Colonial Virginia Bank Announces Third Quarter 2013 Earnings
Colonial Virginia Bank (OTCBB:CNVB) ("the Bank"), today reported net income of $105,136, or $0.17 per share assuming dilution, for the quarter ended September 30, 2013, compared to net income of $100,598, or $0.16 per share assuming dilution, for the quarter ended September 30, 2012. Return on average assets ("ROA") was 0.38% (annualized) for the current quarter compared to 0.34% for the quarter ended September 30, 2012, while return on average equity ("ROE") was 3.79% and 3.61%, respectively, for the same periods. For the quarter ended June 30, 2013, net income totaled $121,452, or $0.20 per share assuming dilution, with corresponding ROA and ROE of 0.44% and 4.26%, respectively.
Current period earnings reflected an increase in net interest income to $1,094,599 from $1,063,459 in the second quarter 2013, but represented a decline from $1,147,539 for the third quarter 2012. The modest volatility has been due primarily to fluctuating levels of the earning asset base, combined with declining rates in the bond market and an increase in non-accrual loans. Some loans on non-accrual status may be current or only 30-60 days past due, but the financial weakness of the borrower, imprudent original or restructured repayment schedule, or lack of collateral have led to the decision to stop accruing interest. The average net interest margin expanded to 4.30% from 4.20% in the prior quarter 2013 and 4.22% in the same period a year ago, as pricing practices continued to be aggressive relative to funding strategies.
Several other factors significantly influenced earnings in the third quarter and resulted in the decline in profitability relative to the previous quarter. The provision for loan loss expense increased to $55,000 for the quarter ended September 30, 2013, compared to $35,000 for the quarter ended June 30, 2013. Net loan charge-offs during the quarter were minimal, but outstanding loan balances grew by $1.3 million in the third quarter 2013, necessitating additional provision expenses to bolster the allowance for loan and lease losses ("ALLL"). Additionally, there was recognition of losses related to the sale of foreclosed properties totaling $89,287 in the current quarter 2013, which compares to a gain of $7,767 recorded in the previous quarter 2013. One positive development was the growth in net interest income referenced above. Moderately higher average yields in the securities portfolio as well as higher average securities balances replacing lower average Fed funds sold balances contributed to an increase in the average yield on earning assets to 4.83% during the third quarter 2013, which compares to 4.77% in the second quarter 2013. Additionally, although the average rate on interest-bearing liabilities subsided only fractionally, to 0.62% from 0.63% in the previous quarter 2013, the average balances of money market and time deposit accounts decreased meaningfully and were offset by corresponding increases in average non-interest bearing deposits. In addition, the reduction in costs associated with non-performing assets in the third quarter was encouraging, decreasing from $98,857 for the quarter ended June 30, 2013 to $36,173 for the quarter ended September 30, 2013.
Non-interest income for the third quarter 2013 totaled $25,174, which compares to $126,398 in the prior quarter and $82,820 in the third quarter of 2012. These fluctuations are attributed to the net gain or loss on the sale of foreclosed properties discussed above. Total non-interest expense during the quarter was $930,237 which compares to $993,235 in the second quarter and $1,020,011 in the third quarter a year ago. As previously mentioned, loan loss provisions totaled $55,000, up from $35,000 in the previous quarter but down from $75,250 in the third quarter of last year. The ALLL as a percentage of gross loans as of September 30 was 2.20% which compares to 2.18% at June 30, 2013 and 2.68% at September 30, 2012. The ratio of non-performing assets to total assets at the end of third quarter 2013 was 4.23%, moderating somewhat from 4.36% at second quarter end 2013, but considerably higher than the September 2012 level of 2.72%. Provisions for federal income taxes in the third quarter were $29,400 which compares to $40,170 in the prior quarter and $34,500 in the third quarter of last year.
Total assets as of September 30, 2013 of $116.6 million represent growth of 1.7% since June 30, 2013, but a decline of 3.9% from September 2012. Total securities decreased 3.0% quarter over quarter but increased 8.5% year over year to $18.6 million. Total loans outstanding grew 1.7% during the quarter but contracted 5.4% from a year ago to $76.0 million. Deposits totaled $101.4 million at quarter end, demonstrating an increase of 1.9% since the second quarter but a decline of 4.6% from September 30, 2012. FHLB borrowings were unchanged at $1.5 million. Total capital expanded 1.0% for the quarter and 2.2% from a year ago to $12.0 million.
