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 first quarter profits of $553,000, or $.31 per diluted share, compared to a gain of $53,000, or $.03 per diluted share in 2006. Net interest income before provision for loan losses grew by 33% to $2,391,000 in the first quarter of �07 compared to the first quarter of �06. Total non-interest expense increased to $1,251,000 at 3/31/07 from $947,000 at 3/31/06. The company was able to report a very strong return on average assets (ROAA) of 1.41% for the first quarter of �07 compared to 0.22% for the like quarter in �06. Net loans increased 53% to $167.1 million at the end of the first quarter 2007, compared to $109.0 million a year earlier. Net interest margin (NIM) remains a very strong 6.11% for the first quarter of �07 compared to 7.53% in the first quarter a year earlier. Credit quality remains very good with $-0- in net charge-offs for the first quarter. �The one non performing asset reported at 12/31/06 has been paid in full and we are pleased to report that we have no NPA�s as of 3/31/07,� said S. Rick Meikle, CEO. �Furthermore, the company�s allowance for loan losses stands at a very healthy 1.42% of gross loans compared to 1.33% at 3/31/06,� remarked Mr. Meikle. Total deposits increased 71% to $140.2 million at 3/31/07, compared to $81.8 million at 3/31/06. Non-interest bearing deposits increased 41% to $9.3 million at 3/31/07, compared to $6.6 million at 3/31/06. Interest bearing deposits increased 43% to $9.3 million at 3/31/07, compared to $6.5 million. Time deposits increased 80% to $121.6 million at 3/31/07, compared to $67.5 million at 3/31/07. �At the end of April the bank will have five full time, seasoned, in market business development officers in the field gathering local core deposits and insuring that our borrowing customers are also using the bank as their primary deposit institution,� Meikle said. �We are very happy with the results of the Payson loan production office managed by Pat Willis and we have submitted an application to convert the LPO to a full service branch. The Scottsdale loan production office is currently being built out and the majority of the personnel for the facility are already working for the bank,� said Mr. Meikle. �All the preceding high performance financial results have been achieved by the bank after only just celebrating its 3rd year anniversary on 3/31/07 and are a direct reflection of the professional and significant contribution by the entire staff and board of the bank,� said Mr. 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) 1st Qtr 2007 1st Qtr 2006 2007 Change� Mar 2007 Mar 2006 2007 Change� � Net interest income $2,391� $1,800� 32.83% $2,391� $1,800� 32.83% Provision for loan losses $244� $753� -67.56% $244� $753� -67.56% Total non-interest income $12� ($11) 210.82% $12� ($11) 210.82% Total non-interest expense $1,251� $947� 32.10% $1,251� $947� 32.10% Federal and State taxes $355� $36� 888.83% $355� $36� 888.83% Net income $553� $53� 938.90% $553� $53� 938.90% � � Selected Balance Sheet Data (unaudited) Mar 2007 Dec 2006 1st Quarter 2007 Change Dec 2006 YTD 2007 Change Mar 2006 Year OverYear Change � Total assets $177,374� $154,945� $22,429� $154,945� $22,429� $116,140� $61,234� Net Loans $167,143� $147,924� $19,219� $147,924� $19,219� $108,996� $58,147� Total Deposits $140,181� $118,448� $21,733� $118,448� $21,733� $81,799� $58,382� Total borrowings $85� $85� $0� $85� $0� $0� n/a� Total Equity Cap $36,106� $35,553� $553� $35,553� $553� $34,081� $2,025� Book value per share $22.77� $22.42� $0.32� $22.42� $0.32� $21.51� $1.25� � � QUARTERLY TRENDS YEAR-TO-DATE Selected Ratios (unaudited) 1st Qtr 2007 1st Qtr 2006 2007 Change� Mar 2007 Mar 2006 2007 Change� � Net Interest Margin 6.11% 7.53% -18.84% 6.11% 7.53% -18.84% Return on avg assets 1.41% 0.22% 540.14% 1.41% 0.22% 540.14% Return on avg equity 6.13% 0.62% 887.07% 6.13% 0.62% 887.07% Efficiency Ratio 52.07% 52.94% -1.64% 52.07% 52.94% -1.64% Net charge-offs to Total Loans 0.00% 0.01% -100.00% 0.00% 0.01% -100.00% ALLL to Gross Loans % 1.42% 1.33% 7.17% 1.42% 1.33% 7.17% NPA to Total assets 0.00% 0.00% n/a� 0.00% 0.00% n/a� � Per Share data (unaudited) Net income per share $0.35� $0.03� $0.35� $0.03� Net income per share (diluted) $0.31� $0.03� $0.31� $0.03� Total Outstanding Shares 1,586,002� 1,584,156� 1,586,002� 1,584,156� � Note 1: The data for March 2006 YTD and QTD do not include the holding company. The 1st quarter Year 2007 performance of Towne Bank of Arizona, without the inclusion of the Holding Company, is as follows; ROAA 1.43%, ROAE 6.23%, Efficiency Ratio 51.73%, NIM 6.11%, and Net Income Per Share (diluted) $0.32.