Alliance Bankshares Reports Second Quarter Results

CHANTILLY, Va.--()--Alliance Bankshares Corporation (NASDAQ – ABVA) today reported a net loss of $919 thousand for the quarter ended June 30, 2012. Results during the quarter were primarily impacted by reduced interest income, merger-related expenses, OREO expenses, and a negative adjustment to the fair value of the of the $25 million FHLB advance, the total of which offset favorable reductions in non-interest expenses and interest expense. Due to full collection of a large, substantially impaired loan, improvement in the overall risk profile of the loan portfolio and a lower level of total loans, the Company also did not recognize a provision expense during the quarter. On a year-to-date basis, the Company has experienced a loss of $1.35 million. The quarterly results represent a loss of $.18 per share versus income of $.08 per share for the same period in 2011, while the year-to-date results represent a loss of $.26 per share versus income of $.15 per share for the same period in 2011. Alliance’s regulatory capital ratios at June 30, 2012 remain above the levels necessary to be considered a “well capitalized” institution.

At June 30, 2012, total assets amounted to $507.8 million, essentially flat as compared to the level at December 31, 2011. Total loans were $293.5 million at June 30, 2012, reflecting a decline of 4.4% since December 31, 2011. The decline in the loan portfolio results from a combination of strategic repositioning of lending activities, normal amortization and payoffs, the total of which offset new loan production during the period. Investment securities amounted to $103.4 million as of June 30, 2012, a decline of $20.1 million from the December 31, 2011 level of $123.5 million. Total deposits at June 30, 2012, were $382.2, reflecting a slight increase from the level at December 31, 2011.

Non-performing assets (NPAs) of $15.5 million at June 30, 2012 were 13.9% lower when compared to $18.0 million at December 31, 2011. The overall decrease resulted largely from a significant reduction of 31.7% in non-accrual loans during the quarter as compared to year end 2011. NPAs-to-total assets declined slightly from 3.55% at December 31, 2011, to 3.05% at June 30, 2012. At June 30, 2011, the allowance for loan losses stood at $5.1 million, or 1.72% of loans.

The Company’s net interest margin for the quarter was 3.08%, a decrease from 3.82% when compared to the same period in 2011. The margin decline resulted largely from the reduced yield in the investment portfolio due to pre-payments of CMOs and a change in the mix of investments, the latter related to our restructuring the portfolio in anticipation of the planned merger with Eagle Bancorp, Inc. that was subsequently terminated.

On May 3, 2012, the Company and WashingtonFirst Bankshares entered into an agreement to merge. Details regarding the terms of the merger are disclosed in the SEC 8-K filed by the Company on May 8, 2012.

Cautionary Statement Regarding Forward-Looking Statements. Certain statements contained in this report that are not historical facts may constitute “forward-looking statements” within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. These statements can generally be identified by the use of words such as “may,” “will,” “should,” “could,” “would,” “plan,” “believe,” “expect,” “anticipate,” “intend” or words of similar meaning. These statements are inherently uncertain; there can be no assurance that the underlying assumptions will prove to be accurate. These forward-looking statements include statements relating to the Company’s anticipated future performance, mix of assets and liabilities and effects of efforts to reposition its business. Readers should not place undue reliance on such statements, which speak only as of the date of this release. The Company does not undertake to update any forward-looking statement that may be made from time to time by it or on its behalf.

Forward-looking statements are subject to risks, assumptions and uncertainties, and could be affected by many factors. Some factors that could cause the Company’s actual results to differ materially from those anticipated in these forward-looking statements include: interest rates, general business conditions, as well as conditions within the financial markets, general economic conditions, unemployment levels, the legislative/regulatory climate, including the effect of the Dodd-Frank Wall Street Reform Act and Consumer Protection Act of 2010 and related regulations, regulatory compliance costs, monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve, the quality/composition of the loan portfolios and the value of related collateral, the value of securities the Company holds, charge-offs on loans and the adequacy of the allowance for loan losses, loan demand, deposit flows, counterparty strength, competition, reliance on third parties for key services, the health of the real estate markets, the outcome of the Company’s repositioning initiatives, and changes in accounting principles.

