FLOYD, Va. and INDEPENDENCE, Va., Aug. 8, 2016 /PRNewswire/ -- On August 8, 2016, Parkway Acquisition Corp. (Parkway) announced second quarter earnings for both Grayson Bankshares, Inc. (Grayson), and Cardinal Bankshares Corporation (Cardinal), and provided an update on the recently completed merger of Grayson and Cardinal.
As previously announced, Grayson and Cardinal merged with and into Parkway on July 1, 2016, with Parkway as the surviving corporation. Immediately following that merger, Cardinal's wholly-owned banking subsidiary, Bank of Floyd, merged with and into Grayson's wholly-owned banking subsidiary, Grayson National Bank, with Grayson National Bank as the surviving bank. All earnings information contained herein is reported at and for the periods ended June 30, 2016, and, as such, relates solely to Grayson or Cardinal, respectively, prior to the closing of the merger.
Grayson reported consolidated net income of $541 thousand for the second quarter of 2016 versus consolidated net income of $370 thousand for the same quarter in 2015. Net interest margin increased to 3.85% from 3.46% for the second quarters of 2016 and 2015, respectively, primarily due to decreases in interest rates on deposits combined with a $10.0 million reduction in long-term fixed rate borrowings. Non-interest income decreased to $648 thousand from $680 thousand while non-interest expense decreased to $2.65 million from $2.71 million, for the second quarters of 2016 and 2015, respectively. Grayson recognized $68 thousand in merger related expenses during the second quarter of 2016. Loan balances increased to $244.8 million at June 30, 2016 from $241.2 million at December 31, 2015. Deposits decreased to $274.3 million from $279.9 million, and total assets decreased to $317.5 million from $331.8 million over the same time period. The decrease in total assets was due primarily to the reduction in borrowings.
Cardinal reported a consolidated net loss of $354 thousand for the second quarter versus consolidated net income of $102 thousand for the same quarter in 2015. The loss was due primarily to the recognition during the quarter of $376 thousand in expenses related to the merger. Net interest margin increased to 3.38% from 3.21% for the second quarters of 2016 and 2015, respectively. Non-interest income increased to $294 thousand from $266 thousand, and non-interest expense decreased to $2.71 million from $2.79 million, for the second quarters of 2016 and 2015, respectively. Loan balances decreased to $164.0 million at June 30, 2016 from $167.7 million at December 31, 2015 and deposit balances decreased to $218.9 million from $222.0 million over the same time period. Total assets decreased by $10.8 million to $249.4 million at June 30, 2016, compared to $260.2 million at December 31, 2015. The decrease was due primarily to a decrease in borrowings of $8.0 million.
Regarding the recently completed merger, President and CEO Allan Funk stated, "The merger of Grayson and Cardinal with and into Parkway, and the combination of Grayson National Bank and Bank of Floyd into a single national bank charter, was completed on July 1st. As you will recall from our special meetings and investor sessions, we have a project underway to rebrand the combined bank early next year in conjunction with the integration of our bank's major computer systems and operational processes. During this integration process, we are mindful of our dual objectives to reduce the combined bank's total costs by eliminating redundant systems and processes while offering improvements in products, services and technology for our customers."
SEVP and CFO Blake Edwards added, "Shareholders should have received by now a letter from our transfer agent, Computershare, with information about your stock certificate exchange process. If you need assistance with the process, please feel free to ask one of our branches for help, and they will put you in contact with one of several individuals internally who can assist you with this process. Likewise, look for an announcement soon on our new ticker symbol as our shares in Parkway Acquisition Corp., the new holding company, begin to trade publicly."
This release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934 as amended. These include statements as to the benefits of the merger, as well as other statements of expectations regarding the merger and any other statements regarding future results or expectations. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are including this statement for purposes of these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies, and expectations of the combined company, are generally identified by the use of words such as "believe," "expect," "intend," "anticipate," "estimate," or "project" or similar expressions. Our ability to predict results, or the actual effect of future plans or strategies, is inherently uncertain. Factors which could have a material adverse effect on the operations and future prospects of the combined company and its subsidiaries include, but are not limited to: the risk that the businesses of Cardinal and/or Grayson will not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; expected revenue synergies and cost savings from the merger may not be fully realized or realized within the expected time frame; revenues following the merger may be lower than expected; customer and employee relationships and business operations may be disrupted by the merger; changes in interest rates, general economic conditions, legislative/regulatory changes, monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Federal Reserve Board; the quality and composition of the loan and securities portfolios; demand for loan products; deposit flows; competition; demand for financial services in the combined company's market area; the implementation of new technologies; the ability to develop and maintain secure and reliable electronic systems; and accounting principles, policies, and guidelines. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or clarify these forward‐looking statements, whether as a result of new information, future events or otherwise.
Allan Funk, President & CEO – 276-773-2811
Blake Edwards, Senior Executive VP and CFO – 276-773-2811
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SOURCE Cardinal Bankshares Corporation; Grayson Bankshares, Inc.