TYSONS CORNER, Va.--(BUSINESS WIRE)--Virginia Heritage Bank (OTCQB: VGBK), reported net income after taxes of $1.8 million in the fourth quarter of 2012, compared to $1.7 million for the same period in 2011. The increase in net income for the quarter ended December 31, 2012 was due primarily to an increase in non-interest income and, to a lesser extent, an increase in net interest income. Non-interest income, which consisted primarily of gains on sales of originated mortgage loans and securities, increased $2.3 million as a result of increased sales volume. Non-interest expense increased $3.4 million in the 4th quarter of 2012 compared to the prior year quarter was due primarily to expenses relating to the aforementioned mortgage origination activity ($1.4 million) and the one-time charge of approximately $1.0 million representing the settlement of a claim by the U.S. Bankruptcy Trustee for a former loan customer of the Bank. The Bank vigorously defended the claim and was able to settle the case for less than 25% of the original claim. The balance of the increase in non-interest expense was driven by the overall growth of the Bank. Net interest income increased $1.2 million due primarily to strong balance sheet growth. Net income available to common shareholders was $0.40 per share for the fourth quarter of 2012 (basic) and $0.39 per share (diluted), compared to $0.38 per share (basic and diluted) for the fourth quarter of 2011.
Net income after taxes for the year ended December 31, 2012 was $7.6 million, compared to $5.1 million for the same period in 2011. The increase was driven primarily by an increase in non-interest income and, to a lesser extent, an increase in net interest income. Non-interest income, which consisted primarily of gains on sales of originated mortgage loans and securities, increased $7.5 million as a result of increased sales volume. Non-interest expense increased $8.0 million and is primarily driven by the increase in expenses relating to much higher mortgage origination ($4.3 million) and the aforementioned one-time charge. The balance of the increase in non-interest expense was driven by the overall growth of the Bank. Net interest income increased $5.4 million due primarily to strong balance sheet growth. Net income available to common shareholders was $1.70 per share (basic) and $1.68 per share (diluted) for the year ended December 31, 2012, compared to $1.17 per share (basic and diluted) for the year ended December 31, 2011.
Total assets at December 31, 2012 were $781 million, representing an increase of $203 million compared to total assets at December 31, 2011. Total gross loans were $588 million, excluding loans held for sale, at December 31, 2012, an increase of $147 million over total gross loans at December 31, 2011. Total deposits were $660 million at December 31, 2012 compared to $492 million at December 31, 2011.
Non-performing assets, including other real estate owned, as a percentage of total assets, decreased to 0.64% at December 31, 2012, compared to 0.76% at December 31, 2011. Annualized net charge-offs were 0.21% of average loans for the quarter ended December 31, 2012, up from 0.08% for the same period in 2011. The increase in net charge-offs was primarily due to charge-offs for two commercial loans amounting to $283 thousand.
The allowance for loan losses was $8.3 million as of December 31, 2012, or 1.41% of gross loans outstanding, excluding loans held for sale. Asset quality remained significantly better than peers at December 31, 2012 with non-accrual loans of $1.4 million, performing troubled debt restructured loans of $3.1 million, other real estate owned of $479 thousand and no loans past due 90 days or more but still accruing interest. 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:
“2012 was the seventh year of operations for Virginia Heritage Bank. The board of directors and management are pleased to report these exceptional results particularly in light of the difficult economic environment surrounding the great recession. Our growth trends have exceeded expectations while we have been able to maintain excellent asset quality and above peer earnings. Our core lines of business (commercial lending, mortgage lending and indirect lending) have all contributed to our superior performance and their results are summarized below:
- Net commercial lending production exceeded $88 million for 2012.
- Mortgage lending production was $364.5 million for 2012, an increase of $161.6 million over 2011.
- Our indirect consumer loan production was $75 million for 2012, an increase from $36 million of production in 2011.
We also generated bond portfolio gains during 2012 of $1.7 million, up dramatically from 2011 gains of $706 thousand. Although the net interest margin contracted by 10 basis points year over year, we experienced an improvement in our core bank efficiency ratio (exclusive of our mortgage operation) from 57.05% in 2011 to 56.53% in 2012.”
Virginia Heritage Bank is headquartered in Tysons Corner, Virginia. The Bank has five full service offices in Fairfax City, Chantilly, Gainesville, Tysons Corner and Dulles, Virginia. The Bank also has a mortgage division located in Chantilly, Virginia.
