(Source: Business Wire)
Towne Bancorp (OTCBB:TWNE), the holding company for Towne Bank of
Arizona (TBA), today reported a net loss of ($1.779) million (MM) or
($1.10) per diluted share for the quarter ended September 30, 2009,
compared to a loss of ($2.181) MM or ($1.35) per diluted share for the
quarter ended September 30, 2008. This is an improvement over the same
period of 2008 and significantly better than the ($9.332) MM reported
for the quarter ended June 30, 2009. The primary reason for the loss in
the period ended September 30, 2009 continues to relate to the very high
level of non-performing assets held by TBA. Costs associated with these
assets include $1MM for charge-offs; $277K for additional provisions to
the Allowance for Loan and Lease Losses (ALLL); $229 thousand for
increased FDIC deposit insurance premiums together with expenses
associated with Other Real Estate Owned (OREO) such as appraisal, legal,
taxes, insurance, etc.
Highlights for the 3rd Quarter 2009
Non-accruing Loans decreased from $27.7MM at 6/30/09 to $14.8MM at
9/30/09
Loans Past Due 30 to 89 days decreased from $4.7MM at 6/30/09 to
$1.3MM at 9/30/09
Total Non-performing assets (NPA's) decreased from $50.3MM at 6/30/09
to $41.2MM at 9/30/09
Resolved $5.1MM of non-performing assets during the quarter
Entered into contract to sell an additional $6MM of non-performing
assets during the 4th quarter
Total risk-based capital ratio of 10.63%
At 10.63%, total risk-based capital continues to be above current
industry norms as of 9/30/09. Unfortunately the industry norms are not
adequate for the current severely troubled, although improving, economic
environment. In recognition of the severity of current conditions, the
Bank is continuing to move aggressively to reduce the volume of problem
assets.
At September 30, 2009, total assets decreased to $126.6 million from
$132.6 million at quarter end 6/30/09. This reduction in total assets is
primarily due to the Bank's continued efforts to reduce its
concentration of Commercial Real Estate (CRE) loans and Brokered
Deposits used to fund those loans. The Bank reduced Brokered Deposits by
$4.5 million during the quarter ended 9/30/09 or 7.25%.
Net interest income improved to $725 thousand at 9/30/09, compared to
$336 thousand at quarter ended 6/30/09. A primary reason for the
improvement in net interest income was a reduction in the number and
amount of loans entering non-accrual status. The principal source of
earnings for most banks is net interest income. To achieve a return to
appropriate levels the Bank needs to dispose of non-earning assets or
return them to a contributing status, while reducing the cost of
deposits and borrowings. The Bank is moving aggressively to address
these critical issues.
Plans to Increase Capital
While the Bank currently has total risk-based capital in excess of 10%,
the high level of non-performing assets coupled with our high
concentration of brokered deposits in a troubled economic environment
leaves us unable to take advantage of potential opportunities in our
marketplace. For this reason, we have determined we need to increase
TBA's capital. The Board of Directors of the Company authorized a
special shareholders meeting to approve an amendment to the Company's
Articles of Incorporation which would increase the number of authorized
shares of common stock of the Company. The meeting will be held November
19, 2009 at the main office of Towne Bank of Arizona. Upon approval, the
Company would then be in a position to raise additional capital through
the sale of new shares.
The new capital will support continued and aggressive management of
troubled assets, provide operational flexibility, and enable TBA to be
on the offensive coming out of this downward economic cycle.
A Notice of the Special Meeting of Shareholders was mailed October 13,
2009 to shareholders of record on October 8, 2009.
Asset Management
The second quarter of 2009 saw the first reduction in overall NPA's
since the middle of 2008. That trend continued in the third quarter. The
total of loans 30-89 days past due or delinquent, loans on non-accrual,
and OREO decreased from $50.3 million at 6/30/09 to $41.2 million at
9/30/09. The 9/30/09 total was an improvement from the high at May 31,
2009 of $67.2 million, a reduction of 39%.
Separating these categories, loans 30-89 days past due or delinquent
declined from $4.7 million at June 30, 2009 to $1.3 million at September
30, 2009 and loans on non-accrual declined from $27.7 million at 6/30/09
to $14.8 million at 9/30/09. There is a natural progression of
non-accrual loans to OREO, and in that category, OREO increased to $25.1
million at September 30, 2009 from $17.9 million at June 30, 2009.
