# TowneBank: AI strategy

Source: https://www.bankingnewsai.com/banks/townebank
Last updated: Oct 13, 2026

*A relationship bank that completed three acquisitions between April 2025 and January 2026, hired WesBanco's former CIO to run technology, runs member service on Talkdesk's AI contact-centre platform and analytics on SAS, has Microsoft Copilot on bankers' computers but is still working on getting them to use it, and gives AI a stand-alone risk factor in its 10-K.*

## How is TowneBank using AI?

TowneBank, the Hampton Roads bank with about $22 billion of assets after acquiring Village Bank, Old Point Financial ($203 million, 2025) and Dogwood State Bank ($476 million in stock, completed 12 January 2026), has disclosed little about AI beyond its annual report. Its 2025 10-K, filed with the FDIC in February 2026, devotes a stand-alone risk factor to AI: the bank or its vendors 'may develop or incorporate AI technology in certain business processes, services, or products', generative models 'may produce output or take action that is incorrect' or biased, and the bank 'may rely on AI models developed by third parties' over which it 'may have limited visibility'. In operations the visible AI is vendor-supplied: TowneBank runs member service on Talkdesk's cloud contact-centre platform, starting with Talkdesk Copilot and Interaction & Quality Analytics, for which Talkdesk reports a 23-second reduction in average handle time and a 97% satisfaction rate (the vendor's figures), and it has built credit-loss modelling and member analytics on SAS, whose executive calls it 'AI-driven'. Bankers also have Microsoft Copilot on their computers, though many rarely use it; Triad president Scott Baker said 'we have this resource sitting right there, and we don't always go grab it', and a UNC Greensboro MBA capstone team, reported in June 2026, gave the bank a prompt manual and a training plan for safe use. Denys Diaz, chief information officer in 2025, said that 'there's nothing AI can't fix or help with'. Technology leadership changed in February 2026 when Varun Chandhok, formerly chief information officer of WesBanco Bank and a 22-year M&T Bank technology executive, became senior executive vice president and CIO, charged by chief operating officer Lee Clark with expanding 'our technology capabilities so we can continue providing exquisite service to our members'. A vendor, Marquis Software Solutions, suffered a data incident in 2025 that involved some TowneBank member information held in Marquis's environment, disclosed in a December 2025 8-K. The second quarter of 2026 was transformed by the sale of the Towne Vacations resort-management business for a gain of about $198.6 million, lifting reported earnings to $193.2 million, or $2.09 per share, against core earnings of $72.0 million, or $0.78, and funding a $25 million foundation gift and a $0.70 special dividend; deposits reached $18.71 billion and the Carolinas expansion added bankers and treasury officers. Executive chairman Robert Aston and president and CEO William Foster III run what they call the 'Main Street Banking model'. TowneBank is a Virginia state nonmember bank supervised by the FDIC, with which it files its 10-K and 10-Qs; no AI leader, model inventory or AI budget has been disclosed.

## At a glance

| Field | Value |
| --- | --- |
| Lead bank | TowneBank |
| Ticker | TOWN |
| Headquarters | Portsmouth, VA |
| Consolidated assets | $22,359 million |
| Federal Reserve rank | 86 |
| Charter | Virginia state nonmember bank (FDIC) |

## What AI partnerships and patents does TowneBank have?

TowneBank's AI relationships are vendor products: Talkdesk for member-service agent assist and interaction analytics, Microsoft Copilot on bankers' computers, and SAS cloud analytics for credit-loss modelling. No frontier-model lab, cloud AI agreement or standards-body membership is public. A search of Google Patents found no granted patents or published applications assigned to TowneBank, Towne Bank or Towne Mortgage Company. ([Talkdesk](https://www.talkdesk.com/customers/townebank/), [UNC Greensboro Bryan School of Business and Economics](https://bryan.uncg.edu/bryan-school-students-bring-fresh-perspective-to-townebanks-ai-strategy/), [SAS (PR Newswire)](https://www.prnewswire.com/news-releases/banking-on-cloud-townebank-primes-for-continued-growth-with-sas-302153251.html))

| Item | What it is | Status | Date | Sources |
| --- | --- | --- | --- | --- |
| Talkdesk | Cloud contact centre with Talkdesk Copilot and Interaction & Quality Analytics for member service | In production | 2025-09-25 | [Talkdesk](https://www.talkdesk.com/customers/townebank/), [Talkdesk](https://www.talkdesk.com/blog/talkdesk-cx-innovators-awards-meet-winners/) |
| Microsoft Copilot | Assistant installed on bankers' computers; prompt manual and training plan proposed | Pilot | 2026-06-22 | [UNC Greensboro Bryan School of Business and Economics](https://bryan.uncg.edu/bryan-school-students-bring-fresh-perspective-to-townebanks-ai-strategy/) |
| SAS | Cloud credit-loss (CECL) framework and member analytics | In production | 2024-05-22 | [SAS (PR Newswire)](https://www.prnewswire.com/news-releases/banking-on-cloud-townebank-primes-for-continued-growth-with-sas-302153251.html) |

## Flagship platform: Technology organisation under CIO Varun Chandhok; Talkdesk contact centre, SAS analytics and Microsoft Copilot