Bob Bailey, President and CEO, stated, "we are pleased to report our sixth consecutive profitable quarter. Loan and deposit balances have seen small changes but fluctuations in loan related collection expenses and gains or losses on foreclosed properties continue to influence our earnings quarter to quarter. In some collateral liquidations we have experienced losses higher than anticipated and in others we have recaptured funds previously believed to be uncollectable. Our focus remains on improving asset quality and managing expenses while seeking opportunities for growth."
"The Bank will celebrate its 10 year anniversary on November 6 and we invite the public to participate in the festivities at our branch offices that day. We are thankful for the shareholders, customers, and employees who have been integral parts of our success this last decade. The positive impact we have made in the community in the face of an uncertain economy has been gratifying," noted Bailey.
The Bank operates two full service retail bank offices located in Gloucester County. The Bank also operates a Loan Production Office (LPO) in York County, where property has been purchased for a future full service branch. The Bank offers investment services through a non-ownership arrangement with Lions Bridge Financial, offering a full array of investment services and financial planning.
The Bank's stock is listed for trading on the Over the Counter Bulletin Board (OTCBB) under the symbol CNVB. The bank's primary market maker is Davenport & Company LLC, Richmond, VA.
Additional information regarding the bank's products and services, as well as access to its regulatory filings, are available on the bank's web site at http://www.colonialvabank.com.
Use of Certain Non-GAAP Financial Measures. In addition to results presented in accordance with United States generally accepted accounting principles (GAAP), this earnings release includes certain non-GAAP financial measures, which are reconciled to their equivalent GAAP financial measures below. Management believes these non-GAAP financial measures provide information useful to investors in understanding the corporation's performance trends and facilitate comparisons with its peers. Specifically, management believes the exclusion of a significant recovery of income recognized in a single accounting period permits a comparison of results for ongoing business operations, and it is on this basis that management internally assesses the corporation's performance and establishes goals for future periods.
Although the corporation's management believes the non-GAAP financial measures presented in this earnings release enhance investors' understandings of its performance, these non-GAAP financial measures should not be considered an alternative to GAAP-basis financial statements.
Forward-Looking Statements. The statements contained in this press release that are not historical facts may constitute "forward-looking statements" as defined by the federal securities laws. These statements may address issues that involve estimates and assumptions made by management regarding risks and uncertainties. Actual results could differ materially from historical results or those anticipated by such statements. Factors that could have a material adverse effect on the operations and future prospects of the corporation include, but are not limited to, changes in: (1) interest rates, (2) general economic conditions, (3) demand for loan products, (4) the legislative/regulatory climate, (5) monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board, (6) the quality or composition of the loan or investment portfolios, (7) deposit flows, (8) competition, (9) demand for financial services in the Bank's market area, (10) technology, (11) reliance on third parties for key services, and (12) accounting principles, policies and guidelines. These risks and uncertainties should be considered in evaluating the forward-looking statements contained herein, and readers are cautioned not to place undue reliance on such statements, which speak only as of their dates.
Balance Sheet ($) Y-Y Q-Q
2013 Q3 2012 Q3 Ch (%) 2013 Q2 Ch (%)
Loans Held for Investment, before Reserves 75,780,849 80,143,688 (5.44) 74,504,898 1.71
Loan Loss Reserve 1,668,732 2,156,310 (22.61) 1,625,596 2.65
Net Loans Receivable 74,112,117 77,987,378 (4.97) 72,879,302 1.69
Total Assets 116,594,818 121,306,066 (3.88) 114,614,980 1.73
Deposits 101,400,145 106,329,031 (4.64) 99,546,977 1.86
Common Equity 12,017,179 11,762,288 2.17 11,893,904 1.04
Total Shareholders' Equity 12,017,179 11,762,288 2.17 11,893,904 1.04
Shares Outstanding (actual) 610,175 610,175 0.00 610,175 0.00
Income Statement ($) Y-Y Q-Q
2013 Q3 2012 Q3 Ch (%) 2013 Q2 Ch (%)
