SUFFOLK, Va., April 24, 2009 (GLOBE NEWSWIRE) -- Hampton Roads based TowneBank (Nasdaq:TOWN) reported net income of $6.60 million for the quarter ended March 31, 2009 representing a 10.18% increase over the reported net income of $5.99 million in the comparative period of 2008. The Company's 2009 first quarter results included pre-tax merger and integration expenses of $1.21 million related to the previously announced transaction resulting in the formation of Prudential Towne Realty.
Net interest income was $21.85 million, an increase of $1.63 million over last year. The increase in net interest income was attributed primarily to loan growth as the bank's interest margin declined to 2.98%, down from 3.52% in 2008. The decline in margin is a result of the rapid reduction in rates by the Federal Reserve system during 2007 and 2008.
Non-interest income increased 38.72% to $16.31 million. The increase can be partly attributed to the rise in residential mortgage brokerage income, which increased $1.32 million or 102.45% from the comparative period in 2008. First quarter income also included a gain of $4.73 million on the sale of available for sale securities as a result of the bank's asset-liability management strategy.
Over the past year, the bank's capital base has increased 61.56%, or $163.10 million, to over $428 million, including two new issues of preferred stock. Accordingly, fully diluted earnings per common share decreased to $0.14 per share as compared to $0.24 last year. The decrease was due to preferred stock dividends and accretion of preferred stock discount totaling $3.02 million in the first quarter of 2009. The preferred stock dividends and accretion resulted in a net reduction of $0.11 in diluted earnings per common share for the current period. Common dividends paid totaled $1.99 million or $0.08 per common share.
Balance Sheet
Total bank assets reached a record level of $3.31 billion, an increase of $657.54 million over first quarter 2008. Towne has continued to heavily support the credit needs of the community with loan growth of $499.92 million, an increase of 26.15% over last year. Total deposits climbed to $2.41 billion, representing a 23.92% increase over the comparable period of 2008. The increase in deposits from local businesses and other members of the local community allowed TowneBank to reinvest the funds locally, helping to stimulate the local economy.
Asset Quality
Asset quality remained excellent relative to peers with total net loan losses for the quarter of $897 thousand representing a loss ratio of a modest 0.15%. Non-performing assets have also remained at relatively low levels with non-performing assets at March 31, 2009 of $11.16 million or 0.34% of total assets compared to 0.12% last year. "From a credit quality perspective, our borrowers have performed well considering the slowdown in business. However, many of our businesses and friends are having a rough time. Never has our bank's legacy of caring and service to others been more important. We will not cut and run on our borrowers in their greatest time of need. We are here to work with our members to find solutions that will serve to restore their economic well being," said G. Robert Aston, Jr., Chairman and CEO.
Driven in part by the bank's loan growth, the bank's loan loss provision was $1.97 million for the first quarter compared to $895 thousand for last year. The bank's loan loss reserve ended the quarter at 1.18%, up from 1.16% for the comparable period last year.
"While the business environment remains challenging, we were able to again achieve increased earnings through a combination of balance sheet growth, a booming mortgage refinance business, good investment portfolio strategies, and a great performance by the best banking team in town," stated G. Robert Aston, Jr., Chairman and CEO. "We have continued to be blessed with the unwavering support of the Hampton Roads community."
As one of Virginia's top community banks, TowneBank now operates 17 banking offices in Chesapeake, Hampton, Portsmouth, Newport News, Virginia Beach, Norfolk, Williamsburg and York County. Towne also offers a full range of financial services through its controlled divisions and subsidiaries that include Towne Investment Group, Towne Insurance Agency, TFA Benefits, TowneBank Mortgage, TowneBank Commercial Mortgage, Prudential Towne Realty, Towne 1031 Exchange, LLC, Corolla Classic Vacations and Corolla Real Estate. Through its strategic partnership with William E. Wood and Associates, the bank also offers mortgage services in all of their offices in Hampton Roads and Northeastern North Carolina. Local decision-making is a hallmark of its hometown banking strategy that is delivered through the leadership of each group's President and Board of Directors. With total assets of $3.31 billion as of March 31, 2009, TowneBank is one of the largest banks headquartered in Virginia.
