EASTERN VIRGINIA BANKSHARES, INC. TAPPAHANNOCK, Va., July 24, 2015 /PRNewswire/ -- Eastern Virginia Bankshares, Inc. (NASDAQ: EVBS) (the "Company"), the one bank holding company of EVB (the "Bank"), reported today its results of operations for the three and six months ended June 30, 2015.
Performance Summary
Three Months Ended
June 30,
(dollars in thousands, except
per share data) 2015 2014
----------------------------- ---- ----
Net income (1) $1,507 $1,655
Net income available to
common shareholders (1) $1,341 $1,114
Basic net income per common
share $0.10 $0.10
Diluted net income per common
share $0.07 $0.06
Return on average assets
(annualized) 0.45% 0.43%
Return on average common
shareholders' equity
(annualized) 5.29% 4.76%
Net interest margin (tax
equivalent basis)(2) 3.93% 3.82%
Six Months Ended June
30,
(dollars in thousands, except
per share data) 2015 2014
----------------------------- ---- ----
Net income (1) $3,116 $3,651
Net income available to
common shareholders (1) $2,730 $2,592
Basic net income per common
share $0.21 $0.22
Diluted net income per common
share $0.15 $0.15
Return on average assets
(annualized) 0.46% 0.50%
Return on average common
shareholders' equity
(annualized) 5.46% 5.68%
Net interest margin (tax
equivalent basis)(2) 3.97% 3.88%
(1) The difference between net income and net income available to common
shareholders is the effective dividend to holders of the Company's Series A
Preferred Stock.
(2) For more information on the calculation of net interest margin on a tax
equivalent basis, see the average balance sheet and net interest margin analysis
for the three and six month periods ended June 30, 2015 and 2014 contained in this
release.
The Company's results for the three and six months ended June 30, 2015 were directly impacted by the acquisition and integration of Virginia Company Bank ("VCB"), which was effective November 14, 2014, including additional legal fees and integration costs of $224 thousand, and increased average loan and deposit balances during the first six months of 2015 as compared to the same period in 2014. Additionally, during the second quarter of 2015, the Company completed a private placement of $20.0 million in senior subordinated debt. A portion of these proceeds were used to redeem both its outstanding warrants with the U.S. Department of Treasury ("Treasury") and the remaining $9 million of its Series A Preferred Stock related to the Troubled Asset Relief Program ("TARP") that were originally issued during January 2009.
In announcing these results, Joe A. Shearin, President and Chief Executive Officer commented, "I am pleased with our Company's continued progress and results for the second quarter of 2015. Although net income decreased when compared to the same periods last year, which in part was due to current period expenses related to the execution of our strategic initiatives, we have increased net income available to common shareholders for the comparable periods. In June 2015 we repaid our remaining TARP Series A Preferred Stock, and the elimination of this high-cost source of financing drove our improved financial results for our common shareholders in 2015. This repayment, along with our repurchase of the TARP warrants from Treasury in May 2015, eliminates the Company's TARP financing. Although loan growth has been slower than we anticipated, I am very encouraged with the positive trends we saw during the second quarter related to loan growth and loan yields, particularly in the Richmond and Tidewater markets. While our net interest margin declined during the second quarter of 2015 as compared to the first quarter of 2015, due primarily to the issuance of our senior subordinated debt in April 2015, I am pleased with the overall margin performance during the current periods given the competitive pressures in the historically low rate environment."
Shearin continued, "Over the last few years our primary focus has been on improving asset quality and strengthening our balance sheet. As a Company, we have successfully executed on this plan through our previously disclosed strategic initiatives. With healthy asset quality and our balance sheet restructuring complete, we will use our strategic and financial flexibility to focus our efforts on growth and profitability. During the first half of 2015, the Company engaged an independent consultant to conduct a comprehensive assessment of its operations. This assessment identified operating efficiencies and revenue enhancement opportunities. Throughout the balance of 2015 and forward, we plan to evaluate and implement strategies that we believe will improve our performance and profitability and will increase the value of our company. I am also pleased to announce that the Board of Directors not only declared another cash dividend but has also increased the cash dividend to $0.02 per share of common stock and Series B Preferred Stock payable on August 21, 2015 to shareholders of record as of August 7, 2015."