This release contains forward-looking statements, including our expectations with respect to future events that are subject to various risks and uncertainties. Factors that could cause actual results to differ materially from management’s projections, forecasts, estimates and expectations include: fluctuation in market rates of interest and loan and deposit pricing, adverse changes in the overall national economy as well as adverse economic conditions in our specific market areas, maintenance and development of well-established and valued client relationships and referral source relationships, and acquisition or loss of key production personnel. We caution readers that the list of factors above is not exclusive. The forward-looking statements are made as of the date of this release, and we may not undertake steps to update the forward-looking statements to reflect the impact of any circumstances or events that arise after the date the forward-looking statements are made. In addition, our past results of operations are not necessarily indicative of future performance.
| VIRGINIA HERITAGE BANK | |||||||||||||
| FINANCIAL HIGHLIGHTS (Unaudited) | |||||||||||||
| ($ in thousands except per share data) | |||||||||||||
| At or For the Quarter Ended | At or For the Year Ended | ||||||||||||
| December 31, | December 31, | ||||||||||||
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2012 |
2011 |
% Change |
2012 |
2011 |
% Change |
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Statement of Operations Data: |
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| Interest income | $8,220 | $7,232 | 13.66% | $30,814 | $26,140 | 17.88% | |||||||
| Interest expense | 1,417 | 1,678 | -15.55% | 6,147 | 6,895 | -10.85% | |||||||
| Net interest income | 6,803 | 5,554 | 22.49% | 24,667 | 19,245 | 28.17% | |||||||
| Provision for loan losses | 800 | 729 | 9.74% | 3,410 | 2,037 | 67.40% | |||||||
| Total noninterest income | 4,757 | 2,497 | 90.51% | 14,641 | 7,141 | 105.03% | |||||||
| Total noninterest expense | 8,171 | 4,743 | 72.27% | 24,627 | 16,610 | 48.27% | |||||||
| Net income before taxes | 2,589 | 2,579 | 0.39% | 11,271 | 7,739 | 45.64% | |||||||
| Income tax expense | 810 | 862 | -6.03% | 3,625 | 2,601 | 39.37% | |||||||
| Net income after taxes | 1,779 | 1,717 | 3.61% | 7,646 | 5,138 | 48.81% | |||||||
| Preferred dividends paid | 38 | 38 | 0.00% | 289 | 77 | 275.32% | |||||||
| Net income available to common shareholders | 1,741 | 1,679 | 3.69% | 7,357 | 5,061 | 45.37% | |||||||
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Per Share Data and Shares Outstanding: |
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| Net income (basic) (4) | $0.40 | $0.38 | $1.70 | $1.17 | |||||||||
| Net income (diluted) (4) | 0.39 | 0.38 | 1.68 | 1.17 | |||||||||
| Common equity book value at period end | 12.47 | 10.89 | 12.47 | 10.89 | |||||||||
| Weighted average shares (basic) | 4,333,209 | 4,333,209 | 4,333,209 | 4,333,209 | |||||||||
| Weighted average shares (diluted) | 4,408,375 | 4,335,387 | 4,371,355 | 4,337,566 | |||||||||
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Selected Balance Sheet Data: |
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| Assets | $781,574 | $578,087 | 35.20% | ||||||||||
| Total gross loans (3) | 587,547 | 440,416 | 33.41% | ||||||||||
| Loans held for sale | 48,136 | 16,861 | 185.49% | ||||||||||
| Securities available for sale, at fair value | 118,629 | 98,821 | 20.04% | ||||||||||
| Deposits | 660,139 | 491,713 | 34.25% | ||||||||||
| Federal funds purchased | 13,000 | - - | N/M | ||||||||||
| Repurchase agreements | 1,600 | 1,750 | -8.57% | ||||||||||
| FHLB advances | 33,000 | 18,000 | 83.33% | ||||||||||
| Stockholders' equity | 69,317 | 62,476 | 10.95% | ||||||||||
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Asset Quality: |
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| Non-performing assets (1) (5) | |||||||||||||
| to total assets | 0.63% | 0.76% | |||||||||||
| Non-performing loans and past due loans (2) (5) | |||||||||||||
| to total assets | 0.57% | 0.62% | |||||||||||
| to total loans | 0.76% | 0.82% | |||||||||||
| Allowance for loan losses to total loans (3) | 1.41% | 1.39% | |||||||||||
| Annualized net charge-offs to average loans outstanding | 0.21% | 0.08% | 0.24% | 0.18% | |||||||||
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Performance Ratios: |
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| Return on average assets | 0.95% | 1.21% | 1.13% | 1.00% | |||||||||
| Return on average stockholders' equity | 10.30% | 11.07% | 11.58% | 9.91% | |||||||||
| Net interest rate spread | 3.30% | 3.62% | 3.33% | 3.47% | |||||||||
| Net interest margin | 3.67% | 3.92% | 3.69% | 3.79% | |||||||||
| Efficiency ratio | 70.68% | 58.91% | 62.65% | 62.95% | |||||||||
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Minimum To |
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Be Well |
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Regulatory Capital Ratios: |
Actual |
Capitalized |
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| Total risk-based capital ratio | 12.06% | 10.00% | |||||||||||
| Tier 1 risk-based capital ratio | 10.81% | 6.00% | |||||||||||
| Leverage ratio | 9.28% | 5.00% | |||||||||||
| (1) Includes non-accrual loans, troubled debt restructured loans and other real estate owned. | |
| (2) Includes non-accrual loans, troubled debt restructured loans and loans past due 90 days or more and still accruing interest. | |
| (3) Excludes loans held for sale. | |
| (4) The YTD net income per share data has been restated to correctly reflect the net income available to common shareholders. | |
| (5) Both non-performing assets and non-performing loans (YTD) have been restated to include performing troubled debt restructured loans. | |
| N/M - Not Meaningful | |