TNCC Tennessee Commerce Bancorp (TN) (MM)

Tennessee Commerce Bancorp, Inc. (NASDAQ:TNCC) today reported record net income, loans and deposits for the second quarter ended June�30,�2007. Second Quarter Highlights Net income rose 72.9% to a record $1.6 million, or $0.34 per diluted share Net loans increased 50.3% to a record $643.9 million Asset quality remained strong with a 1.32% loan loss reserve to loans Total deposits increased 48.0% to a record $683.4 million Operating efficiency ratio improved to 42.68%, one of the best in the industry �Tennessee Commerce�s record second quarter benefited from increased loan demand, a strengthening in margins and our efficient operating model,� stated Mike Sapp, President of Tennessee Commerce Bancorp. �Total revenues rose 53.3% to $7.3 million due to continued growth in net interest income and non interest income.� �Our operating income jumped 75.4% to $2.7 million compared with the second quarter of last year,� continued Mr. Sapp. �Our business bank operating model is very efficient as evidenced by our asset to employee ratio of $12.5 million that is over three and half times higher than other Tennessee banks. Our efficiency ratio of 42.68% remains one of the best in our industry.� Second Quarter Results Net interest income increased 49.6% to $6.6 million Non interest income rose 111.1% to $610,000 Gain on sale of loans was up 29.3% to $463,000 Non interest expenses increased 39.8% to $3.1 million Net interest income rose 49.6% to $6.6 million in the second quarter of 2007 compared with $4.4�million in the second quarter of 2006. The growth in net interest income was due primarily to an increase in loans and loan fees. Net interest margin improved to 3.89% in the second quarter of 2007 from 3.62% in the first quarter of 2007 due to more stable deposit costs and growth in the loan portfolio. Net interest margin was 4.00% in the second quarter of 2006. Provision for loan losses was $1.5 million in the second quarter of 2007, an increase from $1.0�million in the second quarter of last year. At the end of the second quarter, the allowance for loan losses was $8.6�million, or 1.32% of loans, compared with $5.5 million, or 1.27% of loans, in the year prior period. The increase in allowance for loan losses was primarily related to the $215 million growth in the loan portfolio since the second quarter of 2006. �Our loan quality remains very good across our local and national accounts,� noted George Fort, Chief Financial Officer. �We increased our provision for loan losses since last year primarily due to the growth in our loan portfolio. Our charge-offs to average loans was a low 0.45% annualized for the first six months of 2007.� Non interest income more than doubled in the second quarter of 2007 to $610,000 compared with $289,000 in the second quarter of 2006. Service charges rose 83.9% to $57,000, gain on sale of loans increased 29.3% to $463,000 and other income increased to $90,000 compared with the second quarter of the prior year. �We sold approximately $13.8 million in loans in the second quarter,� continued Mr. Fort. �We continue to have strong demand for loan sales from a number of banks, providing Tennessee Commerce with a steady source of non interest income.� Average weighted diluted shares outstanding increased 35.5% to 4.8 million in the second quarter of 2007 from 3.5 million in the second quarter of 2006. The increase in shares was due to the Company�s initial public stock offering of 1.15 million shares sold in June 2006. Annualized return on average assets was 0.91% and annualized return on average equity was 11.71% in the second quarter of 2007. Tennessee Commerce�s efficiency ratio was 42.68% in the second quarter of 2007, an improvement from 46.83% in the second quarter of 2006. Six Months Results Net income rose 63.9% to $3.0 million, or $0.63 per diluted share Net interest income increased 40.6% to $12.2 million Non interest income rose 168.2% to $1.4 million Gain on sale of loans increased 109.2% to $1.3 million Non interest expenses were up 34.9% to $5.7 million �We are pleased with our progress during the first half of the year that reflects�across the board increases in�relationships throughout the business banking community,� concluded Mr. Sapp. Net income rose 63.9% to $3.0 million for the first six months of 2007 compared with $1.8 million in the same period of 2006. Net income per diluted share increased 21.2% to $0.63 compared with $0.52 in the first six months of 2006. Net interest income rose 40.6% to $12.2 million, up from $8.7 million in the first six months of 2006. The growth in net interest income benefited from a 49% increase in earnings assets to $725 million. Net interest margin was 3.76% for the 2007 period compared with 4.08% for the same period in 2006. Provision for loan losses was $3.0 million for the first six months of 2007 compared with $2.0�million for the same period in 2006. The increase was primarily related to the overall growth in the loan portfolio. About Tennessee Commerce Bancorp, Inc. Tennessee Commerce Bancorp, Inc. is the parent company of Tennessee Commerce Bank. The Bank provides a wide range of banking services and is primarily focused on business accounts. Its corporate and banking offices are located in Franklin, Tennessee, and it has a loan production office in Birmingham, Alabama. Tennessee Commerce Bancorp's stock is traded on the NASDAQ Global Market under the symbol TNCC. Information contained in this press release, other than historical information, may be considered forward-looking in nature and is subject to various risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or expected. Among the key factors that may have a direct bearing on Tennessee Commerce Bancorp's operating results, performance or financial condition are competition, changes in interest rates, the demand for its products and services, the ability to expand, and numerous other factors as set forth in the Corporation's filings with the Securities and Exchange Commission. Additional information concerning Tennessee Commerce can be accessed at www.tncommercebank.com. TENNESSEE COMMERCE BANCORP, INC. CONSOLIDATED BALANCE SHEETS JUNE 30, 2007 (UNAUDITED) AND DECEMBER�31, 2006 � (dollars in thousands except share data) June 30, December 31, 2007 2006 ASSETS Cash and due from financial institutions $ 5,823 $ 177 Federal funds sold 19,600 13,820 Cash and cash equivalents 25,423 13,997 Securities available for sale 61,699 56,943 Loans 652,520 545,518 Allowance for loan losses (8,619 ) (6,968 ) Net loans 643,901 538,550 Premises and equipment, net 1,543 1,633 Accrued interest receivable 5,291 4,116 Restricted equity securities 938 633 Deferred tax asset 1,861 635 Other assets 10,736 7,011 � Total assets $ 751,392 $ 623,518 � LIABILITIES AND SHAREHOLDERS� EQUITY � Liabilities Deposits Noninterest-bearing $ 22,865 $ 17,001 Interest-bearing 660,520 543,566 Total deposits 683,385 560,567 � Accrued interest payable 1,740 1,728 Accrued bonuses 284 623 Long-term subordinated debt 8,248 8,248 Other liabilities 520 1,128 Total liabilities 694,177 572,294 � Shareholders� equity Preferred stock, no par value. Authorized 1,000,000 shares; none issued or outstanding at June 30, 2007 and December 31, 2006 � � Common stock, $0.50 par value. Authorized 10,000,000 shares; issued and outstanding 4,672,796 at June 30, 2007, and 4,451,674 at December 31, 2006 2,336 2,226 Additional paid-in capital 44,111 40,755 Retained earnings 11,547 8,530 Accumulated other comprehensive income (loss) (779 ) (287 ) Total shareholders� equity 57,215 51,224 � Total liabilities and shareholders� equity $ 751,392 $ 623,518 Note: The balance sheet presented above at December 31, 2006, has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. TENNESSEE COMMERCE BANCORP, INC. CONSOLIDATED STATEMENTS OF INCOME SIX MONTHS ENDED JUNE 30, 2007 AND 2006 THREE MONTHS ENDED JUNE 30, 