In February 2026 TowneBank announced Varun Chandhok as senior executive vice president and chief information officer, previously CIO of WesBanco Bank and chief information and operations officer of Premier Bank after a 22-year career in business-line CIO roles at M&T Bank, with a mandate to 'further advance our technology strategy' and 'expand our technology capabilities'; the 10-K dates his tenure from January 2026. Denys Diaz, CIO in 2025, said TowneBank had partnered with Talkdesk, whose cloud contact-centre platform 'is facilitating a more accommodating style of member service', and that 'there's nothing AI can't fix or help with'. Talkdesk says TowneBank began with AI tools that enhance rather than replace people, Talkdesk Copilot and Interaction & Quality Analytics, and reports, as the vendor's own figures, a 23-second cut in average handle time and a 97% satisfaction rate; it cites TowneBank among financial organisations 'scaling customer engagement with automation'. Microsoft Copilot is installed on bankers' computers, but many rarely use it: Triad president Scott Baker asked a UNC Greensboro MBA capstone team for recommendations, and in June 2026 the team delivered a prompt manual and a training plan for using Copilot safely within the bank's private network. Credit-loss (CECL) modelling and member analytics run on SAS in the cloud, with 15 years of data in a SAS warehouse. Customer-facing AI content covers voice cloning and deepfake scams. No AI leader, model inventory or AI budget has been disclosed. ([TowneBank](https://townebank.com/about-towne/news-room/2026/varunchandhok), [TowneBank (from The CEO Magazine)](https://www.townebank.com/about-towne/news-room/2025/information-superhighway-denys-diaz/), [Talkdesk](https://www.talkdesk.com/customers/townebank/), [Talkdesk](https://www.talkdesk.com/blog/talkdesk-cx-innovators-awards-meet-winners/), [Talkdesk (GlobeNewswire)](https://globenewswire.com/news-release/2026/08/18/3346962/0/en/talkdesk-transforms-the-bank-branch-into-an-ai-powered-advisory-hub.html), [SAS (PR Newswire)](https://www.prnewswire.com/news-releases/banking-on-cloud-townebank-primes-for-continued-growth-with-sas-302153251.html), [UNC Greensboro Bryan School of Business and Economics](https://bryan.uncg.edu/bryan-school-students-bring-fresh-perspective-to-townebanks-ai-strategy/), [TowneBank (FDIC filings)](https://securitiesfilings.fdicconnect.fdic.gov/api/instflng/11869/attachment/1), [TowneBank](https://townebank.com/personal/resource/security/fraud/ai-scams))

## Key points

- 2025 10-K (filed with the FDIC): a stand-alone AI risk factor covering evolving AI law, incorrect or biased generative-AI output, model opacity and reliance on third-party models.
- Vendor AI in operations: Talkdesk contact centre with Talkdesk Copilot and Interaction & Quality Analytics (vendor-reported: 23-second cut in average handle time, 97% satisfaction rate) and SAS cloud analytics for CECL and member analytics.
- Microsoft Copilot sits on bankers' computers but is under-used; a UNC Greensboro MBA capstone (June 2026) produced a prompt manual and a training plan for safe use.
- New CIO Varun Chandhok (February 2026), ex-WesBanco CIO and M&T Bank technology executive, tasked with expanding technology capabilities.
- Three acquisitions completed between April 2025 and January 2026 (Village, Old Point, Dogwood State Bank) added about $3.5 billion of loans, $3.8 billion of deposits and a Carolinas footprint.
- Q2 2026 reported earnings $193.2 million ($2.09) on a $198.6 million gain from selling Towne Vacations; core earnings $72.0 million ($0.78); deposits $18.71 billion.
- Customer AI content covers voice cloning and deepfake scams (May 2026).
- No AI leader, model inventory or AI budget disclosed; former CIO Denys Diaz (2025): 'there's nothing AI can't fix or help with'.
- Filings: the 2025 10-K mentions AI in its summary risk list, in the cyber risk factor ('the proliferation of artificial intelligence') and in the stand-alone AI risk factor; the first-quarter and second-quarter 2026 10-Qs contain no reference to AI.
- Governance: the board's Enterprise Risk Management Committee, chaired by an independent director, oversees the cybersecurity programme run by a chief information security officer (unnamed); the bank carries cyber insurance through its corporate programme (2026 proxy).
- Chandhok's 10-K record: CIO at WesBanco March to December 2025, chief information and operations officer at Premier Financial 2021 to 2025, divisional CIO and chief architect at M&T 2017 to 2021; chief risk officer Ernest Piccioli came from Truist/BB&T in 2023.
- Technology workload is acquisition integration: Dogwood's core systems convert in November 2026, the $154 million blueharbor bank deal (announced 6 October 2026) is due to close in the first quarter of 2027, and the executive chairman's incentive of up to $2.5 million is tied to converting and integrating the acquired banks.
- Director Sachin Shetty, an Old Dominion University professor whose research spans network security and machine learning, joined the board in 2024 and is cited in the proxy for cybersecurity and data-privacy expertise.
- No patents or published applications turned up under the assignee names TowneBank, Towne Bank or Towne Mortgage Company in Google Patents; the bank had 2,976 full-time equivalent employees at 31 December 2025.
- Vendor cyber incident: a 2025 breach at Marquis Software Solutions involved some member data held by the vendor; no misuse identified (8-K, December 2025).