Net Interest Income 1,094,599 1,147,539 (4.61) 1,063,459 2.93
Provision for Loan Losses 55,000 75,250 (26.91) 35,000 57.14
Noninterest Income 25,174 82,820 (69.60) 126,398 (80.08)
Noninterest Expense 930,237 1,020,011 (8.80) 993,235 (6.34)
Net Income Before Taxes 134,536 135,098 (0.42) 161,622 (16.76)
Income Tax Provision 29,400 34,500 (14.78) 40,170 (26.81)
Net Income 105,136 100,598 4.51 121,452 (13.43)
Per Share Items ($) Y-Y Q-Q
2013 Q3 2012 Q3 Ch (%) 2013 Q2 Ch (%)
Book Value Per Share 19.69 19.28 2.17 19.49 1.04
Diluted Earnings Per Share 0.17 0.16 6.25 0.20 (15.00)
Performance Ratios (%)* Y-Y Q-Q
2013 Q3 2012 Q3 Ch (bp) 2013 Q2 Ch (bp)
ROAA 0.38 0.34 4 0.44 (6)
ROAE 3.79 3.61 18 4.26 (47)
Net Interest Margin 4.30 4.22 8 4.20 10
Loans / Deposits 74.73 75.37 (64) 74.84 (11)
Efficiency Ratio 79.19 81.69 (250) 74.73 446
Balance Sheet Ratios (%) Y-Y Q-Q
2013 Q3 2012 Q3 Ch (bp) 2013 Q2 Ch (bp)
Equity / Assets 10.31 9.70 61 10.38 (7)
Asset Quality Ratios (%) Y-Y Q-Q
2013 Q3 2012 Q3 Ch (bp) 2013 Q2 Ch (bp)
Nonperforming Assets / Assets 4.23 2.72 151 4.36 (13)
Loan Loss Reserves / Gross Loans 2.20 2.68 (48) 2.18 2
Loan Loss Reserves / Nonperforming Loans 47.22 84.37 (3,715) 47.50 (28)
Net Charge-offs / Avg Loans 0.06 0.16 (10) 2.19 (213)
Regulatory Capital Ratios (%) Y-Y Q-Q
2013 Q3 2012 Q3 Ch (bp) 2013 Q2 Ch (bp)
Tier 1 Capital Ratio 14.60 13.22 138 14.80 (20)
*Performance Ratios are calculated on a fully taxable equivalent basis assuming a federal tax rate of 34%.
CONTACT: Kenneth E. Smith
Executive Vice President & CFO
of Colonial Virginia Bank
1-804-695-9300
Colonial Virginia Bank (OTCBB:CNVB) ("the Bank"), today reported net income of $105,136, or $0.17 per share assuming dilution, for the quarter ended September 30, 2013, compared to net income of $100,598, or $0.16 per share assuming dilution, for the quarter ended September 30, 2012. Return on average assets ("ROA") was 0.38% (annualized) for the current quarter compared to 0.34% for the quarter ended September 30, 2012, while return on average equity ("ROE") was 3.79% and 3.61%, respectively, for the same periods. For the quarter ended June 30, 2013, net income totaled $121,452, or $0.20 per share assuming dilution, with corresponding ROA and ROE of 0.44% and 4.26%, respectively.
Current period earnings reflected an increase in net interest income to $1,094,599 from $1,063,459 in the second quarter 2013, but represented a decline from $1,147,539 for the third quarter 2012. The modest volatility has been due primarily to fluctuating levels of the earning asset base, combined with declining rates in the bond market and an increase in non-accrual loans. Some loans on non-accrual status may be current or only 30-60 days past due, but the financial weakness of the borrower, imprudent original or restructured repayment schedule, or lack of collateral have led to the decision to stop accruing interest. The average net interest margin expanded to 4.30% from 4.20% in the prior quarter 2013 and 4.22% in the same period a year ago, as pricing practices continued to be aggressive relative to funding strategies.
Several other factors significantly influenced earnings in the third quarter and resulted in the decline in profitability relative to the previous quarter. The provision for loan loss expense increased to $55,000 for the quarter ended September 30, 2013, compared to $35,000 for the quarter ended June 30, 2013. Net loan charge-offs during the quarter were minimal, but outstanding loan balances grew by $1.3 million in the third quarter 2013, necessitating additional provision expenses to bolster the allowance for loan and lease losses ("ALLL"). Additionally, there was recognition of losses related to the sale of foreclosed properties totaling $89,287 in the current quarter 2013, which compares to a gain of $7,767 recorded in the previous quarter 2013. One positive development was the growth in net interest income referenced above. Moderately higher average yields in the securities portfolio as well as higher average securities balances replacing lower average Fed funds sold balances contributed to an increase in the average yield on earning assets to 4.83% during the third quarter 2013, which compares to 4.77% in the second quarter 2013. Additionally, although the average rate on interest-bearing liabilities subsided only fractionally, to 0.62% from 0.63% in the previous quarter 2013, the average balances of money market and time deposit accounts decreased meaningfully and were offset by corresponding increases in average non-interest bearing deposits. In addition, the reduction in costs associated with non-performing assets in the third quarter was encouraging, decreasing from $98,857 for the quarter ended June 30, 2013 to $36,173 for the quarter ended September 30, 2013.
