Central Virginia Bankshares Reports Second Quarter 2013 Financial Results

POWHATAN, Va., July 26, 2013 /PRNewswire/ -- Central Virginia Bankshares, Inc. (OTC QB: CVBK) and Central Virginia Bank announced that the Company recorded a net loss of $788 thousand for the second quarter of 2013, and after the effect of unpaid dividends of $161 thousand on preferred stock, net loss available to common shareholders totaled $949 thousand or $(0.36) per basic and diluted share.  This compares to second quarter of 2012 net income of $219 thousand, and after the effect of dividends of $161 thousand on preferred stock, net income available to common shareholders of $58 thousand or $0.02 per basic and diluted share.

For the six months ended June 30, 2013, the Company recorded a net loss of $728 thousand, and after the effect of the unpaid preferred stock dividends of $321 thousand, net loss available to common shareholders totaled $1.1 million or $(0.39) per basic and diluted share.  This compares to the six months ended June 30, 2012 net income of $509 thousand, and after the effect of unpaid preferred stock dividends of $321 thousand, a net income available to common shareholders of $188 thousand or $0.07 per basic and diluted share.

Recent Events
On June 10, 2013, the Company and C&F Financial Corporation jointly announced the signing of a definitive merger agreement pursuant to which C&F will acquire the Company in an all-cash transaction valued at $0.32 per common share, or approximately $855 thousand in the aggregate.  The transaction is expected to close in the fourth quarter of 2013 pending regulatory approvals, the approval of the Company's shareholders and other customary closing conditions.

Herb Marth, President and Chief Executive Officer commented that "the proposed merger will unite two great Virginia companies – Central Virginia Bankshares and C&F Financial Corporation – into C&F Financial Corporation.  As noted in our recent communications, the Company has been faced with some very tough challenges ever since the financial crisis began.  Confronted with these challenges, we sought to assure the best outcome for all our constituents. 

"The US Treasury provided approximately $11.4 million in TARP capital to our bank, and while that helped us weather the storm, paying off TARP became problematic for us.  As of June 30, 2013, our unpaid TARP dividends totaled $2.1 million, which if declared would have reduced our tangible book value per common share by $0.78 at second quarter end 2013.  We did not expect to be in a position to declare or pay our TARP dividends in the foreseeable future.  Capital market options remain limited or nonexistent for banks with our profile, and raising additional capital to help with our TARP situation is not viable.  Through the combination with C&F, our TARP obligations will be fully extinguished. 

"Our objectives with this transaction are simple – to maximize shareholder value, while building on our tradition of outstanding customer service, providing competitive and innovative banking products, and affirming our commitment to be a strong and independent community bank.  Achieving these objectives will benefit all of our constituents, shareholders, customers, and employees alike. 

"We are proud of Central Virginia Bank's history and optimistic about our future as C&F Bank. The entire CVB family greatly appreciates the tremendous support we've received from our customers, shareholders, and friends."     

Balance Sheet
During the second quarter, the Company continued its efforts to gradually shrink the balance sheet, investing in securities with low credit risk and thereby improving its regulatory risk adjusted capital position. The Bank has seen its total risk based capital ratio improve to 12.1% at June 30, 2013 from 10.8% at June 30, 2012.  Average total assets were $383.6 million for the second quarter of 2013, a decline of $5.6 million or 1% compared to $389.2 million for the second quarter of 2012.

The following table provides information regarding the changes in the Company's average balances:

 

Dollars in 000's

Average Balances for the Three Months Ended


June 30, 2013

June 30, 2012

Percent Change





Investment securities(1)

$143,405

$135,934

5%

Loans

181,394

210,843

(14)%

Federal funds sold

30,286

14,307

112%

Average earning assets(1)

355,085

361,084

(2)%

Average assets

383,618

389,239

(1)%

Interest bearing deposits (2)

149,246

142,617

5%

Certificate of deposits

131,882

145,462

(9)%

Non-interest bearing deposits

40,090

38,827

3%

Borrowings

45,160

45,155

< 1%

Shareholders' equity

13,585

14,209

(4)%

(1)  Average balances exclude market value adjustments
(2)  Interest bearing deposits consist of interest checking, money market and savings account.

 

Dollars in 000's

Average Balances for the Six Months Ended


June 30, 2013

June 30, 2012

Percent Change





Investment securities(1)

$149,374

$127,410

17%

Loans

185,853

215,305

(14)%

Federal funds sold

22,558

16,331

38%

Average earning assets(1)

357,785

359,046

< (1)%

Average assets

384,949

389,864

(1)%

Interest bearing deposits (2)

149,924

139,527

7%

Certificate of deposits

133,503

149,521

(11)%

Non-interest bearing deposits

39,082

38,370

2%

Borrowings

45,157

45,406

< (1)%

Shareholders' equity

13,686

13,644

< 1%

(1)  Average balances exclude market value adjustments 
(2)  Interest bearing deposits consist of interest checking, money market and savings account.

