SUFFOLK, Va., Jan. 29, 2009 (GLOBE NEWSWIRE) -- Hampton Roads based TowneBank (Nasdaq:TOWN) reported net income of $23.89 million for the year ended December 31, 2008 as compared to $23.26 in 2007. This represented an increase of 2.73%.
Net interest income was $87.13 million, an increase of $1.63 million over last year. The increase in net interest income was attributed primarily to loan growth, as the bank's interest margin declined to 3.50%, down from 3.94% in 2007. This decline in margin is a result of the rapid reduction in rates by the Federal Reserve system during 2008.
Non-interest income increased 11.31% to $40.91 million. This increase can be partly attributed to the growth of the bank's property management business as total realty related revenue increased 14.05% to $17.54 million. Insurance commissions also contributed significantly as revenue from the sale of insurance products increased 6.39% to $11.54 million.
Fully diluted earnings per common share decreased 3.26% to $0.89 per share as compared to $0.92 last year. This decrease was due to the company's first quarterly cash dividend on the $59.85 million issue of 8% Non-Cumulative Convertible Preferred Stock, Series A purchased by investors during the third quarter of 2008.
Balance Sheet
Total bank assets reached a record level of $3.13 billion, an increase of $632.50 million over 2007. Towne's continuing commitment to meeting the credit needs of the community was demonstrated by loan growth of $520.73 million, an increase of 28.46% over last year. Total deposits climbed to $2.24 billion, representing a 22.04% increase over 2007.
Asset Quality
Asset quality remained excellent with total net loan losses of $842 thousand representing a loss ratio of a modest 0.04%. Non-performing assets at December 31, 2008 totaled $3.80 million or 0.12% of total assets as compared to 0.07% last year.
Due to the record loan growth, the bank's loan loss provision expense climbed to $7.02 million, an increase of $4.28 million. The bank's loan loss reserve remained unchanged at 1.17% of period end loans.
TARP
In December 2008, under the U. S. Treasury's TARP Capital Purchase Program, the bank issued to the U.S. Treasury 76,458 shares of Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series B along with a ten year warrant to purchase 538,184 common shares at an exercise price of $21.31 per share. This represented net new capital proceeds to the bank of $76.46 million. Non-Cumulative dividends are payable at a rate of 5% annually over the first five years and a rate of 9% thereafter.
"As has been reported, the purpose of this program is to stimulate the economy and to make additional funds available to meet the credit needs of communities all across the nation," said G. Robert Aston, Jr., Chairman and CEO. "I am pleased to report that during the fourth quarter, we were able to increase our loan portfolio $150.70 million that enabled us to fully lend our entire TARP proceeds to businesses, organizations, and consumers right here in Hampton Roads."
Net income for the fourth quarter was $5.45 million compared to $5.87 million, a decrease of 7.19% from the comparable period of 2007. Earnings were negatively impacted by a $1.66 million increase in the loan loss provision during the quarter as compared to the same period in 2007. The loan loss provision expense of $2.49 million was necessitated by the sharp increase in loan volume, including the deployment of the TARP proceeds into new loans.
As one of Virginia's top community banks, TowneBank now operates 17 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, TowneBank 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 $3.13 billion as of December 31, 2008, 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 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.
Selected Financial Highlights (unaudited)
TOWNEBANK
December 31, 2008
(dollars in thousands)
=====================================================================
Twelve Months Ended Increase/ % Increase/
December 31, 2008 2007 (Decrease) (Decrease)
---------- ---------- ---------- ----------
Results of Operations:
Net interest income 87,127 $ 85,499 $ 1,628 1.90%
Noninterest income(1) 40,907 36,752 4,155 11.31%
Noninterest expenses 91,257 85,507 5,750 6.72%
Provision for loan
losses 7,022 2,743 4,279 156.00%
Pretax Income 32,645 34,083 (1,438) (4.22%)
Provision for income
tax expense 8,751 10,824 (2,073) (19.15%)
Net income 23,894 23,259 635 2.73%
Net income available
to common
shareholders 22,498 23,259 (761) (3.27%)
Net income per common
share - basic 0.93 0.98 (0.05) (5.10%)
Net income per common
share - diluted 0.89 0.92 (0.03) (3.26%)
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Period End Data:
Total assets 3,133,578 $2,501,078 $ 632,500 25.29%
Total assets -
tangible 3,061,545 2,433,009 628,536 25.83%
Earning assets 2,860,820 2,267,763 593,057 26.15%
Loans (net of
unearned income) 2,350,186 1,829,456 520,730 28.46%
Allowance for loan
losses 27,503 21,323 6,180 28.98%
Noninterest bearing
deposits 475,290 439,122 36,168 8.24%
Interest bearing
deposits 1,763,378 1,395,224 368,154 26.39%
Total deposits 2,238,668 1,834,346 404,322 22.04%
Shareholders' equity 419,671 256,856 162,815 63.39%
Shareholders' equity
- tangible 347,637 188,787 158,850 84.14%
Common shareholders'
equity 284,163 256,856 27,307 10.63%
Common shareholders'
equity - tangible 212,130 188,787 23,343 12.36%
