SUFFOLK, Va., July 28, 2011 (GLOBE NEWSWIRE) -- Hampton Roads based TowneBank (Nasdaq:TOWN) reported earnings for the quarter ended June 30, 2011 of $7.51 million, a 9.11% increase, over the $6.88 million reported for the second quarter of 2010. Earnings for the six month year to date period increased 6.05% to $15.81 million as compared to the $14.91 million earned in the same period last year.
Net income available to common shareholders increased 13.97% to $5.17 million after accretion and preferred dividend payments of $2.33 million. Fully diluted earnings of $0.18 per share were higher as compared to $0.16 in the comparative period in 2010, while the bank's common dividend totaled $2.36 million, or $0.08 per share for the quarter.
Earnings Highlights
Earnings performance in the second quarter was positively affected by an increase in net interest income to $33.76 million, a $4.04 million, or 13.58%, improvement over the second quarter of 2010. The bank's net interest margin on a fully tax equivalent basis increased to 3.92%, up from 3.66% for the same period in 2010. The increase reflects the continued repricing of deposit liabilities to market rates coupled with growth in earning assets. Net interest income was also impacted by the reduction in higher costing borrowings and convertible debt as deposit growth exceeded loan growth allowing us to continue the favorable repositioning of our liabilities.
Non-interest income, excluding gains on available for sale securities, decreased by $398,000, or 2.50%, to $15.49 million. The decline was primarily due to a decrease in residential mortgage brokerage income, which was lower by $847,000, or 23.09%, due to continued softness in the housing market. The decrease was mostly offset by an increase in insurance commissions and fees of $504,000, or 10.24%, over the comparative quarter in the prior year, attributable to the acquisition of W.T. Chapin Insurance Company in the first quarter of 2011.
Balance Sheet
At June 30, 2011, total bank assets reached $4.02 billion, an increase of $284.98 million, or 7.63%, over second quarter 2010. The acquisition of $149.87 million of assets in the Bank of Currituck business combination in December 2010 contributed to the growth.
The bank's loan portfolio ended the period at $2.76 billion representing an increase of 3.27%, or $87.37 million, from the prior year.
Deposit growth continued as total deposits grew to $3.10 billion, an increase of 10.99%, or $306.79 million. Non-interest bearing demand deposits increased 15.99% outpacing overall deposit growth to end the quarter at $779.26 million, representing 25.15% of total deposits.
Capital Strength
The bank's total equity at June 30, 2011 rose to $508.72 million, while common equity increased 3.95% or $14.07 million. Accordingly, total risk based capital, Tier 1 capital and Tier 1 leverage ratios were 14.12%, 12.44% and 10.15%, respectively. All ratios exceed the current regulatory standards for well capitalized status.
Credit Quality
As compared to our major competitors, the bank's loan portfolio has continued to perform relatively well. While non-performing assets increased to 2.28% as compared to 1.50% at June 30, 2010, non-performing assets decreased on a linked quarter basis from the 2.38% reported on March 31, 2011. A 7.99% decrease in non-performing loans contributed to this overall improvement.
"Working with our members to assist them through this economic slowdown continues to yield good results as we are seeing an improving financial outlook for many of them," said G. Robert Aston, Jr., Chairman and Chief Executive Officer.
"August of 2011 will mark the third anniversary of the economic meltdown that still reverberates around the globe. We are pleased to have shown continued positive results throughout this entire period of economic challenges. We are particularly proud of the dedication and support given to us by our borrowers, staff and the community," added Aston.
As one of the top community banks in Virginia and North Carolina, TowneBank operates 26 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. 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 $4.02 billion as of June 30, 2011, 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.