 

Net Interest Income
Net interest income was $1.9 million for the second quarter of 2013 and $2.7 million for the second quarter of 2012. Net interest margin for the second quarter of 2013 was 2.17%, compared to 2.95% for the second quarter of 2012. Interest income for the second quarter of 2013 was $2.9 million compared to $3.8 million for the second quarter of 2012, a decline of 24%.  Interest expense for the second quarter of 2013 was $1.0 million compared to $1.1 million for the second quarter of 2012, a decline of 9%.  The decline in interest income is due to a decrease of $29.5 million in the average loan portfolio and lower yields on the investment portfolio. The decline in interest expense was primarily due to the strategic decision to lower interest rates on deposits and the reduction of certificates of deposits by $16.0 million.

The following table provides the yield earned on average earning assets, rates on average interest bearing liabilities, and net interest margin for the three months and six months ended June 30, 2013 and 2012:

 

Dollars in 000's

For the Three Months Ended


June 30, 2013


June 30, 2012


Interest

Yield(1)


Interest

Yield(1)

Interest Income:






Loans

$2,256

4.97%


$2,875

5.45%

Investment securities

603

1.68%


913

2.69%

Fed funds sold

16

0.21%


8

0.22%

Total

2,875

3.24%


3,796

4.21%

Interest Expense:






Interest bearing deposits

152

0.41%


179

0.50%

Certificate of deposits

393

1.19%


537

1.48%

Borrowings

408

3.61%


413

3.66%

Total

953

1.17%


1,129

1.36%







Net interest spread

$1,922

2.07%


$2,667

2.85%







Net interest margin(2)

2.17%



2.95%


(1)  Yield percentages are annualized. 
(2)  Net interest margin is calculated as interest income less interest expense divided by average earning assets.

 

Dollars in 000's

For the Six Months Ended


June 30, 2013


June 30, 2012


Interest

Yield(1)


Interest

Yield(1)

Interest Income:






Loans

$4,788

5.15%


$5,999

5.57%

Investment securities

1,248

1.67%


1,689

2.65%

Fed funds sold

24

0.21%


18

0.22%

Total

6,060

3.39%


7,706

4.29%

Interest Expense:






Interest bearing deposits

311

0.41%


356

0.51%

Certificate of deposits

805

1.21%


1,168

1.56%

Borrowings

813

3.60%


820

3.61%

Total

1,929

1.17%


2,344

1.40%







Net interest spread

$4,131

2.21%


$5,362

2.89%







Net interest margin(2)

2.31%



2.99%


(1)  Yield percentages are annualized. 
(2)  Net interest margin is calculated as interest income less interest expense divided by average earning assets.

 

Non-interest income 
Total non-interest income for the second quarter of 2013 was $0.8 million, a decrease of $973 thousand or 56% compared to $1.7 million for the second quarter of 2012. The decrease was due to $1.0 million less in realized gains on sale of securities during the second quarter of 2013 compared to the second quarter of 2012.  

Non-interest expense
Total non-interest expense for the second quarter of 2013 was $3.2 million, an increase of $339 thousand or 12% compared to $2.8 million for the second quarter of 2012. The increase in non-interest expense for the second quarter of 2013 compared to the second quarter of 2012 is primarily due to approximately $300 thousand of merger related expenses, such as legal and professional expenses and consulting expenses. 

Reducing expenses remains a priority for the Company and it continues to seek opportunities where cost savings may be recognized.   

Asset Quality
Total non-performing assets at the end of the second quarter of 2013 were $34.7 million, a decrease of $4.7 million or 12% compared to $39.4 million at June 30, 2012 and a decrease of $4.4 million or 11% compared to $39.1 million at December 31, 2012. The change from June 30, 2012 to June 30, 2013 resulted from a decrease in foreclosed property and other non-performing assets, offset by an increase in loan restructurings. The Company is keenly focused on managing the loan portfolio and non-performing assets. 

The reserve for loan losses was $6.5 million or 3.61% of loans at June 30, 2013, compared to $7.2 million or 3.68% of loans at December 31, 2012 and $8.1 million or 3.92 % of loans at June 30, 2012. 

At the end of the second quarter of 2013, all of the Bank's regulatory capital ratios were above levels to be "well capitalized".

About Central Virginia Bankshares, Inc.
Central Virginia Bankshares, Inc. is the parent of Central Virginia Bank, a 39 year old $368 million community bank with its headquarters and main office in Powhatan County, and six additional branch offices; two branches in the adjacent County of Cumberland, three branches in western Chesterfield County, and one branch in western Henrico County.