2007 AND 2006 (UNAUDITED) � � (dollars in thousands except share data) Six Months Ended Three Months Ended June 30, June 30, 2007 2006 2007 2006 Interest income Loans, including fees $ 25,985 $ 16,659 $ 13,886 $ 8,812 Securities 1,587 943 823 488 Federal funds sold 251 156 143 54 Total interest income 27,823 17,758 14,852 9,354 Interest expense Deposits 15,273 8,723 8,047 4,721 Other 319 337 159 190 Total interest expense 15,592 9,060 8,206 4,911 Net interest income 12,231 8,698 6,646 4,443 Provision for loan losses 3,000 2,000 1,500 1,000 � Net interest income after provision for loan losses 9,231 6,698 5,146 3,443 Non interest income Service charges on deposit accounts 118 80 57 31 Gain on sale of loans 1,280 612 463 358 Other 34 (158 ) 90 (100 ) Total non interest income 1,432 534 610 289 � Non interest expense Salaries and employee benefits 3,238 2,505 1,766 1,305 Occupancy and equipment 512 390 244 190 Data processing fees 505 330 279 173 Professional fees 492 381 254 190 Other 965 628 554 358 Total non interest expense 5,712 4,234 3,097 2,216 � Income before income taxes 4,951 2,998 2,659 1,516 Income tax expense 1,934 1,157 1,048 584 � Net income 3,017 1,841 1,611 932 � � Earnings per share (EPS): Basic EPS $ 0.67 $ 0.57 $ 0.36 $ 0.29 Diluted EPS 0.63 0.52 0.34 0.27 Weighted average shares outstanding: � Basic 4,517,133 3,240,619 4,502,985 3,240,674 Diluted 4,818,619 3,549,680 4,788,889 3,533,632 Tennessee Commerce Bancorp, Inc Financial Highlights � (Dollars in thousands except ratios and share data) � 2007 � 2006 � % Change � For the Quarter ending 06/30 Earnings: Net Interest Income $ 6,646 $ 4,443 49.58 % Non-Interest Income 610 289 111.07 % Provision for Loan Losses 1,500 1,000 50.00 % Operating Expense 3,097 2,216 39.76 % Operating Income 2,659 1,516 75.40 % Applicable Tax 1,048 � 584 � 79.45 % Net Income $ 1,611 � $ 932 � 72.85 % � At June 30 Total Assets $ 751,392 $ 504,268 49.01 % Net Loans 643,901 428,498 50.27 % Earning Assets 725,200 485,868 49.26 % Allowance for Loan Losses 8,619 5,508 56.48 % Deposits 683,385 461,709 48.01 % Shareholders' Equity $ 57,215 $ 27,827 105.61 % � Total Shares Outstanding 4,672,796 3,240,674 44.19 % � Significant Ratios � 2nd quarter Net Interest Margin 3.89 % 4.00 % Return on Average Assets a 0.91 % 0.82 % Return on Average Equity a 11.71 % 13.58 % Efficiency Ratio 42.68 % 46.83 % Loan Loss Reserve/Net Loans 1.34 % 1.29 % Basic Earnings per Share $ 0.36 $ 0.29 24.14 % Diluted Earnings per Share $ 0.34 $ 0.27 25.93 % � a annualized TENNESSEE COMMERCE BANCORP, INC. ANALYSIS OF INTEREST INCOME AND EXPENSE, RATES AND YIELDS (UNAUDITED) � Three Months Ended June 30, 2007 Three Months Ended June 30, 2006 (dollars in thousands) Average Balances Interest � Rates/ Yields Average Balances Interest � Rates/ Yields Interest-earning assets: Loans $ 612,545 $ 13,886 9.09 % $ 399,570 $ 8,812 8.85% Securities: Taxable 60,692 823 5.39 % 40,698 488 4.69% Federal funds sold and other � 11,294 � 143 5.08 % 4,372 54 4.95% Total interest-earning assets 684,531 $ 14,852 8.70 % 444,640 $ 9,354 8.42% Nonearning assets � 23,032 13,503 Total assets $ 707,563 $ 458,143 � Interest-bearing liabilities: Interest-bearing deposits $ 619,053 $ 8,047 5.21 % $ 398,333 $ 4,721 4.75% Federal funds purchased 1,406 20 5.71 % 2,069 29 5.62% Subordinated debt � 8,248 � 139 6.76 % 9,435 161 6.84% Total interest-bearing liabilities 628,707 � 8,206 5.24 % 409,837 4,911 4.81% Noninterest bearing deposits and other liabilities 23,690 20,772 Stockholders� equity � 55,166 27,534 Total liabilities and equity $ 707,563 $ 458,143 Net interest income $ 6,646 $ 4,443 Net interest spread (1) 3.46 % 3.61% Net interest margin (2) 3.89 % 4.00% � (1) Yields realized on interest-earning assets less the rates paid on interest-bearing liabilities. � (2) Net interest margin is the result of annualized net interest income calculated on a tax equivalent basis divided by average interest-earning assets for the period.