For the three months ended June 30, 2015, the following were significant factors in the Company's reported results:
-- Increase in net interest income of $1.5 million from the same period in
2014, principally due to a $1.8 million increase in interest and fees on
loans driven primarily by loans acquired through the acquisition of VCB,
partially offset by a decrease in interest income on investment
securities and an increase in interest expense associated with the
issuance of $20.0 million in senior subordinated debt during the second
quarter of 2015;
-- Net interest margin (tax equivalent basis) increased 11 basis points to
3.93% during the second quarter of 2015 as compared to 3.82% for the
same period in 2014;
-- Increase in salaries and employee benefits of $775 thousand from the
same period in 2014, primarily due to increased staff levels and support
positions associated with the addition of three branches through the
acquisition of VCB;
-- Operating results were impacted by accounting adjustments which were
recorded in relation to the VCB acquisition. As a result, yields on
acquired loans increased and were partially offset by amortization of
the core deposit intangible and the fair value adjustment for time
deposits. The net accretion attributable to these adjustments was $223
thousand;
-- No provision for loan losses was recorded during the second quarter of
2015 or 2014. Net charge-offs increased to $371 thousand for the second
quarter of 2015 from $288 thousand in the same period of 2014;
-- Other operating expenses increased $834 thousand during the second
quarter of 2015 as compared to the same period in 2014 and were driven
primarily by increased costs associated with outsourcing of the Bank's
core information technology processing and consultant fees. Consultant
fees increased due to the Company's engagement of an independent
consultant to conduct a comprehensive assessment of its operations, as
discussed above; and
-- Decrease in the effective dividend on preferred stock of $375 thousand
from the same period in 2014. This was due to the redemption of the
Company's Series A Preferred Stock (10,000, 5,000 and 9,000 shares on
October 15, 2014, January 15, 2015 and June 15, 2015, respectively).
For the six months ended June 30, 2015, the following were significant factors in the Company's reported results:
-- Increase in net interest income of $2.8 million from the same period in
2014, principally due to a $3.5 million increase in interest and fees on
loans driven primarily by loans acquired through the acquisition of VCB,
partially offset by a decrease in interest income on investment
securities and an increase in interest expense associated with the
issuance of $20.0 million in senior subordinated debt;
-- Increase in net interest margin (tax equivalent basis) of 9 basis points
to 3.97% for the six months ended June 30, 2015 as compared to 3.88% for
the six months ended June 30, 2014;
-- The net accretion attributable to accounting adjustments related to the
VCB acquisition was $402 thousand;
-- No provision for loan losses was recorded during the six months ended
June 30, 2015 compared to $250 thousand for the same period in 2014. Net
charge-offs increased to $734 thousand for the six months ended June 30,
2015 from $399 thousand in the same period of 2014;
-- Nonperforming assets at June 30, 2015 decreased $1.5 million from June
30, 2014, primarily due to a $2.5 million decline in nonaccrual loans
which was partially offset by a $743 thousand increase in other real
estate owned;
-- Expenses related to FDIC insurance premiums declined to $426 thousand as
compared to $637 thousand for the same period in 2014. The Company faced
lower FDIC insurance assessment rates following termination of its
memorandum of understanding with its federal and state banking
regulators (the "MOU"), which was partially offset by higher average
asset balances due to the VCB acquisition;
-- Other operating expenses increased $1.5 million for the six months ended
June 30, 2015 as compared to the same period in 2014 and were driven
primarily by increased costs associated with outsourcing of the Bank's
core information technology processing and consultant fees. Consultant
fees increased due to the Company's engagement of an independent
consultant to conduct a comprehensive assessment of its operations; and
-- Decrease in the effective dividend on preferred stock of $673 thousand
from the same period in 2014. This was due to the redemption of the
Company's Series A Preferred Stock (10,000, 5,000 and 9,000 shares on
October 15, 2014, January 15, 2015 and June 15, 2015, respectively).
Operations Analysis
The following tables present average balances of assets and liabilities, the average yields earned on such assets (on a tax equivalent basis) and rates paid on such liabilities, and the net interest margin for the three and six months ended June 30, 2015 and 2014.
