Towne Bancorp (CE) (USOTC:TWNE)
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Towne Bancorp (OTCBB: TWNE), the parent company of Towne Bank of
Arizona, today reported that solid loan growth led to second quarter
profits of $453,000, or $.26 per diluted share, compared to a gain of
$486,000, or $.28 per diluted share in 2006. It should be noted that the
2006 performance numbers do not include the holding company activities
and therefore the 2007 Net Income per Share would be $.27 per diluted
share without the inclusion of the holding company results.
Net interest income before provision for loan losses grew by 35% to
$2,664,000 in the second quarter of ’07
compared to the second quarter of ’06. Total
non-interest expense increased to $1,621,000 from $1,085,000 at 6/30/06.
The company reported return on average assets (ROAA) of .99% for the
second quarter of ’07 (1.05% without the
holding company activities included) compared to 1.59% for the like
quarter of ’06. The year to date ROAA for ’07
was 1.18% compared to .98% for the same period of ’06.
Net loans increased 49% to $174.6 million at the end of the second
quarter 2007, compared to $117.4 million a year earlier. Net interest
margin (NIM) continued to decline to 5.86% for the second quarter of ’07
compared to 6.52% in the second quarter a year earlier. “Even
with the recent declines in our NIM over the last year, we continue to
enjoy strong margins compared to many of our peers,”
said S. Rick Meikle, CEO.
The company’s efficiency ratio has risen to
60.45% at 6/30/07 from 54.66% reported at 6/30/06. “We
have significantly grown our staff in a number of support and
infrastructure areas. This will allow us to better manage the bank as it
grows and as we continue to provide the type of quality and responsive
customer service to our clients that we demand of ourselves. In addition
we have opened loan production offices in both Scottsdale and Payson. It
is important to note that our efficiency ratio continues to compare very
favorably to our peers,” Meikle said.
“The second quarter of ’07
was a challenging quarter for the bank from several perspectives,”
said Mr. Meikle. “Our former Chief Credit
Officer resigned from the bank, effective June 1, 2007. Mr. Ken Coplen,
who has been with the bank since its inception, has been appointed as
the bank’s new CCO. Mr. Coplen has both a
long and successful career in banking and the necessary skill set to
work on several credit administration issues that need attention and
improvement as well as provide the leadership necessary to support our
growth and expansion in the future,” remarked
Mr. Meikle. “Furthermore, the company has
just added a new Credit Administrator and an internal credit review
department. We are continuing our search for additional quality,
experienced loan underwriters to enhance the bank’s
credit function from all perspectives,” added
Mr. Meikle.
Credit quality remains good with no net charge-offs for the second
quarter. “The one non-performing asset
reported at 6/30/07 is a residential construction loan for a completed
home that is well secured, adequately reserved and in the process of
collection. The resulting NPA to Total Assets ratio is 0.26% compared to
0.00% for the second quarter of ’06. Our
provision for loan loss expense in the quarter was $308,000 compared
with $91,000 and $244,000 for the second quarter of ’06
and the first quarter of ’07 respectively.
The higher provision resulted in a healthy allowance for loan losses of
1.53% of gross loans compared to 1.31% at 6/30/06 which is the result of
several downgrades of credits that were not receiving the proper level
of credit administration, monitoring and management that they deserved,”
Meikle said.
Total deposits increased 66% to $154.7 million at 6/30/07, compared to
$93.1 million at 6/30/06. “We are still too
dependent upon wholesale funding sources at the bank compared to the
growth that we must achieve in local core deposit relationships,”
reported Mr. Meikle. “Furthermore, our core
deposit funding strategies of adding dedicated deposit business
development officers and enhanced product offerings such as remote
capture deposit services need to be more effective during upcoming
quarters or we may be limited in some of our loan growth opportunities
because of core deposit funding challenges,”
Meikle said.
