Virginia Financial Grp. (MM) (NASDAQ:VFGI)
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Virginia Financial Group, Inc. Announces 5% Growth In First
Quarter Earnings
CULPEPER, Va., April 19 /PRNewswire-FirstCall/ -- Virginia Financial Group,
Inc. today reported first quarter 2004 earnings of $3.5 million or $.48 per
diluted share, an increase of 4.9% compared to earnings of $3.3 million or $.46
per diluted share for the first quarter of 2003. Diluted earnings per share
growth represented an increase of 4.4% compared to first quarter 2003 results.
VFG'S earnings for the first quarter of 2004 produced an annualized return on
average assets of .99% and an annualized return on average equity of 11.51%,
compared to prior year ratios of 1.20% and 11.62%, respectively.
Total revenues for the first quarter of 2004 were $15.9 million, an increase of
$2.0 million or 14.4% over the $13.9 million in 2003. The largest component,
net interest income, amounted to $12.5 million for the first quarter, up $2.2
million or 21.5% compared with $10.3 million for the same quarter in 2003.
Continuing loan growth and contributions from eight new branches purchased late
in 2003 were primarily contributors to this growth. The net interest margin for
the first quarter of 2004 was 4.09%, an improvement of .18% when compared to
3.91% for the fourth quarter of 2003, but down .18% when compared to 4.27% for
the first quarter of 2003.
Total noninterest income was $3.5 million for the first quarter of 2004, a
decrease of $202 thousand or 5.5% compared to $3.7 million for the first
quarter of 2003. Lower revenues from VFG's mortgage operations where the
primary contributor to this decline. Fees and net gains from mortgages sold
were $645 thousand for the first quarter of 2004, a decrease of $418 thousand
or 39.3% from the first quarter of 2003. Originations were down $20.9 million
or 32.9%, from $63.5 million for the three months ended March 31, 2003 to $42.6
million for the three months ended March 31, 2004. Refinance loans represented
$51.2 million or 80.6% and $27.7 million or 65.1% of total originations for the
three-month periods ended March 31, 2003 and 2004, respectively. Offsetting
much of this decline were retail banking fees, which increased $301 thousand to
$1.5 million, compared to $1.2 million in 2003.
Noninterest expense for the first quarter of 2004 amounted to $10.4 million, an
increase of $1.3 million or 14.0% compared $9.2 million for the same period in
2003. This increase is largely attributable to the Company's expansion
efforts, and the incremental costs associated with the eight purchased
branches, loan production offices in Charlottesville and Lynchburg and a de
novo branch in Fishersville, Virginia.
The Company continues to see improvement in its asset mix, with loan growth of
$249.0 million or 34.8% from $716.1 million at March 31, 2003 to $965.2 million
at March 31, 2004, and growth of $42.1 million or 4.4% for the first quarter of
2004 from $923.1 million at December 31, 2003. Total asset growth was $275.1
million or 24.2% from $1.14 billion at March 31, 2003, to $1.41 billion at
March 31, 2004, and growth of $23.7 million or 1.7% from $1.39 billion at
December 31, 2003. Deposits grew $229.5 million or 23.4% from $980.2 million
at March 31, 2003 to $1.21 billion at March 31, 2004, and remained essentially
flat for the first quarter of 2004. A significant component of the twelve
month growth relates to the branch purchase in September 2003, which initially
accounted for approximately $201 million in asset and deposit growth, and $79
million in loan growth for the period.
The major component of loan growth during the past twelve months occurred in
the non-residential real estate portfolio, which grew $115.4 million or 37.6%
from $306.5 million at March 31, 2003 to $421.9 million at March 31, 2004.
Construction lending represented the largest percentage increase, with growth
of $44.6 million or 74.0% from $60.2 million to $104.8 million. Commercial
lending and residential real estate portfolios also experience double-digit
growth year to year. For the quarter ended March 31, 2004, real estate
construction loans increased $10.4 million or 11.1%, residential real estate
loans decreased $1.5 million or .5%, nonresidential real estate loans increased
$17.6 million or 4.4% and commercial loans increased $6.3 million or 8.6%.
