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TowneBank Reports Second Quarter Earnings

Stocks in this article: TOWN

SUFFOLK, Va., July 26, 2013 (GLOBE NEWSWIRE) -- Hampton Roads based TowneBank (the "Bank") (Nasdaq:TOWN) reported record earnings of $11.20 million for the quarter ended June 30, 2013, a 17.54% increase, or $1.67 million, over the $9.53 million reported for the comparative period in 2012. Earnings for the year-to-date period increased 14.26% to $21.67 million as compared to the $18.97 million earned in the same period last year.

Net income available to common shareholders increased 24.31% to $9.86 million after preferred dividend payments of $1.34 million. Fully diluted earnings per share increased 19.23% to $0.31 per share compared to $0.26 per share for the comparative period of 2012. For the six-month period ended June 30, 2013, fully diluted earnings per share increased 22.0% to $0.61 from $0.50 in the comparative prior year period.

The Bank's common dividend was $0.09 per share for the quarter with the common dividend totaling $2.89 million. The current dividend represents an increase of 12.5% over the dividend paid during the same quarter of 2012.

Earnings Highlights

Net interest income increased to $36.08 million, a $173,000, a slight improvement over the second quarter of 2012. The increase in net interest income was driven by a combination of the growth in the Bank's earning assets and the continued reduction in funding costs. The Bank's net interest margin on a fully tax equivalent basis decreased to 3.67%, down from 3.99% in the same period in 2012, and 3.72% in the first quarter of 2013. The declines in net interest margin are primarily due to yield declines on earning assets and are consistent with the continued low interest rate environment.

Noninterest income, excluding gains or losses on investment securities, increased by $3.72 million, or 17.93%, to $24.46 million for the second quarter of 2013, compared to the second quarter of 2012. The majority of the increase is attributable to residential mortgage brokerage income, which increased $2.39 million or 36.63% from the comparative period in 2012 and insurance commissions, which increased $819,000, or 13.61%, from the comparative period in 2012. The increase in residential mortgage brokerage income was due to the continued expansion of our mortgage operations, while the increase in insurance commissions is largely due to the acquisition of an insurance agency in December 2012.

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