Forward-Looking Statements:
This release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. 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 competitive pressures in the banking industry that may increase significantly; changes in the interest rate environment may reduce margins and/or the volumes and values of loans made or held as well as the value of other financial assets held; general economic conditions, either nationally or regionally, 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; changes in the legislative or regulatory environment, including changes in accounting standards, may adversely affect our business; costs or difficulties; related to the integration of the business and the businesses we have acquired may be greater than expected; expected cost savings associated with pending or recently completed acquisitions may not be fully realized or realized within the expected time frame; our competitors 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 regards to our market area and its heavy concentration of U.S. military based and related personnel. We assume no obligation to update information contained in this release.
Selected Financial Highlights (unaudited)
TOWNEBANK
March 31, 2009
(dollars in thousands)
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Three Months Ended Increase/ % Increase/
March 31, 2009 2008 (Decrease) (Decrease)
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Results of
Operations:
Net interest
income $ 21,851 $ 20,225 $ 1,626 8.04%
Noninterest
income 16,313 11,760 4,553 38.72%
Noninterest
expenses 27,260 22,552 4,708 20.88%
Provision for
loan losses 1,970 895 1,075 120.11%
Pretax Income 9,271 8,529 742 8.70%
Provision for
income tax
expense 2,668 2,536 132 5.21%
Net income 6,603 5,993 610 10.18%
Net income avail-
able to common
shareholders 3,587 5,993 (2,406) (40.15%)
Net income per
common share -
basic 0.15 0.25 (0.10) (40.00%)
Net income per
common share -
diluted 0.14 0.24 (0.10) (41.67%)
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Period End Data:
Total assets $3,305,821 $2,648,277 $657,544 24.83%
Total assets -
tangible 3,222,064 2,575,034 647,030 25.13%
Earning assets 2,930,908 2,400,673 530,235 22.09%
Loans (net of
unearned
income) 2,411,659 1,911,740 499,919 26.15%
Allowance for
loan losses 28,576 22,199 6,377 28.73%
Noninterest
bearing deposits 536,255 480,966 55,289 11.50%
Interest bearing
deposits 1,872,815 1,463,076 409,739 28.01%
Total
deposits 2,409,070 1,944,042 465,028 23.92%
Total equity 428,039 264,939 163,100 61.56%
Total equity -
tangible 344,282 191,696 152,586 79.60%
Common equity 292,490 264,939 27,551 10.40%
Common equity -
tangible 208,733 191,696 17,037 8.89%
Book value per
common share 11.79 10.95 0.84 7.67%
Book value per
common share -
tangible 8.41 7.92 0.49 6.19%
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Daily Average
Balances:
Total assets $3,216,247 $2,562,010 $654,237 25.54%
Total assets -
tangible 3,139,247 2,490,434 648,813 26.05%
Earning assets 2,974,812 2,308,539 666,273 28.86%
Loans (net of
unearned income),
excluding non-
accrual loans 2,376,255 1,861,245 515,010 27.67%
Allowance for
loan losses 27,491 21,638 5,853 27.05%
Noninterest
bearing deposits 493,714 446,706 47,008 10.52%
Interest bearing
deposits 1,831,118 1,427,055 404,063 28.31%
Total
deposits 2,324,832 1,873,761 451,071 24.07%
Total equity 422,075 261,293 160,782 61.53%
Total equity -
tangible 345,076 189,717 155,359 81.89%
Common equity 286,572 261,293 25,279 9.67%
Common equity -
tangible 209,572 189,717 19,855 10.47%
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Key Ratios:
Return on average
assets 0.83% 0.94% (0.11%) (11.70%)
Return on average
assets - tangible 0.85% 0.97% (0.12%) (12.37%)
Return on average
equity 6.34% 9.22% (2.88%) (31.24%)
Return on average
equity - tangible 7.76% 12.71% (4.95%) (38.95%)
Return on common
equity 5.08% 9.22% (4.14%) (44.90%)
Return on common
equity - tangible 6.94% 12.71% (5.77%) (45.40%)
Net interest
margin 2.98% 3.52% (0.54%) (15.34%)
Average earning
assets/total
average assets 92.49% 90.11% 2.38% 2.64%
Average loans/
average deposits 102.21% 99.33% 2.88% 2.90%
Average non-
interest
deposits/total
average deposits 21.24% 23.84% (2.60%) (10.91%)
Allowance for loan
losses/period end
loans 1.18% 1.16% 0.02% 1.72%
Period end equity/
period end total
assets 12.95% 10.00% 2.95% 29.50%
Efficiency ratio 71.43% 70.51% 0.92% 1.30%
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