Average Balance Sheet and Net Interest Margin Analysis
(dollars in thousands)
Three Months Ended June 30,
2015 2014
---- ----
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate (1) Balance Expense Rate (1)
------- ------- ------- ------- ------- -------
Assets:
Securities
Taxable $221,747 $1,185 2.14% $236,634 $1,338 2.27%
Restricted securities 7,198 96 5.35% 6,779 89 5.27%
Tax exempt (2) 38,794 385 3.99% 29,521 294 3.99%
------ --- ------ ---
Total securities 267,739 1,666 2.50% 272,934 1,721 2.53%
Interest bearing deposits in other banks 6,886 4 0.23% 5,097 4 0.31%
Federal funds sold 188 - 0.00% 121 - 0.00%
Loans, net of unearned income (3) 819,061 10,382 5.08% 685,491 8,562 5.01%
------- ------ ------- -----
Total earning assets 1,093,874 12,052 4.42% 963,643 10,287 4.28%
Less allowance for loan losses (12,524) (14,898)
Total non-earning assets 113,370 98,403
------- ------
Total assets $1,194,720 $1,047,148
========== ==========
Liabilities & Shareholders' Equity:
Interest-bearing deposits
Checking $289,473 $269 0.37% $259,279 $233 0.36%
Savings 92,733 31 0.13% 89,334 30 0.13%
Money market savings 163,105 190 0.47% 113,929 116 0.41%
Time deposits 233,699 444 0.76% 223,621 599 1.07%
------- --- ------- ---
Total interest-bearing deposits 779,010 934 0.48% 686,163 978 0.57%
Federal funds purchased and repurchase
agreements 8,275 13 0.63% 3,274 5 0.61%
Short-term borrowings 72,526 37 0.20% 68,547 36 0.21%
Junior subordinated debt 10,310 81 3.15% 10,310 88 3.42%
Senior subordinated debt 15,034 264 7.04% - - 0.00%
------ --- --- ---
Total interest-bearing liabilities 885,155 1,329 0.60% 768,294 1,107 0.58%
Noninterest-bearing liabilities
Demand deposits 171,957 134,605
Other liabilities 6,947 4,801
----- -----
Total liabilities 1,064,059 907,700
Shareholders' equity 130,661 139,448
------- -------
Total liabilities and shareholders' equity $1,194,720 $1,047,148
========== ==========
Net interest income (2) $10,723 $9,180
======= ======
Interest rate spread (2)(4) 3.82% 3.70%
Interest expense as a percent of
average earning assets 0.49% 0.46%
Net interest margin (2)(5) 3.93% 3.82%
Notes:
(1) Yields are annualized and based on average daily balances.
(2) Income and yields are reported on a tax equivalent basis assuming a federal tax rate of 34%, with a
$117 adjustment for 2015 and a $90 adjustment in 2014.
(3) Nonaccrual loans have been included in the computations of average loan balances.
(4) Interest rate spread is the average yield on earning assets, calculated on a fully taxable basis, less the average
rate incurred on interest-bearing liabilities.
(5) Net interest margin is the net interest income, calculated on a fully taxable basis, expressed as a percentage
of average earning assets.
(dollars in thousands)
Six Months Ended June 30,
2015 2014
---- ----
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate (1) Balance Expense Rate (1)
------- ------- ------- ------- ------- -------
Assets:
Securities
Taxable $217,733 $2,387 2.21% $238,849 $2,845 2.40%
Restricted securities 7,490 204 5.49% 7,006 191 5.50%
Tax exempt (2) 38,504 760 3.98% 29,893 600 4.05%
------ --- ------ ---
Total securities 263,727 3,351 2.56% 275,748 3,636 2.66%
Interest bearing deposits in other banks 6,926 8 0.23% 6,288 8 0.26%
Federal funds sold 232 - 0.00% 132 - 0.00%
Loans, net of unearned income (3) 818,059 20,573 5.07% 681,821 17,112 5.06%
------- ------ ------- ------
Total earning assets 1,088,944 23,932 4.43% 963,989 20,756 4.34%
Less allowance for loan losses (12,714) (14,842)
Total non-earning assets 113,530 98,946
------- ------
Total assets $1,189,760 $1,048,093
========== ==========
Liabilities & Shareholders' Equity:
Interest-bearing deposits
Checking $285,428 $523 0.37% $258,234 $461 0.36%
Savings 92,033 60 0.13% 89,757 60 0.13%
Money market savings 164,421 385 0.47% 116,494 241 0.42%
Time deposits 237,883 1,017 0.86% 224,734 1,203 1.08%
------- ----- ------- -----
Total interest-bearing deposits 779,765 1,985 0.51% 689,219 1,965 0.57%
Federal funds purchased and repurchase
agreements 10,055 31 0.62% 3,329 10 0.61%
Short-term borrowings 77,453 79 0.21% 70,754 71 0.20%
Junior subordinated debt 10,310 161 3.15% 10,310 176 3.44%
Senior subordinated debt 7,558 264 7.04% - - 0.00%
----- --- --- ---
Total interest-bearing liabilities 885,141 2,520 0.57% 773,612 2,222 0.58%
Noninterest-bearing liabilities
Demand deposits 166,823 132,074
Other liabilities 6,796 4,745
----- -----
Total liabilities 1,058,760 910,431
Shareholders' equity 131,000 137,662
------- -------
Total liabilities and shareholders' equity $1,189,760 $1,048,093
========== ==========
Net interest income (2) $21,412 $18,534
======= =======
Interest rate spread (2)(4) 3.86% 3.76%
Interest expense as a percent of
average earning assets 0.47% 0.46%
Net interest margin (2)(5) 3.97% 3.88%
Notes:
(1) Yields are annualized and based on average daily balances.
(2) Income and yields are reported on a tax equivalent basis assuming a federal tax rate of 34%, with a
$232 adjustment for 2015 and a $183 adjustment in 2014.
