Alliance Bankshares Reports 3rd Quarter 2011 Results

Nov 14, 2011, 17:32 ET from Alliance Bankshares Corporation

CHANTILLY, Va., Nov. 14, 2011 /PRNewswire/ -- Alliance Bankshares Corporation (NASDAQ: ABVA) today reported a net loss of $503 thousand for the third quarter 2011.  Three primary factors influenced operating results during the period, as follows:

  • The unprecedented decline in the 10 year Treasury rate resulted in a significant increase in the valuation of our $25 million FHLB Advance, which is accounted for under Fair Value Option (FVO) accounting.  The liability increased from $26.2 million to $29.1 million, impacting pre-tax income by $2.9 million.
  • On a more positive note, the decline in the 10 year Treasury rate presented opportunities to take securities gains totaling $2.1 million
  • Non-interest expenses relating to the previously announced merger with Eagle Bancorp totaled $619 thousand during the quarter; these expenses are largely comprised of legal and investment banking fees

This represents a loss of $.10 per share versus income of $.05 for the same period in 2010.  For the nine month period ended September 30, 2011, net income was $257 thousand, or $.05 per share, versus $547 thousand, or $.11 per share, for the nine month period ended September 30, 2010.  Alliance's regulatory capital ratios are strengthened since December 31, 2010, and remain above the levels necessary to be considered a "well capitalized" institution.

At September 30, 2011, total assets amounted to $536.1 million, or a decline of $2.4 million compared to the December 31, 2010 level of $538.5 million.  As of September 30, 2011, total loans were $319 million, which is $13.3 million below the December 31, 2010 level of $332.3 million.  Investment securities amounted to $105.2 million as of September 30, 2011, a decline of $30.6 million from the December 31, 2010 level of $135.9 million.  Modest increases in low cost deposit sources offset a decline in time deposits, resulting in total deposits of $402.3 million at September 30, 2011, as compared to $406.9 million at December 31, 2010.

Non-performing assets (NPAs) at September 30, 2011 amounted to $15.3 million, compared to $9.4 million at December 31, 2010.  NPAs remain above December 31, 2010 levels due to specific credit situations described in a prior quarter earnings release. At September 30, 2011, the allowance for loan losses was $5.2 million, or 1.62% of loans.

Continued efforts to manage expenses have resulted in a decline in noninterest expense of $269,000 on a quarterly comparative basis, and nearly $1.7 million when comparing the respective nine month period.  Our net interest margin decreased to 3.61% for the third quarter.  The margin decline resulted largely from the change in mix within the investment portfolio and was also artificially depressed due to nonaccrual interest income reversals of $150,200.

Cautionary Statement Regarding Forward-Looking Statements.  Certain statements contained in this report that are not historical facts may constitute "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934.  These statements can generally be identified by the use of words such as "may," "will," "should," "could," "would," "plan," "believe," "expect," "anticipate," "intend" or words of similar meaning. These statements are inherently uncertain; there can be no assurance that the underlying assumptions will prove to be accurate. These forward-looking statements include statements relating to the Company's anticipated future performance, mix of assets and liabilities and effects of efforts to reposition its business. Readers should not place undue reliance on such statements, which speak only as of the date of this release.  The Company does not undertake to update any forward-looking statement that may be made from time to time by it or on its behalf.

Forward-looking statements are subject to risks, assumptions and uncertainties, and could be affected by many factors. Some factors that could cause the Company's actual results to differ materially from those anticipated in these forward-looking statements include: interest rates, general business conditions, as well as conditions within the financial markets, general economic conditions, unemployment levels, the legislative/regulatory climate, including the effect of the Dodd-Frank Wall Street Reform Act and Consumer Protection Act of 2010 and related regulations, regulatory compliance costs, monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve, the quality/composition of the loan portfolios and the value of related collateral, the value of securities the Company holds, charge-offs on loans and the adequacy of the allowance for loan losses, loan demand, deposit flows, counterparty strength, competition, reliance on third parties for key services, the health of the real estate markets, the outcome of the Company's repositioning initiatives, and changes in accounting principles.

