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TowneBank Reports Third Quarter Earnings

SUFFOLK, Va., Oct. 25, 2013 (GLOBE NEWSWIRE) -- Hampton Roads based TowneBank (the "Bank") (Nasdaq:TOWN) reported earnings of $10.42 million for the quarter ended September 30, 2013, an 11.42% increase, or $1.07 million, over the $9.35 million reported for the comparative period in 2012. Earnings for the year-to-date period increased 13.33% to $32.09 million as compared to the $28.31 million earned in the same period last year.

Net income available to common shareholders increased 13.55% to $9.08 million after preferred dividend payments of $1.34 million. Fully diluted earnings per share increased 7.69% to $0.28 per share compared to $0.26 per share for the comparative period of 2012. For the nine-month period ended September 30, 2013, fully diluted earnings per share increased 17.11% to $0.89 from $0.76 in the comparative prior year period.

The Bank's common dividend was $0.10 per share for the quarter with the common dividend totaling $3.53 million. The current dividend represents an increase of 25.0% over the dividend paid during the same quarter of 2012.

Earnings Highlights

Net interest income was $36.15 million, an $832,000, or 2.25%, decrease from the third quarter of 2012. The reduction in net interest income was primarily driven by lower yields on the Bank's earning assets and was partially offset by continued reductions in funding costs. The Bank's loan portfolio ended the period at $3.21 billion representing an increase of 5.88%, or $178.06 million. The Bank's net interest margin on a fully tax equivalent basis decreased to 3.53%, down from 3.95% in the same period in 2012, and 3.67% in the second 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 $1.31 million, or 6.06%, to $22.99 million for the third quarter of 2013, compared to the third quarter of 2012. The majority of the increase is attributable to insurance commissions, which increased $1.50 million or 25.07%, while residential mortgage brokerage income declined due to a combination of lower production volumes related to rising rates and lower margins.

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