(3) Nonaccrual loans have been included in the computations of average loan balances.
(4) Interest rate spread is the average yield on earning assets, calculated on a fully taxable basis, less the average
rate incurred on interest-bearing liabilities.
(5) Net interest margin is the net interest income, calculated on a fully taxable basis, expressed as a percentage
of average earning assets.
Interest Income and Expense
Net interest income and net interest margin
Net interest income in the second quarter of 2015 increased $1.5 million, or 16.7%, when compared to the second quarter of 2014. Net interest income for the six months ended June 30, 2015 increased $2.8 million, or 15.4%, as compared to the first half of 2014. The Company's net interest margin increased to 3.93% and 3.97% for the three and six months ended June 30, 2015, representing 11 and 9 basis point increases, respectively, over the Company's net interest margins for the three and six months ended June 30, 2014. The most significant factors impacting net interest income during these periods were as follows:
Positive Impacts:
-- Average loan balances increased primarily due to the acquisition of VCB;
and
-- Average rates paid on total interest-bearing deposits decreased for the
three and six months ended June 30, 2015. However, higher average
interest-bearing deposit balances during the first half of 2015 over the
comparable 2014 period, due to interest-bearing deposits added from the
VCB acquisition, offset the favorable impacts of the lower rates paid on
interest-bearing deposits and drove a slight increase in interest
expense attributable to the Company's deposit portfolio.
Negative Impacts:
-- Decreases in the average balances of and average rates earned on total
investment securities for both the three and six months ended June 30,
2015; and
-- Private placement of $20.0 million of senior subordinated debt resulting
in increases to total average interest-bearing liabilities and related
interest expense. The issuance of the senior subordinated debt was the
primary driver of the 7 basis point decline in the Company's net
interest margin from the first quarter of 2015 to the second quarter of
2015.
Total interest and dividend income
Total interest and dividend income increased 17.0% and 15.2% for the three and six months ended June 30, 2015, respectively, as compared to the same periods in 2014. The increase in total interest and dividend income during the three and six months ended June 30, 2015 was primarily driven by an increase in average loan balances and slight increases in average loan yields, and partially offset by a decrease in average investment securities balances and declines in investment securities yields.
Loans
Average loan balances increased for the three and six month periods ended June 30, 2015, as compared to the same periods in 2014, due primarily to the acquisition of VCB loans totaling $101.5 million as of November 14, 2014, net of fair value adjustments, the purchase of $11.3 million in performing one-to-four family residential mortgage loans and government guaranteed loans in June 2015, organic loan growth, the opening of a new loan production office in Chesterfield County, Virginia in the second quarter of 2014 and the origination of a line of credit to fund loan originations through Southern Trust Mortgage, LLC (balance of $12.3 million as of June 30, 2015) in the second quarter of 2014. Despite a 3% increase in loans during the current period, loan growth came in lower than our expectations. Loan growth in our rural markets, primarily on the consumer side, remains weak while competition for commercial loans, especially in the Richmond and Tidewater markets, has been and we expect will continue to be intense given the historically low rate environment. The Company's average loan balances increased $133.6 million for the three months ended June 30, 2015 and increased $136.2 million for the six months ended June 30, 2015, as compared to average loan balances for the same periods in 2014. Total average loans were 74.9% of total average interest-earning assets for the three months ended June 30, 2015, compared to 71.1% for the three months ended June 30, 2014. Total average loans were 75.1% of total average interest-earning assets for the six months ended June 30, 2015, compared to 70.7% for the six months ended June 30, 3014.
Investment securities
Average investment securities balances declined 1.9% and 4.4% for the three and six month periods ended June 30, 2015, respectively, as compared to the same periods in 2014. These declines were the result of the Company moving towards its long term target of the investment securities portfolio comprising 20% of the Company's total assets, the lack of investment opportunities with acceptable risk-adjusted rates of return and liquidity needs to support our operations and strategic initiatives. The yields on investment securities decreased 3 and 10 basis points for the three and six months ended June 30, 2015, respectively, as compared to the same periods in 2014, driven by lower interest rates and sales/calls of higher yielding municipal securities since the first and second quarters of 2014.
Interest-bearing deposits
Average total interest-bearing deposit balances increased for the three and six month periods ended June 30, 2015, as compared to the same periods in 2014, primarily due to the acquisition of VCB's interest-bearing deposit liabilities, which totaled $85.6 million as of November 14, 2014.
Borrowings
Average total borrowings increased for the three and six month periods ended June 30, 2015, as compared to the same periods in 2014, primarily due to the issuance of $20.0 million in senior subordinated debt in April 2015, the assumption of $8.7 million in short-term FHLB advances as a result of the VCB acquisition and increased repurchase agreement balances related to a significant customer deposit relationship.