| Selected Financial Highlights (unaudited) | ||||
| TOWNEBANK | ||||
| June 30, 2011 | ||||
| (dollars in thousands) | ||||
| Increase/ | % Increase/ | |||
| Three Months Ended June 30, | 2011 | 2010 | (Decrease) | (Decrease) |
| Results of Operations: | ||||
| Net interest income | $ 33,763 | $ 29,727 | $ 4,036 | 13.58% |
| Noninterest income (1) | 15,493 | 15,891 | (398) | (2.50%) |
| Gain on available for sale securities | 3,629 | 1,979 | 1,650 | 83.38% |
| Noninterest expenses | 36,321 | 30,152 | 6,169 | 20.46% |
| Provision for loan losses | 7,322 | 7,326 | (4) | (0.05%) |
| Pretax Income | 10,119 | 9,728 | 391 | 4.02% |
| Provision for income tax expense | 2,613 | 2,849 | (236) | (8.28%) |
| Net income attributable to TowneBank | 7,506 | 6,879 | 627 | 9.11% |
| Preferred stock dividends and accretion | 2,333 | 2,340 | (7) | (0.30%) |
| Net income available to common shareholders | 5,173 | 4,539 | 634 | 13.97% |
| Net income per common share - basic | 0.18 | 0.16 | 0.02 | 12.50% |
| Net income per common share - diluted | 0.18 | 0.16 | 0.02 | 12.50% |
| Period End Data: | ||||
| Total assets | $ 4,017,719 | $ 3,732,744 | $ 284,975 | 7.63% |
| Total assets - tangible | 3,904,307 | 3,634,797 | 269,510 | 7.41% |
| Earning assets (2) | 3,648,351 | 3,389,733 | 258,618 | 7.63% |
| Loans (net of unearned income) | 2,761,326 | 2,673,954 | 87,372 | 3.27% |
| Allowance for loan losses | 41,787 | 35,898 | 5,889 | 16.40% |
| Goodwill and other intangibles | 113,411 | 97,947 | 15,464 | 15.79% |
| Nonperforming assets | 91,521 | 56,113 | 35,408 | 63.10% |
| Noninterest bearing deposits | 779,262 | 671,861 | 107,401 | 15.99% |
| Interest bearing deposits | 2,319,420 | 2,120,029 | 199,391 | 9.41% |
| Total deposits | 3,098,682 | 2,791,890 | 306,792 | 10.99% |
| Total equity | 508,719 | 495,072 | 13,647 | 2.76% |
| Total equity - tangible | 395,308 | 397,125 | (1,817) | (0.46%) |
| Common equity | 370,027 | 355,961 | 14,066 | 3.95% |
| Common equity - tangible | 256,616 | 258,014 | (1,397) | (0.54%) |
| Book value per common share | 12.73 | 12.33 | 0.40 | 3.24% |
| Book value per common share - tangible | 8.83 | 8.94 | (0.11) | (1.23%) |
| Daily Average Balances: | ||||
| Total assets | $ 3,988,736 | $ 3,723,756 | $ 264,980 | 7.12% |
| Total assets - tangible | 3,874,851 | 3,625,341 | 249,510 | 6.88% |
| Earning assets (2) | 3,584,896 | 3,381,196 | 203,700 | 6.02% |
|
Loans (net of unearned income), excluding nonaccrual loans |
2,680,352 | 2,578,261 | 102,091 | 3.96% |
| Allowance for loan losses | 41,053 | 34,347 | 6,706 | 19.52% |
| Goodwill and other intangibles | 113,886 | 98,415 | 15,471 | 15.72% |
| Noninterest bearing deposits | 754,746 | 638,349 | 116,397 | 18.23% |
| Interest bearing deposits | 2,313,512 | 2,100,734 | 212,778 | 10.13% |
| Total deposits | 3,068,258 | 2,739,083 | 329,175 | 12.02% |
| Total equity | 510,262 | 486,795 | 23,467 | 4.82% |
| Total equity - tangible | 396,376 | 388,380 | 7,996 | 2.06% |
| Common equity | 370,590 | 348,010 | 22,580 | 6.49% |
| Common equity - tangible | 256,704 | 249,594 | 7,110 | 2.85% |
| Key Ratios: | ||||
| Return on average assets | 0.75% | 0.74% | 0.01% | 1.35% |
| Return on average assets - tangible | 0.78% | 0.76% | 0.02% | 2.63% |
| Return on average equity | 5.90% | 5.67% | 0.23% | 4.06% |
| Return on average equity - tangible | 7.60% | 7.10% | 0.50% | 7.04% |
| Return on average common equity | 5.60% | 5.23% | 0.37% | 7.07% |
| Return on average common equity - tangible | 8.08% | 7.29% | 0.79% | 10.84% |
| Net interest margin-fully tax equivalent (2)(3) | 3.92% | 3.66% | 0.26% | 7.10% |
| Net interest margin (2) | 3.83% | 3.59% | 0.24% | 6.69% |
| Average earning assets/total average assets | 89.88% | 90.80% | (0.92%) | (1.01%) |
| Average loans/average deposits | 87.36% | 94.13% | (6.77%) | (7.19%) |
| Average noninterest deposits/total average deposits | 24.60% | 23.31% | 1.29% | 5.53% |
| Allowance for loan losses/period end loans | 1.51% | 1.34% | 0.17% | 12.69% |
| Nonperforming assets to period end assets | 2.28% | 1.50% | 0.78% | 52.00% |
| Period end equity/period end total assets | 12.66% | 13.26% | (0.60%) | (4.52%) |
| Efficiency ratio (1) | 73.74% | 66.10% | 7.64% | 11.56% |
| (1) Excludes gain on available for sale securities | ||||
| (2) Includes bank-owned life insurance | ||||
| (3) Presented on a tax-equivalent basis | ||||