## Timeline

- Oct 6, 2026 — **blueharbor bank acquisition announced** About $154 million, 75% in stock; $628 million of assets; expected to close in the first quarter of 2027, adding a fourth Carolinas conversion to the integration queue. ([Banking Dive](https://bankingdive.com/news/townebank-blueharbor-deal-north-carolina-bank-acquisition-targets/832513), [Yahoo Finance](https://finance.yahoo.com/markets/stocks/articles/townebank-agrees-acquire-blueharbor-bank-145031180.html))
- Aug 18, 2026 — **Talkdesk cites TowneBank as an automation reference** Talkdesk's bank-branch launch points to TowneBank and Merchants Bank as financial organisations scaling customer engagement with automation. ([Talkdesk (GlobeNewswire)](https://globenewswire.com/news-release/2026/08/18/3346962/0/en/talkdesk-transforms-the-bank-branch-into-an-ai-powered-advisory-hub.html))
- Aug 6, 2026 — **Second-quarter 2026 10-Q filed with the FDIC** No reference to artificial intelligence; banking-segment data-processing expense was $3.20 million, up 12.5% from $2.84 million; banking segment had 2,011 full-time equivalent employees. ([TowneBank (FDIC filings)](https://securitiesfilings.fdicconnect.fdic.gov/api/instflng/11985/attachment/1))
- Jul 22, 2026 — **Second-quarter 2026 results; Towne Vacations sold** Reported EPS $2.09; core EPS $0.78; $198.6 million gain; special dividend $0.70. ([TowneBank (GlobeNewswire)](https://globenewswire.com/news-release/2026/07/23/3331831/0/en/TowneBank-Reports-Second-Quarter-2026-Earnings.html))
- Jun 22, 2026 — **UNCG MBA capstone on Microsoft Copilot adoption** Students recommended meeting-preparation uses, a prompt manual and a training plan for using Copilot safely within the bank's private network. ([UNC Greensboro Bryan School of Business and Economics](https://bryan.uncg.edu/bryan-school-students-bring-fresh-perspective-to-townebanks-ai-strategy/))
- May 14, 2026 — **Guide to recognising AI scams** Voice cloning and deepfake videos. ([TowneBank](https://townebank.com/personal/resource/security/fraud/ai-scams))
- May 7, 2026 — **First-quarter 2026 10-Q filed with the FDIC** The quarterly report contains no reference to artificial intelligence, generative AI or machine learning. ([TowneBank (FDIC filings)](https://securitiesfilings.fdicconnect.fdic.gov/api/instflng/11938/attachment/1))
- Apr 22, 2026 — **First-quarter 2026 results** Dogwood added $1.95 billion of loans and $1.93 billion of deposits; reported EPS $0.45, core EPS $0.74; the release does not mention AI. ([TowneBank (GlobeNewswire)](https://globenewswire.com/news-release/2026/04/22/3279424/0/en/townebank-reports-first-quarter-2026-earnings.html))
- Apr 10, 2026 — **2026 proxy statement: cyber oversight and a conversion incentive** The Enterprise Risk Management Committee oversees the cybersecurity programme run by an unnamed chief information security officer; the bank carries cyber insurance; the executive chairman can earn up to $2.5 million tied to converting and integrating the acquired banks. ([TowneBank (FDIC filings)](https://securitiesfilings.fdicconnect.fdic.gov/api/instflng/11911/attachment/1))
- Feb 27, 2026 — **10-K executive-officer table names the CIO and chief risk officer** Chandhok is CIO since January 2026 (WesBanco CIO March to December 2025; Premier Financial chief information and operations officer 2021 to 2025; M&T divisional CIO and chief architect 2017 to 2021); Ernest Piccioli is chief risk officer since May 2023, formerly of Truist/BB&T. The bank had 2,976 full-time equivalent employees. ([TowneBank (FDIC filings)](https://securitiesfilings.fdicconnect.fdic.gov/api/instflng/11869/attachment/1))
- Feb 27, 2026 — **2025 10-K: stand-alone AI risk factor** AI law is 'uncertain and rapidly evolving'; generative models may produce incorrect or biased output; opacity complicates explaining decisions; third-party models limit visibility. ([TowneBank (FDIC filings)](https://securitiesfilings.fdicconnect.fdic.gov/api/instflng/11869/attachment/1))
- Feb 17, 2026 — **Varun Chandhok named chief information officer** Ex-WesBanco CIO; mandate to expand technology capabilities. ([TowneBank](https://townebank.com/about-towne/news-room/2026/varunchandhok))
- Jan 28, 2026 — **Full-year 2025 results** Record core earnings of $3.02 per share on $835.72 million of revenue; the release credits 'nearly 3,000' teammates and does not mention AI. ([TowneBank (investor relations)](https://investor.townebank.com/news/news-details/2026/TowneBank-Reports-Full-Year-and-Fourth-Quarter-Financial-Results-for-2025/default.aspx))
- Jan 12, 2026 — **Dogwood core-systems conversion scheduled for November 2026** Dogwood locations operate as a division of TowneBank until November 2026, when its core systems and operations convert to TowneBank's. ([TowneBank](https://townebank.com/about-towne/news-room/2026/completionofdogwoodstatebank))
- Jan 12, 2026 — **Dogwood State Bank merger completed** Carolinas growth initiatives follow; early results cited in the second-quarter release. ([TowneBank (GlobeNewswire)](https://globenewswire.com/news-release/2026/07/23/3331831/0/en/TowneBank-Reports-Second-Quarter-2026-Earnings.html), [American Banker](https://americanbanker.com/news/virginias-townebank-strikes-deal-to-deepen-n-c-footprint))
- Dec 4, 2025 — **8-K: data incident at vendor Marquis** Information held by Marquis that may have included names, contact details and Social Security or account numbers was involved; TowneBank's own systems were not affected and no misuse has been found. ([TowneBank (FDIC filings)](https://securitiesfilings.fdicconnect.fdic.gov/api/instflng/11839/attachment/1))
- Oct 30, 2025 — **Talkdesk CX Innovators honourable mention** Talkdesk reports 200+ simultaneous calls handled during the system conversion, a 23-second reduction in average handle time and a 97% satisfaction rate (vendor-reported). ([Talkdesk](https://www.talkdesk.com/blog/talkdesk-cx-innovators-awards-meet-winners/))
- Sep 25, 2025 — **Talkdesk customer story: AI tools in member service** TowneBank started with Talkdesk Copilot and Interaction & Quality Analytics on Talkdesk's Financial Services Experience Cloud, choosing AI features that enhance rather than replace human interactions. ([Talkdesk](https://www.talkdesk.com/customers/townebank/))
- Sep 1, 2025 — **Old Point Financial acquisition completed** Closed on 1 September 2025; with Village it added $1.53 billion of loans and $1.85 billion of deposits. ([TowneBank (FDIC filings)](https://securitiesfilings.fdicconnect.fdic.gov/api/instflng/11869/attachment/1), [TowneBank (investor relations)](https://investor.townebank.com/news/news-details/2026/TowneBank-Reports-Full-Year-and-Fourth-Quarter-Financial-Results-for-2025/default.aspx))
- Aug 19, 2025 — **Dogwood State Bank acquisition announced** $476 million in stock; 17 Carolinas branches; 8% EPS accretion projected for 2027. ([American Banker](https://americanbanker.com/news/virginias-townebank-strikes-deal-to-deepen-n-c-footprint))
- Jun 18, 2025 — **CIO Denys Diaz on Talkdesk and AI** Talkdesk's cloud contact-centre platform supports member service; Diaz: 'there's nothing AI can't fix or help with'. ([TowneBank (from The CEO Magazine)](https://www.townebank.com/about-towne/news-room/2025/information-superhighway-denys-diaz/))
- Apr 3, 2025 — **Old Point Financial acquisition announced** $203 million in cash and stock; 13 Hampton Roads and Richmond branches. ([American Banker](https://americanbanker.com/news/virginias-townebank-strikes-deal-for-a-local-rival))
- Apr 1, 2025 — **Village Bank and Trust Financial acquisition completed** First of the three acquisitions closed between April 2025 and January 2026; the 10-K lists it with Old Point. ([TowneBank (FDIC filings)](https://securitiesfilings.fdicconnect.fdic.gov/api/instflng/11869/attachment/1))
- May 22, 2024 — **SAS case study: CECL and member analytics in the cloud** SAS credit-loss (CECL) framework reused for peer analysis and member-needs analytics; answers 'in hours instead of days or months'. ([SAS (PR Newswire)](https://www.prnewswire.com/news-releases/banking-on-cloud-townebank-primes-for-continued-growth-with-sas-302153251.html))