Noninterest Income
The following tables depict the components of noninterest income for the three and six months ended June 30, 2015 and 2014:
Three Months Ended June 30,
(dollars in thousands) 2015 2014 Change $ Change %
--------------------- ---- ---- -------- -------
Service charges and fees on deposit
accounts $673 $837 $(164) -19.6%
Debit/credit card fees 442 378 64 16.9%
Gain on sale of available for sale
securities, net 26 109 (83) -76.1%
(Loss) on sale of bank premises and
equipment (30) - (30) -100.0%
Other operating income 421 315 106 33.7%
---------------------- --- --- --- ----
Total noninterest income $1,532 $1,639 $(107) -6.5%
====== ====== ===== ====
Six Months Ended June 30,
(dollars in thousands) 2015 2014 Change $ Change %
--------------------- ---- ---- -------- -------
Service charges and fees on deposit
accounts $1,336 $1,659 $(323) -19.5%
Debit/credit card fees 805 687 118 17.2%
Gain on sale of available for sale
securities, net 51 489 (438) -89.6%
(Loss) gain on sale of bank premises and
equipment (27) 5 (32) -640.0%
Other operating income 886 691 195 28.2%
---------------------- --- --- --- ----
Total noninterest income $3,051 $3,531 $(480) -13.6%
====== ====== ===== =====
Key changes in the components of noninterest income for both the three and six months ended June 30, 2015, as compared to the same periods in 2014, are discussed below:
-- Service charges and fees on deposit accounts declined due to decreases
in service charge and overdraft fees on checking accounts;
-- Debit/credit card fees increased primarily due to an increase in debit
card fees driven by the acquisition of VCB and a higher utilization rate
of debit cards by our customer base;
-- Gain on sale of available for sale securities, net decreased for the
second quarter of 2015 compared to the same period of 2014 primarily as
a result of the Company adjusting the composition of the investment
securities portfolio as part of the Company's overall asset/liability
management strategy. Additionally, gains decreased during the first six
months of 2015 primarily due to the sale of a portion of its previously
impaired agency preferred securities (FNMA & FHLMC) during the first
quarter of 2014, and because the Company did not generate comparable
gains during 2015;
-- (Loss) gain on sale of bank premises and equipment was primarily due to
the sale of our former Heathsville branch building as operations were
relocated to a new facility, with no similar losses occurring during
2014; and
-- Other operating income increased primarily due to higher earnings from
the Bank's subsidiaries, its investment in Bankers Insurance, LLC and
bank owned life insurance policies, partially offset by higher losses
from the Bank's investments in Housing Equity Funds. Additionally, other
operating income includes earnings from the Bank's investments in
Southern Trust Mortgage, LLC (acquired 4.9% ownership on May 15, 2014)
and Bankers Title, LLC (acquired 6.0% ownership on October 1, 2014).
Noninterest Expense
The following tables depict the components of noninterest expense for the three and six months ended June 30, 2015 and 2014:
Three Months Ended June 30,
(dollars in thousands) 2015 2014 Change $ Change %
--------------------- ---- ---- -------- -------
Salaries and employee benefits $5,523 $4,748 $775 16.3%
Occupancy and equipment expenses 1,392 1,267 125 9.9%
FDIC expense 254 305 (51) -16.7%
Collection, repossession and other real estate
owned 126 89 37 41.6%
(Gain) loss on sale of other real estate owned (6) 28 (34) -121.4%
Impairment losses on other real estate owned - 6 (6) -100.0%
Other operating expenses 2,910 2,076 834 40.2%
------------------------ ----- ----- --- ----
Total noninterest expenses $10,199 $8,519 $1,680 19.7%
======= ====== ====== ====
Six Months Ended June 30,
(dollars in thousands) 2015 2014 Change $ Change %
--------------------- ---- ---- -------- -------
Salaries and employee benefits $11,113 $9,334 $1,779 19.1%
Occupancy and equipment expenses 2,913 2,586 327 12.6%
FDIC expense 426 637 (211) -33.1%
Collection, repossession and other real estate
owned 215 156 59 37.8%
Loss on sale of other real estate owned 26 15 11 73.3%
Impairment losses on other real estate owned 5 11 (6) -54.5%
Other operating expenses 5,468 3,958 1,510 38.2%
------------------------ ----- ----- ----- ----
Total noninterest expenses $20,166 $16,697 $3,469 20.8%
======= ======= ====== ====
Key changes in the components of noninterest expense for both the three and six months ended June 30, 2015, as compared to the same periods in 2014, are discussed below:
-- Salaries and employee benefits increased due to annual merit salary
increases, increased restricted stock compensation expense, increased
bonuses, commissions and other incentive compensation and valuation
adjustments related to pension plan liabilities, partially offset by an
increase in deferred compensation on loan originations and reduced
expense related to paid time off accrual adjustments for the six month
period. Additionally, the Bank incurred higher personnel costs
associated with increased staff levels and support positions due to the
addition of three branches through the acquisition of VCB;
-- Occupancy and equipment expenses increased primarily due to depreciation
expense associated with certain acquired VCB assets and increased rent,
building repairs and maintenance and real estate tax expenses related to
the acquired VCB branch locations;
-- FDIC expense decreased due to lower base insurance assessment rates
resulting from the improvement in the Bank's overall composite rating in
connection with the termination of the MOU in March 2014;
-- Collection, repossession and other real estate owned expenses increased
due to increases in carrying balances of and costs associated with other
real estate owned and classified assets; and
-- Other operating expenses increased primarily due to elevated costs
associated with outsourcing of the Bank's core information technology
processing, consultant fees and marketing and advertising expenses.