Statements concerning future performance, developments or events,
expectations for earnings, growth and market forecasts, and any other
guidance on future periods, constitute forward-looking statements, which
are subject to a number of risks and uncertainties that are beyond Towne
Bancorp’s control and might cause actual
results to differ materially from the expectations and stated
objectives. Factors which could cause actual results to differ
materially include, but are not limited to, regional and general
economic conditions, management's ability to generate continued
improvement in asset quality and profitability, changes in interest
rates, deposit flows, real estate values, competition, loan delinquency
rates, the successful operation of the newly opened branches and loan
offices, changes in accounting principles, practices, policies or
guidelines, changes in legislation or regulation, other economic,
competitive, governmental, regulatory and technological factors
affecting operations, pricing, products and services. Accordingly, these
factors should be considered in evaluating the forward-looking
statements, and undue reliance should not be placed on such statements.
Towne Bancorp undertakes no responsibility to update or revise any
forward-looking statements.
(All dollars in thousands except per share data)
QUARTER
YEAR-TO-DATE
Selected Income Statement Data (unaudited)
2nd Qtr 2007
2nd Qtr 2006
Change
Jun 2007
Jun 2006
Change
Net interest income
$2,664
$1,979
34.60%
$5,056
$3,780
33.76%
Provision for loan losses
$308
$91
239.58%
$552
$844
-34.58%
Total non-interest income
$17
$5
220.64%
$29
($6)
605.80%
Total non-interest expense
$1,621
$1,085
49.39%
$2,872
$2,032
41.33%
Federal and state taxes
$300
$324
-7.32%
$655
$360
82.08%
Net income
$453
$486
-6.73%
$1,006
$539
86.70%
Selected Balance Sheet Data (unaudited)
Jun 2007
Mar 2007
2nd Quarter Change
Dec 2006
YTD 2007Change
Jun 2006
Year Over Year Change
Total assets
$192,232
$177,374
$14,858
$154,945
$37,287
$128,128
$64,104
Net loans
$174,594
$167,143
$7,451
$147,924
$26,670
$117,433
$57,162
Total deposits
$154,674
$140,181
$14,493
$118,448
$36,226
$93,144
$61,530
Total borrowings
$105
$85
$20
$85
$20
$0
$105
Total equity cap
$36,750
$36,106
$644
$35,553
$1,197
$34,580
$2,170
Book value per share
$23.03
$22.77
$0.26
$22.42
$0.61
$21.82
$1.21
QUARTER
YEAR-TO-DATE
Selected ratios (unaudited)
2nd Qtr 2007
2nd Qtr 2006
Change
Jun 2007
Jun 2006
Change
Net interest margin
5.86%
6.52%
-10.14%
5.97%
6.96%
-14.21%
Return on avg assets
0.99%
1.59%
-37.65%
1.18%
0.98%
20.31%
Return on avg equity
4.98%
5.66%
-12.07%
5.55%
3.14%
76.69%
Efficiency ratio
60.45%
54.66%
10.59%
56.49%
53.84%
4.91%
Net charge-offs to total loans
0.00%
0.01%
-100.00%
0.00%
0.01%
-100.00%
ALLL to gross loans %
1.53%
1.31%
17.31%
1.53%
1.31%
17.31%
NPA to total assets
0.26%
0.00%
n/a
0.26%
0.00%
n/a
Per share data (unaudited)
Net income per share
$0.28
$0.31
$0.63
$0.34
Net income per share (diluted)
$0.26
$0.28
$0.57
$0.31
Average shares outstanding
1,594,626
1,584,623
1,591,403
1,584,389
Note 1:
The data for June 2006 YTD and QTD do not include the holding
company.
The 2nd quarter Year 2007 performance of Towne Bank of Arizona,
without the inclusion of the Holding Company is as follows; ROAA
1.05%, ROAE 5.26%, Efficiency Ratio 59.53%, NIM 5.86%, and Net
Income Per Share (diluted) $0.27.