Cardinal Bankshares Corporation Reports Results for the Quarter ended March 31, 2015

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Apr 21, 2015, 05:01 ET

FLOYD, Va., April 21, 2015 /PRNewswire/ -- Cardinal Bankshares Corporation (OTC-QB: CDBK), parent company of Bank of Floyd, announced its consolidated financial results for the first quarter ended March 31, 2015. The Company reported consolidated net income of $71 thousand for the first quarter versus consolidated net income of $87 thousand for the same quarter in 2014. Capital ratios remain above those required by banking regulations to be considered well-capitalized.

Total loans were $172.7 million for the three-month period ending March 31, 2015, an increase of $2.7 million compared to December 31, 2014. The Company again realized an increase in net interest income reaching $2.0 million for the three-month period March 31, 2015, representing an increase of $104 thousand or 5.4% compared to the same period in 2014. Interest expense on deposits and borrowings for the three-month period ended March 31, 2015 was $437 thousand, representing a decrease of $56 thousand or 11.4% for the same comparable period in 2014. According to Mark A. Smith, Interim President & CEO, "The continued improvement in net interest income is driven by an increase in interest income associated with loan growth and a decrease in interest expense associated with the maturity and repricing of long-term high interest time deposits coupled with the acquisition of low cost deposits."

Mr. Smith continued, "We are encouraged to see the Bank's business development activities combining positively with the improvements in infrastructure put in place over the last three years. As a result, we are experiencing increases in revenue associated with our core operation. The Bank has engaged in a program to acquire new checking accounts and generated 138 net new checking accounts during the quarter ended March 31, 2015 compared to 31 for the same comparable period in 2014. Significant favorable progress continues to be made in reducing non-performing assets as evidenced by a reduction of $5.4 million or 63.6% to $3.1 million for the period ended March 31, 2015 versus $8.4 million for the same comparable period in 2014."

"The growth in new loans and new account acquisitions, combined with decreasing deposit interest expense and declining non-performing assets, gives us confidence that we are well-positioned to move beyond the legacy credit issues that have demanded our attention over the past three years. We appreciate our loyal customers, new and old, and look forward to earning the loyalty of those customers we have not yet met. Thank you to the dedicated employees and shareholders who understand the potential of their company. Our ultimate purpose is to create long-term economic rewards for our customers and shareholders by providing excellent customer service and products while continuing to support the communities in which we do business," said Smith.

Many changes have been made and more are on the way! We remain committed to our customers, both present and future – Good change is already here. More's on the way. We invite you to experience the difference at Bank of Floyd!

Mark A. Smith
Interim President & CEO/Chief Lending Officer

This letter contains forward-looking statements. Forward-looking statements involve inherent risks and uncertainties Management believes these forward-looking statements are reasonable; however undue reliance should not be placed on such forward-looking statements, which are based on current expectations. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. The future results and stockholder values of Cardinal may differ materially from those expressed in forward-looking statements contained in this report. Many factors that will determine these results and values are beyond the Company's ability to control or predict.

CONTACT: Alan Dickerson, CFO, 540-745-5207

Consolidated Balance Sheets
*(in thousands, except share data)*

	March 31,		December 31,
	2015		2014
Assets
Cash and due from banks	$	3,608	$	3,578
Interest-bearing deposits in banks		7,444		6,034
Investment securities, available for sale		80,513		82,845
Restricted equity securities		1,570		1,535

Total loans		172,748		170,062
Allowance for loan losses		(2,567)		(3,098)
Net loans		170,181		166,964

Bank premises and equipment, net		5,673		5,776
Accrued interest receivable		681		669
Foreclosed assets		724		735
Bank owned life insurance		6,776		6,737
Deferred tax asset		5,296		5,487
Reserve deferred tax asset		(5,137)		(5,139)
Prepaid assets		580		490
Other assets		1,095		1,105
Total assets	$	279,004	$	276,816

Liabilities and Stockholders' Equity

*Liabilities*
Noninterest-bearing deposits	$	39,407	$	39,785
Interest-bearing deposits		195,361		195,325
Total deposits		234,768		235,110
FHLB advances		22,000		20,000
Accrued interest payable		58		57
Bank owned life insurance SERP		720		727
Other liabilities		686		589
Total liabilities		258,232		256,483

*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		2,797		2,726
Accumulated other comprehensive income		(307)		(675)
Total stockholders' equity		20,772		20,333
Total liabilities and stockholders' equity	$	279,004	$	276,816

Consolidated Statements of Operations
*(in thousands, except share data)*

	Three Months Ended March 31,
	2015		2014
Interest and dividend income
Loans and fees on loans	$	2,022	$	1,845
Investment securities
Taxable		367		485
Exempt from federal income tax		64		81
Dividend income		11		5
Deposits with banks		3		3
Total interest income		2,467		2,419

*Interest expense*
Deposits		427		489
Borrowings		10		4
Total interest expense		437		493
Net interest income		2,030		1,926

*Provision for loan losses*		33		22
Net interest income after provision
for loan losses		1,997		1,904

*Noninterest income*
Service charges on deposit accounts		68		38
Other service charges and fees		79		24
Net realized gains on sales of securities		3		(1)
Income on bank owned life insurance		39		40
Other income		37		99
Total noninterest income		226		200

*Noninterest expense*
Salaries and employee benefits		1,128		1,122
Occupancy and equipment		343		287
Legal and professional		66		68
Bank franchise tax		32		42
Data processing services		164		124
FDIC insurance premiums		92		91
Foreclosed assets, net		12		19
Other operating expense		315		265
Total noninterest expense		2,152		2,018
Income (loss) before income taxes		71		86
Income tax expense (benefit)		-		(1)
*Net income (loss)*	$	71	$	87
*Basic earnings (loss) per share*	$	0.05	$	0.06

Cardinal Bankshares Corporation
Financial Highlights (Unaudited)
(in thousands)
	Three Months Ended
	March 31, 2015	March 31, 2014

Per Share
Earnings per share, basic and diluted	$ 0.05	$ 0.06
Book value	$ 13.53	$ 12.02

Financial Ratios
Annualized Return on Average Assets	0.10%	0.13%
Annualized Return on Average Equity	1.39%	1.93%
Annualized Net Interest Margin for the quarter ended¹	3.14%	3.08%
Efficiency Ratio²	94.98%	94.03%

Capital Ratios
Tier 1 risk-based capital - Bank only	10.14%	11.15%
Total risk-based capital - Bank only	11.39%	12.40%

Tier 1 risk-based capital - consolidated	11.21%	12.25%
Total risk-based capital - consolidated	12.46%	13.50%

Allowance for Loan Losses at Beginning of Period	$ 3,098	$ 2,862
Loans Charged-off, net of Recoveries	(564)	156
Provision for Loan Losses	33	22
Allowance for Loan Losses at End of Period	$ 2,567	$ 3,040

Credit Quality Ratios
Nonperforming Assets as a % of Total Assets	1.10%	3.10%
Total Allowance for Loan Losses as a % of Total Loans	1.49%	2.08%
Total Allowance for Loan Losses as a % of Nonperforming Loans	109.61%	48.97%
Annualized Net Charge-offs as a % of Average Loans	1.34%	-0.43%

Nonperforming Assets
Nonaccrual Loans	$ 2,342	$ 6,192
Loans Past Due 90 Days+, still accruing	-	16

*Total Nonperforming Loans*	2,342	6,208
Other Real Estate Owned	725	2,209
Total Nonperforming Assets	$ 3,067	$ 8,417

¹Net interest margin equals net interest income divided by interest-earning average assets.
²Efficiency 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).