## Where AI runs

| Use case | What | Status | Detail | Sources |
| --- | --- | --- | --- | --- |
| [Customer-facing chatbots](https://www.bankingnewsai.com/ai-regulation/by-use-case#customer-chatbots) | Talkdesk cloud contact centre with Talkdesk Copilot | In production | Member service runs on Talkdesk's cloud contact-centre platform, starting with Talkdesk Copilot agent assistance and Interaction & Quality Analytics; Talkdesk reports a 23-second cut in average handle time and a 97% satisfaction rate (vendor-reported). | [TowneBank (from The CEO Magazine)](https://www.townebank.com/about-towne/news-room/2025/information-superhighway-denys-diaz/), [Talkdesk](https://www.talkdesk.com/customers/townebank/), [Talkdesk](https://www.talkdesk.com/blog/talkdesk-cx-innovators-awards-meet-winners/), [Talkdesk (GlobeNewswire)](https://globenewswire.com/news-release/2026/08/18/3346962/0/en/talkdesk-transforms-the-bank-branch-into-an-ai-powered-advisory-hub.html) |
| [Generative & agentic AI](https://www.bankingnewsai.com/ai-regulation/by-use-case#generative-agentic-ai) | Microsoft Copilot for bankers | Rolling out | Copilot is installed on bankers' computers but rarely used by many; a UNC Greensboro MBA capstone recommended meeting-preparation uses, a prompt manual and a training plan for safe use within the bank's private network. | [UNC Greensboro Bryan School of Business and Economics](https://bryan.uncg.edu/bryan-school-students-bring-fresh-perspective-to-townebanks-ai-strategy/) |
| [Credit scoring & underwriting](https://www.bankingnewsai.com/ai-regulation/by-use-case#credit-underwriting) | SAS credit-loss modelling and member analytics | In production | Cloud-based SAS CECL solution with 15 years of historical and forecast data; the framework is reused for peer analysis and member-needs analytics. | [SAS (PR Newswire)](https://www.prnewswire.com/news-releases/banking-on-cloud-townebank-primes-for-continued-growth-with-sas-302153251.html) |
| [Model risk management](https://www.bankingnewsai.com/ai-regulation/by-use-case#model-risk) | AI risk-factor disclosure | In production | A stand-alone 10-K risk factor: evolving AI regulation, incorrect or biased generative-AI output, limited transparency of AI models, and dependence on third-party model developers. | [TowneBank (FDIC filings)](https://securitiesfilings.fdicconnect.fdic.gov/api/instflng/11869/attachment/1) |
| [Cybersecurity](https://www.bankingnewsai.com/ai-regulation/by-use-case#cybersecurity) | Cyber risk management and vendor incident response | In production | Aligned to FFIEC and NIST frameworks, with a vendor management programme and internal-audit testing; a 2025 incident at vendor Marquis was disclosed by 8-K. | [TowneBank (FDIC filings)](https://securitiesfilings.fdicconnect.fdic.gov/api/instflng/11869/attachment/1), [TowneBank (FDIC filings)](https://securitiesfilings.fdicconnect.fdic.gov/api/instflng/11839/attachment/1) |
| [Third-party & vendor AI](https://www.bankingnewsai.com/ai-regulation/by-use-case#third-party-vendors) | Acquisition integration (Old Point, Dogwood) | In production | Integration of Village (April 2025), Old Point (September 2025) and Dogwood State Bank (January 2026) across Virginia and the Carolinas; the 10-K names system-conversion delays among technology risks, and Talkdesk reports its contact centre handled 200+ simultaneous calls during a system conversion. | [TowneBank (FDIC filings)](https://securitiesfilings.fdicconnect.fdic.gov/api/instflng/11869/attachment/1), [TowneBank (GlobeNewswire)](https://globenewswire.com/news-release/2026/07/23/3331831/0/en/TowneBank-Reports-Second-Quarter-2026-Earnings.html), [Talkdesk](https://www.talkdesk.com/blog/talkdesk-cx-innovators-awards-meet-winners/) |
| [AI governance (general)](https://www.bankingnewsai.com/ai-regulation/by-use-case#governance-general) | Board-level risk oversight covering cyber and technology risk | In production | The Enterprise Risk Management Committee oversees the enterprise risk programme, which lists cyber and security risk, operational risk and Bank Secrecy Act/anti-money-laundering compliance, and receives reports on actual or potential security breaches; chief risk officer Ernest Piccioli is its non-voting secretary. No AI-specific committee or policy is disclosed. | [TowneBank (FDIC filings)](https://securitiesfilings.fdicconnect.fdic.gov/api/instflng/11911/attachment/1), [TowneBank (FDIC filings)](https://securitiesfilings.fdicconnect.fdic.gov/api/instflng/11869/attachment/1) |
| [Data & privacy](https://www.bankingnewsai.com/ai-regulation/by-use-case#data-privacy) | Information-security and privacy programme | In production | Layered preventive and detective tools, software patch management, independent internal and external penetration testing, an incident response programme, a disaster recovery plan and mandatory annual information-security training, led by a chief information security officer. | [TowneBank (FDIC filings)](https://securitiesfilings.fdicconnect.fdic.gov/api/instflng/11911/attachment/1) |
| [Generative & agentic AI](https://www.bankingnewsai.com/ai-regulation/by-use-case#generative-agentic-ai) | Copilot for meeting preparation and document review | Pilot | Suggested uses are summarising industry trends, drafting meeting briefs, reviewing appraisals and credit memos, and turning handwritten notes into to-do lists; assistant vice president Jon Fulton used Copilot to turn financial-statement data into a customer graphic in under two minutes, a task he said would take an hour or two. | [UNC Greensboro Bryan School of Business and Economics](https://bryan.uncg.edu/bryan-school-students-bring-fresh-perspective-to-townebanks-ai-strategy/) |
| [Customer-facing chatbots](https://www.bankingnewsai.com/ai-regulation/by-use-case#customer-chatbots) | Talkdesk agent assist across loans, cards and online banking | In production | Talkdesk says member support was unified across loans, cards and online banking, with real-time insights, automated summaries and AI-driven knowledge for agents; the bank chose AI features that enhance rather than replace human interactions (vendor description). | [Talkdesk](https://www.talkdesk.com/customers/townebank/) |
| [Third-party & vendor AI](https://www.bankingnewsai.com/ai-regulation/by-use-case#third-party-vendors) | Dogwood and blueharbor system conversions | Announced | Dogwood's core systems and operations convert to TowneBank's in November 2026; the blueharbor agreement of 6 October 2026 is expected to close in the first quarter of 2027. The 10-K lists system-conversion delays among technology risks. | [TowneBank](https://townebank.com/about-towne/news-room/2026/completionofdogwoodstatebank), [Banking Dive](https://bankingdive.com/news/townebank-blueharbor-deal-north-carolina-bank-acquisition-targets/832513), [TowneBank (FDIC filings)](https://securitiesfilings.fdicconnect.fdic.gov/api/instflng/11869/attachment/1) |
| [Fraud detection](https://www.bankingnewsai.com/ai-regulation/by-use-case#fraud) | Customer education on AI scams | In production | Voice cloning and deepfake awareness. | [TowneBank](https://townebank.com/personal/resource/security/fraud/ai-scams) |