Book value per share 11.58 10.66 0.92 8.63%
Book value per share
- tangible 8.64 7.83 0.81 10.34%
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Daily Average Balances:
Total assets 2,778,722 $2,387,258 $ 391,464 16.40%
Total assets -
tangible 2,706,140 2,321,193 384,947 16.58%
Earning assets 2,491,049 2,171,352 319,697 14.72%
Loans (net of
unearned income),
excluding nonaccrual
loans 2,059,351 1,741,441 317,910 18.26%
Allowance for loan
losses 23,745 20,401 3,344 16.39%
Noninterest bearing
deposits 484,735 453,799 30,936 6.82%
Interest bearing
deposits 1,537,759 1,325,619 212,140 16.00%
Total deposits 2,022,494 1,779,418 243,076 13.66%
Shareholders' equity 296,749 242,186 54,563 22.53%
Shareholders' equity
- tangible 224,167 176,122 48,045 27.28%
Common shareholders'
equity 274,189 242,186 32,003 13.21%
Common shareholders'
equity - tangible 201,607 176,122 25,485 14.47%
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Key Ratios:
Return on average
assets 0.86% 0.97% (0.11%) (11.34%)
Return on average
assets - tangible 0.88% 1.00% (0.12%) (12.00%)
Return on average
equity 8.05% 9.60% (1.55%) (16.15%)
Return on average
equity - tangible 10.66% 13.21% (2.55%) (19.30%)
Return on common
equity 8.21% 9.60% (1.39%) (14.48%)
Return on common
equity - tangible 11.16% 13.21% (2.05%) (15.52%)
Net interest margin 3.50% 3.94% (0.44%) (11.17%)
Average earning
assets/total average
assets 89.65% 90.96% (1.31%) (1.44%)
Average loans/average
deposits 101.82% 97.87% 3.95% 4.04%
Average noninterest
deposits/total
average deposits 23.97% 25.50% (1.53%) (6.00%)
Allowance for loan
losses/period end
loans 1.17% 1.17% -- --
Period end
shareholders' equity/
period end total
assets 13.39% 10.27% 3.12% 30.38%
Efficiency ratio 71.28% 69.94% 1.34% 1.92%
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(1) Noninterest income excludes gains/(losses) on available-for-sale
securities
Selected Financial Highlights (unaudited)
TOWNEBANK
December 31, 2008
(dollars in thousands)
=====================================================================
Three Months Ended Increase/ % Increase/
December 31, 2008 2007 (Decrease) (Decrease)
---------- ---------- ---------- ----------
Results of Operations:
Net interest income 22,313 $ 21,084 $ 1,229 5.83%
Noninterest income(1) 9,196 9,014 182 2.02%
Noninterest expenses 22,315 20,938 1,377 6.58%
Provision for loan
losses 2,491 831 1,660 199.76%
Pretax Income 6,686 8,420 (1,734) (20.59%)
Provision for income
tax expense 1,242 2,553 (1,311) (51.35%)
Net income 5,445 5,867 (422) (7.19%)
Net income available
to common
shareholders 4,049 5,867 (1,818) (30.99%)
Net income per common
share - basic 0.17 0.25 (0.08) (32.00%)
Net income per common
share - diluted 0.16 0.23 (0.07) (30.43%)
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Period End Data:
Total assets 3,133,578 $2,501,078 $ 632,500 25.29%
Total assets -
tangible 3,061,545 2,433,009 628,536 25.83%
Earning assets 2,860,820 2,267,763 593,057 26.15%
Loans (net of
unearned income) 2,350,186 1,829,456 520,730 28.46%
Allowance for loan
losses 27,503 21,323 6,180 28.98%
Noninterest bearing
deposits 475,290 439,122 36,168 8.24%
Interest bearing
deposits 1,763,378 1,395,224 368,154 26.39%
Total deposits 2,238,668 1,834,346 404,322 22.04%
Shareholders' equity 419,671 256,856 162,815 63.39%
Shareholders' equity
- tangible 347,637 188,787 158,850 84.14%
Common shareholders'
equity 284,163 256,856 27,307 10.63%
Common shareholders'
equity - tangible 212,130 188,787 23,343 12.36%
Book value per common
share 11.58 10.66 0.92 8.63%
Book value per common
share - tangible 8.64 7.83 0.81 10.34%
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Daily Average Balances:
Total assets 3,037,140 $2,497,178 $ 539,962 21.62%
Total assets -
tangible 2,964,412 2,429,901 534,511 22.00%
Earning assets 2,669,026 2,256,534 412,492 18.28%
Loans (net of
unearned income),
excluding nonaccrual
loans 2,257,680 1,806,149 451,531 25.00%
Allowance for loan
losses 25,903 20,944 4,959 23.68%
Noninterest bearing
deposits 502,152 451,987 50,165 11.10%
Interest bearing
deposits 1,703,484 1,390,072 313,412 22.55%
Total deposits 2,205,636 1,842,059 363,577 19.74%
Shareholders' equity 352,353 251,624 100,729 40.03%
Shareholders' equity
- tangible 279,625 184,347 95,278 51.68%
Common Shareholders'
equity 276,202 251,624 24,578 9.77%
Common Shareholders'
equity - tangible 203,475 184,347 19,128 10.38%
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Key Ratios:
Return on average
assets 0.71% 0.93% (0.22%) (23.66%)
Return on average
assets - tangible 0.73% 0.96% (0.23%) (23.96%)
Return on average
equity 6.15% 9.25% (3.10%) (33.51%)
Return on average
equity - tangible 7.75% 12.63% (4.88%) (38.64%)
Return on common
equity 5.83% 9.25% (3.42%) (36.97%)
Return on common
equity - tangible 7.92% 12.63% (4.71%) (37.29%)
Net interest margin 3.33% 3.71% (0.38%) (10.24%)
Average earning
assets/total average
assets 87.88% 90.36% (2.48%) (2.74%)
Average loans/average
deposits 102.36% 98.05% 4.31% 4.40%
Average noninterest
deposits/total
average deposits 22.77% 24.54% (1.77%) (7.21%)
Allowance for loan
losses/period end
loans 1.17% 1.17% -- --
Period end
shareholders' equity/
period end total
assets 13.39% 10.27% 3.12% 30.38%
Efficiency ratio 70.82% 69.57% 1.25% 1.80%
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(1) Noninterest income excludes gains/(losses) on available-for-sale
securities