More information on Alliance Bankshares Corporation can be found online at www.alliancebankva.com, or by phoning an Alliance office.

ALLIANCE BANKSHARES CORPORATION

Consolidated Balance Sheets

September 30,

December 31,

September 30,

2011*

2010

2010*

ASSETS

(Dollars in thousands)

Cash and due from banks

$                 67,497

$                 24,078

$               102,526

Federal funds sold

23,644

17,870

14,595

Trading securities, at fair value

559

2,075

2,250

Investment securities available-for-sale, at fair value

105,210

135,852

125,685

Restricted stock, at cost

5,224

6,355

6,548

Loans, net of unearned discount and fees

318,993

332,310

337,087

  Less: allowance for loan losses

(5,178)

(5,281)

(5,224)

Loans, net

313,815

327,029

331,863

Premises and equipment, net

1,547

1,584

1,652

Other real estate owned (OREO)

4,102

4,627

4,748

Other assets

14,544

19,041

17,604

     TOTAL ASSETS

536,142

538,511

607,471

LIABILITIES AND STOCKHOLDERS' EQUITY

Non-interest bearing deposits

$               125,872

$               124,639

$               138,831

Savings and NOW deposits

58,281

56,569

75,451

Money market deposits

23,660

25,524

24,931

Time deposits

194,518

200,211

227,030

  Total deposits

402,331

406,943

466,243

Repurchase agreements, federal funds purchased and other borrowings

42,496

43,153

39,853

Federal Home Loan Bank advances ($29,081, $26,208 and $26,765 at fair value)

44,081

41,208

51,765

Trust Preferred Capital Notes

10,310

10,310

10,310

Other liabilities

2,460

3,212

2,256

  TOTAL LIABILITIES

501,678

504,826

570,427

Common stock, $4 par value; 15,000,000 shares authorized;

  5,108,969 shares issued and outstanding at September 30, 2011 and

  5,106,819 shares at December 31, 2010 and September 30, 2010, respectively.

20,436

20,427

20,427

Capital surplus

25,864

25,857

25,857

Retained (deficit)

(12,055)

(12,311)

(12,469)

Accumulated other comprehensive income (loss), net

219

(288)

3,229

  TOTAL STOCKHOLDERS' EQUITY

34,464

33,685

37,044

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$               536,142

$               538,511

$               607,471

* Unaudited financial results

ALLIANCE BANKSHARES CORPORATION

Consolidated Income Statements

Three Months Ended

Three Months Ended

Nine Months Ended

Nine Months Ended

September 30,

September 30,

September 30,

September 30,

2011*

2010*

2011*

2010*

(Dollars in thousands, except per share)

INTEREST INCOME:

  Loans

$                          4,574

$                          5,046

$                     13,674

$                     15,414

  Investment securities

802

1,387

3,290

4,766

  Trading securities

12

40

57

177

  Federal funds sold

10

18

32

40

     Total interest income

5,398

6,491

17,053

20,397

INTEREST EXPENSE:

  Savings and NOW deposits

26

46

88

173

  Time deposits

877

1,290

2,845

4,424

  Money market deposits

45

65

139

216

  Repurchase agreements, federal funds purchased and other borrowings

54

82

194

288

  FHLB advances

261

282

776

866

  Trust preferred capital notes

93

101

278

275

     Total interest expense

1,356

1,866

4,320

6,242

Net interest income

4,042

4,625

12,733

14,155

Provision for loan losses

130

378

1,205

1,328

     Net interest income after provision for loan losses

3,912

4,247

11,528

12,827

OTHER INCOME:

  Deposit account service charges

39

49

115

172

  Net gain on sale of available-for-sale securities

2,120

656

3,034

1,715

  Fair value adjustments

(2,844)

(412)

(2,950)

(1,028)

  Other operating income

34

58

153

166

     Total other income

(651)

351

352

1,025

OTHER EXPENSES:

