FAIRFAX, Va.--(BUSINESS WIRE)--Virginia Heritage Bank (OTCBB: VGBK), reported net income before taxes of $1.3 million in the fourth quarter of 2010, compared to $697 thousand for the same period in 2009. The increase in net income for the three months ended December 31, 2010 was primarily due to the $1.4 million increase in net interest income representing strong balance sheet growth. The fourth quarter net income after taxes was $0.20 per share (basic and diluted), compared to $0.18 per share (basic and diluted) for the fourth quarter of 2009.
Net income before taxes for the year ended December 31, 2010 was $4.5 million, compared to $1.5 million for the year ended December 31, 2009. The increase was primarily driven by a $4.4 million increase in net interest income representing strong balance sheet growth and continued improvement in net interest margin.
Net income after tax benefit was $5.1 million for the year ended December 31, 2010. The increase in net income after taxes for the year ended December 31, 2010 was due to the recognition of a one-time deferred income tax benefit relating to net operating loss carry-forwards from the Bank’s early stage losses and other timing differences in the recognition of income and expense for tax purposes. The net income per share (basic and diluted) was $1.33 and $1.32 per share, respectively, for the year ended December 31, 2010, compared to $0.40 per share (basic and diluted) in 2009.
The Bank had significant balance sheet growth with total assets of $453 million at December 31, 2010, representing an increase of $112 million compared to total assets at December 31, 2009. Total gross loans were $367 million, excluding loans held for sale, at December 31, 2010, an increase of $67 million over total gross loans at December 31, 2009. Total deposits were $381 million at December 31, 2010 compared to $258 million at December 31, 2009.
Nonperforming assets, including other real estate owned, as a percentage of total assets, decreased to 0.31% at December 31, 2010, compared to 0.72% at December 31, 2009. Annualized net charge-offs were 0.21% of average loans at December 31, 2010, down from 0.29% in 2009.
The allowance for loan losses was $4.8 million as of December 31, 2010, or 1.31% of gross loans outstanding, excluding loans held for sale. Asset quality remained significantly better than peers at December 31, 2010 with non-accrual loans of $496 thousand, loans past due 90 days or more but still accruing interest of $3.1 million and other real estate owned of $889 thousand. The Bank’s capital ratios, as set forth in the attached Financial Highlights schedule, are in excess of regulatory requirements.
David P. Summers, Chairman and Chief Executive Officer of the Bank said:
“Management and the Board of Directors are pleased to report these improved operating results over last year. The Bank’s results significantly exceeded our internal projections for 2010. Much of the improvement came from a better than anticipated net interest margin as our funding costs remained at historically low levels while our booking of new loans remained robust. Our operating efficiency ratio improved to 68.75% during 2010 which reflects a maturing of our franchise and thus better cost control. The other major factor contributing to our improvement in 2010 was our mortgage operation which nearly doubled its pre-tax income from the prior year.
As you are all aware, 2010 was another challenging year with the local economy not able to gain much traction from the extended recession of the past several years. The passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was signed into law on July 21, 2010, was the most extensive financial regulatory reform legislation ever enacted. The impact of this law has yet to be felt, but future bank compliance and operating strategies will certainly be adjusted (at considerable cost to the industry) in order to comply.
In spite of these conditions, we continue to see opportunity for successful expansion of the Virginia Heritage Bank (“VHB”) franchise in 2011. Our fifth office, located adjacent to the Dulles Town Center mall, is scheduled to open in the first quarter of 2011 subject to regulatory approval. We have plans to hire several more loan production staff during 2011 in anticipation of a better business environment with more growth coming from the private sector. The completion of our recent $5.3 million equity raise provides us with the additional capital needed to continue the balance sheet growth in order to build VHB into one of the more significant community banks in Northern Virginia.”
Virginia Heritage Bank is headquartered in Fairfax City, Virginia. The Bank has four full service offices in Fairfax City, Chantilly, Gainesville and Vienna, Virginia. The Bank also has a mortgage division located in Chantilly, Virginia.
This release contains forward-looking statements, including our expectations with respect to future events that are subject to various risks and uncertainties. Factors that could cause actual results to differ materially from management’s projections, forecasts, estimates and expectations include: fluctuation in market rates of interest and loan and deposit pricing, adverse changes in the overall national economy as well as adverse economic conditions in our specific market areas, maintenance and development of well-established and valued client relationships and referral source relationships, and acquisition or loss of key production personnel. Other risks that can affect the Bank are detailed from time to time in our quarterly and annual reports filed with the Board of Governors of the Federal Reserve System. We caution readers that the list of factors above is not exclusive. The forward-looking statements are made as of the date of this release, and we may not undertake steps to update the forward-looking statements to reflect the impact of any circumstances or events that arise after the date the forward-looking statements are made. In addition, our past results of operations are not necessarily indicative of future performance.