Towne Bank's Management Team continues to work to resolve balance sheet
issues while positioning the Bank to take advantage of what we believe
will be very opportune local market conditions in the future. The
improvements described over the last few quarters in the decline in
non-performing assets and reduction of brokered deposits are a result of
management's efforts to realistically recognize loan losses, dispose of
acquired assets at market prices, and improve the liability side of our
balance sheet by replacing brokered deposits with core deposits. These
effects, combined with an improving local economy and additional
capital, should leave the Bank well positioned for the future.
FORWARD-LOOKING STATEMENT
This document contains statements that are forward-looking in nature
and, as such, these statements are subject to risks and uncertainties
that may cause actual results to vary materially from those discussed in
the document. Specific risks and uncertainties, among others, associated
with forward-looking statements in the document include credit risks in
the bank's loan portfolio and the ability of the bank to recover on
non-performing loans; liquidity risks relating to deposit growth,
funding costs and the bank's need for brokered deposits that could
adversely affect future net income; risks relating to expected formal
regulatory actions and the resolution of such concerns; and economic and
market risks relating to disruptions in the financial markets and the
impact of the current decline in the real estate market in the bank's
market area. Forward-looking statements include those identified by the
use of the words "expect," "anticipate," "plan" and similar words of
prospective meaning. The reader should not place undue reliance on such
forward-looking statements, and the company undertakes no obligation to
update such statements.
(All dollars in thousands except per share data)
QUARTER YEAR-TO-DATE
Selected Income Statement Data (unaudited) 3rd Qtr 2009 3rd Qtr 2008 2009 Change 2nd Qtr 2009 Sep 2009 Sep 2008 Dec 2008
Net interest income $725 $1,383 -47.56 % $336 $1,696 $4,531 $5,028
Provision for loan losses $277 $3,353 -91.74 % $5,400 $7,650 $3,353 $9,776
Total non-interest income ($403 ) ($77 ) -423.72 % ($2,620 ) ($3,514 ) ($93 ) $153
Total non-interest expense $1,824 $1,493 22.15 % $1,649 $4,989 $4,737 $6,627
Federal and state taxes $0 ($1,359 ) 100.00 % $0 $0 ($1,402 ) $24
Net income (loss) ($1,779 ) ($2,182 ) 18.46 % ($9,332 ) ($14,457 ) ($2,250 ) ($11,246 )
Selected Balance Sheet Data (unaudited) Sep 2009 Jun 2009 3rd Quarter2009 Change Dec 2008 YTD 2009Change Sep 2008 Year OverYear Change
Total assets $126,597 $132,622 ($6,025 ) $150,749 ($24,010 ) $157,193 ($30,596 )
Net loans $82,112 $94,038 ($11,926 ) $113,823 ($31,711 ) $121,527 ($39,414 )
Total deposits $108,921 $113,187 ($4,266 ) $118,431 ($9,510 ) $116,232 ($7,311 )
Total borrowings $6,000 $6,000 $0 $6,000 $0 $6,000 $0
Total equity cap $10,955 $12,756 ($1,801 ) $25,476 ($14,396 ) $34,239 ($23,284 )
Book value per share $6.76 $7.87 ($1.11 ) $15.65 ($8.89 ) $21.14 ($14.38 )
QUARTER YEAR-TO-DATE
Selected ratios (unaudited) 3rd Qtr 2009 3rd Qtr 2008 2nd Qtr 2009 Sep 2009 Sep 2008 Dec 2008
Net interest margin 2.67 % 3.42 % 0.98 % 1.73 % 3.43 % 3.00 %
Return on avg assets -5.40 % -5.32 % -25.81 % -13.39 % -1.69 % -6.48 %
Return on avg equity -57.77 % -23.95 % -168.05 % -84.59 % -8.22 % -31.36 %
Efficiency ratio 566.04 % 114.37 % -72.21 % -274.37 % 106.74 % 132.75 %
Net charge-offs to total loans 1.19 % 1.52 % 10.69 % 20.01 % 1.71 % 4.31 %
ALLL to gross loans % 5.14 % 4.44 % 5.24 % 5.14 % 4.44 % 7.15 %
NPA to total assets 31.65 % 15.87 % 33.41 % 31.65 % 15.87 % 26.47 %
Per share data (unaudited)
Net income (loss) per share ($1.10 ) ($1.35 ) ($5.76 ) ($8.92 ) ($1.39 ) ($6.94 )
Net income (loss) per share (diluted) ($1.10 ) ($1.35 ) ($5.76 ) ($8.92 ) ($1.39 ) ($6.94 )
Average shares outstanding 1,621,024 1,619,619 1,621,024 1,621,024 1,619,619 1,621,024
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