  Salaries and employee benefits

1,197

1,800

3,993

5,350

  Occupancy expense

578

702

1,703

1,975

  Equipment expense

163

186

486

565

  Other real estate owned expense

26

55

77

449

  FDIC assessments

220

366

860

1,031

  Merger expenses

619

-

619

-

  Operating expenses

1,264

1,227

3,816

3,924

     Total other expenses

4,067

4,336

11,554

13,294

Income (loss) before income taxes

(806)

262

326

558

Income tax expense (benefit)

(303)

20

70

11

NET INCOME (LOSS)

$                           (503)

$                             242

$                          256

$                          547

Net income (loss) per common share, basic

$                          (0.10)

$                            0.05

$                         0.05

$                         0.11

Net income (loss) per common share, diluted

$                          (0.10)

$                            0.05

$                         0.05

$                         0.11

Weighted average number of shares, basic

5,108,969

5,106,819

5,108,616

5,106,819

Weighted average number of shares, diluted

5,125,607

5,108,150

5,129,311

5,107,800

* Unaudited financial results

ALLIANCE BANKSHARES CORPORATION

Consolidated Statistical Information

Performance Information

September 30,

September 30,

2011*

2010*

(Dollars in thousands, except per share)

Performance Information:

For The Three Months Ended:

Average loans

$             320,004

$             337,923

Average earning assets

446,088

498,336

Average assets

485,386

543,338

Average non-interest bearing deposits

89,101

105,065

Average total deposits

354,348

405,019

Average interest-bearing liabilities

357,429

399,742

Average stockholder equity

36,285

36,524

Net interest margin (1)

3.61%

3.72%

Net income per share, basic

$                  (0.10)

$                   0.05

Net income per share, diluted

$                  (0.10)

$                   0.05

For The Nine Months Ended:

Average loans

$             321,981

$             347,896

Average earning assets

457,547

515,467

Average assets

495,897

560,371

Average non-interest bearing deposits

89,369

96,159

Average total deposits

358,021

409,264

Average interest-bearing liabilities

369,136

426,989

Average equity

34,839

34,877

Return on average assets

0.07%

0.13%

Return on average equity

0.98%

2.10%

Net interest margin (1)

3.74%

3.76%

Net income (loss) per share, basic

$                   0.05

$                   0.11

Net income (loss) per share, diluted

0.05

0.11

* Unaudited financial results

(1) On a fully-tax equivalent basis assuming a 34% federal tax rate.

ALLIANCE BANKSHARES CORPORATION

Consolidated Statistical Information

Credit Quality Information (1)

September 30,

December 31,

September 30,

2011*

2010

2010*

(Dollars in thousands)

Credit Quality Information:

Nonperforming assets:

 Impaired loans (performing loans with a specific allowance)

$                          -

$                   2,400

$                           -

 Non-accrual loans  

10,657

1,903

3,065

 Loans past due 90 days and still accruing

-

256

-

 Troubled debt restructured

501

212

-

 OREO

4,102

4,627

4,748

Total nonperforming assets

$                 15,260

$                   9,398

$                   7,813

Specific reserves associated with impaired & non-accrual loans

$                   1,370

$                      873

$                      727

Largest components of the nonperforming assets listed above:

September 30, 2011 non-accrual loans (91% of the total)

  $2.7 million which is secured by commercial real estate.

  $2.4 million which is secured by residential land.

  $1.1 million which is secured by commercial land.

  $1.1 million which is secured by 11 residential properties.

  $1.0 million which is secured by commercial equipment and receivables.

  $540 thousand which is secured by a residential property and lot.

  $495 thousand which is secured by residential building lots.

  $408 thousand which is secured by commercial real estate.

