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Net income available to common shareholders was $4.78 million after accretion and preferred dividend payments of $2.34 million on the Bank's preferred equity issued during the third and fourth quarters of 2008. Accordingly fully diluted earnings per common share were reduced to $0.19 per share as compared to $0.25 for the prior year. The Bank's common dividend remained at $0.08 per share with the common dividend payout totaling $2.03 million.
For the third quarter, net interest income was $26.36 million, an increase of 14.98% over last year. The increase in net interest income was driven primarily by loan growth of $298.54 million, representing a 13.57% increase over last year. The Bank's net interest margin was 3.24% as compared to 3.12% in the linked quarter and 3.52% for the same period last year.
Noninterest income increased 32.38% to $15.52 million. This significant growth can be partially attributed to the rise in residential mortgage brokerage income, which increased $1.61 million or 120.86% from the comparative period in 2008. Real estate brokerage and property management revenue increased 50.69% to $4.17 million due largely to the formation of Prudential Towne Realty in the first quarter of 2009. Third quarter 2009 income also included a gain of $1.18 million on the sale of available-for-sale securities as a result of the continuation of management's strategy to shorten duration in the investment portfolio.
Noninterest expense increased $3.83 million or 15.92% over the prior year quarter, while decreasing from the linked quarter by $684 thousand or 2.40%. The Bank's second quarter results included a $1.57 million special assessment expense as the FDIC imposed an additional insurance premium on the banking industry to replenish the deposit insurance fund.
Balance Sheet
Total Bank assets grew to a record level of $3.58 billion, an increase of $560.38 million over third quarter 2008. Towne continues to meet the credit needs of the community with total loans reaching $2.50 billion, an increase of 13.57% over the prior year. Total deposits climbed to $2.65 billion, representing a 20.54% increase over the comparable period of 2008. The Bank's risk-based and tangible capital ratios remain well above regulatory standards for well-capitalized banks.
Asset Quality
The Bank's loan portfolio continues to perform well compared to the overall banking industry. Non-performing assets at September 30, 2009 were $27.51 million or 0.77% of total assets, up from a negligible 0.09% last year. Net losses for the quarter were $3.32 million or 0.54% of average loans. The loan loss provision, which increased in part due to loan growth, was $3.47 million as compared to $1.57 million for the same period last year. The Bank's loan loss reserve ended the quarter at 1.17%, up slightly from 1.16% for the comparable period last year.
"Our favorable operating results can be attributed to a great team effort on the part of our hometown bankers," stated G. Robert Aston, Jr., Chairman and CEO. "I am particularly proud of the caring our bankers are demonstrating in working with our community businesses to help restore their financial health. During these challenging economic conditions, it is a responsibility we take very seriously."
As one of Virginia's top community banks, TowneBank now operates 18 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 $3.58 billion as of September 30, 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 bases and related personnel. We assume no obligation to update information contained in this release.
