RICHMOND, Va., May 18, 2011 (GLOBE NEWSWIRE) -- Bank of Virginia (Nasdaq:BOVA) (www.bankofva.com), announced financial results for the first quarter of 2011.
For the quarter ended March 31, 2011, the Bank reported a net loss of $1.77 million, or ($0.16) per share, compared with a net loss of $358,000 or ($0.08) per share for the quarter ended March 31, 2010. The loss was driven primarily by increases in the provision for losses on impaired loans and credit-related charge-offs. The net interest margin, at 3.12% for first quarter 2011, remained at the same level as for first quarter 2010, reflecting substantial and roughly equal declines in both deposit costs and the yield on earning assets. Net interest income declined $148,000 to $1.46 million for the quarter ended March 31, 2011, compared to $1.61 million for the quarter ended March 31, 2010, as average earning assets declined $19.5 million. On a linked quarter basis, net interest income declined $185,000 in the first quarter of 2011 from the $1.65 million recorded for the quarter ended December 31, 2010.
"While we are disappointed at the need to increase our provision for losses, we believe that our strengthened credit risk management and lending practices and the addition of a talented new senior credit team will result in sustained improvements in the Bank's credit portfolio for years to come," commented Jack Zoeller, Chairman and CEO.
Well Capitalized
The bank remained well-capitalized at March 31, 2011, with a total risk-based capital ratio of 11.6%. This compares to the 10% minimum total risk-based capital requirement to be considered well-capitalized. At March 31, 2011, the Bank's Tier 1 leverage ratio was 7.1% compared with 7.9% at December 31, 2010, which exceeded the well-capitalized threshold of 4.0%. The Bank's tier one capital to risk-weighted assets ratio was 10.3% on March 31, 2011, substantially exceeding the well capitalized threshold of 5.0%. The Bank's total capital declined $1.8 million in the first quarter of 2011 to $15.2 million from $17.0 million at December 31, 2010.
Review of the balance sheet
The Bank's total assets decreased $4.5 million to $204.7 million at March 31, 2011, compared to $209.2 million at December 31, 2010. Net loans declined $9.7 million from $139.7 million at December 31, 2010 to $130.0 million at March 31, 2011. The decline in loan balances was attributable to additional loan charge-offs and increased reserves as well as efforts to reduce the exposure to commercial real estate and construction loans. Net securities available for sale declined $10.9 million to $24.1 million from $35.0 million at December 31, 2010. Offsetting the decreases in loans and securities was an increase of $14.5 million in cash and cash equivalents to $40.2 million at March 31, 2011.
During first quarter 2011, the level of nonperforming assets increased $4.9 million, from $7.5 million at December 31, 2010 to $12.4 million at March 31, 2011 and impaired loans increased $3.1 million, from $22.3 million at December 31, 2010 to $25.4 million at March 31, 2011. The Bank reported net charge offs of $644,000 for the first quarter of 2011 and a $900,000 increase in the allowance for loan losses, from $6.8 million at December 31, 2010 to $7.7 million at March 31, 2011.
The liability side of the balance sheet shows total deposits down moderately to $178.5 million at March 31, 2011, compared to $181.2 million at year end 2010. This decrease is attributable to a strategic decision to target lower cost deposits and reduce deposit balances to align more closely with current loan balances. Total liabilities were $189.5 million and $192.2 million at March 31, 2011 and December 31, 2010, respectively.
Recent Changes
During the first quarter of 2011, the Bank continued to strengthen its Board and senior management team with the appointment of new, highly qualified directors and senior executives. Hunter R. Hollar, retired CEO of Sandy Spring Bank, and David C. Bushnell, retired senior risk officer of Citigroup, were elected Directors. Another new Director, Todd S. Thompson, former CFO of Citigroup, was elected to the Board in April 2011, subject to regulatory approval. Also in the first quarter, Nancy Corsiglia was elected Chief Financial Officer and subsequently, Roy Barzel was hired as Chief Credit Officer, subject to regulatory approval.
"We are on the cusp of completing the Bank's transition to a new era of credit risk management, and we want to be appropriately reserved and also prepared for renewed and measured loan growth," said Jack Zoeller, Chairman and CEO. "As for our deposit strategy, the benefits of our tighter pricing have not yet been fully realized, but we anticipate improved net interest margins later in the year, as our new lending goals begin to be achieved. Overall, we are encouraged by the progress we have made in the face of ongoing challenges in the Central Virginia economic environment," Zoeller continued.
About Bank of Virginia
Bank of Virginia, a Virginia state chartered bank headquartered in Midlothian, Virginia, currently operates five full-service offices in the counties of Chesterfield and Henrico, Virginia. Bank of Virginia's common stock is traded on the NASDAQ stock market under the quotation symbol "BOVA". Additional investor relations information can be found on the internet at www.bankofva.com. Bank of Virginia is a member of the FDIC and Equal Housing Lender.
