TowneBank Reports Second Quarter 2026 Earnings Accessibility: Skip TopNav Consumer Products and Services News
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News Telecom Services News More Browse the Latest News TowneBank Reports Second Quarter 2026 Earnings July 22, 2026
21:18 ET | Source: TowneBank TowneBank 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. Quarterly 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, 757-638-6780William I. Foster III, President and Chief Executive
Officer, 757-417-6482 Investor contact:William B. Littreal, Chief Financial Officer, 757-638-6813 TOWNEBANKSelected
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 2025Income 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 6.16x 6.08x 12.57x 19.38x 16.81x 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. TOWNEBANKSelected Data (unaudited)(dollars in thousands) Investment
Securities % Change Q2 Q2 Q1 Q2 26 vs. Q2 26 vs.Available-for-sale securities, at fair
value2026 2025 2026 Q2 25 Q1 26U.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% % ChangeLoans Held For
InvestmentQ2 Q2 Q1 Q2 26 vs. Q2 26 vs.Community Banking: 2026 2025 2026 Q2 25 Q1 26CRE - 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/MTotal
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)%
TOWNEBANKSelected Data (unaudited)(dollars in thousands) %
ChangeDepositsQ2 Q2 Q1 Q2 26 vs. Q2 26 vs. 2026 2025 2026 Q2 25 Q1 26Noninterest-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 $75,555Loans held for sale 40,596 36,981 — 3,615Loans
held for investment 3,438,268 1,905,599 956,429 576,240Core deposit
intangibles 82,900 30,490 31,390 21,020Total
assets 4,492,136 2,343,049 1,403,159 745,928Noninterest-bearing demand
deposits 1,089,093 544,484 306,066 238,543Interest-bearing
deposits 2,690,894 1,387,029 904,915 398,950Total
deposits 3,779,987 1,931,513 1,210,981 637,493Advances from the
FHLB 205,000 155,000 40,000 10,000Subordinated debt, net 39,693 — 25,274 14,419Total
liabilities 4,071,303 2,118,357 1,284,531 668,415 Goodwill $368,990 $233,269 $92,729 $42,992Initial
allowance for credit losses on loans held for investment 65,406 59,492 4,223 1,691Initial 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.
TOWNEBANKAverage 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 incomeand 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. TOWNEBANKAverage 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. TOWNEBANKConsolidated 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 TOWNEBANKConsolidated 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 TOWNEBANKConsolidated 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
TOWNEBANKConsolidated 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 TOWNEBANKBanking
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 PercentRevenue 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/MGain on sale of equity
investment 198,550 — — 198,550 2,000 196,550 N/MOther
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/MTotal 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%
TOWNEBANKMortgage 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 PercentRevenue 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)%
TOWNEBANKInsurance 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 PercentCommission 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 $(2,297) (11.89)% Efficiency
ratio(non-GAAP) 64.94% 60.60% 65.33% 65.14% 60.97% 4.17% 6.84% TOWNEBANKResort Property Management
Segment Financial Information (unaudited)(dollars in thousands) Three Months Ended Six Months
Ended Increase/(Decrease) June 30, March 31, June 30, YTD 2026 over 2025 2026
(1) 2025 2026 2026 2025 Amount PercentRevenue Property management fees,
net$— $18,207 $12,440 12,440 28,759 (16,319) (56.74)%Net interest and other
income — 24 1 1 37