More information on Alliance Bankshares Corporation can be found online at www.alliancebankva.com, or by phoning an Alliance office.

 
ALLIANCE BANKSHARES CORPORATION
Consolidated Balance Sheets
       
 
June 30, December 31,
2012*     2011
ASSETS (Dollars in thousands)

 

Cash and due from banks $ 74,777 $ 45,837
Federal funds sold 22,880 16,567
Trading securities, at fair value 300 596
Investment securities available-for-sale, at fair value 103,353 123,463
Restricted stock, at cost 4,150 4,772
Loans, net of unearned discount and fees 293,471 306,876
Less: allowance for loan losses   (5,055 )       (5,393 )
Loans, net 288,416 301,483
 
Premises and equipment, net 1,211 1,415
Other real estate owned (OREO) 4,031 3,748
Deferred tax asset, net of allowance ($5,291, $5,291, and $0) 1,442 1,553
Other assets   7,258         7,049  
 
TOTAL ASSETS $ 507,818       $ 506,483  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Non-interest bearing deposits $ 119,553 $ 112,450
Savings and NOW deposits 66,643 51,475
Money market deposits 18,087 23,370
Time deposits   177,916         193,148  
Total deposits 382,199 380,443
 
Repurchase agreements, federal funds purchased and other borrowings 40,388 40,420
Federal Home Loan Bank advances ($29,559, $29,350 and $26,057 at fair value) 44,559 44,350
Trust Preferred Capital Notes 10,310 10,310
Other liabilities   3,223         2,838  
 
TOTAL LIABILITIES   480,679         478,361  
 

Common stock, $4 par value; 15,000,000 shares authorized; 5,109,969 issued and outstanding at June 30, 2012 and December 31, 2011 and 5,108,969 shares issued and outstanding at June 30, 2011

20,440 20,440
Capital surplus 25,933 25,915
Retained (deficit) (19,621 ) (18,269 )

Accumulated other comprehensive income, net

  387         36  
 
TOTAL STOCKHOLDERS' EQUITY   27,139         28,122  
 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 507,818       $ 506,483  
 
                     
* Unaudited financial results
 
 
ALLIANCE BANKSHARES CORPORATION
Consolidated Income Statements
               
 
Three Months Ended Three Months Ended Six Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2012*     2011*     2012* 2011*
(Dollars in thousands, except per share)
 
INTEREST INCOME:
Loans $ 4,089 $ 4,555 $ 8,272 $ 9,100
Trading securities 9 12 18 45
Investment securities 331 1,167 655 2,488
Federal funds sold   24         12         39     22  
 
Total interest income   4,453         5,746         8,984     11,655  
 
INTEREST EXPENSE:
Savings and NOW deposits 30 30 59 62
Time deposits 694 971 1,441 1,968
Money market deposits 32 45 61 94
Repurchase agreements, federal funds purchased and other borrowings 49 52 94 140
FHLB advances 268 256 536 515
Trust preferred capital notes   129         93         243     185  
 
Total interest expense   1,202         1,447         2,434     2,964  
 
Net interest income 3,251 4,299 6,550 8,691
Provision for loan losses   -         769         450     1,075  
 
Net interest income after provision for loan losses   3,251         3,530         6,100     7,616  
 
OTHER INCOME:
Deposit account service charges 41 39 74 76
Net gain on sale of available-for-sale securities - 835 3 914
Gain (loss) on fair value adjustments on trading securities (100 ) 94 (171 ) (33 )
Fair value adjustments of FHLB advance (672 ) (224 ) (209 ) (73 )
Other operating income   39         75         78     119  
 
Total other income (loss) (692 ) 819 (225 ) 1,003
 
OTHER EXPENSES:
Salaries and employee benefits 1,148 1,404 2,321 2,796
Occupancy expense 532 564 1,123 1,125
Equipment expense 136 155 270 323
Other real estate owned expense 54 16 95 51
FDIC assessments 210 290 431 640
Merger Expense 410 - 418 -
Operating expenses   1,217         1,335         2,640     2,552  
 