DISCLAIMER
This news release may include forward-looking statements. These forward-looking statements are based on current expectations that involve risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may differ materially. These risks include: changes in business or other market conditions; the timely development, production and acceptance of new products and services; the challenge of managing asset/liability levels; the management of credit risk and interest rate risk; the difficulty of keeping expense growth at modest levels while increasing revenues; and other risks detailed from time to time in the Bank's periodic filings with the Board of Governors of the Federal Reserve System, including the Bank's annual report on Form 10-K as filed with the Board of Governors of the Federal Reserve. Pursuant to the Private Securities Litigation Reform Act of 1995, the Bank does not undertake to update forward-looking statements contained within this news release.
| BANK OF VIRGINIA | ||
| Balance Sheets | ||
| (dollars in thousands) | March 31, | December 31, |
| 2011 | 2010 | |
| Assets | (Unaudited) | (Audited) |
| Cash and due from banks | $ 4,583 | $ 25,641 |
| Federal funds sold and interest-bearing deposits with banks | 35,624 | 43 |
| Total cash and cash equivalents | 40,207 | 25,684 |
| Securities available for sale, at fair market value | 24,091 | 34,956 |
| Restricted securities | 1,428 | 1,435 |
| Loans, net of allowance for loan losses of $7,671 and | ||
| $6,832 in 2011 and 2010, respectively | 130,027 | 139,740 |
| Premises and equipment, net | 5,625 | 5,655 |
| Accrued interest receivable | 614 | 774 |
| Other real estate owned, net of valuation allowance | 2,173 | 551 |
| Other assets | 542 | 395 |
| Total assets | $ 204,707 | $ 209,190 |
| Liabilities and Stockholders' Equity | ||
| Deposits | ||
| Non-interest-bearing | $ 15,639 | $ 14,506 |
| Savings and interest-bearing demand | 28,581 | 26,489 |
| Time, $100,000 and over | 61,898 | 64,149 |
| Other time | 72,393 | 76,097 |
| Total deposits | 178,511 | 181,241 |
| Accrued expenses and other liabilities | 982 | 969 |
| FHLB Borrowings | 10,000 | 10,000 |
| Total liabilities | 189,493 | 192,210 |
| Stockholders' Equity | ||
| Preferred stock, $5 par value, 5,000,000 shares authorized, none issued | -- | -- |
| Common stock, $1 par value, 40,000,000 shares authorized, 11,328,182 | ||
| shares issued and outstanding in 2011 and 2010, respectively | 11,328 | 11,328 |
| Additional paid-in capital | 24,612 | 24,611 |
| Retained deficit | (21,044) | (19,277) |
| Accumulated other comprehensive income | 318 | 318 |
| Total stockholders' equity | 15,214 | 16,980 |
| Total liabilities and stockholders' equity | $ 204,707 | $ 209,190 |
| BANK OF VIRGINIA | ||
| Statements of Operations | ||
| For the Three Months Ended March 31, 2011 and 2010 | ||
| (Unaudited) | ||
| (in thousands except per share data) | ||
| March 31, | March 31, | |
| 2011 | 2010 | |
| Interest Income: | ||
| Interest and fees on loans | $ 2,078 | $ 2,450 |
| Investment securities | 283 | 365 |
| Interest on federal funds sold and interest-bearing deposits | 11 | 2 |
| Total interest income | 2,372 | 2,817 |
| Interest Expense: | ||
| Interest on deposits | 800 | 1,094 |
| Interest on fed funds purchased and FHLB borrowings | 111 | 114 |
| Total interest expense | 911 | 1,208 |
| Net Interest Income | 1,461 | 1,609 |
| Provision for loan losses | 1,483 | 326 |
| Net interest (loss) income after provision | ||
| for loan losses | (22) | 1,283 |
| Non-interest Income: | ||
| Service charges on deposit accounts | 45 | 37 |
| Net gain on available for sale securities | 35 | 94 |
| Other fee income | 76 | 30 |
| Total non-interest income | 156 | 161 |
| Non-interest Expense: | ||
| Salaries and employee benefits | 946 | 830 |
| Occupancy expense | 170 | 173 |
| Equipment expense | 76 | 89 |
| Data processing expense | 83 | 110 |
| Marketing expense | 38 | 31 |
| Legal and professional fees | 226 | 207 |