Cautionary Statement about Forward-Looking Information
In accordance with the Private Securities Litigation Reform Act of 1995, we caution you that this news release contains forward-looking statements about our future financial performance and business. We make forward-looking statements when we use words such as "believe," "expect," "anticipate," "estimate," "should," "may," "can," "will," "outlook," "project," "appears" or similar expressions.  Forward-looking statements in this news release include, among others, statements about our future capital raise.

Do not unduly rely on forward-looking statements as actual results could differ materially from expectations. Forward-looking statements speak only as of the date made, and we do not undertake to update them to reflect changes or events that occur after that date. Several factors could cause actual results to differ materially from expectations including: current and future economic and market conditions, including the effects of further declines in housing prices and high unemployment rates; our capital requirements and our ability to generate capital internally or raise capital on favorable terms; the terms of capital investments or other financial assistance provided by the U.S. government; financial services reform; recognition of other than-temporary impairment on securities held in our available-for-sale portfolio; the effect of changes in interest rates on our net interest margin; our ability to sell more products to our customers; the effect of the economic recession on the demand for our products and services; changes in our accounting policies or in accounting standards or in how accounting standards are to be applied; mergers and acquisitions; federal and state regulations; reputational damage from negative publicity, fines, penalties and other negative consequences from regulatory violations; the loss of checking and saving account deposits to other investments such as the stock market; and fiscal and monetary policies of the Federal Reserve Board. There is no assurance that our allowance for credit losses will be adequate to cover future credit losses, especially if credit markets, housing prices, and unemployment do not improve. Increases in loan charge-offs or in the allowance for credit losses and related provision expense could materially adversely affect our financial results and condition.

Website: www.centralvabank.com

 

SELECTED FINANCIAL DATA FOR CENTRAL VIRGINIA BANKSHARES, INC.

Dollars in 000's, except  per share data

Three Months Ended

(unaudited)

Six Months Ended

(unaudited)


June 30, 2013


June 30, 2012

June 30, 2013


June 30, 2012








Net income (loss)

$(788)


$219

$(728)


$509

Net income (loss) available to common shareholders

(949)


58

(1,050)


188

Interest income & fees on loans

2,256


2,875

4,788


5,999

Interest income on investments

603


913

1,248


1,689

Interest income on fed funds sold

16


8

24


18

Interest expense on deposits

545


716

1,116


1,524

Interest expense on borrowings

408


413

813


820

Net interest income

1,922


2,667

4,131


5,362

Loan loss provision

300


1,350

300


1,550

Non-interest income

775


1,748

1,446


2,851

Non-interest expense

3,185


2,846

6,006


6,154

Period End Balances

Investment securities

$125,071


$136,272




Fed funds sold

41,692


8,764




Loans (net of unearned discount)

178,874


206,156




Allowance for loan and lease losses

6,460


8,071




Assets

376,421


387,765




Non-interest bearing deposits

39,105


39,049




Total deposits

318,393


325,026




Borrowings

45,155


45,155




Shareholders' equity

8,844


14,269




Average shares outstanding – basic

2,666


2,674

2,666


2,674

Average shares outstanding – diluted

2,666


2,674

2,666


2,674

Asset Quality

Non-accrual loans

$22,300


$22,046




Loans past due 90 days and still accruing

-


73




Loans restructured(1)

9,317


7,863




Other real estate owned

1,149


5,703




Other non-performing assets

1,948


3,683




Total non-performing assets

34,714


39,368




Charge-offs

777


2,058

1,071


2,882

Recoveries

29


43

65


81

Per Share Data & Ratios

Net income (loss) available to common shareholders-basic

$(0.36)


$0.02

$(0.39)


$0.07

Net income (loss) available to common shareholders-diluted

$(0.36)


$0.02

$(0.39)


$0.07

Book value per common share

$3.32


$5.34




Tangible common equity per common share

$(1.07)


$0.99




Return on average assets(2)

(0.82)%


0.23%

(0.38)%


0.26%

Return on average equity(2)

(23.21)%


6.16%

(10.65)%


7.46%

Efficiency ratio (3)

118.1%


64.5%

107.7%


74.9%

Average loans to average deposits(4)

56.5%


64.5%

57.6%


65.8%

Allowance for loan and lease losses/Loans EOP

3.61%


3.92%




(1)  Loans restructured, accruing and in compliance with modified terms.
(2)  Calculation excludes the effective dividend on preferred stock

(3)  The efficiency ratio is a non-GAAP measure calculated by dividing noninterest expense by net interest income plus noninterest income.

(4)  Excludes mortgage loans held for resale

Reconciliation of Efficiency Ratio

Non-interest expense

$3,185


$2,846

$6,006


$6,154

Net interest income plus non-interest income

2,697


4,415

5,577


8,213

Efficiency Ratio

118.1%


64.5%

107.7%


74.9%

 

SOURCE Central Virginia Bankshares, Inc.



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