Total other expenses   3,707         3,764         7,298     7,487  
 
Income before income taxes (1,148 ) 585 (1,423 ) 1,132
Income tax expense (benefit)   (229 )       191         (71 )   373  
NET INCOME (LOSS) $ (919 )     $ 394       $ (1,352 ) $ 759  
Net income (loss) per common share, basic $ (0.18 )     $ 0.08       $ (0.26 ) $ 0.15  
Net income (loss) per common share, diluted $ (0.18 )     $ 0.08       $ (0.26 ) $ 0.15  
Weighted average number of shares, basic   5,109,969         5,108,821         5,109,969     5,108,436  
Weighted average number of shares, diluted   5,109,969         5,134,153         5,109,969     5,125,151  
                                   
* Unaudited financial results
 
ALLIANCE BANKSHARES CORPORATION
Consolidated Statistical Information
Performance Information
       
 
June 30, June 30,
2012*     2011*
(Dollars in thousands, except per share)
Performance Information:
 
For The Three Months Ended:
Average loans $ 293,553 $ 320,845
Average earning assets 417,195 449,770
Average assets 466,062 489,814
Average non-interest bearing deposits 93,548 91,033
Average total deposits 343,741 362,512
Average interest-bearing liabilities 342,085 361,398
Average stockholder equity 27,911 34,581
Net interest margin (1) 3.13 % 3.86 %
Net income (loss) per share, basic $ (0.18 ) $ 0.08
Net income (loss) per share, diluted $ (0.18 ) $ 0.08
 
For The Six Months Ended:
Average loans $ 297,570 $ 322,986
Average earning assets 426,607 461,962
Average assets 467,100 501,238
Average non-interest bearing deposits 90,085 89,505
Average total deposits 340,439 359,888
Average interest-bearing liabilities 343,885 375,087
Average stockholder equity 30,710 34,102
Net interest margin (1) 3.08 % 3.82 %
Net income (loss) per share, basic $ (0.26 ) $ 0.15
Net income (loss) per share, diluted (0.26 ) 0.15
 
             
* Unaudited financial results

(1) On a fully-tax equivalent basis assuming a 34% federal tax rate.

 
 
ALLIANCE BANKSHARES CORPORATION
Consolidated Statistical Information
Credit Quality Information (1)
           
 
June 30, December 31, June 30,
2012*     2011 2011*
(Dollars in thousands)
Credit Quality Information:
Nonperforming assets:
Impaired loans (performing loans with a specific allowance) $ 4,369 $ 4,233 $ 1,249
Non-accrual loans 6,166 9,031 9,272
Loans past due 90 days and still accruing - - 408
Troubled debt restructured 900 957 749
OREO   4,031   3,748   4,312
Total nonperforming assets $ 15,466 $ 17,969 $ 15,990
 
 
Specific reserves associated with impaired & non-accrual loans $ 2,121 $ 2,271 $ 1,533
 
 
Largest components of the nonperforming assets listed above:
 
June 30, 2012 non-accrual loans (93% of the total)
$2.5 million secured by commercial real estate.
$2.2 million secured by residential land.
$2.2 million secured by a 17 unit condominium project.
$998 thousand secured by commercial land.
$923 thousand secured by commercial equipment and receivables.
$559 thousand secured by a residential property and lot.
$336 thousand secured by a residential building lot.
 
 
 
June 30, 2012 OREO (91% of the total)
$1.1 million which are residential lots in Stephens City, VA.
$963 thousand which is a residential property in Annandale, VA.
$879 thousand which is acreage in Woodstock, VA
$720 thousand which is acreage near Charles Town, WV.
 
                 
 

(1) The allowance for loan losses includes a specific allocation for all impaired loans. Nonperforming assets are defined as impaired loans, non-accrual loans, OREO, troubled debt restructured, and loans past due 90 days or more and still accruing interest.