| FDIC insurance assessments | 145 | 150 |
| Other operating expenses | 217 | 212 |
| Total non-interest expenses | 1,901 | 1,802 |
| Net loss | $ (1,767) | $ (358) |
| Loss per share, basic | $ (0.16) | $ (0.08) |
| Loss per share, diluted | $ (0.16) | $ (0.08) |
| Weighted Average Shares Outstanding, basic | 11,328,182 | 4,551,866 |
| Weighted Average Shares Outstanding, diluted | 11,328,182 | 4,551,866 |
| AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS | |||||||
| (unaudited) | |||||||
| Three Months Ended | Three Months Ended | ||||||
| March 31, 2011 | March 31, 2010 | ||||||
| Average | Interest | Yield/Rate | Average | Interest | Yield/Rate | ||
| Balance | (1) | (1) | Balance | (1) | (1) | ||
| Earning Assets: | |||||||
| Loans (2) | 142,940 | 2,078 | 5.90% | 170,650 | 2,450 | 5.82% | |
| Securities Available for Sale | 31,041 | 283 | 3.70% | 35,572 | 365 | 4.16% | |
| Federal funds sold and interest-bearing balances | 15,796 | 11 | 0.28% | 3,015 | 2 | 0.27% | |
| Total Earning Assets | 189,777 | 2,372 | 5.07% | 209,237 | 2,817 | 5.46% | |
| Other Assets | 25,865 | 14,250 | |||||
| Allowance for Loan Losses | (6,905) | (5,249) | |||||
| Total | $ 208,737 | $ 218,238 | |||||
| Interest-Bearing Liabilities: | |||||||
| Demand Deposits | $ 7,739 | $ 6 | 0.31% | $ 6,542 | $ 6 | 0.37% | |
| Savings and Money Market | 20,020 | 35 | 0.71% | 24,211 | 62 | 1.04% | |
| Time Deposits | 137,895 | 759 | 2.23% | 145,322 | 1,026 | 2.86% | |
| Total Deposits | 165,654 | 800 | 1.96% | 176,075 | 1,094 | 2.52% | |
| Federal Funds Purchased and Repurchase Agreements | -- | -- | 0.00% | 41 | $ -- | 0.25% | |
| FHLB Borrowings | 10,000 | 111 | 4.50% | 10,000 | 114 | 4.62% | |
| Total Interest-bearing liabilities | 175,654 | 911 | 2.10% | 186,116 | 1,208 | 2.63% | |
| Demand Deposits | 14,613 | 13,791 | |||||
| Other Liabilities | 974 | 990 | |||||
| Stockholders' Equity | 17,496 | 17,341 | |||||
| Total | $ 208,737 | $ 218,238 | |||||
| Net Interest Income, tax equivalent | $ 1,461 | $ 1,609 | |||||
| Net Interest Rate Spread (3) | 2.97% | 2.83% | |||||
| Net Interest Margin (4) | 3.12% | 3.12% | |||||
| (1) There are currently no tax-exempt assets and tax equivalent yields are not presented. | |||||||
| (2) Non-accrual loans are generally included in average balances outstanding but with no related interest income during the period of non-accrual. | |||||||
| (3) Represents the difference between the yield on earning assets and cost of funds. | |||||||
| (4) Represents net interest income divided by average interest earning assets. | |||||||
| March 31, | December 31, | |
| Capital ratios: | 2011 | 2010 |
| Tier 1 leverage | 7.1% | 7.9% |
| Tier 1 capital to risk-weighted assets | 10.3% | 10.9% |
| Total regulatory capital to risk-weighted assets | 11.6% | 12.2% |
| Total equity to total assets | 7.4% | 8.1% |
| Bank of Virginia | |||||
| Quarterly Earnings Summary | |||||
| (Unaudited) | |||||
| 2011 | 2010 | ||||
| (dollars in thousands) | March 31 | March 31 | June 30 | Sept 30 | Dec 31 |
| Interest income | $ 2,372 | $ 2,817 | $ 2,620 | $ 2,755 | $ 2,640 |
| Interest expense | 911 | 1,208 | 1,145 | 1,105 | 994 |
| Net interest income | 1,461 | 1,609 | 1,475 | 1,650 | 1,646 |
| Provision for loan losses | 1,483 | 326 | 162 | 4,842 | 3,688 |
| Net interest (loss) income | |||||
| after provision for loan losses | (22) | 1,283 | 1,313 | (3,192) | (2,042) |
| Other income | 121 | 67 | 75 | 60 | 86 |
| Securities gains | 35 | 94 | -- | 15 | 435 |
| Other expenses | 1,901 | 1,802 | 1,652 | 1,771 | 2,119 |
| Loss income before income taxes | (1,767) | (358) | (264) | (4,888) | (3,640) |
| Income taxes | -- | -- | -- | -- | -- |
| Net loss | $ (1,767) | $ (358) | $ (264) | $ (4,888) | $ (3,640) |
| Basic and diluted loss per share | $ (0.16) | $ (0.08) | $ (0.06) | $ (1.07) | $ (0.60) |
| Weighted-average basic and diluted shares | 11,328,182 | 4,551,866 | 4,551,866 | 4,551,866 | 6,057,714 |