TWNE Towne Bancorp Inc (CE)

Towne Bancorp, the parent company of Towne Bank of Arizona (OTCBB: TWNE), today reported that continued strong loan growth led to record third quarter profits of $529,000, or $.30 per diluted share, compared to $172,000, or $.10 per diluted share, in the third quarter a year ago. For the nine months ended at 9-30-06, net income totaled $1,068,000, or $.61 per diluted share, compared to a loss of $284,000, or ($.16) per diluted share, in the first nine months of 2005. �Two and one half years after opening, we continue to be presented with significant quality business loan and deposit relationship opportunities in the Valley which are producing gratifying net income returns and furthering the establishment of a strong and healthy community bank franchise,� said S. Rick Meikle, president and CEO. Net interest income before provision for loan losses grew by 135% to $1,978,000 in the third quarter of �06 compared to the third quarter of �05. Total non interest expense increased to $911,000 at 9/30/06 from $575,000 at 9/30/05. However, after the bank�s first full quarter of complete implementation of FASB 91 regarding the recognition of fee income, the company was able to report a return on average assets (ROAA) of 1.56% & 1.20% for the third quarter and year to date, respectively. �To achieve these levels of return on assets after only 30 short months of operation is indeed impressive and a tribute to the entire staff and board of directors of the bank,� noted Meikle. Net loans increased 157% to $133.4 million at the end of the third quarter 2006, compared to $51.9 million a year earlier. Loans have increased 90% or $63.4 million during the first nine months of 2006. Net interest margin (NIM) remains very strong at 5.84% for the third quarter of �06 compared to 5.54% in the third quarter a year earlier. Year to date NIM for September 30, 2005 & 2006 were 5.17% & 6.53% respectively. �Even with the current yield curve presenting ever increasing challenges to funding and the heightened competition in the Valley, we are very pleased with our performance in the all important area of net interest margin,� said Meikle. Credit quality remains very good with $-0- and $11,000 in net charge-offs for the third quarter and year to date, respectively. The company�s allowance for loan losses stands at 1.29% of gross loans compared to 1.03% at 9-30-05. Total deposits increased 153% to $103.8 million at 9-30-06, compared to $41.0 million at 9-30-05. Non-interest bearing deposits increased 175% to $6.1 million at 9-30-06, compared to $2.2 million at 9-30-05. Interest bearing deposits decreased 3% to $6.2 million at 9-30-06, compared to $6.4 million at 9-30-05. Time deposits increased 182% to $91.5 million at 9-30-06, compared to $32.4 million at 9-30-05. �With the addition of a seasoned in-market dedicated deposit gathering professional we are continuing to make progress with respect to adding local core deposit relationships and obtaining the maximum deposit benefit from our loan customers,� noted Meikle. 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) � QUARTERLY TRENDS YEAR-TO-DATE Income Statement Data (unaudited) 3rd Qtr 2006 3rd Qtr 2005 2006 Change� Sep 2006 Sep 2005 2006 Change� � Net interest income $1,978� $848� 134.96% $5,757� $1,653� 248.24% Provision for loan losses $194� $108� 79.49% $1,037� $340� 205.02% Total non-interest income $9� $6� 41.88% $3� $11� -69.42% Total non-interest expense $911� $575� 58.42% $2,943� $1,608� 83.02% Federal Taxes $353� $0� n/a� $712� $0� n/a� Net income $529� $172� 208.62% $1,068� ($284) 476.51% � � Selected Balance Sheet Data (unaudited) Sep 2006 Jun 2006 3rd Quarter 2006 Change Dec 2005 YTD 2006 Change Sep 2005 Year Over Year Change � Total assets $139,517� $128,128� $11,389� $75,349� $64,168� $74,357� $65,160� Net Loans $133,408� $117,433� $15,976� $70,054� $63,354� $51,908� $81,500� Total Deposits $103,797� $93,144� $10,653� $41,128� $62,670� $41,007� $62,790� Total Equity Cap $35,109� $34,580� $529� $34,027� $1,082� $33,161� $1,949� Book value per share $22.15� $21.83� $0.29� $21.47� $0.68� $20.97� $1.18� � � QUARTERLY TRENDS YEAR-TO-DATE Selected Ratios (unaudited) 3rd Qtr 2006 3rd Qtr 2005 2006 Change� Sep 2006 Sep 2005 2006 Change� � Net Interest Margin 5.84% 5.54% 5.44% 6.53% 5.17% 26.44% Return on assets 1.56% 1.11% 40.75% 1.20% -0.87% 238.83% Return on equity 6.05% 4.47% 35.36% 4.13% -3.44% 220.10% Efficiency Ratio 45.86% 67.31% -31.87% 51.09% 96.61% -47.12% Net charge-offs to Total Loans 0.00% -0.01% 100.00% 0.01% 0.01% -35.89% ALLL to Gross Loans % 1.29% 1.03% 25.91% 1.29% 1.03% 25.91% � � Per Share data (unaudited) Net income per share $0.33� $0.19� $0.67� ($0.65) Net income per share (diluted) $0.30� $0.10� $0.61� ($0.16) Total Outstanding Shares 1,584,856� 1,581,656� 1,584,856� 1,581,656� Towne Bancorp, the parent company of Towne Bank of Arizona (OTCBB: TWNE), today reported that continued strong loan growth led to record third quarter profits of $529,000, or $.30 per diluted share, compared to $172,000, or $.10 per diluted share, in the third quarter a year ago. For the nine months ended at 9-30-06, net income totaled $1,068,000, or $.61 per diluted share, compared to a loss of $284,000, or ($.16) per