 

* Unaudited financial results

 
 
ALLIANCE BANKSHARES CORPORATION
Consolidated Statistical Information
Credit Quality Information (1)
           

 

       
 
For The Six Months Ended: June 30, June 30,
2012*     2011*
(Dollars in thousands)
 
Balance, beginning of period $ 5,393 $ 5,281
 
Provision for loan losses 450 1,075
 
Loans charged off (821 ) (986 )
 
Recoveries of loans charged off   33     240  
 
Net charge-offs   (788 )   (746 )
 
Balance, end of period $ 5,055   $ 5,610  
 
 
 
 
June 30, March 31, December 31, September 30, June 30,
2012*     2012 2011* 2011*     2011*
Ratios:
Allowance for loan losses to total loans 1.7 % 1.71 % 1.76 % 1.62 % 1.75 %
 
Allowance for loan losses to non-accrual loans

 

0.48

X

 

0.45

X

0.41

X

0.49

X

0.53

X

 
Allowance for loan losses to nonperforming assets 27.2 % 29.6 % 30.0 % 33.9 % 35.1 %
 
Nonperforming assets to total assets 3.05 % 3.37 % 3.55 % 2.85 % 2.98 %
 
Net charge-offs to average loans 0.27 % 0.26 % 0.45 % 0.40 % 0.23 %
                                             
 
* Unaudited financial results
 

(1) The allowance for loan losses includes a specific allocation for all impaired loans. Nonperforming assets are defined as impaired loans, non-accrual loans, OREO, troubled debt restructured, and loans past due 90 days or more and still accruing interest.

 
 
ALLIANCE BANKSHARES CORPORATION
Consolidated Statistical Information
Trading Asset & Liability Summary
                             
 

June 30, 2012

December 31, 2011

Fair Fair
Trading Security                   Value     Yield     Value     Yield
(Dollars in thousands)
 
PCMO 1 $ 300 5.43 % $ 596 5.44 %
 
Total $ 300 5.40 % $ 596 5.44 %
                                               
 

1 As of June 30, 2012 trading securities consisted of one PCMO instrument. This PCMO was rated AAA by at least one ratings agency on the purchase date. Currently the security has a rating below investment grade. The instrument is currently performing as expected.

 
                 

June 30, 2012

December 31, 2011

Fair Fair
Fair Value Asset and Liabilities       Value           Value      
(Dollars in thousands)
 
Trading security $ 300 $ 596
 
FHLB advances $ 29,559 $ 29,350
 
 
* Unaudited financial results
 
 
ALLIANCE BANKSHARES CORPORATION
Consolidated Statistical Information
Capital Information
       
 
June 30, December 31,
2012*     2011
(Dollars in thousands, except per share)
 
Capital Information:
Book value per share $ 5.31 $ 5.50
Tier I risk-based capital ratio 11.8 % 12.3 %
Total risk-based capital ratio 13.4 % 13.8 %
Leverage capital ratio 7.7 % 7.4 %
Total equity to total assets ratio 5.3 % 5.6 %
 
 
* Unaudited financial results
 
 
ALLIANCE BANKSHARES CORPORATION
Components of Stockholder Equity
on a Book Value per Share Basis
           
 
Six Months Twelve Months Six Months
Ended June 30, Ended December 31, Ended June 30,
2012*     2011     2011*
Book Value Per Share, beginning of the period $ 5.50 $ 6.60 $ 6.60
 
Net income (loss) per common share (0.26 ) (1.17 ) 0.15
 

Effects of Changes in Other Comprehensive Income1

  0.07         0.07         0.25
 
Book Value Per Share, end of the period $ 5.31       $ 5.50       $ 7.00
 
* Unaudited financial results

1 Other Comprehensive Income represents the unrealized gains or losses associated with available-for-sale securities and the related reclassification adjustments.

Contacts

Alliance Bankshares Corporation
William E. Doyle, Jr., 703-814-7200

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Contacts

Alliance Bankshares Corporation
William E. Doyle, Jr., 703-814-7200