Central Virginia Bankshares Reports Second Quarter 2013 Financial Results
POWHATAN, Va., July 26, 2013 /PRNewswire/ -- Central Virginia Bankshares, Inc. (OTC QB: CVBK) and Central Virginia Bank announced that the Company recorded a net loss of $788 thousand for the second quarter of 2013, and after the effect of unpaid dividends of $161 thousand on preferred stock, net loss available to common shareholders totaled $949 thousand or $(0.36) per basic and diluted share. This compares to second quarter of 2012 net income of $219 thousand, and after the effect of dividends of $161 thousand on preferred stock, net income available to common shareholders of $58 thousand or $0.02 per basic and diluted share.
For the six months ended June 30, 2013, the Company recorded a net loss of $728 thousand, and after the effect of the unpaid preferred stock dividends of $321 thousand, net loss available to common shareholders totaled $1.1 million or $(0.39) per basic and diluted share. This compares to the six months ended June 30, 2012 net income of $509 thousand, and after the effect of unpaid preferred stock dividends of $321 thousand, a net income available to common shareholders of $188 thousand or $0.07 per basic and diluted share.
Recent Events
On June 10, 2013, the Company and C&F Financial Corporation jointly announced the signing of a definitive merger agreement pursuant to which C&F will acquire the Company in an all-cash transaction valued at $0.32 per common share, or approximately $855 thousand in the aggregate. The transaction is expected to close in the fourth quarter of 2013 pending regulatory approvals, the approval of the Company's shareholders and other customary closing conditions.
Herb Marth, President and Chief Executive Officer commented that "the proposed merger will unite two great Virginia companies – Central Virginia Bankshares and C&F Financial Corporation – into C&F Financial Corporation. As noted in our recent communications, the Company has been faced with some very tough challenges ever since the financial crisis began. Confronted with these challenges, we sought to assure the best outcome for all our constituents.
"The US Treasury provided approximately $11.4 million in TARP capital to our bank, and while that helped us weather the storm, paying off TARP became problematic for us. As of June 30, 2013, our unpaid TARP dividends totaled $2.1 million, which if declared would have reduced our tangible book value per common share by $0.78 at second quarter end 2013. We did not expect to be in a position to declare or pay our TARP dividends in the foreseeable future. Capital market options remain limited or nonexistent for banks with our profile, and raising additional capital to help with our TARP situation is not viable. Through the combination with C&F, our TARP obligations will be fully extinguished.
"Our objectives with this transaction are simple – to maximize shareholder value, while building on our tradition of outstanding customer service, providing competitive and innovative banking products, and affirming our commitment to be a strong and independent community bank. Achieving these objectives will benefit all of our constituents, shareholders, customers, and employees alike.
"We are proud of Central Virginia Bank's history and optimistic about our future as C&F Bank. The entire CVB family greatly appreciates the tremendous support we've received from our customers, shareholders, and friends."
Balance Sheet
During the second 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 12.1% at June 30, 2013 from 10.8% at June 30, 2012. Average total assets were $383.6 million for the second quarter of 2013, a decline of $5.6 million or 1% compared to $389.2 million for the second quarter of 2012.
The following table provides information regarding the changes in the Company's average balances:
Dollars in 000's |
Average Balances for the Three Months Ended |
||
June 30, 2013 |
June 30, 2012 |
Percent Change |
|
Investment securities(1) |
$143,405 |
$135,934 |
5% |
Loans |
181,394 |
210,843 |
(14)% |
Federal funds sold |
30,286 |
14,307 |
112% |
Average earning assets(1) |
355,085 |
361,084 |
(2)% |
Average assets |
383,618 |
389,239 |
(1)% |
Interest bearing deposits (2) |
149,246 |
142,617 |
5% |
Certificate of deposits |
131,882 |
145,462 |
(9)% |
Non-interest bearing deposits |
40,090 |
38,827 |
3% |
Borrowings |
45,160 |
45,155 |
< 1% |
Shareholders' equity |
13,585 |
14,209 |
(4)% |
(1) Average balances exclude market value adjustments |
Dollars in 000's |
Average Balances for the Six Months Ended |
||
June 30, 2013 |
June 30, 2012 |
Percent Change |
|
Investment securities(1) |
$149,374 |
$127,410 |
17% |
Loans |
185,853 |
215,305 |
(14)% |
Federal funds sold |
22,558 |
16,331 |
38% |
Average earning assets(1) |
357,785 |
359,046 |
< (1)% |
Average assets |
384,949 |
389,864 |
(1)% |
Interest bearing deposits (2) |
149,924 |
139,527 |
7% |
Certificate of deposits |
133,503 |
149,521 |
(11)% |
Non-interest bearing deposits |
39,082 |
38,370 |
2% |
Borrowings |
45,157 |
45,406 |
< (1)% |
Shareholders' equity |
13,686 |
13,644 |
< 1% |
(1) Average balances exclude market value adjustments |
Net Interest Income
Net interest income was $1.9 million for the second quarter of 2013 and $2.7 million for the second quarter of 2012. Net interest margin for the second quarter of 2013 was 2.17%, compared to 2.95% for the second quarter of 2012. Interest income for the second quarter of 2013 was $2.9 million compared to $3.8 million for the second quarter of 2012, a decline of 24%. Interest expense for the second quarter of 2013 was $1.0 million compared to $1.1 million for the second quarter of 2012, a decline of 9%. The decline in interest income is due to a decrease of $29.5 million in the average loan portfolio and lower yields on the investment portfolio. The decline in interest expense was primarily due to the strategic decision to lower interest rates on deposits and the reduction of certificates of deposits by $16.0 million.