Selected Financial Highlights (unaudited)
TOWNEBANK
September 30, 2009
(dollars in thousands)
Three Months Ended
September 30,
---------------------- -----------------------
Increase/ % Increase/
2009 2008 (Decrease) (Decrease)
---------- ---------- ---------- -----------
Results of Operations:
Net interest income $ 26,362 $ 22,927 $ 3,435 14.98%
Noninterest income 15,522 11,725 3,797 32.38%
Noninterest expenses 27,868 24,040 3,828 15.92%
Provision for loan
losses 3,475 1,568 1,907 121.62%
Pretax Income 10,367 9,029 1,338 14.82%
Provision for income
tax expense 3,246 2,614 632 24.18%
Net income 7,121 6,415 706 11.01%
Preferred stock
dividends and
accretion 2,341 -- 2,341 N/M
Net income available
to common
shareholders 4,780 6,415 (1,635) (25.49%)
Net income per
common share - basic 0.19 0.26 (0.07) (26.92%)
Net income per
common share -
diluted 0.19 0.25 (0.06) (24.00%)
---------- ---------- ---------- -----------
Period End Data:
Total assets $3,575,889 $3,015,506 $ 560,383 18.58%
Total assets -
tangible 3,493,147 2,942,613 550,534 18.71%
Earning assets 3,271,999 2,587,869 684,130 26.44%
Loans (net of
unearned income) 2,498,021 2,199,486 298,535 13.57%
Allowance for loan
losses 29,163 25,452 3,711 14.58%
Goodwill and other
intangibles 82,742 72,892 9,850 13.51%
Nonperforming assets 27,512 2,734 24,778 906.29%
Noninterest bearing
deposits 612,158 561,040 51,118 9.11%
Interest bearing
deposits 2,037,793 1,637,320 400,473 24.46%
Total deposits 2,649,951 2,198,360 451,591 20.54%
Total equity 447,740 333,372 114,368 34.31%
Total equity -
tangible 364,998 260,480 104,518 40.13%
Common equity 298,332 273,764 24,568 8.97%
Common equity -
tangible 215,590 200,872 14,718 7.33%
Book value per
common share 11.91 11.23 0.68 6.06%
Book value per
common share -
tangible 8.61 8.24 0.37 4.49%
---------- ---------- ---------- -----------
Daily Average
Balances:
Total assets $3,538,954 $2,862,793 $ 676,161 23.62%
Total assets -
tangible 3,455,956 2,789,811 666,145 23.88%
Earning assets 3,231,192 2,593,447 637,745 24.59%
Loans (net of
unearned income),
excluding
nonaccrual loans 2,461,833 2,139,210 322,623 15.08%
Allowance for loan
losses 29,164 24,562 4,602 18.74%
Goodwill and other
intangibles 82,998 72,982 10,016 13.72%
Noninterest bearing
deposits 591,717 506,676 85,041 16.78%
Interest bearing
deposits 2,037,733 1,563,047 474,686 30.37%
Total deposits 2,629,450 2,069,723 559,727 27.04%
Total equity 437,706 306,702 131,004 42.71%
Total equity -
tangible 354,708 233,720 120,988 51.77%
Common equity 295,527 268,794 26,733 9.95%
Common equity -
tangible 212,529 195,812 16,716 8.54%
---------- ---------- ---------- -----------
Key Ratios:
Return on average
assets 0.80% 0.89% (0.09%) (10.11%)
Return on average
assets - tangible 0.82% 0.91% (0.09%) (9.89%)
Return on average
equity 6.45% 8.32% (1.87%) (22.48%)
Return on average
equity - tangible 7.96% 10.92% (2.96%) (27.11%)
Return on common
equity 6.42% 9.49% (3.07%) (32.35%)
Return on common
equity - tangible 8.92% 13.03% (4.11%) (31.54%)
Net interest margin 3.24% 3.52% (0.28%) (7.95%)
Average earning
assets/total
average assets 91.30% 90.59% 0.71% 0.78%
Average loans/
average deposits 93.63% 103.36% (9.73%) (9.41%)
Average noninterest
deposits/total
average deposits 22.50% 24.48% (1.98%) (8.09%)
Allowance for loan
losses/period end
loans 1.17% 1.16% 0.01% 0.86%
Nonperforming assets
to period end
assets 0.77% 0.09% 0.68% 755.56%
Period end equity/
period end total
assets 12.52% 11.06% 1.46% 13.20%
Efficiency ratio 66.54% 69.37% (2.83%) (4.08%)
---------- ---------- ---------- -----------
Selected Financial Highlights (unaudited)
TOWNEBANK
September 30, 2009
(dollars in thousands)
Nine Months Ended
September 30,