| Selected Financial Highlights (unaudited) | ||||
| TOWNEBANK | ||||
| June 30, 2011 | ||||
| (dollars in thousands) | ||||
| Increase/ | % Increase/ | |||
| Six Months Ended June 30, | 2011 | 2010 | (Decrease) | (Decrease) |
| Results of Operations: | ||||
| Net interest income | $ 67,859 | $ 58,591 | $ 9,268 | 15.82% |
| Noninterest income (1) | 31,260 | 30,999 | 261 | 0.84% |
| Gain on available for sale securities | 3,681 | 2,479 | 1,202 | 48.49% |
| Noninterest expenses | 70,627 | 60,637 | 9,990 | 16.48% |
| Provision for loan losses | 11,140 | 9,931 | 1,209 | 12.17% |
| Pretax Income | 21,820 | 21,162 | 658 | 3.11% |
| Provision for income tax expense | 6,011 | 6,255 | (244) | (3.89%) |
| Net income attributable to TowneBank | 15,809 | 14,907 | 902 | 6.05% |
| Preferred stock dividends and accretion | 4,667 | 4,681 | (14) | (0.30%) |
| Net income available to common shareholders | 11,142 | 10,226 | 916 | 8.96% |
| Net income per common share - basic | 0.39 | 0.37 | 0.02 | 5.41% |
| Net income per common share - diluted | 0.38 | 0.36 | 0.02 | 5.56% |
| Period End Data: | ||||
| Total assets | $ 4,017,719 | $ 3,732,744 | $ 284,975 | 7.63% |
| Total assets - tangible | 3,904,307 | 3,634,797 | 269,510 | 7.41% |
| Earning assets (2) | 3,648,351 | 3,389,733 | 258,618 | 7.63% |
| Loans (net of unearned income) | 2,761,326 | 2,673,954 | 87,372 | 3.27% |
| Allowance for loan losses | 41,787 | 35,898 | 5,889 | 16.40% |
| Goodwill and other intangibles | 113,411 | 97,947 | 15,464 | 15.79% |
| Nonperforming assets | 91,521 | 56,113 | 35,408 | 63.10% |
| Noninterest bearing deposits | 779,262 | 671,861 | 107,401 | 15.99% |
| Interest bearing deposits | 2,319,420 | 2,120,029 | 199,391 | 9.41% |
| Total deposits | 3,098,682 | 2,791,890 | 306,792 | 10.99% |
| Total equity | 508,719 | 495,072 | 13,647 | 2.76% |
| Total equity - tangible | 395,308 | 397,125 | (1,817) | (0.46%) |
| Common equity | 370,027 | 355,961 | 14,066 | 3.95% |
| Common equity - tangible | 256,616 | 258,014 | (1,397) | (0.54%) |
| Book value per share | 12.73 | 12.33 | 0.40 | 3.24% |
| Book value per share - tangible | 8.83 | 8.94 | (0.11) | (1.23%) |
| Daily Average Balances: | ||||
| Total assets | $ 3,949,767 | $ 3,686,830 | $ 262,937 | 7.13% |
| Total assets - tangible | 3,836,793 | 3,587,883 | 248,910 | 6.94% |
| Earning assets (2) | 3,553,153 | 3,356,008 | 197,145 | 5.87% |
|
Loans (net of unearned income), excluding nonaccrual loans |
2,678,202 | 2,557,471 | 120,731 | 4.72% |
| Allowance for loan losses | 39,698 | 34,175 | 5,523 | 16.16% |
| Goodwill and other intangibles | 112,974 | 98,947 | 14,027 | 14.18% |
| Noninterest bearing deposits | 738,036 | 609,388 | 128,648 | 21.11% |
| Interest bearing deposits | 2,294,626 | 2,067,605 | 227,021 | 10.98% |
| Total deposits | 3,032,662 | 2,676,993 | 355,669 | 13.29% |
| Total equity | 507,101 | 479,034 | 28,067 | 5.86% |
| Total equity - tangible | 394,127 | 380,087 | 14,040 | 3.69% |
| Common equity | 367,498 | 340,374 | 27,124 | 7.97% |
| Common equity - tangible | 254,524 | 241,427 | 13,097 | 5.42% |
| Key Ratios: | ||||
| Return on average assets | 0.81% | 0.82% | (0.01%) | (1.22%) |
| Return on average assets - tangible | 0.83% | 0.84% | (0.01%) | (1.19%) |
| Return on average equity | 6.29% | 6.28% | 0.01% | 0.16% |
| Return on average equity - tangible | 8.09% | 7.91% | 0.18% | 2.28% |
| Return on average common equity | 6.11% | 6.06% | 0.05% | 0.83% |
| Return on average common equity - tangible | 8.83% | 8.54% | 0.29% | 3.40% |
| Net interest margin-fully tax equivalent (2)(3) | 4.00% | 3.65% | 0.35% | 9.59% |
| Net interest margin (2) | 3.91% | 3.58% | 0.33% | 9.22% |
| Average earning assets/total average assets | 89.96% | 91.03% | (1.07%) | (1.18%) |
| Average loans/average deposits | 88.31% | 95.54% | (7.23%) | (7.57%) |
| Average noninterest deposits/total average deposits | 24.34% | 22.76% | 1.58% | 6.94% |
| Allowance for loan losses/period end loans | 1.51% | 1.34% | 0.17% | 12.69% |
| Nonperforming assets to period end assets | 2.28% | 1.50% | 0.78% | 52.00% |
| Period end equity/period end total assets | 12.66% | 13.26% | (0.60%) | (4.52%) |
| Efficiency ratio (1) | 71.25% | 67.68% | 3.57% | 5.27% |
| (1) Excludes gain on available for sale securities | ||||
| (2) Includes bank-owned life insurance | ||||
| (3) Presented on a tax-equivalent basis | ||||