Central Virginia Bankshares Reports First Quarter 2013 Financial Results

POWHATAN, Va., May 17, 2013 /PRNewswire/ -- Central Virginia Bankshares, Inc. (OTC QB: CVBK) and Central Virginia Bank announced that the Company recorded net income of $60 thousand for the first quarter of 2013, and after the effect of unpaid dividends of $161 thousand on preferred stock, net loss available to common shareholders totaled $101 thousand or $(0.04) per basic and diluted share.  This compares to first quarter of 2012 net income of $291 thousand, and after the effect of dividends of $161 thousand on preferred stock, net income available to common shareholders of $130 thousand or $0.05 per basic and diluted share.

Herb Marth, President and Chief Executive Officer commented that, "Our first quarter results continue to reflect the actions we've taken to strengthen your Company by improving asset quality and increasing regulatory capital ratios.   Although we've made significant progress, we continue to face many challenges given the current economic and interest rate environment.    Producing income in 2013 has become more challenging for us than in the previous two years, when we were able to harvest significant gains in our investment portfolio."  

"The US Treasury provided approximately $11.4 million in TARP capital to our bank after the financial crisis.  While that helped CVB weather the storm, paying off TARP has become problematic for us and many other community banks in the U.S.   As of March 31, 2013, our unpaid TARP dividends totaled $1.9 million, which if declared would have reduced our tangible book value per common share from $0.84 to $0.12 at first quarter end 2013.  The reduction in our tangible book value per common share from year end 2012 was primarily the result of unrealized losses in our investment portfolio.  Our Written Agreement with our regulators requires us to preserve capital and therefore prohibits us from paying any dividends, including TARP dividends, until our capital situation improves and we satisfy the other terms of the agreement.  We do not expect to be in a position to declare or pay our TARP dividends in the foreseeable future.  Capital market options continue to be limited or nonexistent for banks with our profile, and raising additional capital to help with our TARP situation has not been viable.  Therefore we continue to evaluate and pursue all of our strategic alternatives."

"We continue to stay focused on serving our customers and strengthening your Company in spite of these significant challenges.  The tremendous support we've received from our customers, shareholders, and friends is greatly appreciated by the entire CVB family."     

Balance Sheet
During the first 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 11.7% at March 31, 2013 from 10.4% at March 31, 2012.    Average total assets were $386.3 million for the first quarter of 2013, a decline of $3.1 million or 1% compared to $389.4 million for the first quarter of 2012.

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

Net Interest Income
Net interest income for the first quarter of 2013 was $2.2 million compared to $2.7 million for the first quarter of 2012. Net interest margin was 2.45% for the first quarter of 2013 compared to 3.02% for the first quarter of 2012. Interest income for the first quarter of 2013 was $3.2 million compared to $3.9 million for the first quarter of 2012, a decline of 18%.  Interest expense for the first quarter of 2013 was $1.0 million compared to $1.2 million for the first quarter of 2012, a decline of 17%.  The decline in net interest income is due to the decline in the volume and yield of the average loan portfolio, offset somewhat by a decline in interest expense due to the reduction of the certificate of deposits balance and the strategic decision to decrease interest rates paid on deposits. The average loan portfolio has declined $29.4 million and certificate of deposits have declined $18.4 million when compared to March 31, 2012. 

The following table provides the yield earned on average earning assets, rates on average interest bearing liabilities, and net interest margin:

Non-interest income
Total non-interest income for the first quarter of 2013 was $671 thousand, a decrease of $429 thousand or 11% compared to $1.1 million for the first quarter of 2012. The decrease was due primarily to lower gain on sales of securities of $383 thousand for the first quarter of 2013 compared to the first quarter of 2012.  Deposit fees and other charges also decreased to $283 thousand for the first quarter of 2013, a decrease of $57 thousand compared to the first quarter of 2012.

Non-interest expense
Total non-interest expense for the first quarter of 2013 was $2.8 million, a decrease of $500 thousand or 15% compared to $3.3 million for the first quarter of 2012. The decrease was due primarily to a $501 thousand decrease in expenses associated with OREO properties, which included gains on sale of OREO properties, legal and tax expenses, and OREO provision expense. Salaries and benefits expense decreased $23 thousand for the first quarter of 2013 as compared to the first quarter of 2012 and legal and professional fees decreased $45 thousand for the first quarter of 2013 as compared to the first quarter of 2012.  The decrease in non-interest expenses were offset by an increase in FDIC insurance premium expense of $53 thousand.

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 (which includes Troubled Debt Restructured loans) at the end of the first quarter were $36.2 million, a decrease of $2.2 million or 6% compared to $38.4 million at March 31, 2012 and a decrease of $2.9 million or 7% compared to $39.1 million at December 31, 2012. The change from March 31, 2012 to March 31, 2013 resulted from a decrease in foreclosed property, impaired securities, and loans greater than 90 days past due and still accruing. The Company is keenly focused on managing the loan portfolio and non-performing assets. 

The reserve for loan losses was $6.9 million or 3.71% of loans at March 31, 2013, compared to $7.2 million or 3.68% of loans at December 31, 2012 and $8.7 million or 4.11 % of loans at March 31, 2012. 

At the end of the first 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 $388 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 

SOURCE Central Virginia Bankshares, Inc.