diluted share, in the first nine months of 2005. "Two and one half years after opening, we continue to be presented with significant quality business loan and deposit relationship opportunities in the Valley which are producing gratifying net income returns and furthering the establishment of a strong and healthy community bank franchise," said S. Rick Meikle, president and CEO. Net interest income before provision for loan losses grew by 135% to $1,978,000 in the third quarter of '06 compared to the third quarter of '05. Total non interest expense increased to $911,000 at 9/30/06 from $575,000 at 9/30/05. However, after the bank's first full quarter of complete implementation of FASB 91 regarding the recognition of fee income, the company was able to report a return on average assets (ROAA) of 1.56% & 1.20% for the third quarter and year to date, respectively. "To achieve these levels of return on assets after only 30 short months of operation is indeed impressive and a tribute to the entire staff and board of directors of the bank," noted Meikle. Net loans increased 157% to $133.4 million at the end of the third quarter 2006, compared to $51.9 million a year earlier. Loans have increased 90% or $63.4 million during the first nine months of 2006. Net interest margin (NIM) remains very strong at 5.84% for the third quarter of '06 compared to 5.54% in the third quarter a year earlier. Year to date NIM for September 30, 2005 & 2006 were 5.17% & 6.53% respectively. "Even with the current yield curve presenting ever increasing challenges to funding and the heightened competition in the Valley, we are very pleased with our performance in the all important area of net interest margin," said Meikle. Credit quality remains very good with $-0- and $11,000 in net charge-offs for the third quarter and year to date, respectively. The company's allowance for loan losses stands at 1.29% of gross loans compared to 1.03% at 9-30-05. Total deposits increased 153% to $103.8 million at 9-30-06, compared to $41.0 million at 9-30-05. Non-interest bearing deposits increased 175% to $6.1 million at 9-30-06, compared to $2.2 million at 9-30-05. Interest bearing deposits decreased 3% to $6.2 million at 9-30-06, compared to $6.4 million at 9-30-05. Time deposits increased 182% to $91.5 million at 9-30-06, compared to $32.4 million at 9-30-05. "With the addition of a seasoned in-market dedicated deposit gathering professional we are continuing to make progress with respect to adding local core deposit relationships and obtaining the maximum deposit benefit from our loan customers," noted Meikle. 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. -0- *T (All dollars in thousands except per share data) QUARTERLY TRENDS -------------------------------------- Income Statement Data (unaudited) 3rd Qtr 2006 3rd Qtr 2005 2006 Change ------------ ------------ ------------ Net interest income $1,978 $848 134.96% Provision for loan losses $194 $108 79.49% Total non-interest income $9 $6 41.88% Total non-interest expense $911 $575 58.42% Federal Taxes $353 $0 n/a Net income $529 $172 208.62% Selected Balance Sheet Data 3rd Quarter (unaudited) Sep 2006 Jun 2006 2006 Change ------------ ------------ ------------ Total assets $139,517 $128,128 $11,389 Net Loans $133,408 $117,433 $15,976 Total Deposits $103,797 $93,144 $10,653 Total Equity Cap $35,109 $34,580 $529 Book value per share $22.15 $21.83 $0.29 QUARTERLY TRENDS -------------------------------------- Selected Ratios (unaudited) 3rd Qtr 2006 3rd Qtr 2005 2006 Change ------------ ------------ ------------ Net Interest Margin 5.84% 5.54% 5.44% Return on assets 1.56% 1.11% 40.75% Return on equity 6.05% 4.47% 35.36% Efficiency Ratio 45.86% 67.31% -31.87% Net charge-offs to Total Loans 0.00% -0.01% 100.00% ALLL to Gross Loans % 1.29% 1.03% 25.91% Per Share data (unaudited) Net income per share $0.33 $0.19 Net income per share (diluted) $0.30 $0.10 Total Outstanding Shares 1,584,856 1,581,656 YEAR-TO-DATE ---------------------------------- Income Statement Data (unaudited) Sep 2006 Sep 2005 2006 Change ---------- ---------- ------------ Net interest income $5,757 $1,653 248.24% Provision for loan losses $1,037 $340 205.02% Total non-interest income $3 $11 -69.42% Total non-interest expense $2,943 $1,608 83.02% Federal Taxes $712 $0 n/a Net income $1,068 ($284) 476.51% Selected Balance Sheet YTD 2006 Year Over Data (unaudited) Dec 2005 Change Sep 2005 Year Change ---------- ---------- ------------ ------------ Total assets $75,349 $64,168 $74,357 $65,160 Net Loans $70,054 $63,354 $51,908 $81,500 Total Deposits $41,128 $62,670 $41,007 $62,790 Total Equity Cap $34,027 $1,082 $33,161 $1,949 Book value per share $21.47 $0.68 $20.97 $1.18 YEAR-TO-DATE ---------------------------------- Selected Ratios (unaudited) Sep 2006 Sep 2005 2006 Change ---------- ---------- ------------ Net Interest Margin 6.53% 5.17% 26.44% Return on assets 1.20% -0.87% 238.83% Return on equity 4.13% -3.44% 220.10% Efficiency Ratio 51.09% 96.61% -47.12% Net charge-offs to Total Loans 0.01% 0.01% -35.89% ALLL to Gross Loans % 1.29% 1.03% 25.91% Per Share data (unaudited) Net income per share $0.67 ($0.65) Net income per share (diluted) $0.61 ($0.16) Total Outstanding Shares 1,584,856 1,581,656 *T