## Disclosed numbers

| Measure | Value | As of | Sources |
| --- | --- | --- | --- |
| Q2 2026 reported / core earnings | $193.2 million ($2.09) / $72.0 million ($0.78) | Jul 22, 2026 | [TowneBank (GlobeNewswire)](https://globenewswire.com/news-release/2026/07/23/3331831/0/en/TowneBank-Reports-Second-Quarter-2026-Earnings.html) |
| Gain on sale of Towne Vacations | ≈ $198.6 million | Jul 22, 2026 | [TowneBank (GlobeNewswire)](https://globenewswire.com/news-release/2026/07/23/3331831/0/en/TowneBank-Reports-Second-Quarter-2026-Earnings.html) |
| Total deposits | $18.71 billion | Jun 30, 2026 | [TowneBank (GlobeNewswire)](https://globenewswire.com/news-release/2026/07/23/3331831/0/en/TowneBank-Reports-Second-Quarter-2026-Earnings.html) |
| Dogwood State Bank acquisition | $476 million in stock | Aug 19, 2025 | [American Banker](https://americanbanker.com/news/virginias-townebank-strikes-deal-to-deepen-n-c-footprint) |
| Talkdesk-reported contact-centre results (vendor figures) | 23-second cut in average handle time; 97% satisfaction rate | Oct 30, 2025 | [Talkdesk](https://www.talkdesk.com/blog/talkdesk-cx-innovators-awards-meet-winners/) |
| Historical data in the SAS warehouse | 15 years | May 22, 2024 | [SAS (PR Newswire)](https://www.prnewswire.com/news-releases/banking-on-cloud-townebank-primes-for-continued-growth-with-sas-302153251.html) |
| Full-time equivalent employees | 2,976 | Dec 31, 2025 | [TowneBank (FDIC filings)](https://securitiesfilings.fdicconnect.fdic.gov/api/instflng/11869/attachment/1) |
| Banking-segment data-processing expense, Q2 2026 | $3.20 million, up 12.5% from $2.84 million | Jun 30, 2026 | [TowneBank (FDIC filings)](https://securitiesfilings.fdicconnect.fdic.gov/api/instflng/11985/attachment/1) |
| Total noninterest expense, Q2 2026 | $189.9 million, up 26.1% from $150.7 million | Jun 30, 2026 | [TowneBank (FDIC filings)](https://securitiesfilings.fdicconnect.fdic.gov/api/instflng/11985/attachment/1) |
| Loans acquired in Village, Old Point and Dogwood | $3.48 billion ($1.53 billion plus $1.95 billion) | Apr 22, 2026 | [TowneBank (investor relations)](https://investor.townebank.com/news/news-details/2026/TowneBank-Reports-Full-Year-and-Fourth-Quarter-Financial-Results-for-2025/default.aspx), [TowneBank (GlobeNewswire)](https://globenewswire.com/news-release/2026/04/22/3279424/0/en/townebank-reports-first-quarter-2026-earnings.html) |
| Executive chairman's transaction success incentive | up to $2.5 million, tied to conversion and integration | Apr 10, 2026 | [TowneBank (FDIC filings)](https://securitiesfilings.fdicconnect.fdic.gov/api/instflng/11911/attachment/1) |
| blueharbor bank acquisition | about $154 million; $628 million of assets; close expected Q1 2027 | Oct 6, 2026 | [Banking Dive](https://bankingdive.com/news/townebank-blueharbor-deal-north-carolina-bank-acquisition-targets/832513), [Yahoo Finance](https://finance.yahoo.com/markets/stocks/articles/townebank-agrees-acquire-blueharbor-bank-145031180.html) |