The following table provides the yield earned on average earning assets, rates on average interest bearing liabilities, and net interest margin for the three months and six months ended June 30, 2013 and 2012:
Dollars in 000's |
For the Three Months Ended |
||||
June 30, 2013 |
June 30, 2012 |
||||
Interest |
Yield(1) |
Interest |
Yield(1) |
||
Interest Income: |
|||||
Loans |
$2,256 |
4.97% |
$2,875 |
5.45% |
|
Investment securities |
603 |
1.68% |
913 |
2.69% |
|
Fed funds sold |
16 |
0.21% |
8 |
0.22% |
|
Total |
2,875 |
3.24% |
3,796 |
4.21% |
|
Interest Expense: |
|||||
Interest bearing deposits |
152 |
0.41% |
179 |
0.50% |
|
Certificate of deposits |
393 |
1.19% |
537 |
1.48% |
|
Borrowings |
408 |
3.61% |
413 |
3.66% |
|
Total |
953 |
1.17% |
1,129 |
1.36% |
|
Net interest spread |
$1,922 |
2.07% |
$2,667 |
2.85% |
|
Net interest margin(2) |
2.17% |
2.95% |
|||
(1) Yield percentages are annualized. |
Dollars in 000's |
For the Six Months Ended |
||||
June 30, 2013 |
June 30, 2012 |
||||
Interest |
Yield(1) |
Interest |
Yield(1) |
||
Interest Income: |
|||||
Loans |
$4,788 |
5.15% |
$5,999 |
5.57% |
|
Investment securities |
1,248 |
1.67% |
1,689 |
2.65% |
|
Fed funds sold |
24 |
0.21% |
18 |
0.22% |
|
Total |
6,060 |
3.39% |
7,706 |
4.29% |
|
Interest Expense: |
|||||
Interest bearing deposits |
311 |
0.41% |
356 |
0.51% |
|
Certificate of deposits |
805 |
1.21% |
1,168 |
1.56% |
|
Borrowings |
813 |
3.60% |
820 |
3.61% |
|
Total |
1,929 |
1.17% |
2,344 |
1.40% |
|
Net interest spread |
$4,131 |
2.21% |
$5,362 |
2.89% |
|
Net interest margin(2) |
2.31% |
2.99% |
|||
(1) Yield percentages are annualized. |
Non-interest income
Total non-interest income for the second quarter of 2013 was $0.8 million, a decrease of $973 thousand or 56% compared to $1.7 million for the second quarter of 2012. The decrease was due to $1.0 million less in realized gains on sale of securities during the second quarter of 2013 compared to the second quarter of 2012.
Non-interest expense
Total non-interest expense for the second quarter of 2013 was $3.2 million, an increase of $339 thousand or 12% compared to $2.8 million for the second quarter of 2012. The increase in non-interest expense for the second quarter of 2013 compared to the second quarter of 2012 is primarily due to approximately $300 thousand of merger related expenses, such as legal and professional expenses and consulting expenses.
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 at the end of the second quarter of 2013 were $34.7 million, a decrease of $4.7 million or 12% compared to $39.4 million at June 30, 2012 and a decrease of $4.4 million or 11% compared to $39.1 million at December 31, 2012. The change from June 30, 2012 to June 30, 2013 resulted from a decrease in foreclosed property and other non-performing assets, offset by an increase in loan restructurings. The Company is keenly focused on managing the loan portfolio and non-performing assets.
