SUFFOLK, Va., April 24, 2014 (GLOBE NEWSWIRE) -- Hampton Roads based TowneBank (the "Bank") (Nasdaq:TOWN) reported earnings of $11.13 million for the quarter ended March 31, 2014, a 6.29% increase, or $659,000, over the $10.47 million reported for the comparative period in 2013. Net income available to common shareholders increased 19.96% to a record $10.94 million after preferred dividend payments of $191,000. Fully diluted earnings per share increased 6.90% to $0.31 per share compared to $0.29 per share for the comparative period of 2013.

The Bank's common dividend was $0.10 per share for the quarter with the common dividend totaling $3.53 million. The current dividend represents an increase of 11.1% over the dividend paid during the same quarter of 2013.

Earnings Highlights

Net interest income was virtually unchanged at $35.19 million, an $18,000, or 0.05%, decrease from the first quarter of 2013. Growth in average earning assets of $338.82 million was offset by a 28 basis point narrowing of the tax-equivalent net interest margin to 3.44% in the current quarter from 3.72% in the first quarter of 2013.

Noninterest income, excluding gains or losses on investment securities, decreased by $1.03 million, or 4.33%, to $22.73 million for the first quarter of 2014, compared to the first quarter of 2013. The majority of the decline is attributable to residential mortgage banking income, which decreased $2.76 million, or 35.25%, from the comparative period in 2013 due to lower loan production volumes. The decrease was partially offset by increases in insurance commissions, which increased $1.08 million, or 13.51%, from the comparative period in 2013.

Noninterest expense increased by $485,000, or 1.19%, compared to the comparative quarter of 2013. A significant portion of the increase from the comparative period in 2013 is related to the acquisition of two insurance agencies in July 2013. Excluding the effect of the acquisitions, noninterest expense was essentially flat as the Bank launched a cost-control initiative in the first quarter of 2014 to improve operating efficiency.

Balance Sheet

At March 31, 2014, total Bank assets reached $4.78 billion, an increase of $400.07 million, or 9.14%, over March 31, 2013. The Bank's loan portfolio ended the period at $3.27 billion representing an increase of 3.52%, or $111.24 million, from the prior year.

The Bank continued to experience deposit growth with total deposits increasing to $3.68 billion, up $338.78 million, or 10.13%, from March 31, 2013. The Bank saw continued growth in noninterest bearing demand deposits, which ended the quarter at $1.09 billion, a 7.66% increase from March 31, 2013. Noninterest deposits represented 29.61% of total deposits at March 31, 2014.

Capital Strength

The Bank's total equity at March 31, 2014 rose to $593.41 million, an increase of $26.51 million, or 4.68%, from March 31, 2013. Common equity increased 19.34%, or $82.32 million, as the Bank's 8% Series A Preferred Stock mandatorily converted on September 1, 2013 into 3.19 million shares of TowneBank common stock reflecting a conversion price of $18.02 per share of common stock. Total risk-based capital remained strong as total risk-based capital, Tier 1 capital, Tier 1 leverage ratios, and Tier 1 common capital ratios were 13.97%, 12.95%, 10.42%, 10.62%, respectively. All ratios exceed the current regulatory standards for well capitalized status.

Credit Quality

Continued improvements in credit quality contributed to the Bank's financial results as nonperforming loans decreased to $10.98 million from $17.39 million, at March 31, 2013 and $12.75 million at December 31, 2013. Net charge-offs were $1.17 million in the first quarter of 2014 compared to $3.35 million in the first quarter of 2013 and the provision for loan losses decreased by $3.24 million as compared to the same quarter of 2013. Total nonperforming assets were $52.49 million, or 1.10%, of Bank assets at March 31, 2014, as compared to $64.01 million, or 1.46%, at March 31, 2013, and $52.29 million, or 1.12%, at December 31, 2013.

"We are pleased to report excellent first quarter results despite the headwinds presented by the extended period of historically low interest rates and the current slowdown in the mortgage banking industry. Our growth in earnings has been driven by a vigorous emphasis on cost savings combined with continued improvements in credit quality. As we celebrate the 15th anniversary of the day TowneBank opened its doors to serve the community and to contribute to the quality of life here in our hometown, we continue our focus on financial performance as we strive to provide outstanding returns to our shareholders," said G. Robert Aston, Jr., Chairman and Chief Executive Officer.

As one of the top community banks in Virginia and North Carolina, TowneBank operates 27 banking offices serving Chesapeake, Hampton, Newport News, Norfolk, Portsmouth, Suffolk, Virginia Beach, Williamsburg, James City County and York County in Virginia along with Moyock, Grandy, Camden, Southern Shores, Corolla and Kill Devil Hills in North Carolina. 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, and Corolla Classic Vacations. 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 $4.78 billion as of March 31, 2014, 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 bases and related personnel. We assume no obligation to update information contained in this release.