## Quotes

> "Varun is exceptionally well-equipped to further advance our technology strategy and champion our continued growth." — Lee Clark, Senior EVP and Chief Operating Officer, Feb 17, 2026 ([TowneBank](https://townebank.com/about-towne/news-room/2026/varunchandhok))

> "The sale of Towne Vacations generated a gain of nearly $200 million, significantly enhancing our capital levels and tangible book value." — G. Robert Aston, Jr., Executive Chairman, Jul 22, 2026 ([TowneBank (GlobeNewswire)](https://globenewswire.com/news-release/2026/07/23/3331831/0/en/TowneBank-Reports-Second-Quarter-2026-Earnings.html))

> "I believe there's nothing AI can't fix or help with. When I joined TowneBank, I promised management I would relentlessly pursue progress and that mission is never done." — Denys Diaz, Chief Information Officer, Jun 18, 2025 ([TowneBank (from The CEO Magazine)](https://www.townebank.com/about-towne/news-room/2025/information-superhighway-denys-diaz/))

> "We have this resource sitting right there, and we don't always go grab it." — Scott Baker, Triad President, Jun 22, 2026 ([UNC Greensboro Bryan School of Business and Economics](https://bryan.uncg.edu/bryan-school-students-bring-fresh-perspective-to-townebanks-ai-strategy/))

> "We have a tool in the SAS platform to get those answers in hours instead of days or months." — Erich Reuter, EVP, Quantitative Analytics and Enterprise Stress Testing, May 22, 2024 ([SAS (PR Newswire)](https://www.prnewswire.com/news-releases/banking-on-cloud-townebank-primes-for-continued-growth-with-sas-302153251.html))

> "The real value of our Talkdesk implementation goes beyond efficiency metrics." — Michelle Davis, VP, Systems Analyst, TowneBank, Sep 25, 2025 ([Talkdesk](https://www.talkdesk.com/customers/townebank/))

> "When CoPilot is used in a governed, controlled way, it can almost feel like a superpower." — Mya Logan, MBA student, UNC Greensboro capstone team, Jun 22, 2026 ([UNC Greensboro Bryan School of Business and Economics](https://bryan.uncg.edu/bryan-school-students-bring-fresh-perspective-to-townebanks-ai-strategy/))

> "I've heard it said that AI allows you to be the artist, without having to be the painter." — Jon Fulton, Assistant Vice President, TowneBank, Jun 22, 2026 ([UNC Greensboro Bryan School of Business and Economics](https://bryan.uncg.edu/bryan-school-students-bring-fresh-perspective-to-townebanks-ai-strategy/))

> "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." — William I. Foster III, President and CEO, Jul 22, 2026 ([TowneBank (GlobeNewswire)](https://globenewswire.com/news-release/2026/07/23/3331831/0/en/TowneBank-Reports-Second-Quarter-2026-Earnings.html))

## Who runs AI

- **William I. Foster III** — President and CEO ([LinkedIn](https://www.linkedin.com/in/bill-foster-874a875)) ([TowneBank (GlobeNewswire)](https://globenewswire.com/news-release/2026/07/23/3331831/0/en/TowneBank-Reports-Second-Quarter-2026-Earnings.html))
- **G. Robert Aston, Jr.** — Executive Chairman ([LinkedIn](https://www.linkedin.com/in/g-robert-aston-jr-468bb2208)) ([TowneBank (GlobeNewswire)](https://globenewswire.com/news-release/2026/07/23/3331831/0/en/TowneBank-Reports-Second-Quarter-2026-Earnings.html), [American Banker](https://americanbanker.com/news/virginias-townebank-strikes-deal-to-deepen-n-c-footprint))
- **Varun Chandhok** — Senior EVP and Chief Information Officer ([LinkedIn](https://www.linkedin.com/in/vchandhok)) ([TowneBank](https://townebank.com/about-towne/news-room/2026/varunchandhok))
- **Lee Clark** — Senior EVP and Chief Operating Officer ([LinkedIn](https://www.linkedin.com/in/lee-clark-a1640746)) ([TowneBank](https://townebank.com/about-towne/news-room/2026/varunchandhok), [TowneBank (FDIC filings)](https://securitiesfilings.fdicconnect.fdic.gov/api/instflng/11869/attachment/1))
- **Denys Diaz** — Former Chief Information Officer (CIO in 2025) ([LinkedIn](https://www.linkedin.com/in/denysdiaz)) ([TowneBank (from The CEO Magazine)](https://www.townebank.com/about-towne/news-room/2025/information-superhighway-denys-diaz/))
- **Scott Baker** — Triad President ([UNC Greensboro Bryan School of Business and Economics](https://bryan.uncg.edu/bryan-school-students-bring-fresh-perspective-to-townebanks-ai-strategy/))
- **Ernest Piccioli** — Senior EVP and Chief Risk Officer ([TowneBank (FDIC filings)](https://securitiesfilings.fdicconnect.fdic.gov/api/instflng/11869/attachment/1), [TowneBank (FDIC filings)](https://securitiesfilings.fdicconnect.fdic.gov/api/instflng/11911/attachment/1))
- **Michelle Davis** — VP, Systems Analyst (Talkdesk implementation) ([Talkdesk](https://www.talkdesk.com/customers/townebank/))
- **Erich Reuter** — EVP, Quantitative Analytics and Enterprise Stress Testing ([LinkedIn](https://www.linkedin.com/in/reutererich)) ([SAS (PR Newswire)](https://www.prnewswire.com/news-releases/banking-on-cloud-townebank-primes-for-continued-growth-with-sas-302153251.html))