Consultant fees increased due to the Company's engagement of an
independent consultant to conduct a comprehensive assessment of its
operations. Marketing and advertising expenses were higher due to the
timing of campaigns and costs associated with the acquisition of VCB.
Other operating expenses also increased due to higher franchise taxes,
education and training, dues and subscriptions, legal expenses and core
deposit intangible amortization expense.
Balance Sheet and Asset Quality
Balance Sheet
Key balance sheet components as of June 30, 2015 and December 31, 2014 are as follows:
June 30, December 31,
(dollars in
thousands) 2015 2014 Change $ Change %
----------- ---- ---- -------- -------
Total assets $1,219,191 $1,181,972 $37,219 3.1%
Securities
available for
sale, at fair
value 227,932 214,011 13,921 6.5%
Securities held to
maturity, at
carrying value 30,671 32,163 (1,492) -4.6%
Total loans 840,710 820,569 20,141 2.5%
Total deposits 957,222 939,254 17,968 1.9%
Total borrowings 132,544 102,013 30,531 29.9%
Total shareholders'
equity 121,909 134,274 (12,365) -9.2%
Key balance sheet components as of June 30, 2015 and 2014 are as follows:
June 30, June 30,
(dollars
in
thousands) 2015 2014 Change $ Change %
---------- ---- ---- -------- -------
Total
assets $1,219,191 $1,056,083 $163,108 15.4%
Securities
available
for
sale,
at
fair
value 227,932 227,632 300 0.1%
Securities
held
to
maturity,
at
carrying
value 30,671 34,077 (3,406) -10.0%
Total
loans 840,710 697,993 142,717 20.4%
Total
deposits 957,222 821,526 135,696 16.5%
Total
borrowings 132,544 90,552 41,992 46.4%
Total
shareholders'
equity 121,909 140,760 (18,851) -13.4%
Asset Quality
The asset quality measures depicted below continue to reflect the Company's efforts to prudently charge-off loans as losses are identified and maintain an appropriate allowance for potential future loan losses.
The following table depicts the net charge-off activity for the three and six months ended June 30, 2015 and 2014.
Three months ended Six months ended
------------------ ----------------
June 30, June 30,
-------- --------
(dollars in
thousands) 2015 2014 2015 2014
----------- ---- ---- ---- ----
Net charge-offs $371 $288 $734 $399
Net charge-offs
to average
loans 0.18% 0.17% 0.18% 0.12%
The following table depicts the level of the allowance for loan losses as of the dates presented.
June 30, December 31, June 30,
(dollars in
thousands) 2015 2014 2014
----------- ---- ---- ----
Allowance
for loan
losses $12,287 $13,021 $14,618
Allowance
for loan
losses to
period end
loans 1.46% 1.59% 2.09%
Allowance
for loan
losses to
nonaccrual
loans 169.17% 196.63% 149.61%
Allowance
for loan
losses to
nonperforming
loans 163.77% 195.07% 149.61%
The following table depicts the level of nonperforming assets as of the dates presented.
June 30, December 31, June 30,
(dollars in
thousands) 2015 2014 2014
----------- ---- ---- ----
Nonaccrual loans $7,263 $6,622 $9,770
Loans past due 90
days and
accruing
interest 240 53 -
--- --- ---
Total
nonperforming
loans $7,503 $6,675 $9,770
Other real estate
owned ("OREO") 1,344 1,838 601
----- ----- ---
Total
nonperforming
assets $8,847 $8,513 $10,371
====== ====== =======
Nonperforming
assets to total
loans and OREO 1.05% 1.04% 1.48%
The following tables present the change in the balances of OREO and nonaccrual loans for the six months ended June 30, 2015.