Non-interest income for the third quarter 2013 totaled $25,174, which compares to $126,398 in the prior quarter and $82,820 in the third quarter of 2012. These fluctuations are attributed to the net gain or loss on the sale of foreclosed properties discussed above. Total non-interest expense during the quarter was $930,237 which compares to $993,235 in the second quarter and $1,020,011 in the third quarter a year ago. As previously mentioned, loan loss provisions totaled $55,000, up from $35,000 in the previous quarter but down from $75,250 in the third quarter of last year. The ALLL as a percentage of gross loans as of September 30 was 2.20% which compares to 2.18% at June 30, 2013 and 2.68% at September 30, 2012. The ratio of non-performing assets to total assets at the end of third quarter 2013 was 4.23%, moderating somewhat from 4.36% at second quarter end 2013, but considerably higher than the September 2012 level of 2.72%. Provisions for federal income taxes in the third quarter were $29,400 which compares to $40,170 in the prior quarter and $34,500 in the third quarter of last year.
Total assets as of September 30, 2013 of $116.6 million represent growth of 1.7% since June 30, 2013, but a decline of 3.9% from September 2012. Total securities decreased 3.0% quarter over quarter but increased 8.5% year over year to $18.6 million. Total loans outstanding grew 1.7% during the quarter but contracted 5.4% from a year ago to $76.0 million. Deposits totaled $101.4 million at quarter end, demonstrating an increase of 1.9% since the second quarter but a decline of 4.6% from September 30, 2012. FHLB borrowings were unchanged at $1.5 million. Total capital expanded 1.0% for the quarter and 2.2% from a year ago to $12.0 million.
Bob Bailey, President and CEO, stated, "we are pleased to report our sixth consecutive profitable quarter. Loan and deposit balances have seen small changes but fluctuations in loan related collection expenses and gains or losses on foreclosed properties continue to influence our earnings quarter to quarter. In some collateral liquidations we have experienced losses higher than anticipated and in others we have recaptured funds previously believed to be uncollectable. Our focus remains on improving asset quality and managing expenses while seeking opportunities for growth."
"The Bank will celebrate its 10 year anniversary on November 6 and we invite the public to participate in the festivities at our branch offices that day. We are thankful for the shareholders, customers, and employees who have been integral parts of our success this last decade. The positive impact we have made in the community in the face of an uncertain economy has been gratifying," noted Bailey.
The Bank operates two full service retail bank offices located in Gloucester County. The Bank also operates a Loan Production Office (LPO) in York County, where property has been purchased for a future full service branch. The Bank offers investment services through a non-ownership arrangement with Lions Bridge Financial, offering a full array of investment services and financial planning.
The Bank's stock is listed for trading on the Over the Counter Bulletin Board (OTCBB) under the symbol CNVB. The bank's primary market maker is Davenport & Company LLC, Richmond, VA.
Additional information regarding the bank's products and services, as well as access to its regulatory filings, are available on the bank's web site at http://www.colonialvabank.com.
Use of Certain Non-GAAP Financial Measures. In addition to results presented in accordance with United States generally accepted accounting principles (GAAP), this earnings release includes certain non-GAAP financial measures, which are reconciled to their equivalent GAAP financial measures below. Management believes these non-GAAP financial measures provide information useful to investors in understanding the corporation's performance trends and facilitate comparisons with its peers. Specifically, management believes the exclusion of a significant recovery of income recognized in a single accounting period permits a comparison of results for ongoing business operations, and it is on this basis that management internally assesses the corporation's performance and establishes goals for future periods.
Although the corporation's management believes the non-GAAP financial measures presented in this earnings release enhance investors' understandings of its performance, these non-GAAP financial measures should not be considered an alternative to GAAP-basis financial statements.