| VIRGINIA HERITAGE BANK | |||||||||||||||||||||
| FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||||||||||
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At or For the Quarter Ended |
At or For the Year Ended |
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December 31, |
December 31, |
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2010 |
2009 |
% Change |
2010 |
2009 |
% Change |
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Statement of Operations Data: |
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| Interest income | $ | 5,958 | $ | 4,570 | 30.37 | % | $ | 21,479 | $ | 15,753 | 36.35 | % | |||||||||
| Interest expense | 1,730 | 1,355 | 27.68 | % | 6,463 | 5,164 | 25.15 | % | |||||||||||||
| Net interest income | 4,228 | 3,215 | 31.51 | % | 15,016 | 10,589 | 41.81 | % | |||||||||||||
| Provision for loan losses | 525 | 426 | 23.24 | % | 2,002 | 2,021 | -0.94 | % | |||||||||||||
| Total noninterest income | 1,985 | 783 | 153.51 | % | 5,848 | 4,280 | 36.64 | % | |||||||||||||
| Total noninterest expense | 4,424 | 2,875 | 53.88 | % | 14,344 | 11,346 | 26.42 | % | |||||||||||||
| Net income before taxes | 1,264 | 697 | 81.35 | % | 4,518 | 1,502 | 200.80 | % | |||||||||||||
| Income tax expense (benefit) | 432 | - | N/M | (629 | ) | - | N/M | ||||||||||||||
| Net income after taxes | 832 | 697 | 19.37 | % | 5,147 | 1,502 | 242.68 | % | |||||||||||||
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Per Share Data and Shares Outstanding: |
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| Net income (basic) | $ | 0.20 | $ | 0.18 | $ | 1.33 | $ | 0.40 | |||||||||||||
| Net income (diluted) | $ | 0.20 | $ | 0.18 | $ | 1.32 | $ | 0.40 | |||||||||||||
| Book value at period end | 9.54 | 8.18 | 9.54 | 8.18 | |||||||||||||||||
| Weighted average shares (basic) | 4,152,684 | 3,791,633 | 3,881,896 | 3,791,633 | |||||||||||||||||
| Weighted average shares (diluted) | 4,157,693 | 3,794,577 | 3,885,276 | 3,795,768 | |||||||||||||||||
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Selected Balance Sheet Data: |
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| Assets | $ | 452,509 | $ | 341,034 | 32.69 | % | |||||||||||||||
| Total gross loans (3) | 367,256 | 300,293 | 22.30 | % | |||||||||||||||||
| Loans held for sale | 11,366 | 5,699 | 99.44 | % | |||||||||||||||||
| Securities available for sale, at fair value | 39,789 | 17,912 | 122.14 | % | |||||||||||||||||
| Securities held to maturity, at book value | 554 | - | N/M | ||||||||||||||||||
| Deposits | 381,426 | 258,457 | 47.58 | % | |||||||||||||||||
| Federal funds purchased | - | 18,650 | N/M | ||||||||||||||||||
| Repurchase agreements | 2,920 | 3,646 | -19.91 | % | |||||||||||||||||
| FHLB advances | 25,000 | 28,000 | -10.71 | % | |||||||||||||||||
| Stockholders' equity | 41,373 | 31,020 | 33.38 | % | |||||||||||||||||
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Asset Quality: |
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| Non-performing assets (1) | |||||||||||||||||||||
| to total assets | 0.31 | % | 0.72 | % | |||||||||||||||||
| Non-performing loans and past due loans (2) | |||||||||||||||||||||
| to total assets | 0.80 | % | 0.17 | % | |||||||||||||||||
| to total loans | 0.98 | % | 0.20 | % | |||||||||||||||||
| Allowance for loan losses to total loans (3) | 1.31 | % | 1.18 | % | |||||||||||||||||
| Net charge-offs to average loans outstanding | 0.52 | % | 0.08 | % | 0.21 | % | 0.29 | % | |||||||||||||
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Performance Ratios: |
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| Return on average assets (4) | 0.73 | % | 0.84 | % | 1.29 | % | 0.51 | % | |||||||||||||
| Return on average stockholders' equity (4) | 8.78 | % | 9.02 | % | 14.81 | % | 4.94 | % | |||||||||||||
| Net interest rate spread | 3.38 | % | 3.54 | % | 3.43 | % | 3.21 | % | |||||||||||||
| Net interest margin | 3.73 | % | 3.95 | % | 3.81 | % | 3.71 | % | |||||||||||||
| Efficiency ratio | 71.21 | % | 71.91 | % | 68.75 | % | 76.31 | % | |||||||||||||
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Regulatory Capital Ratios: |
Actual |
Minimum To |
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| Total risk-based capital ratio | 12.00 | % | 10.00 | % | |||||||||||||||||
| Tier 1 risk-based capital ratio | 10.75 | % | 6.00 | % | |||||||||||||||||
| Leverage ratio | 8.86 | % | 5.00 | % | |||||||||||||||||
| (1) Includes non-accrual loans and other real estate owned. | |||||||||||||||||||||
| (2) Includes non-accrual loans and loans past due 90 days or more and still accruing interest. | |||||||||||||||||||||
| (3) Excludes loans held for sale. | |||||||||||||||||||||
| (4) Excludes income taxes for comparison to prior period. | |||||||||||||||||||||
| N/M - Not meaningful | |||||||||||||||||||||