Central Virginia Bankshares Reports Third Quarter 2012 Financial Results

POWHATAN, Va., Oct. 31, 2012 /PRNewswire/ -- Central Virginia Bankshares, Inc. (OTC: CVBK) and Central Virginia Bank announced that the Company recorded net income of $185 thousand for the third quarter of 2012, and after the effect of unpaid dividends of $161 thousand on preferred stock, net income available to common shareholders totaled $24 thousand or $0.01 per basic and diluted share.  This compares to third quarter of 2011 net income of $307 thousand, and after the effect of dividends of $161 thousand on preferred stock, net income available to common shareholders of $146 thousand or $0.05 per basic and diluted share.

For the nine months ended September 30, 2012, the Company recorded net income of $694 thousand, and after the effect of the unpaid preferred stock dividends of $481 thousand, net income available to common shareholders totaled $212 thousand or $0.08 per basic and diluted share.  This compares to the nine months ended September 30, 2011 net income of $658 thousand, and after the effect of unpaid preferred stock dividends of $481 thousand, a net income available to common shareholders of $177 thousand or $0.07 per basic and diluted share.

Herbert Marth, President and Chief Executive Officer commented that "CVBK's performance in the third quarter continued to strengthen the financial position of the Bank. Our results over the past several quarters have been steady as we progress through this slow growth economy. Strategically managing the risk in our investment and loan portfolios has contributed significantly to our "well capitalized" status, for regulatory purposes, at September 30, 2012. The Bank's continued commitment to developing and enhancing customer service and building strong customer relationships has resulted in 9% growth of our average core deposits over the past year."

Balance Sheet
The Company has successfully taken steps to restructure its balance sheet by reducing the risk in the investment portfolio and reducing the size of the loan portfolio, thereby improving its risk adjusted regulatory capital position. Due to the balance sheet improvements and increased profitability of the Company, the Bank has seen its total risk based capital ratio improve to 11.3% at September 30, 2012 from 9.4% at September 30, 2011. 

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

Net Interest Income
Net interest income was $2.2 million for the third quarter of 2012 and $2.5 million for the third quarter of 2011. Net interest margin for the third quarter of 2012 was 2.45%, compared to 2.68% for the third quarter of 2011. Interest income for the third quarter of 2012 was $3.3 million compared to $4.1 million for the third quarter of 2011, a decline of 20%.  Interest expense for the third quarter of 2012 was $1.1 million compared to $1.6 million for the third quarter of 2011, a decline of 31%.  Net interest income has decreased as compared to the third quarter of 2011 as the average loan portfolio balance and yields have declined, and yields on the investment portfolio have decreased.  The decline in net interest income was partially offset by the reduction of the certificate of deposit balances and the strategic pricing decision to decrease interest rates paid on deposits. The loan portfolio has declined $36.4 million and certificates of deposit have declined $28.4 million when compared to September 30, 2011. 

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 nine months ended September 30, 2012 and 2011:

Non-interest income
Total non-interest income for the third quarter of 2012 was $1.6 million, an increase of $100 thousand or 7% compared to $1.5 million for the third quarter of 2011. The increase was due primarily to the gain on sale of an unused former branch building of $150,000 for the third quarter of 2012. 

Non-interest expense
Total non-interest expense for the third quarter of 2012 was $3.1 million, an increase of $100 thousand or 3% compared to $3.0 million for the third quarter of 2011. The increase in non-interest expense for the third quarter of 2012 compared to the third quarter of 2011 is primarily due to increases in occupancy, professional services and consulting expenses as well as net OREO expenses.  The Company continues to manage all expense categories to identify opportunities where savings may be recognized. Reducing expenses will benefit current and future periods and is consistent with the goal of improving the Company's efficiency ratio.

Asset Quality
Total non-performing assets at the end of the third quarter were $40.3 million, a decrease of $1.4 million or 3% compared to $41.7 million at September 30, 2011 and a decrease of $2.5 million or 6% compared to $42.8 million at December 31, 2011. The change from September 30, 2011 to September 30, 2012 resulted from a decrease in non-accrual loans and foreclosed property, partially offset by an increase in restructured loans. The Company continues to focus on reducing non-performing assets. 

The reserve for loan losses was $7.3 million or 3.70% of loans at September 30, 2012, compared to $9.3 million or 4.16% of loans at December 31, 2011 and $9.9 million or 4.24 % of loans at September 30, 2011.  The reserve for loan loss as a percentage of non-performing loans was 32% at September 30, 2012, compared to 38% at December 31, 2011 and 38% at September 30, 2011.

At the end of the third quarter of 2012, 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 $385 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. Central Virginia Bankshares, Inc. trades under the symbol CVBK (OTC).

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. For more information about factors that could cause actual results to differ materially from our expectations, refer to our reports filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2011, including the discussions under "Risk Factors" in that report, as filed with the SEC and available on the SEC's website at www.sec.gov. Any factor described above or in our SEC reports could, by itself or together with one or more other factors, adversely affect our financial results and condition.

Website: www.centralvabank.com

SOURCE Central Virginia Bankshares, Inc.