The Company's asset quality remains sound, with VFG's ratio of non- performing
assets as a percentage of total assets amounting to .49% as of March 31, 2004,
compared to .79% at March 31, 2003 and .53% at December 31, 2003. Net
charge-offs as a percentage of average loans receivable amounted to .01% for
the quarter ended March 31, 2004, compared to .02% for the quarter ended March
31, 2003 and .03% for the previous quarter ended December 31, 2003. At March
31, 2004, the allowance for loan losses as a percentage of non-performing
assets was 148.5%, while the allowance as a percentage of total loans amounted
to 1.07%. The Company increased its provision for loan losses by $358 thousand
or over 100%, from $323 thousand for the three months ended March 31, 2003 to
$681 thousand for the three months ended March 31, 2004, consistent with the
loan growth experienced for the period.
VFG is the holding company for Planters Bank & Trust Company of Virginia - in
Staunton; Second Bank & Trust - in Culpeper; Virginia Heartland Bank - in
Fredericksburg and Virginia Commonwealth Trust Company - in Culpeper. The
organization maintains a network of thirty-seven branches serving Central and
Southwest Virginia. It also has loan production offices located in
Charlottesville and Lynchburg.
This press release contains forward-looking statements as defined by federal
securities laws. These statements may address certain results that are
expected or anticipated to occur or otherwise state the company's predictions
for the future. These particular forward-looking statements and all other
statements that are not historical facts are subject to a number of risks and
uncertainties, and actual results may differ materially. Such factors include
but are not limited to: general economic conditions, significant fluctuations
in interest rates that could reduce net interest margin; difficulties in
executing integration plans: reduction of fee income from existing products due
to market conditions; and the amount of growth in the company's general and
administrative expenses. Consequently, these cautionary statements qualify all
forward-looking statements made herein. Please refer to VFG's filings with the
Securities and Exchange Commission for additional information, which may be
accessed at http://www.vfgi.net/.
QUARTERLY PERFORMANCE SUMMARY
Virginia Financial Group, Inc. (NASDAQ:VFGI)
(Dollars in thousands, except per share data)
For the Three Percent
Months Ended Increase
03/31/2004 03/31/2003 (Decrease)
INCOME STATEMENT
Interest income - taxable
equivalent $ 17,842 $ 15,860 12.50%
Interest expense 4,888 4,991 -2.06%
Net interest income -
taxable equivalent 12,954 10,869 19.18%
Less: taxable equivalent
adjustment 462 588 -21.43%
Net interest income 12,492 10,281 21.51%
Provision for loan and
lease losses 681 323 110.84%
Net interest income after
provision for loan
and lease losses 11,811 9,958 18.61%
Noninterest income 3,457 3,659 -5.52%
Noninterest expense 10,435 9,150 14.04%
Provision for income taxes 1,378 1,173 17.48%
Net income $ 3,455 $ 3,294 4.89%
PER SHARE DATA
Basic earnings $ 0.48 $ 0.46 4.35%
Diluted earnings $ 0.48 $ 0.46 4.35%
Shares Outstanding 7,155,519 7,161,234
Weighted average shares -
Basic 7,153,348 7,168,741
Diluted 7,202,328 7,202,137
Dividends paid on common shares $ 0.19 $ 0.18
PERFORMANCE RATIOS
Return on average assets 0.99% 1.20% -17.50%
Return on average equity 11.51% 11.62% -0.95%
Return on average realized
equity(A) 11.98% 12.35% -3.00%
Net yield on earning assets
(taxable equivalent) 4.09% 4.27% -4.22%
Efficiency (taxable
equivalent)(B) 63.54% 62.89% 1.03%
ASSET QUALITY
Allowance for loan losses
Beginning of period $ 9,743 $ 9,180
Provision for loan losses 681 323
Charge offs (176) (175)
Recoveries 35 39
End of period $ 10,283 $ 9,367
Non-performing assets:
Non-accrual loans $ 2,121 $ 1,085
Loans 90+ days past due
and still accruing 78 46
Other real estate owned 241 576
Troubled debt restructurings 4,483 7,041
Total non-performing assets $ 6,923 $ 8,748
NOTES: Applicable ratios are annualized
(A) Excludes the effect on average shareholders' equity of unrealized
gains (losses) that result from changes in market values of
securities and other comprehensive pension expense.
(B) Excludes foreclosed property expense and non-recurring items for all
periods.