September 30, 2011 OREO (100% of the total)

  $1.47 million which is acreage near Winchester, Virginia.     (OREO as of 9/30/07)

  $879 thousand which is acreage in Woodstock, VA.     (OREO as of 3/31/08)

  $837 thousand which is property in Charles Town, WV.     (OREO as of 6/30/10)

  $477 thousand which consists of two parcels of land in Northern Virginia.     (OREO as of 3/31/08)

  $164 thousand which is residential lots in Virginia.     (OREO as of 6/30/11)

  $156 thousand which is acreage in Spotsylvania, VA.     (OREO as of 12/31/10)

  $117 thousand which is a commercial lot in King George, VA.     (OREO as of 3/31/10)

* Unaudited financial results

(1) The allowance for loan losses includes a specific allocation for all impaired loans.  Nonperforming assets are defined as impaired loans, non-accrual loans, OREO, troubled debt restructured, and loans past due 90 days or more and still accruing interest.

ALLIANCE BANKSHARES CORPORATION

Consolidated Statistical Information

Credit Quality Information (1)

For The Nine Months Ended:

September 30,

September 30,

2011*

2010*

(Dollars in thousands)

Balance, beginning of period

$                    5,281

$                  5,619

  Provision for loan losses

1,205

1,328

  Loans charged off

(1,556)

(1,850)

  Recoveries of loans charged off

248

127

     Net charge-offs

(1,308)

(1,723)

Balance, end of period

$                    5,178

$                  5,224

September 30,

June 30,

March 31,

December 31,

September 30,

2011

2011

2011

2010*

2010*

Ratios:

Allowance for loan losses to total loans

1.62%

1.62%

1.75%

1.59%

1.55%

Allowance for loan losses to non-accrual loans

0.49X

0.53X

0.48X

2.8X

1.7X

Allowance for loan losses to nonperforming assets

0.34X

0.35X

0.33X

0.6X

0.7X

Nonperforming assets to total assets

2.85%

2.98%

3.16%

1.75%

1.29%

Net charge-offs to average loans

0.54%

0.46%

0.03%

0.61%

0.66%

* Unaudited financial results

(1) The allowance for loan losses includes a specific allocation for all impaired loans.  Nonperforming assets are defined as impaired loans, non-accrual loans, OREO,  troubled  debt restructured, and loans past due 90 days or more and still accruing interest.

ALLIANCE BANKSHARES CORPORATION

Consolidated Statistical Information

Trading Asset & Liability Summary

September 30, 2011

December 31, 2010

Fair

Fair

Trading Securities

Value

Yield

Value

Yield

(Dollars in thousands)

PCMOs (1)

$           559

5.43%

$        2,075

5.32%

Totals

$           559

5.43%

$        2,075

5.32%

(1)  As of September 30, 2011 trading securities consisted of one PCMO instrument.  This PCMO was rated AAA by at least one ratings agency on the purchase date.  Currently the security has a rating below investment grade.  The instrument is currently performing as expected.

September 30, 2011

December 31, 2010

Fair

Fair

Fair Value Assets and Liabilities

Value

Value

(Dollars in thousands)

Trading securities

$           559

$        2,075

FHLB advances

        29,081

        26,208

ALLIANCE BANKSHARES CORPORATION

Consolidated Statistical Information

Capital Information

September 30,

December 31,

2011*

2010

(Dollars in thousands, except per share)

Capital Information:

Book value per share

$                  6.75

$                     6.60

Tier I risk-based capital ratio

12.5%

11.6%

Total risk-based capital ratio

13.8%

12.9%

Leverage capital ratio

8.3%

7.5%

Total equity to total assets ratio

6.4%

6.3%

* Unaudited financial results

ALLIANCE BANKSHARES CORPORATION

Components of Stockholder Equity

on a Book Value per Share Basis

Nine Months

Twelve Months

Nine Months

Ended September 30,

Ended December 31,

Ended September 30,

2011

2010

2010

Book Value Per Share, beginning of the period

$6.60

$6.49

$6.49

Net income (loss) per common share

0.05

0.14

0.11

Effects of Changes in Other Comprehensive Income (1)

0.10

(0.03)

0.65

Book Value Per Share, end of the period

$6.75

$6.60

$7.25

(1) Other Comprehensive Income represents the unrealized gains or losses associated with available-for-sale securities and the related

 reclassification adjustments.  

SOURCE Alliance Bankshares Corporation



RELATED LINKS

http://www.alliancebankva.com