TowneBank Reports Second Quarter 2026 Earnings

TowneBank (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 seco...