Consolidated Balance Sheets
Selected Balance Sheet Data
Virginia Financial Group, Inc. (NASDAQ:VFGI)
(Dollars in thousands)
Percent
Increase
03/31/2004 03/31/2003 (Decrease)
End of period balances
Securities available for sale $ 325,001 $ 308,580 5.32%
Securities held to maturity 5,840 7,053 -17.20%
Total securities 330,841 315,633 4.82%
Real estate - construction 104,804 60,243 73.97%
Real estate - 1-4 family
residential 307,097 219,682 39.79%
Real estate - commercial and
multifamily 421,887 306,510 37.64%
Commercial, financial and
agricultural 80,173 66,363 20.81%
Consumer loans 47,428 51,109 -7.20%
All other loans 3,761 12,211 -69.20%
Total loans 965,150 716,118 34.78%
Allowance for loan losses (10,283) (9,367) 9.78%
Other earning assets 8,935 37,696 -76.30%
Total earning assets 1,304,926 1,069,447 22.02%
Total assets 1,410,928 1,135,793 24.22%
Non-interest bearing deposits 219,413 181,807 20.68%
Money market & interest checking 361,498 286,395 26.22%
Savings 139,807 109,210 28.02%
CD's and other time deposits 488,979 402,800 21.39%
Total deposits 1,209,697 980,212 23.41%
Short-term borrowed funds 34,038 21,938 55.16%
Trust preferred capital notes 20,000 - 100.00%
Federal Home Loan Bank advances 14,120 9,140 54.49%
Total interest-bearing
liabilities 1,058,442 849,483 24.60%
Total shareholders' equity 123,429 115,566 6.80%
Average balances
Total assets 1,403,681 1,110,692 26.38%
Total shareholder's equity $ 120,732 $ 115,058 4.93%
Consolidated Statements of Income
Virginia Financial Group, Inc. (NASDAQ:VFGI)
(Dollars in thousands)
For the Three Months Ended
03/31/2004 03/31/2003
Interest Income
Interest and fees on loans $ 14,055 $ 12,208
Interest on deposits in other banks 1 2
Interest on investment securities:
Taxable 95 114
Interest and dividends on securities
available for sale:
Taxable 2,431 1,920
Nontaxable 749 894
Dividends 47 55
Interest income on federal funds sold 2 79
Total Interest Income 17,380 15,272
Interest Expense
Interest on deposits 4,534 4,750
Interest on trust preferred
capital notes 28 -
Interest on Federal Home Loan
Bank advances 155 192
Interest on federal funds repurchased
and securities sold under
agreements to repurchase 100 48
Interest on other short-term
borrowings 71 1
Total Interest Expense 4,888 4,991
Net Interest Income 12,492 10,281
Provision for loan losses 681 323
Net Interest Income after Provision
for Loan Losses 11,811 9,958
Other Income
Retail banking fees 1,549 1,248
Fees from fiduciary activities 776 779
Brokerage services 198 233
Other operating income 289 312
Gains (losses) on securities
available for sale - 24
Gains (losses) on other real estate
owned - -
Gains (losses) on sale of fixed
assets - -
Fees on mortgage loans sold 645 1,063
Total Other Income 3,457 3,659
Other Expense
Compensation and employee benefits 5,860 5,258
Net occupancy expense 706 570
Supplies and equipment 1,044 948
Amortization-intangible assets 173 39
Computer services 299 341
Professional fees 201 212
Other operating expenses 2,152 1,782
Total Other Expense 10,435 9,150
Income Before Income Tax Expense 4,833 4,467
Income tax expense 1,378 1,173
Net Income $ 3,455 $ 3,294
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES
VIRGINIA FINANCIAL GROUP, INC. (NASDAQ:VFGI)
THREE MONTHS ENDED MARCH 31, 2004 AND 2003
2004
Interest
Average Income/ Average
Dollars in thousands Balance Expense Rates
Assets
Loans receivable, net $ 942,969,430 $ 14,114,179 6.02%
Investment securities
Taxable 257,815,886 2,573,977 4.02%
Tax exempt 70,909,182 1,151,963 6.53%
Total Investments 328,725,068 3,725,940 4.56%
FHLB interest bearing 548,712 754 0.55%
Federal funds sold 858,579 2,085 0.98%
330,132,359 3,728,779 4.54%
Total Earning Assets $1,273,101,789 17,842,958 5.64%
Liabilities and Stockholders'
Equity
Time and savings deposits
Interest-bearing transaction
accounts $ 196,532,271 $ 385,099 0.79%
Money market deposit accounts 169,228,844 405,823 0.96%
Passbook savings accounts 137,018,701 248,569 0.73%
Certificates of deposit >$100k 115,851,857 986,679 3.43%
Certificates of deposit