News Column

Virginia Heritage Bank Reports Continued Profits for 2013 and Expansion for 2014

February 14, 2014

By a News Reporter-Staff News Editor at Real Estate Weekly News -- Virginia Heritage Bank (OTCBB: VGBK), announced quarterly earnings of $2.5 million after taxes, or $0.40 per share (basic) and $0.39 per share (diluted), for the quarter ended December 31, 2013 . This is a 38% increase compared to earnings of $1.8 million after taxes, or $0.40 per share (basic) and $0.39 per share (diluted), for the same period a year ago. For the year ended December 31, 2013 , earnings were $9.0 million after taxes, or $1.70 per share (basic) and $1.65 per share (diluted) versus $7.6 million after taxes, or $1.70 per share (basic) and $1.68 per share (diluted), in 2012. The Bank's fourth quarter results produced an annualized rate of return of 1.15% on average assets and 12.12% on average common equity compared to 0.95% and 13.24%, respectively, for the same period a year ago. For the year ended December 31, 2013 , the rate of return was 1.10% on average assets and 13.14% on average common equity compared to 1.13% and 15.07%, respectively, for 2012. Selected Highlights At December 31, 2013 , total assets were $894.8 million , an increase of $113.2 million , or 14%, from total assets at December 31, 2012 . Total gross loans, excluding loans held for sale, at December 31, 2013 were $705.9 million , an increase of $118.4 million , or 20% compared to December 31, 2012 . Asset quality continues to be strong and remained significantly better than peers. Nonperforming assets, including other real estate owned, as a percentage of total assets, decreased to 0.33% at December 31, 2013 , compared to 0.63% at December 31, 2012 . Net charge-offs were 0.04% of average loans for the year ended December 31, 2013 and 0.24% for 2012. Allowance for loan losses was $9.8 million as of December 31, 2013 , or 1.39% of gross loans outstanding, excluding loans held for sale. At December 31, 2013 , the Bank had nonaccrual loans of $1.1 million , performing troubled debt restructured loans of $2.1 million and loans past due 90 days or more but still accruing interest amounting to $17 thousand . Total deposits grew to $711.4 million , an increase of $51.3 million , or 8%, compared to deposits at December 31, 2012 . At December 31, 2013 , all of the Bank's capital ratios substantially exceeded regulatory requirements. Income Statement Review Net interest income Net interest income was $7.7 million and $6.8 million for quarter ended December 31, 2013 and 2012, respectively. Net interest margin was 3.61% and 3.67% for the quarter ended December 31, 2013 and 2012, respectively. Net interest income was $28.7 million and $24.7 million for the year ended December 31, 2013 and 2012, respectively. Net interest margin was 3.56% and 3.69% for the year ended December 31, 2013 and 2012, respectively. The Bank's growth in net interest income is directly attributable to the Bank's asset growth. Provision for loan losses The Bank recognized a provision for possible loan losses of $306 thousand for the quarter ended December 31, 2013 compared to $800 thousand for the same period in 2012. For the year ended December 31, 2013 and 2012, the Bank provisioned $1.8 million and $3.4 million , respectively, to the allowance for loan losses. The Bank maintains a policy of adding an appropriate amount to the allowance for loan losses to ensure adequate reserves based on, among other factors, the portfolio composition, specific credit extended by the Bank and general economic conditions. Noninterest income The Bank's primary sources of noninterest income are the gain on sale of loans, gain on sale of securities, service charges and loan processing fees. Noninterest income amounted to $1.8 million for the quarter ended December 31, 2013 and was $4.8 million for the same period in 2012. Total gain on sale of loans was $1.3 million and $4.0 million for the quarter ended December 31, 2013 and 2012, respectively. In addition, the Bank recorded a gain on sale of securities available for sale of $39 thousand for the three months ended December 31, 2013 compared to a gain of $245 thousand for the same period in 2012. Noninterest income for the year ended December 31, 2013 and 2012 was $10.7 million and $14.6 million , respectively. Total gain on sale of loans was $7.9 million for the year ended December 31, 2013 compared to $11.0 million for the year ended December 31, 2012 . In addition, the gain on sale of securities held for sale decreased to $557 thousand for the year ended December 31, 2013 compared to $1.8 million for the same period in 2012. The decrease in noninterest income for the three months and year ended December 31, 2013 was primarily due to lower volume in mortgage originations and a reduction in securities gains. Overall, mortgage banking activity during 2013 is a more typical representation of normal volume. The volume reported in 2012 was unusually high due to heavy refinancing during the low rate environment. Noninterest expense The largest component of noninterest expense is salaries and employee benefits which amounted to $3.4 million for the quarter ended December 31, 2013 and $4.1 million in 2012. All other operating expenses were $2.2 million for the quarter ended December 31, 2013 compared to $4.0 million for the same period in 2012. The decrease in salary and employee benefits expense and other operating expenses for the quarter ended December 31, 2013 was due to the lower volume in mortgage originations discussed earlier. With regard to the decrease in other operating expenses, the prior year included a one-time charge of approximately $1.0 million representing the settlement of a claim by the U.S. Bankruptcy Trustee for a former loan customer. Salary and employee benefits expense was $14.3 million versus $13.6 million for the year ended December 31, 2013 and 2012, respectively. All other operating expenses were $10.0 million for the year ended December 31, 2013 and $11.0 million for the same period in 2012. The increase in salary and employee benefits expense for the year ended December 31, 2013 was due to additional staffing needs based on the growth of the Bank. The decrease in other operating expenses for 2013 was primarily due to the lower volume in mortgage originations discussed earlier. Balance Sheet Review At December 31, 2013 , total assets were $894.8 million , an increase of $113.2 million , or 14%, from total assets at December 31, 2012 . Total gross loans grew 20% to $705.9 million at December 31, 2013 , from $587.5 million at December 31, 2012 . Loans held for sale were $10.7 million at December 31, 2013 compared to $48.1 million at December 31, 2012 . During this period, the Bank's investment portfolio increased to $126.8 million compared to $118.6 million , a year ago. Total deposits were $711.4 million at December 31, 2013 , which represents an 8% increase from $660.1 million of total deposits at December 31, 2012 . Total borrowings were $84.1 million at December 31, 2013 and $47.6 million at December 31, 2012 . Federal Home Loan Bank advances and repurchase agreements were used to supplement deposits and fund asset growth. Keywords for this news article include: Mortgage, Real Estate, Virginia Heritage Bank . Our reports deliver fact-based news of research and discoveries from around the world. Copyright 2014, NewsRx LLC


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Source: Real Estate Weekly News


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