SUFFOLK, Va., Nov. 9, 2010 (GLOBE NEWSWIRE) -- Hampton Roads based TowneBank (Nasdaq:TOWN) reported net income of $7.53 million for the quarter ended September 30, 2010 representing a 5.80% increase over the $7.12 million earned in the comparative period of 2009. Earnings for the nine month year to date period increased 11.93% to $22.44 million as compared to the $20.05 million earned in the same period last year.
For the third quarter, net income available to common shareholders increased 8.72% to $5.20 million after accretion and preferred dividend payments of $2.34 million. The bank's common dividend payments totaled $2.34 million or $0.08 per share. Fully diluted earnings of $0.18 per share were down slightly from the third quarter of 2009 due to the issuance of 3.84 million new common shares since September 30, 2009.
Contributing to the improvement in earnings performance was a 16.14% increase in net interest income to $30.62 million, an increase of $4.25 million over last year. The bank's net interest margin on a fully tax equivalent basis increased to 3.74%, up from 3.32% for the same period in 2009. The increase reflects the continued repricing of deposit liabilities and growth of the loan portfolio.
Non-interest income, excluding gains on available for sale securities, increased 9.39% to $15.69 million. The improvement was driven by insurance fees and commissions and mortgage brokerage income, which increased 48.94% and 25.37% respectively over the comparative prior year quarter. The bank also recognized a gain on available for sale securities of $3.48 million for the quarter as compared to the $1.18 million recorded for the same period in 2009 as the bank continues to reposition its securities portfolio while taking advantage of market volatility.
Total bank assets reached $3.66 billion, an increase of $85.36 million over the third quarter 2009 reflecting a growth rate of 2.39%. Towne continued to meet the credit needs of the Hampton Roads community with loans outstanding increasing 5.77% or $144.08 million over last year in the same period. Total deposits climbed to $2.73 billion representing a 3.02% increase for the period.
Asset quality remained favorable relative to our local, regional and national competitors during the quarter. During the quarter, non-performing assets rose modestly by $2.13 million to end the quarter at 1.59% of total assets. Non-performing loans decreased by $6.14 million, while OREO properties, in the process of sale, rose to $14.41 million.
The bank's loan loss provision for the quarter was $7.30 million reflective of net loan losses of $7.26 million. The bank's loan loss reserve as a percentage of period-end loans at September 30, 2010 was 1.36% compared to 1.17% at the period ended September 30, 2009.
"Overall, we are pleased with the trends seen in our third quarter operating results," said G. Robert Aston, Jr., Chairman and Chief Executive Officer. "Excluding securities gains, the bank's pre-tax, pre-provision revenue increased 13.76%, or $5.60 million, for the third quarter of 2010 and $689,000 or 1.51% on a linked quarter basis."
As one of Virginia's top community banks, TowneBank now operates 20 banking offices in Chesapeake, Hampton, Portsmouth, Newport News, Virginia Beach, Norfolk, Williamsburg, York County, and Suffolk. 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 $3.66 billion as of September 30, 2010, TowneBank is one of the largest banks headquartered in Virginia.
This release may contain 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 businesses, 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: TowneBank G. Robert Aston, Chairman and CEO 757-638-6780 Clyde E. McFarland, Jr., Senior Executive Vice President and CFO 757-638-6801