Forward-Looking Statements. The statements contained in this press release that are not historical facts may constitute "forward-looking statements" as defined by the federal securities laws. These statements may address issues that involve estimates and assumptions made by management regarding risks and uncertainties. Actual results could differ materially from historical results or those anticipated by such statements. Factors that could have a material adverse effect on the operations and future prospects of the corporation include, but are not limited to, changes in: (1) interest rates, (2) general economic conditions, (3) demand for loan products, (4) the legislative/regulatory climate, (5) monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board, (6) the quality or composition of the loan or investment portfolios, (7) deposit flows, (8) competition, (9) demand for financial services in the Bank's market area, (10) technology, (11) reliance on third parties for key services, and (12) accounting principles, policies and guidelines. These risks and uncertainties should be considered in evaluating the forward-looking statements contained herein, and readers are cautioned not to place undue reliance on such statements, which speak only as of their dates.
Balance Sheet ($) Y-Y Q-Q
2013 Q3 2012 Q3 Ch (%) 2013 Q2 Ch (%)
Loans Held for Investment, before Reserves 75,780,849 80,143,688 (5.44) 74,504,898 1.71
Loan Loss Reserve 1,668,732 2,156,310 (22.61) 1,625,596 2.65
Net Loans Receivable 74,112,117 77,987,378 (4.97) 72,879,302 1.69
Total Assets 116,594,818 121,306,066 (3.88) 114,614,980 1.73
Deposits 101,400,145 106,329,031 (4.64) 99,546,977 1.86
Common Equity 12,017,179 11,762,288 2.17 11,893,904 1.04
Total Shareholders' Equity 12,017,179 11,762,288 2.17 11,893,904 1.04
Shares Outstanding (actual) 610,175 610,175 0.00 610,175 0.00
Income Statement ($) Y-Y Q-Q
2013 Q3 2012 Q3 Ch (%) 2013 Q2 Ch (%)
Net Interest Income 1,094,599 1,147,539 (4.61) 1,063,459 2.93
Provision for Loan Losses 55,000 75,250 (26.91) 35,000 57.14
Noninterest Income 25,174 82,820 (69.60) 126,398 (80.08)
Noninterest Expense 930,237 1,020,011 (8.80) 993,235 (6.34)
Net Income Before Taxes 134,536 135,098 (0.42) 161,622 (16.76)
Income Tax Provision 29,400 34,500 (14.78) 40,170 (26.81)
Net Income 105,136 100,598 4.51 121,452 (13.43)
Per Share Items ($) Y-Y Q-Q
2013 Q3 2012 Q3 Ch (%) 2013 Q2 Ch (%)
Book Value Per Share 19.69 19.28 2.17 19.49 1.04
Diluted Earnings Per Share 0.17 0.16 6.25 0.20 (15.00)
Performance Ratios (%)* Y-Y Q-Q
2013 Q3 2012 Q3 Ch (bp) 2013 Q2 Ch (bp)
ROAA 0.38 0.34 4 0.44 (6)
ROAE 3.79 3.61 18 4.26 (47)
Net Interest Margin 4.30 4.22 8 4.20 10
Loans / Deposits 74.73 75.37 (64) 74.84 (11)
Efficiency Ratio 79.19 81.69 (250) 74.73 446
Balance Sheet Ratios (%) Y-Y Q-Q
2013 Q3 2012 Q3 Ch (bp) 2013 Q2 Ch (bp)
Equity / Assets 10.31 9.70 61 10.38 (7)
Asset Quality Ratios (%) Y-Y Q-Q
2013 Q3 2012 Q3 Ch (bp) 2013 Q2 Ch (bp)
Nonperforming Assets / Assets 4.23 2.72 151 4.36 (13)
Loan Loss Reserves / Gross Loans 2.20 2.68 (48) 2.18 2
Loan Loss Reserves / Nonperforming Loans 47.22 84.37 (3,715) 47.50 (28)
Net Charge-offs / Avg Loans 0.06 0.16 (10) 2.19 (213)
Regulatory Capital Ratios (%) Y-Y Q-Q
2013 Q3 2012 Q3 Ch (bp) 2013 Q2 Ch (bp)
Tier 1 Capital Ratio 14.60 13.22 138 14.80 (20)
*Performance Ratios are calculated on a fully taxable equivalent basis assuming a federal tax rate of 34%.
CONTACT: Kenneth E. Smith
Executive Vice President & CFO
of Colonial Virginia Bank
1-804-695-9300
