratio(non-GAAP) 64.94 % 60.60 % 65.33 % 65.14 % 60.97 % 4.17 % 6.84 % **TOWNEBANK** **Resort Property Management Segment Financial Information (unaudited)** **(dollars in thousands)** **Three Months Ended** **Six Months Ended** **Increase/(Decrease)** **June 30,** **March 31,** **June 30,** **YTD 2026 over 2025** **2026 (1)** **2025** **2026** **2026** **2025** **Amount** **Percent** Revenue Property management fees, net $ — $ 18,207 $ 12,440 12,440 28,759 (16,319 ) (56.74 )% Net interest and other income — 24 1 1 37 (36 ) (97.30 )% Total revenue — 18,231 12,441 12,441 28,796 (16,355 ) (56.80 )% Expenses Salaries and employee benefits — 5,250 5,081 5,081 10,698 (5,617 ) (52.51 )% Occupancy — 574 627 627 1,189 (562 ) (47.27 )% Furniture and equipment — 385 335 335 791 (456 ) (57.65 )% Amortization of intangible assets — 637 425 425 1,273 (848 ) (66.61 )% Software — 877 848 848 1,736 (888 ) (51.15 )% Data processing — 1,339 878 878 2,283 (1,405 ) (61.54 )% Accounting and professional fees — 236 110 110 362 (252 ) (69.61 )% Advertising and marketing — 750 821 821 1,641 (820 ) (49.97 )% FDIC and other insurance — 113 118 118 180 (62 ) (34.44 )% Acquisition related — — 2 2 — 2 N/M Other expenses — 427 489 489 3,040 (2,551 ) (83.91 )% Total expenses — 10,588 9,734 9,734 23,193 (13,459 ) (58.03 )% Income before income tax, corporate allocation and noncontrolling interest — 7,643 2,707 2,707 5,603 (2,896 ) (51.69 )% Corporate allocation — (316 ) (290 ) (290 ) (636 ) 346 54.40 % Income before income tax provision and noncontrolling interest — 7,327 2,417 2,417 4,967 (2,550 ) (51.34 )% Provision for income tax expense — 1,828 681 681 1,388 (707 ) (50.94 )% Net income — 5,499 1,736 1,736 3,579 (1,843 ) (51.49 )% Noncontrolling interest — — — — (220 ) 220 100.00 % Net income attributable to TowneBank $ — $ 5,499 $ 1,736 $ 1,736 $ 3,359 $ (1,623 ) (48.32 )% Efficiency ratio excluding gain on equity investment(non-GAAP) N/M 54.58 % 74.83 % 74.83 % 76.12 % (1.29 )% (1.69 )% (1) The Resort Property Management segment was sold on April 3, 2026. There is no operating income to report in the quarter ended June 30, 2026. **TOWNEBANK** **Reconciliation of Non-GAAP Financial Measures** **(dollars in thousands)** **Three Months Ended** **Six Months Ended** **June 30,** **June 30,** **March 31,** **June 30,** **June 30,** **2026** **2025** **2026** **2026** **2025** Return on average assets (GAAP) 3.45 % 0.91 % 0.76 % 2.13 % 0.97 % Impact of excluding average goodwill and other intangibles and amortization 0.23 % 0.10 % 0.13 % 0.18 % 0.09 % Return on average tangible assets (non-GAAP) 3.68 % 1.01 % 0.89 % 2.31 % 1.06 % Return on average equity (GAAP) 25.66 % 7.52 % 5.84 % 16.09 % 7.86 % Impact of excluding average goodwill and other intangibles and amortization 11.97 % 3.42 % 3.71 % 8.12 % 3.30 % Return on average tangible equity (non-GAAP) 37.63 % 10.94 % 9.55 % 24.21 % 11.16 % Return on average common equity (GAAP) 25.72 % 7.54 % 5.85 % 16.13 % 7.90 % Impact of excluding average goodwill and other intangibles and amortization 12.04 % 3.45 % 3.73 % 8.16 % 3.35 % Return on average tangible common equity (non-GAAP) 37.76 % 10.99 % 9.58 % 24.29 % 11.25 % Book value (GAAP) $ 32.40 $ 29.41 $ 31.31 $ 32.40 $ 29.41 Impact of excluding average goodwill and other intangibles and amortization (9.80 ) (7.61 ) (9.82 ) (9.80 ) (7.61 ) Tangible book value (non-GAAP) $ 22.60 $ 21.80 $ 21.49 $ 22.60 $ 21.80 Efficiency ratio (GAAP) 42.75 % 71.71 % 79.48 % 55.86 % 71.52 % Impact of exclusions 32.16 % (1.89 )% (2.52 )% 20.08 % (1.43 )% Efficiency ratio (non-GAAP) 74.91 % 69.82 % 76.96 % 75.94 % 70.09 % Average assets (GAAP) $ 22,485,951 $ 18,056,980 $ 21,888,365 $ 22,188,808 $ 17,636,755 Less: average goodwill and intangible assets 911,261 567,250 896,106 903,725 542,095 Average tangible assets (non-GAAP) $ 21,574,690 $ 17,489,730 $ 20,992,259 $ 21,285,083 $ 17,094,660 Average equity (GAAP) $ 3,019,560 $ 2,188,322 $ 2,848,884 $ 2,934,694 $ 2,174,246 Less: average goodwill and intangible assets 911,261 567,250 896,106 903,725 542,095 Average tangible equity (non-GAAP) $ 2,108,299 $ 1,621,072 $ 1,952,778 $ 2,030,969 $ 1,632,151 Average common equity (GAAP) $ 3,012,709 $ 2,180,687 $ 2,842,105 $ 2,927,879 $ 2,162,348 Less: average goodwill and intangible assets 911,261 567,250 896,106 903,725 542,095 Average tangible common equity (non-GAAP) $ 2,101,448 $ 1,613,437 $ 1,945,999 $ 2,024,154 $ 1,620,253 Net income (GAAP) $ 193,186 $ 40,887 $ 40,993 $ 234,179 $ 84,600 Amortization of intangibles, net of tax 4,634 3,143 4,994 9,628 5,534 Tangible net income (non-GAAP) $ 197,820 $ 44,030 $ 45,987 $ 243,807 $ 90,134 Total revenue (GAAP) $ 444,266 $ 210,093 $ 246,447 $ 690,714 $ 393,189 Net (gain)/loss on investment securities/equity investments (198,550 ) — (126 ) (198,676 ) (2,000 ) Total revenue for efficiency calculation (non-GAAP) $ 245,716 $ 210,093 $ 246,321 $ 492,038 $ 391,189 Noninterest expense (GAAP) $ 189,943 $ 150,665 $ 195,886 $ 385,829 $ 281,201 Less: amortization of intangibles 5,866 3,979 6,321 12,187 7,005 Noninterest expense net of amortization (non-GAAP) $ 184,077 $ 146,686 $ 189,565 $ 373,642 $ 274,196 **TOWNEBANK** **Reconciliation of Non-GAAP Financial Measures** **(dollars in thousands, except per share data)** **Reconciliation of GAAP Earnings to Operating Earnings Excluding Certain Items Affecting Comparability** **Three Months Ended** **June 30,** **March 31,** **December 31,** **September 30,** **June 30,** **2026** **2026** **2025** **2025** **2025** Net income available to common shareholders (GAAP) $ 193,186 $ 40,993 $ 40,630 $ 44,295 $ 40,887 Adjustments Plus: Acquisition-related expenses, net of tax 8,983 25,736 14,659 14,996 15,291 Plus: Special contribution, net of tax 19,750 — — — — Plus: Initial provision for acquired loans, net of tax — — — 9,478 4,926 Plus: Resort Property Management deferred tax adjustment for repurchase of noncontrolling interests — — — — 2,286 Less: Gain on sale of equity investments, net of noncontrolling interest and tax (149,905 ) — — — — Total adjustments, net of taxes (121,172 ) 25,736 14,659 24,474 22,503 Core operating earnings, excluding certain items affecting comparability (non-GAAP) $ 72,014 $ 66,729 $ 55,289 $ 68,769 $ 63,390 Annualized interest impact of Series IV Notes, net of tax 41 42 42 42 42 Core net income for diluted EPS (non-GAAP) $ 72,055 $ 66,771 $ 55,331 $ 68,811 $ 63,432 Weighted average diluted shares 92,463,558 90,775,117 79,109,745 76,763,640 75,540,822 Diluted EPS (GAAP) $ 2.09 $ 0.45 $ 0.51 $ 0.58 $ 0.54 Diluted EPS, excluding certain items affecting comparability (non-GAAP) $ 0.78 $ 0.74 $ 0.70 $ 0.90 $ 0.84 Average assets $ 22,485,951 $ 21,888,365 $ 19,707,366 $ 18,624,097 $ 18,056,980 Average tangible equity $ 2,108,299 $ 1,952,778 $ 1,724,687 $ 1,668,148 $ 1,621,072 Average tangible common equity $ 2,101,448 $ 1,945,999 $ 1,717,982 $ 1,660,673 $ 1,613,437 Return on average assets, excluding certain items affecting comparability (non-GAAP) 1.28 % 1.24 % 1.11 % 1.46 % 1.41 % Return on average tangible equity, excluding certain items affecting comparability (non-GAAP) 14.58 % 14.90 % 13.69 % 17.23 % 16.53 % Return on average common equity, excluding certain items affecting comparability (non-GAAP) 9.59 % 9.52 % 9.10 % 12.03 % 11.69 % Return on average common tangible equity, excluding certain items affecting comparability (non-GAAP) 14.63 % 14.95 % 13.74 % 17.31 % 16.61 % Efficiency ratio, excluding certain items affecting comparability (non-GAAP) 62.56 % 66.66 % 67.50 % 61.06 % 62.79 % **TOWNEBANK** **Reconciliation of Non-GAAP Financial Measures** **(dollars in thousands, except per share data)** **Reconciliation of GAAP Earnings to Operating Earnings Excluding Certain Items Affecting Comparability** **Six Months Ended** **June 30,** **June 30,** **2026** **2025** Net income available to common shareholders (GAAP) $ 234,179 $ 84,600 Adjustments Plus: Acquisition-related expenses, net of tax 34,719 15,680 Plus: Special contribution, net of tax 19,750 — Plus: Initial provision for acquired loans, net of tax — 4,926 Plus: Resort Property Management deferred tax adjustment for repurchase of noncontrolling interests — 2,286 Less: Gain on sale of equity investments, net of noncontrolling interest and tax (149,905 ) — Total adjustments, net of taxes (95,436 ) 22,892 Core operating earnings, excluding certain items affecting comparability (non-GAAP) $ 138,743 $ 107,492 Annualized interest impact of Series IV Notes, net of tax 83 84 Core net income for diluted EPS (non-GAAP) $ 138,826 $ 107,576 Weighted average diluted shares 91,616,241 75,535,484 Diluted EPS (GAAP) $ 2.56 $ 1.12 Diluted EPS, excluding certain items affecting comparability (non-GAAP) $ 1.52 $ 1.42 Average assets $ 22,188,808 $ 17,636,755 Average tangible equity $ 2,030,969 $ 1,632,151 Average tangible common equity $ 2,024,154 $ 1,620,253 Return on average assets, excluding certain items affecting comparability (non-GAAP) 1.26 % 1.23 % Return on average tangible equity, excluding certain items affecting comparability (non-GAAP) 14.73 % 14.00 % Return on average common equity, excluding certain items affecting comparability (non-GAAP) 9.56 % 10.04 % Return on average common tangible equity, excluding certain items affecting comparability (non-GAAP) 14.78 % 14.10 % Efficiency ratio, excluding certain items affecting comparability (non-GAAP) 64.62 % 66.99 % ### Related Stocks - [TOWN.US](https://longbridge.com/en/quote/TOWN.US.md) ## Related News & Research - [TOWN: Q2-26 net income soared on a major one-time gain, with strong core growth and capital metrics](https://longbridge.com/en/news/293542457.md) - [Linde's Q2 2026 Earnings: What to Expect](https://longbridge.com/en/news/293494879.md) - [The Cooper Companies’ Q2 2026 Earnings: What to Expect](https://longbridge.com/en/news/293747625.md) - [Solventum’s Q2 2026 Earnings: What to Expect](https://longbridge.com/en/news/293459582.md) - [What to Expect From Booking Holdings’ Q2 2026 Earnings 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