The reserve for loan losses was $6.5 million or 3.61% of loans at June 30, 2013, compared to $7.2 million or 3.68% of loans at December 31, 2012 and $8.1 million or 3.92 % of loans at June 30, 2012.
At the end of the second 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 $368 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
SELECTED FINANCIAL DATA FOR CENTRAL VIRGINIA BANKSHARES, INC. |
||||||
Dollars in 000's, except per share data |
Three Months Ended (unaudited) |
Six Months Ended (unaudited) |
||||
June 30, 2013 |
June 30, 2012 |
June 30, 2013 |
June 30, 2012 |
|||
Net income (loss) |
$(788) |
$219 |
$(728) |
$509 |
||
Net income (loss) available to common shareholders |
(949) |
58 |
(1,050) |
188 |
||
Interest income & fees on loans |
2,256 |
2,875 |
4,788 |
5,999 |
||
Interest income on investments |
603 |
913 |
1,248 |
1,689 |
||
Interest income on fed funds sold |
16 |
8 |
24 |
18 |
||
Interest expense on deposits |
545 |
716 |
1,116 |
1,524 |
||
Interest expense on borrowings |
408 |
413 |
813 |
820 |
||
Net interest income |
1,922 |
2,667 |
4,131 |
5,362 |
||
Loan loss provision |
300 |
1,350 |
300 |
1,550 |
||
Non-interest income |
775 |
1,748 |
1,446 |
2,851 |
||
Non-interest expense |
3,185 |
2,846 |
6,006 |
6,154 |
||
Period End Balances |
||||||
Investment securities |
$125,071 |
$136,272 |
||||
Fed funds sold |
41,692 |
8,764 |
||||
Loans (net of unearned discount) |
178,874 |
206,156 |
||||
Allowance for loan and lease losses |
6,460 |
8,071 |
||||
Assets |
376,421 |
387,765 |
||||
Non-interest bearing deposits |
39,105 |
39,049 |
||||
Total deposits |
318,393 |
325,026 |
||||
Borrowings |
45,155 |
45,155 |
||||
Shareholders' equity |
8,844 |
14,269 |
||||
Average shares outstanding – basic |
2,666 |
2,674 |
2,666 |
2,674 |
||
Average shares outstanding – diluted |
2,666 |
2,674 |
2,666 |
2,674 |
||
Asset Quality |
||||||
Non-accrual loans |
$22,300 |
$22,046 |
||||
Loans past due 90 days and still accruing |
- |
73 |
||||
Loans restructured(1) |
9,317 |
7,863 |
||||
Other real estate owned |
1,149 |
5,703 |
||||
Other non-performing assets |
1,948 |
3,683 |
||||
Total non-performing assets |
34,714 |
39,368 |
||||
Charge-offs |
777 |
2,058 |
1,071 |
2,882 |
||
Recoveries |
29 |
43 |
65 |
81 |
||
Per Share Data & Ratios |
||||||
Net income (loss) available to common shareholders-basic |
$(0.36) |
$0.02 |
$(0.39) |
$0.07 |
||
Net income (loss) available to common shareholders-diluted |
$(0.36) |
$0.02 |
$(0.39) |
$0.07 |
||
Book value per common share |
$3.32 |
$5.34 |
||||
Tangible common equity per common share |
$(1.07) |
$0.99 |
||||
Return on average assets(2) |
(0.82)% |
0.23% |
(0.38)% |
0.26% |
||
Return on average equity(2) |
(23.21)% |
6.16% |
(10.65)% |
7.46% |
||
Efficiency ratio (3) |
118.1% |
64.5% |
107.7% |
74.9% |
||
Average loans to average deposits(4) |
56.5% |
64.5% |
57.6% |
65.8% |
||
Allowance for loan and lease losses/Loans EOP |
3.61% |
3.92% |
||||
(1) Loans restructured, accruing and in compliance with modified terms. (3) The efficiency ratio is a non-GAAP measure calculated by dividing noninterest expense by net interest income plus noninterest income. (4) Excludes mortgage loans held for resale |
||||||
Reconciliation of Efficiency Ratio |
||||||
Non-interest expense |
$3,185 |
$2,846 |
$6,006 |
$6,154 |
||
Net interest income plus non-interest income |
2,697 |
4,415 |
5,577 |
8,213 |
||
Efficiency Ratio |
118.1% |
64.5% |
107.7% |
74.9% |
SOURCE Central Virginia Bankshares, Inc.
Share this article