Cardinal Bankshares Corporation Reports Results for the Quarter ended March 31, 2014
FLOYD, Va., April 22, 2014 /PRNewswire/ -- Cardinal Bankshares Corporation (OTC: CDBK), parent company of Bank of Floyd, announced today its consolidated financial results for the first quarter of 2014 and reported net income of $87 thousand, or $0.06 per share versus $130 thousand, or $0.08 per share for the same quarter in 2013. The Company's net income for the three-month period produced an annualized return on average assets of 0.13% and an annualized return on average equity of 1.93% as compared to 0.19% and 1.74% for these measures in the same period last year.
Michael Larrowe, President and Chief Executive Officer added, "The Bank experienced increased net interest income, driven by additional loan income and a decrease in interest expense on deposit accounts relative to the same period in 2013. As a result, net interest margin for the quarter improved to 3.08% from 2.85% for the year in 2013. We believe these improved operating metrics coupled with our new product and service offerings will continue to bring improved value to our customers and shareholders. Due to substantial investment in both technology and personnel, the Bank's ability to be competitive has dramatically improved, while retaining capital levels well above required amounts."
Financial Highlights:
- Total assets increased by $2.9 million from $268.8 million at December 31, 2013 to $271.7 million at March 31, 2014.
- Total loans at March 31, 2014 were $146.2 million, which is an increase of $200 thousand compared to December 31, 2013.
- A decrease in higher cost interest-bearing deposits of $2.9 million in the three-month period helped to improve the net interest margin.
- The first quarter 2014 provision for loan losses of $22 thousand was an improvement of $278 thousand versus the same period in 2013 as losses from legacy loans continue to decrease.
Capital Levels
Both the Bank's and the Company's capital levels remain above the regulatory well-capitalized ratios. The Company's consolidated Tier 1 risk-based and total risk-based capital ratios were 12.25% and 13.50%, respectively, at March 31, 2014, down from the 12.63% and 13.89% reported at December 31, 2013.
Nonperforming Assets
The Company's ratio of nonperforming assets as a percentage of total assets decreased 169 basis points to 3.10% as compared to 4.79% one year earlier. Nonperforming assets decreased $5.1 million from $13.5 million at March 31, 2013 to $8.4 million at March 31, 2014. Nonperforming assets at March 31, 2014 consisted of nonaccrual loans of $6.2 million, foreclosed assets of $2.2 million, and loans that were past due greater than 90 days and still accruing interest of zero. Nonperforming assets at March 31, 2013 consisted of nonaccrual loans of $9.3 million, foreclosed assets of $2.7 million, and loans totaling $1.5 million that were past due greater than 90 days and still accruing interest.
The Company recorded a provision for loan losses for the first quarter of 2014 of $22 thousand, as compared to a provision of $300 thousand for the same period last year. Net charge-offs annualized as a percentage of average loans outstanding was (.043%) for the first quarter of 2014, compared to (.04%) for the same quarter in the prior year. Net charge-offs (recoveries) for the quarter ended March 31, 2014 were $(156) thousand, in comparison to $(11) thousand for the same quarter one year ago.
The allowance for loan losses as a percentage of total loans increased from 1.30% at March 31, 2013 to 2.08% at March 31, 2014. At March 31, 2014, the Company's total reserves were $3.0 million, which was comprised of $2.3 million in general reserves to cover estimated losses in the portfolio and $780 thousand that are allocated to specific credits.
Financial Position
At March 31, 2014, the Company's total assets were $271.7 million, total deposits were $237.0 million, total loans were $143.2 million and total stockholders' equity was $18.5 million. Compared with December 31, 2013, the Company's total assets increased $2.9 million or 1.1%.
Total deposits decreased by $4.7 million or 2.0%, while new advances of $7.0 million were drawn on the Federal Home Loan Bank of Atlanta during the first three months of 2014. This shift allowed the Bank to reduce its cost of funds as rates paid on these borrowings are lower than rates paid on most of our deposits.
Stockholders' equity increased $1.1 million to $18.4 million at March 31, 2014 compared to $17.3 at December 31, 2013. Reduction of unrealized portfolio losses resulted in an increase to total equity of $1.0 million as compared to December 31, 2013. Net income of $87 thousand accounts for the remaining increase to equity.