OREO: Nonaccrual Loans:
----- -----------------
(dollars in thousands) (dollars in thousands)
Balance at December 31, 2014 $1,838 Balance at December 31, 2014 $6,622
Transfers from loans 1,084 Loans returned to accrual status (2,459)
Capitalized costs 1 Net principal curtailments (1,309)
Sales proceeds (1,548) Charge-offs (676)
Impairment losses on valuation adjustments (5) Loan collateral moved to OREO (1,084)
Loss on disposition (26) Loans placed on nonaccrual during
period 6,169
--- -----
Balance at June 30, 2015 $1,344 Balance at June 30, 2015 $7,263
====== ======
In general, the modification or restructuring of a loan constitutes a troubled debt restructuring ("TDR") when we grant a concession to a borrower experiencing financial difficulty. The following table depicts the balances of TDRs as of the dates presented.
June 30, December 31, June 30,
(dollars in thousands) 2015 2014 2014
--------------------- ---- ---- ----
Performing TDRs $14,843 $15,223 $16,383
Nonperforming TDRs* 2,252 3,438 3,963
----- ----- -----
Total TDRs $17,095 $18,661 $20,346
======= ======= =======
* Included in nonaccrual loans.
Forward Looking Statements
Certain statements contained in this release that are not historical facts may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In addition, certain statements may be contained in the Company's future filings with the Securities and Exchange Commission (the "SEC"), in press releases, and in oral and written statements made by or with the approval of the Company that are not statements of historical fact and constitute forward-looking statements. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, expenses, income or loss, income or loss per share, the payment or nonpayment of dividends, capital structure and other financial items; (ii) statements of plans, objectives and expectations of the Company or its management or Board of Directors, including those relating to products or services, the performance or disposition of portions of the Company's asset portfolio, future changes to the Bank's branch network and the payment of dividends; (iii) statements of future financial performance and economic conditions; (iv) statements regarding the adequacy of the allowance for loan losses; (v) statements regarding the effect of future sales of investment securities or foreclosed properties; (vi) statements regarding the Company's liquidity; (vii) statements of management's expectations regarding future trends in interest rates, real estate values, and economic conditions generally and in the Company's markets; (viii) statements regarding future asset quality, including expected levels of charge-offs; (ix) statements regarding potential changes to laws, regulations or administrative guidance; (x) statements regarding strategic initiatives of the Company or the Bank and the results of these initiatives; and (xi) statements of assumptions underlying such statements. Words such as "believes," "anticipates," "expects," "intends," "targeted," "continue," "remain," "will," "should," "may" and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.
Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those in such statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:
-- factors that adversely affect the Company's and the Bank's strategic and
business initiatives, including, without limitation, changes in the
economic or business conditions in the Company's markets;
-- the Company's ability and efforts to assess, manage and improve its
asset quality;
-- the strength of the economy in the Company's target market area, as well
as general economic, market, political, or business factors;
-- changes in the quality or composition of the Company's loan or
investment portfolios, including adverse developments in borrower
industries or in the repayment ability of individual borrowers or
issuers;
-- concentrations in segments of the loan portfolio or declines in real
estate values in the Company's markets;
-- the effects of the Company's adjustments to the composition of its
investment portfolio;
-- the strength of the Company's counterparties;
-- an insufficient allowance for loan losses;
-- the Company's ability to meet the capital requirements of its regulatory
agencies;
-- changes in laws, regulations and the policies of federal or state
regulators and agencies, the implementation of the Basel III capital
framework and for calculating risk-weighted assets;
-- changes in the interest rates affecting the Company's deposits and
loans;
-- the loss of any of the Company's key employees;
-- failure, interruption or breach of any of the Company's communication or
information systems, including those provided by external vendors;
-- the Company's potential growth, including its entrance or expansion into
new markets, the opportunities that may be presented to and pursued by
it and the need for sufficient capital to support that growth;
-- future mergers or acquisitions, if any;
-- changes in government monetary policy, interest rates, deposit flow, the
cost of funds, and demand for loan products and financial services;
-- the Company's ability to maintain internal control over financial
reporting;
-- the Company's ability to realize its deferred tax assets, including in
the event the Company experiences an ownership change as defined by
section 382 of the code;
-- the Company's ability to raise capital as needed by its business;
-- the Company's reliance on secondary sources, such as Federal Home Loan
Bank advances, sales of securities and loans, and federal funds lines of
credit from correspondent banks to meet its liquidity needs; and
-- other circumstances, many of which are beyond the Company's control.
Although the Company believes that its expectations with respect to the forward-looking statements are based upon reliable assumptions and projections within the bounds of its knowledge of its business and operations, there can be no assurance that actual results, performance, actions or achievements of the Company will not differ materially from any future results, performance, actions or achievements expressed or implied by such forward-looking statements. Readers should not place undue reliance on such statements, which speak only as of the date of this report. The Company does not undertake any steps to update any forward-looking statement that may be made from time to time by it or on its behalf. For additional information on risk factors that could affect the Company's forward-looking statements, see the Company's Annual Report on Form 10-K for the year ended December 31, 2014 and other reports filed with the SEC.
