Cooperative Bankshares reports income up.(Financial report)

Oct. 31--Wilmington-based Cooperative Bankshares Inc. on Tuesday reported that third-quarter net income rose 2.1 percent from a year earlier, to $2.1 million, or 32 cents per diluted share, excluding special items.

The earnings comparison excluded recovery of $215,000 in taxes and penalties related to the June 2006 dissolution of the company's Virginia-based holding company for CS&L Real Estate Trust Inc., a North Carolina-based real estate investment trust.

Cooperative participated in a settlement with North Carolina concerning the tax treatment of dividends paid to out-of-state holding companies of REITs owned by North Carolina-based banks. Including the special item, earnings in the third quarter of 2006 were $2.279 million, or 34 cents per diluted share.

For the nine months ended Sept. 30, net income rose 13.5 percent from the year-earlier period, to $6.3 million, or 95 cents per diluted share, from $5.5 million, or 84 cents.

Cooperative, parent of Cooperative Bank, attributed the higher nine-month profit mainly to an increase in net interest income that came primarily from growth in loans, a gain of $275,000 on the sale of a branch in Morehead City and a reduction in its provision for loan losses.

Cooperative cut its loan loss provision by 46.9 percent, to ...