---------------------- ----------------------
Increase/ % Increase/
2009 2008 (Decrease) (Decrease)
---------- ---------- ---------- ----------
Results of Operations:
Net interest income $ 72,251 $ 64,815 $ 7,436 11.47%
Noninterest income 47,832 34,671 13,161 37.96%
Noninterest expenses 83,680 68,942 14,738 21.38%
Provision for loan
losses 8,164 4,531 3,633 80.18%
Pretax Income 28,303 25,959 2,344 9.03%
Provision for income
tax expense 8,253 7,510 743 9.89%
Net income 20,050 18,449 1,601 8.68%
Preferred stock
dividends and
accretion 7,702 -- 7,702 N/M
Net income available
to common
shareholders 12,348 18,449 (6,101) (33.07%)
Net income per common
share - basic 0.50 0.76 (0.26) (34.21%)
Net income per common
share - diluted 0.49 0.73 (0.24) (32.88%)
---------- ---------- ---------- ----------
Period End Data:
Total assets $3,575,889 $3,015,506 $ 560,383 18.58%
Total assets -
tangible 3,493,147 2,942,613 550,534 18.71%
Earning assets 3,271,999 2,587,869 684,130 26.44%
Loans (net of
unearned income) 2,498,021 2,199,486 298,535 13.57%
Allowance for loan
losses 29,163 25,452 3,711 14.58%
Goodwill and other
intangibles 82,742 72,892 9,850 13.51%
Nonperforming assets 27,512 2,734 24,778 906.29%
Noninterest bearing
deposits 612,158 561,040 51,118 9.11%
Interest bearing
deposits 2,037,793 1,637,320 400,473 24.46%
Total deposits 2,649,951 2,198,360 451,591 20.54%
Total equity 447,740 333,372 114,368 34.31%
Total equity -
tangible 364,998 260,480 104,518 40.13%
Common equity 298,332 273,764 24,568 8.97%
Common equity -
tangible 215,590 200,872 14,718 7.33%
Book value per share 11.91 11.23 0.68 6.06%
Book value per share -
tangible 8.61 8.24 0.37 4.49%
---------- ---------- ---------- ----------
Daily Average Balances:
Total assets $3,375,160 $2,691,954 $ 683,206 25.38%
Total assets -
tangible 3,293,976 2,619,406 674,570 25.75%
Earning assets 3,098,152 2,431,290 666,862 27.43%
Loans (net of
unearned income),
excluding nonaccrual
loans 2,421,991 1,992,759 429,232 21.54%
Allowance for loan
losses 28,527 23,020 5,507 23.92%
Goodwill and other
intangibles 81,184 72,547 8,637 11.91%
Noninterest bearing
deposits 546,375 478,887 67,488 14.09%
Interest bearing
deposits 1,930,002 1,482,114 447,888 30.22%
Total deposits 2,476,377 1,961,001 515,376 26.28%
Total equity 430,086 278,079 152,007 54.66%
Total equity -
tangible 348,902 205,531 143,371 69.76%
Common equity 292,938 265,351 27,587 10.40%
Common equity -
tangible 211,754 192,804 18,950 9.83%
---------- ---------- ---------- ----------
Key Ratios:
Return on average
assets 0.79% 0.92% (0.13%) (14.13%)
Return on average
assets - tangible 0.81% 0.94% (0.13%) (13.83%)
Return on average
equity 6.23% 8.86% (2.63%) (29.68%)
Return on average
equity - tangible 7.68% 11.99% (4.31%) (35.95%)
Return on common
equity 5.64% 9.29% (3.65%) (39.29%)
Return on common
equity - tangible 7.80% 12.78% (4.98%) (38.97%)
Net interest margin 3.12% 3.56% (0.44%) (12.36%)
Average earning
assets/total average
assets 91.79% 90.32% 1.47% 1.63%
Average loans/average
deposits 97.80% 101.62% (3.82%) (3.76%)
Average noninterest
deposits/total
average deposits 22.06% 24.42% (2.36%) (9.66%)
Allowance for loan
losses/period end
loans 1.17% 1.16% 0.01% 0.86%
Nonperforming assets
to period end assets 0.77% 0.09% 0.68% 755.56%
Period end equity/
period end total
assets 12.52% 11.06% 1.46% 13.20%
Efficiency ratio 69.69% 69.30% 0.39% 0.56%
---------- ---------- ---------- ----------
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: TowneBank
CONTACT: TowneBank G. Robert Aston, Chairman and CEO 757-638-6780 Clyde E. McFarland, Jr., Senior Executive Vice President and CFO 757-638-6801
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