SUFFOLK, Va., May 4, 2011 (GLOBE NEWSWIRE) -- Hampton Roads based TowneBank (Nasdaq:TOWN) reported record earnings for the quarter ended March 31, 2011 of $8.30 million, a 3.44% increase, over the $8.03 million reported for the first quarter of 2010.
Net income available to common shareholders increased 4.98% to $5.97 million after accretion and preferred dividend payments of $2.33 million. Fully diluted earnings of $0.20 per share were unchanged from 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
The growth in earnings was driven by an 18.13% increase in net interest income, which rose to $34.10 million, a $5.23 million improvement from 2010. The bank's net interest margin on a fully tax equivalent basis increased to 4.08%, up from 3.65% 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, increased 4.36% to $15.77 million. The improvement was primarily attributable to the acquisition of W.T. Chapin Insurance Company, which led to an increase in insurance commissions and fees of $443,000, or 7.48%, over the comparative prior year.
Balance Sheet
At March 31, 2011, total bank assets reached $3.97 billion, an increase of $282.82 million, or 7.66%, over first quarter 2010. Contributing to the growth was the acquisition of $149.80 million of assets in the Bank of Currituck business combination in December 2010.
The bank's loan portfolio ended the period at $2.74 billion representing an increase of 5.56%, or $144.13 million, from one year ago.
Deposit growth continued as total deposits grew to $3.06 billion, an increase of 14.07%, or $376.97 million. Non-interest bearing demand deposits increased a very healthy 22.88% to end the quarter at $736.85 million, representing 24.11% of total deposits.
Capital Strength
The bank's total equity at March 31, 2011 rose to $505.73 million, while common equity increased 9.07% or $30.45 million. Accordingly, total risk based capital, Tier 1 capital and Tier 1 leverage ratios were 13.64%, 11.98% and 10.28%, respectively. All ratios exceed the current regulatory standards for well capitalized status.
Credit Quality
The bank's loan portfolio continued to perform reasonably well compared to our major competitors. Non-performing loans at the end of the first quarter totaled $70.94 million as compared to $44.51 million for the same period last year. The increase can be largely attributed to the two residential developer relationships.
Bank-owned foreclosed properties ended the period at $23.70 million consisting largely of single family homes and residential building lots. The bank's total non-performing assets represented 2.38% of total assets at March 31, 2011 up from 2.01% on a linked quarter basis from December 31, 2010.
"While we are continuing to see some growth in our non-performing assets, we have been encouraged by the overall health of our local economy and the dedication of many of our borrowers in working through their challenges," said G. Robert Aston, Jr., Chairman and Chief Executive Officer.
"From an operating perspective, we have been extremely pleased with the strength of our core earnings growth. Top line revenue growth continued during the quarter and our pre-tax, pre-provision net income, excluding securities gains, increased to $15.47 million representing a 14.24% increase from the year ago period," 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 $3.97 billion as of March 31, 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.
CONTACT: G. Robert Aston, Chairman and CEO 757-638-6780 Clyde E. McFarland, Jr., Senior Executive Vice President and CFO 757-638-6801