Net Interest Income
The Company's net interest income was $1.9 million for the three months ended March 31, 2014, an increase of $225 thousand or 13.1% compared to same period last year. The increase is a result interest income from new loan originations combined with lower-costs on deposits and debt.
Noninterest Income
Noninterest income decreased $247 thousand for the three-month period ended March 31, 2014, compared to the same period last year, due to recognition of net realized gains on sales of securities of $296 thousand for the three-month period ended March 31, 2013. However, excluding gains taken on the sales of securities, noninterest income increased $50 thousand or 32.5%.
Noninterest Expense
Noninterest expense for the first quarter of 2014 totaled $2.0 million, up $226 thousand or 12.5% as compared to the quarter ended March 31, 2013. The increase in noninterest expense is due to salaries and employee benefits as a result of experienced personnel additions, occupancy and equipment expense as building improvements are ongoing, data processing services as technology services offered continue to expand and other operating expenses related to increased data transmission speeds.
For Further Information Contact:
Michael D. Larrowe, President and Chief Executive Officer
Alan Dickerson, Chief Financial Officer
(540) 745-4191
| Consolidated Balance Sheets |
|||
| (in thousands, except share data) |
|||
| March 31, |
December 31, |
||
| 2014 |
2013 |
||
| Assets |
|||
| Cash and due from banks |
$ 3,537 |
$ 3,339 |
|
| Interest-bearing deposits in banks |
8,240 |
6,757 |
|
| Investment securities, available for sale |
97,452 |
96,932 |
|
| Investment securities, held to maturity |
- |
- |
|
| Restricted equity securities |
1,314 |
999 |
|
| Total loans |
146,206 |
146,031 |
|
| Allowance for loan losses |
(3,040) |
(2,862) |
|
| Net loans |
143,166 |
143,169 |
|
| Bank premises and equipment, net |
4,951 |
4,971 |
|
| Accrued interest receivable |
795 |
910 |
|
| Foreclosed assets |
2,209 |
2,196 |
|
| Bank owned life insurance |
6,611 |
6,571 |
|
| Deferred tax asset |
6,351 |
6,891 |
|
| Reserve deferred tax asset |
(5,139) |
(5,139) |
|
| Prepaid assets |
947 |
800 |
|
| Other assets |
1,299 |
451 |
|
| Total assets |
$ 271,733 |
$ 268,847 |
|
| Liabilities and Stockholders' Equity |
|||
| Liabilities |
|||
| Noninterest-bearing deposits |
$ 39,020 |
$ 40,882 |
|
| Interest-bearing deposits |
197,976 |
200,861 |
|
| Total deposits |
236,996 |
241,743 |
|
| FHLB advances |
15,000 |
8,000 |
|
| Accrued interest payable |
67 |
65 |
|
| Bank owned life insurance SERP |
830 |
828 |
|
| Other liabilities |
383 |
891 |
|
| Total liabilities |
253,276 |
251,527 |
|
| Stockholders' Equity |
|||
| Common stock, $10 par value; 5,000,000 |
|||
| Shares authorized; 1,535,733 shares issued |
|||
| Issued and outstanding |
15,357 |
15,357 |
|
| Additional paid-in capital |
2,925 |
2,925 |
|
| Retained earnings |
2,527 |
2,440 |
|
| Accumulated other comprehensive income |
(2,352) |
(3,402) |
|
| Total stockholders' equity |
18,457 |
17,320 |
|
| Total liabilities and stockholders' equity |
$ 271,733 |
$ 268,847 |
|
| Consolidated Statements of Operations |
|||
| (in thousands, except share data) |
|||
| Three Months Ended March 31, |
|||
| 2014 |
2013 |
||
| Interest and dividend income |
|||
| Loans and fees on loans |
$ 1,858 |
$ 1,723 |
|
| Federal funds sold |
- |
- |
|
| Investment securities |
|||
| Taxable |
485 |
402 |