## Which AI vendors and fintechs does TowneBank work with?

| Company | What TowneBank uses it for | Status | Category |
| --- | --- | --- | --- |
| [Talkdesk](https://www.bankingnewsai.com/vendors/talkdesk) | Talkdesk Financial Services Experience Cloud contact centre with Talkdesk Copilot and Interaction & Quality Analytics for member service; named again in Talkdesk's August 2026 branch launch. | In production | [Conversational AI](https://www.bankingnewsai.com/ai-tools/conversational-ai) |
| [Microsoft 365 Copilot](https://www.bankingnewsai.com/vendors/microsoft-copilot) | Microsoft Copilot is installed on bankers' computers, but many rarely use it; a 2026 MBA capstone produced adoption recommendations. | In production | [Enterprise AI assistants](https://www.bankingnewsai.com/ai-tools/enterprise-ai-assistants) |

Each vendor and fintech page cites the source for the relationship. [AI tools for banks](https://www.bankingnewsai.com/ai-tools) · [fintech and neobank AI dossiers](https://www.bankingnewsai.com/fintech).

## Regulators it answers to

- [FDIC](https://www.bankingnewsai.com/ai-regulation/fdic) — TowneBank is a state nonmember bank that files its 10-K with the FDIC; FDIC third-party and model-risk guidance govern its vendor AI (Talkdesk, SAS) and acquisition conversions. See [FDIC FIL-29-2023](https://www.bankingnewsai.com/ai-regulation/documents/fdic-fil-29-2023), [FDIC FIL-15-2026](https://www.bankingnewsai.com/ai-regulation/documents/fdic-fil-15-2026).
- [CFPB](https://www.bankingnewsai.com/ai-regulation/cfpb) — Consumer and mortgage products bring adverse-action and UDAAP duties to any automated decisioning. See [ECOA / Regulation B adverse action (15 U.S.C. 1691(d); 12 CFR 1002.9)](https://www.bankingnewsai.com/ai-regulation/documents/cfpb-ecoa-regulation-b-adverse-action).
- [Federal Reserve](https://www.bankingnewsai.com/ai-regulation/federal-reserve) — Interagency third-party guidance applies to the Talkdesk, SAS and Marquis relationships and acquired-bank vendors. See [SR 23-4](https://www.bankingnewsai.com/ai-regulation/documents/fed-sr-23-4).

## What the record suggests

### The risk factor is ahead of the programme

TowneBank's 10-K describes generative-AI bias, opacity and third-party model risk in detail while the bank discloses no AI inventory or governance owner; naming one would close the gap.

### Vendor AI is the default route

Talkdesk in the contact centre and SAS in risk analytics mean most AI will arrive inside vendor platforms, which puts vendor due diligence, already stressed by the Marquis incident, at the centre of AI risk.

### The new CIO arrives with an AI-capable stack

Chandhok's WesBanco and M&T background is in enterprise platforms; expect consolidation of three acquired banks' systems before new AI.

### Copilot adoption is the cheapest AI win

Microsoft Copilot is already licensed and installed; turning the capstone's prompt manual and training plan into routine use by bankers would deliver productivity without a new vendor.

### Capital from Towne Vacations could fund technology

A near-$200 million gain is an unusual opportunity to invest in platforms without pressuring core earnings.

## FAQ

### Does TowneBank use AI?

Through vendors. Member service runs on Talkdesk's cloud contact-centre platform with Talkdesk Copilot and Interaction & Quality Analytics, for which Talkdesk reports a 23-second cut in average handle time and a 97% satisfaction rate, and risk analytics run on SAS, which calls its platform AI-driven. Bankers have Microsoft Copilot on their computers, and a UNC Greensboro MBA team produced a prompt manual and training plan in 2026 to raise its use. The bank's 2025 10-K, filed with the FDIC, has a stand-alone AI risk factor that says the bank or its vendors may incorporate AI in business processes, services or products. It hired a new chief information officer in early 2026 and publishes customer guidance on AI scams. No AI leader, model inventory or AI budget has been disclosed.

### Where does TowneBank file its annual report?

With the FDIC, not the SEC: TowneBank has no holding company, so its 10-K, 10-Qs and 8-Ks are filed under the Securities Exchange Act with the FDIC, which publishes them on its securities-filings site.

### What did TowneBank sell in 2026?

Its Towne Vacations resort property-management segment, generating a pre-tax gain of about $198.6 million in the second quarter of 2026. Reported earnings were $193.2 million, or $2.09 per share, against core earnings of $72.0 million, or $0.78, and the bank paid a $0.70 special dividend and made a $25 million foundation contribution.

### Who leads AI at TowneBank?

Nobody is named. TowneBank has disclosed no head of AI, chief data officer or AI committee. Technology sits with chief information officer Varun Chandhok, who joined in January 2026 from WesBanco, reporting into chief operating officer Lee Clark. Chief risk officer Ernest Piccioli, formerly of Truist, serves as secretary to the board's Enterprise Risk Management Committee, which oversees cyber risk. A chief information security officer runs the security programme but is not named. Denys Diaz, CIO until December 2025, said he believed there was nothing AI could not fix or help with. Day-to-day AI use is vendor-led: Talkdesk in member service and Microsoft Copilot for bankers.