Selected Financial Information
(dollars in thousands, except per share data) Three months ended June 30, Six months ended June 30,
Statements of Income 2015 2014 2015 2014
-------------------- ---- ---- ---- ----
Interest and dividend income $11,935 $10,197 $23,700 $20,573
Interest expense 1,329 1,107 2,520 2,222
----- ----- ----- -----
Net interest income 10,606 9,090 21,180 18,351
Provision for loan losses - - - 250
--- --- --- ---
Net interest income after provision for loan losses 10,606 9,090 21,180 18,101
Service charges and fees on deposit accounts 673 837 1,336 1,659
Other operating income 421 315 886 691
Debit/credit card fees 442 378 805 687
Gain on sale of available for sale securities, net 26 109 51 489
(Loss) gain on sale of bank premises and equipment (30) - (27) 5
Noninterest income 1,532 1,639 3,051 3,531
----- ----- ----- -----
Salaries and employee benefits 5,523 4,748 11,113 9,334
Occupancy and equipment expenses 1,392 1,267 2,913 2,586
FDIC expense 254 305 426 637
Collection, repossession and other real estate owned 126 89 215 156
(Gain) loss on sale of other real estate owned (6) 28 26 15
Impairment losses on other real estate owned - 6 5 11
Other operating expenses 2,910 2,076 5,468 3,958
----- ----- ----- -----
Noninterest expenses 10,199 8,519 20,166 16,697
------ ----- ------ ------
Income before income taxes 1,939 2,210 4,065 4,935
Income tax expense 432 555 949 1,284
--- --- --- -----
Net income $1,507 $1,655 $3,116 $3,651
Less: Effective dividend on preferred stock 166 541 386 1,059
--- --- --- -----
Net income available to common shareholders $1,341 $1,114 $2,730 $2,592
====== ====== ====== ======
Net income per common share: basic $0.10 $0.10 $0.21 $0.22
diluted $0.07 $0.06 $0.15 $0.15
Selected Ratios
---------------
Return on average assets (annualized) 0.45% 0.43% 0.46% 0.50%
Return on average common shareholders' equity (annualized) 5.29% 4.76% 5.46% 5.68%
Net interest margin (tax equivalent basis) 3.93% 3.82% 3.97% 3.88%
Period End Balances
-------------------
Investment securities $266,721 $268,939 $266,721 $268,939
Loans, net of unearned income 840,710 697,993 840,710 697,993
Total assets 1,219,191 1,056,083 1,219,191 1,056,083
Total deposits 957,222 821,526 957,222 821,526
Total borrowings 132,544 90,552 132,544 90,552
Total shareholders' equity 121,909 140,760 121,909 140,760
Book value per common share 7.79 8.07 7.79 8.07
Average Balances
----------------
Investment securities $267,739 $272,934 $263,727 $275,748
Loans, net of unearned income 819,061 685,491 818,059 681,821
Total earning assets 1,093,874 963,643 1,088,944 963,989
Total assets 1,194,720 1,047,148 1,189,760 1,048,093
Total deposits 950,967 820,768 946,588 821,293
Total borrowings 106,145 82,131 105,376 84,393
Total shareholders' equity 130,661 139,448 131,000 137,662
Asset Quality at Period End
---------------------------
Allowance for loan losses $12,287 $14,618 $12,287 $14,618
Nonperforming assets 8,847 10,371 8,847 10,371
Net charge-offs 371 288 734 399
Net charge-offs to average loans 0.18% 0.17% 0.18% 0.12%
Allowance for loan losses to period end loans 1.46% 2.09% 1.46% 2.09%
Allowance for loan losses to nonaccrual loans 169.17% 149.61% 169.17% 149.61%
Allowance for loan losses to nonperforming loans 163.77% 149.61% 163.77% 149.61%
Nonperforming assets to total assets 0.73% 0.98% 0.73% 0.98%
Nonperforming assets to total loans and other real estate owned 1.05% 1.48% 1.05% 1.48%
Other Information
-----------------
Number of shares outstanding - period end 13,023,550 11,862,367 13,023,550 11,862,367
Average shares outstanding - basic 13,023,550 11,862,367 13,004,595 11,862,367
Average shares outstanding - diluted 18,263,742 17,102,559 18,244,787 17,102,559
Contact: Adam Sothen
Chief Financial Officer
Voice: (804) 443-8404
Fax: (804) 445-1047
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/eastern-virginia-bankshares-inc-releases-second-quarter-2015-results-300118119.html
SOURCE Eastern Virginia Bankshares, Inc.