|
| Exempt from federal income tax |
81 |
191 |
|
| Dividend income |
5 |
5 |
|
| Deposits with banks |
3 |
6 |
|
| Total interest income |
2,432 |
2,327 |
|
| Interest expense |
|||
| Deposits |
489 |
611 |
|
| Borrowings |
4 |
2 |
|
| Total interest expense |
493 |
613 |
|
| Net interest income |
1,939 |
1,714 |
|
| Provision for loan losses |
22 |
300 |
|
| Net interest income after provision |
|||
| for loan losses |
1,917 |
1,414 |
|
| Noninterest income |
|||
| Service charges on deposit accounts |
38 |
42 |
|
| Other service charges and fees |
27 |
26 |
|
| Net realized gains on sales of securities |
(1) |
296 |
|
| Income on bank owned life insurance |
40 |
43 |
|
| Other income |
99 |
43 |
|
| Total noninterest income |
203 |
450 |
|
| Noninterest expense |
|||
| Salaries and employee benefits |
1,138 |
1,065 |
|
| Occupancy and equipment |
287 |
202 |
|
| Legal and professional |
68 |
120 |
|
| Bank franchise tax |
42 |
36 |
|
| Data processing services |
124 |
71 |
|
| FDIC insurance premiums |
91 |
91 |
|
| Foreclosed assets, net |
19 |
34 |
|
| Other operating expense |
265 |
189 |
|
| Total noninterest expense |
2,034 |
1,808 |
|
| Income (loss) before income taxes |
86 |
56 |
|
| Income tax expense (benefit) |
(1) |
(74) |
|
| Net income (loss) |
$ 87 |
$ 130 |
|
| Basic earnings (loss) per share |
$ 0.06 |
$ 0.08 |
|
| Cardinal Bankshares Corporation |
|||
| Financial Highlights (Unaudited) |
|||
| (in thousands) |
|||
| Three Months Ended |
|||
| March 31, |
March 31, |
||
| Per Share |
|||
| Earnings per share, basic and diluted |
$ 0.06 |
$ 0.08 |
|
| Book value |
$ 12.02 |
$ 18.41 |
|
| Financial Ratios |
|||
| Annualized Return on Average Assets |
0.13% |
0.19% |
|
| Annualized Return on Average Equity |
1.93% |
1.74% |
|
| Annualized Net Interest Margin for the quarter ended1 |
3.08% |
3.25% |
|
| Efficiency Ratio2 |
94.03% |
97.39% |
|
| Capital Ratios |
|||
| Tier 1 risk-based capital - Bank only |
11.15% |
12.19% |
|
| Total risk-based capital - Bank only |
12.40% |
13.22% |
|
| Tier 1 risk-based capital - consolidated |
12.25% |
15.33% |
|
| Total risk-based capital - consolidated |
13.50% |
16.42% |
|
| Allowance for Loan Losses at Beginning of Period |
$ 2,862 |
$ 1,514 |
|
| Loans Charged-off, net of Recoveries |
156 |
11 |
|
| Provision for Loan Losses |
22 |
300 |
|
| Allowance for Loan Losses at End of Period |
$ 3,040 |
$ 1,825 |
|
| Credit Quality Ratios |
|||
| Nonperforming Assets as a % of Total Assets |
3.10% |
4.79% |
|
| Total Allowance for Loan Losses as a % of Total Loans |
2.08% |
1.30% |
|
| Total Allowance for Loan Losses as a % of Nonperforming Loans |
48.97% |
16.87% |
|
| Annualized Net Charge-offs as a % of Average Loans |
-0.43% |
-0.04% |
|
| Nonperforming Assets |
|||
| Nonaccrual Loans |
$ 6,192 |
$ 9,271 |
|
| Loans Past Due 90 Days+, still accruing |
16 |
1,547 |
|
| Total Nonperforming Loans |
6,208 |
10,818 |
|
| Other Real Estate Owned |
2,209 |
2,671 |
|
| Total Nonperforming Assets |
$ 8,417 |
$ 13,489 |
|
| 1 Net interest margin equals net interest income divided by interest-earning average assets. |
||||
| 2 Efficiency ratio equals noninterest expense (excluding OREO valuations and OREO operating expenses) divided by net interest income plus noninterest income (excluding net realized gains on sales of securities). |
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SOURCE Cardinal Bankshares Corporation
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