### Does TowneBank mention AI in its 2026 filings?

Only in the 2025 10-K, filed with the FDIC on 27 February 2026. It names AI in its summary risk list, in the cyber risk factor and in a stand-alone risk factor on legal uncertainty, incorrect or biased generative-AI output, limited model transparency and reliance on third-party models. The first-quarter and second-quarter 2026 10-Qs, filed on 7 May and 6 August, contain no reference to artificial intelligence, and the 2026 proxy mentions machine learning only in a director's biography. The earnings releases for the fourth quarter of 2025 and the first and second quarters of 2026 do not discuss AI.

### What is TowneBank working on in technology in 2026?

Integration. Dogwood State Bank's core systems and operations convert to TowneBank's in November 2026, and the $154 million blueharbor bank agreement signed on 6 October 2026 is expected to close in the first quarter of 2027. The 2026 proxy offers executive chairman Robert Aston up to $2.5 million for converting and integrating the acquired banks. Banking-segment data-processing expense was $3.20 million in the second quarter, up 12.5%. New CIO Varun Chandhok is charged with expanding technology capabilities, and the bank had 2,976 full-time equivalent employees at the end of 2025.

## Sources (21)

1. Virginia's TowneBank strikes deal for a local rival — American Banker, Apr 4, 2025. https://americanbanker.com/news/virginias-townebank-strikes-deal-for-a-local-rival
2. Virginia's TowneBank strikes deal to deepen N.C. footprint — American Banker, Aug 19, 2025. https://americanbanker.com/news/virginias-townebank-strikes-deal-to-deepen-n-c-footprint
3. TowneBank Welcomes Varun Chandhok as Chief Information Officer — TowneBank, Feb 17, 2026. https://townebank.com/about-towne/news-room/2026/varunchandhok
4. How to Recognize AI Scams in 2026 — TowneBank, May 14, 2026. https://townebank.com/personal/resource/security/fraud/ai-scams
5. Banking on cloud: TowneBank primes for continued growth with SAS — SAS (PR Newswire), May 22, 2024. https://www.prnewswire.com/news-releases/banking-on-cloud-townebank-primes-for-continued-growth-with-sas-302153251.html
6. Information superhighway: Denys Diaz — TowneBank (from The CEO Magazine), Jun 18, 2025. https://www.townebank.com/about-towne/news-room/2025/information-superhighway-denys-diaz/
7. TowneBank Form 8-K (Item 8.01: data security incident at a third-party service provider) — TowneBank (FDIC filings), Dec 4, 2025. https://securitiesfilings.fdicconnect.fdic.gov/api/instflng/11839/attachment/1
8. TowneBank Annual Report on Form 10-K for the fiscal year ended December 31, 2025 — TowneBank (FDIC filings), Feb 27, 2026. https://securitiesfilings.fdicconnect.fdic.gov/api/instflng/11869/attachment/1
9. Talkdesk transforms the bank branch into an AI-powered advisory hub — Talkdesk (GlobeNewswire), Aug 18, 2026. https://globenewswire.com/news-release/2026/08/18/3346962/0/en/talkdesk-transforms-the-bank-branch-into-an-ai-powered-advisory-hub.html
10. Bryan School Students Bring Fresh Perspective to TowneBank's AI Strategy — UNC Greensboro Bryan School of Business and Economics, Jun 22, 2026. https://bryan.uncg.edu/bryan-school-students-bring-fresh-perspective-to-townebanks-ai-strategy/
11. TowneBank Customer Story — Talkdesk, Sep 25, 2025. https://www.talkdesk.com/customers/townebank/
12. Celebrating the CX Innovators winners shaping customer experience — Talkdesk, Oct 30, 2025. https://www.talkdesk.com/blog/talkdesk-cx-innovators-awards-meet-winners/
13. TowneBank Reports Second Quarter 2026 Earnings — TowneBank (GlobeNewswire), Jul 22, 2026. https://globenewswire.com/news-release/2026/07/23/3331831/0/en/TowneBank-Reports-Second-Quarter-2026-Earnings.html
14. TowneBank Announces Completion of Dogwood State Bank Merger — TowneBank, Jan 12, 2026. https://townebank.com/about-towne/news-room/2026/completionofdogwoodstatebank
15. TowneBank Reports Full Year and Fourth Quarter Financial Results for 2025 — TowneBank (investor relations), Jan 28, 2026. https://investor.townebank.com/news/news-details/2026/TowneBank-Reports-Full-Year-and-Fourth-Quarter-Financial-Results-for-2025/default.aspx
16. TowneBank 2026 Proxy Statement — TowneBank (FDIC filings), Apr 10, 2026. https://securitiesfilings.fdicconnect.fdic.gov/api/instflng/11911/attachment/1
17. TowneBank Reports First Quarter 2026 Earnings — TowneBank (GlobeNewswire), Apr 22, 2026. https://globenewswire.com/news-release/2026/04/22/3279424/0/en/townebank-reports-first-quarter-2026-earnings.html
18. TowneBank Form 10-Q for the quarter ended March 31, 2026 — TowneBank (FDIC filings), May 7, 2026. https://securitiesfilings.fdicconnect.fdic.gov/api/instflng/11938/attachment/1
19. TowneBank Form 10-Q for the quarter ended June 30, 2026 — TowneBank (FDIC filings), Aug 6, 2026. https://securitiesfilings.fdicconnect.fdic.gov/api/instflng/11985/attachment/1
20. TowneBank deal shrinks pool of NC bank targets — Banking Dive, Oct 7, 2026. https://bankingdive.com/news/townebank-blueharbor-deal-north-carolina-bank-acquisition-targets/832513
21. TowneBank Agrees to Acquire blueharbor bank for Approximately $154 Million — Yahoo Finance, Oct 6, 2026. https://finance.yahoo.com/markets/stocks/articles/townebank-agrees-acquire-blueharbor-bank-145031180.html

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