Alliance Bankshares Reports 2nd Quarter 2008 Results
Positive progress seen in non-performing assets
CHANTILLY, Va.--(BUSINESS WIRE)--Alliance Bankshares Corporation (NASDAQ – ABVA) today reported a second quarter loss of $1,088,000 which is a $990,000 improvement over the first quarter 2008 loss of $2,078,000. Much of this loss can be attributed to $566,000 in direct OREO expenses and a $610,000 increase in our loan loss provision. On a year to date basis, the organization had a net loss of $3,166,000. Despite the net loss, all regulatory capital ratios remain above the levels necessary to be considered a “well capitalized” institution.
“Needless to say, our management team is less than pleased with the performance levels as they are not reflective of our typical performance or long term expectations, however, we believe the second quarter results reflect several bright spots as we continue to deal with this very unusual and challenging real estate recession. During the quarter, we recorded a fair value gain of $166,000 which is a significant improvement over the first quarter fair value adjustment. This is the result of a restructuring of our balance sheet which has placed the company in a more balanced position relative to fair value. In addition, we sold several pieces of other real estate owned (OREO) which led to a reduction of nonperforming assets by $2.6MM and we have seen a more stable credit quality picture. Lastly, we continue to look closely at all of our expense areas and are making difficult decisions where necessary,” said Thomas A. Young, Jr., President & CEO.
Total loans declined by approximately $17.4 million from June 30, 2007 to June 30, 2008. Total loans were $372.2 million as of June 30, 2008. Total assets were $569.6 million as of June 30, 2008 or $11.5 million less than the June 30, 2007 position of $581.1 million or $28.3 million greater than the December 31, 2007 level of $541.3 million. The modest year over year reduction in assets was primarily the result of the previously reported plan to reduce our investment portfolio and our exposure to mortgage related securities.
Our non-interest bearing deposits decreased by $24.1 million over the past year. Total non-interest bearing deposits were $89.2 million or 20.9% of total deposits as of June 30, 2008. Our non-interest bearing deposits increased by $23 million or 34.8%, over the December 31, 2007 level of $66.2 million. The growth is coming from both existing clients and the expansion of our title and escrow services client base which has led to significant amount of new accounts during 2008. Our total deposits grew to $426.3 million as of June 30, 2008 or $37.0 million greater than the June 30, 2007 level of $389.3 and $61.0 million greater than the December 31, 2007 level of $365.3 million.
Total non-performing assets amounted to $21.9 million as of June 30, 2008 which is down $2.7 million from the March 31, 2008 level of $24.6 million and $2.4 million down from the December 31, 2007 level of $24.3 million. During the quarter we had success in moving two residential properties out of the non-performing assets. The attached schedule reflects the individual properties in the non-performing status. We have expressions of interest in several of the OREO properties and we expect potential contracts in the near term. We recognize several of the development projects may have longer resolution time horizons due to the current real estate slowdown.
“The board and management remain committed to the vision of performance improvement. The management team has taken a variety of proactive steps over the year to improve core performance. As the newspapers, newscasts and the internet reflect each day, this is one of the toughest economic cycles America has faced in a long time. Our management team is working diligently to reduce the levels of non-performing assets as fast as can be reasonably expected. We anticipate the levels of non-performing assets to drop in a systematic fashion over the coming quarters. Our base franchise is an excellent banking company located in one of the key metropolitan areas in the United States. As the economy improves the metropolitan Washington, DC area we will clearly benefit. The support of shareholders during these trying times is greatly appreciated, said Harvey E. Johnson, Jr., Chairman of the Board.
Some of the matters discussed herein may include forward-looking statements. These forward-looking statements may include statements regarding profitability, balance sheet management goals and actions and financial and other goals. These statements are based on certain assumptions and analyses by the company and other factors it believes are appropriate in the circumstances. However, the company's expectations are subject to a number of risks and uncertainties such as changes in personnel, interest rates, accounting standards, economic conditions and other factors that could cause actual results, events and developments to differ materially from those contemplated by any forward-looking statements herein. Consequently, all forwarding-looking statements made herein are qualified by these cautionary statements and cautionary language in the company's most recent report on Form 10-K and other documents filed with the Securities and Exchange Commission.
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More information on Alliance Bankshares Corporation can be found online at www.alliancebankva.com, or by phoning an Alliance office.
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| ALLIANCE BANKSHARES CORPORATION | ||||||||||||
| Consolidated Balance Sheets | ||||||||||||
| June 30, | December 31, | June 30, | ||||||||||
| 2008* | 2007 | 2007* | ||||||||||
| ASSETS | (Dollars in thousands) | |||||||||||
| Cash and due from banks | $ | 26,321 | $ | 10,121 | $ | 26,708 | ||||||
| Federal funds sold | 15,265 | 1,256 | 6,523 | |||||||||
| Trading securities, at fair value | 98,514 | 84,950 | 112,017 | |||||||||
| Investment securities available-for-sale, at fair value | 24,354 | 26,128 | 28,494 | |||||||||
| Investment securities held-to-maturity, at amortized cost | - | - | 100 | |||||||||
| Loans held for sale | 1,087 | 1,925 | 3,721 | |||||||||
| Loans, net of unearned discount and fees | 372,169 | 398,224 | 389,575 | |||||||||
| Less: allowance for loan losses | (5,502 | ) | (6,411 | ) | (4,899 | ) | ||||||
| Loans, net | 366,667 | 391,813 | 384,676 | |||||||||
| Premises and equipment, net | 2,073 | 2,106 | 2,247 | |||||||||
| Other real estate owned (OREO) | 14,495 | 4,277 | 367 | |||||||||
| Goodwill and intangibles | 6,368 | 6,338 | 6,318 | |||||||||
| Other assets | 14,418 | 12,348 | 9,949 | |||||||||
| TOTAL ASSETS | $ | 569,562 | $ | 541,262 | $ | 581,120 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||
| Non-interest bearing deposits | $ | 89,173 | $ | 66,152 | $ | 113,332 | ||||||
| Interest-bearing deposits ($78,964, $110,665 and $97,620 at fair value) | 337,102 | 299,112 | 275,957 | |||||||||
| Total deposits | 426,275 | 365,264 | 389,289 | |||||||||
| Repurchase agreements, federal funds purchased and other borrowings | 35,075 | 38,203 | 50,165 | |||||||||
| Federal Home Loan Bank advances ($25,871, $76,615 and $74,671 at fair value) | 50,871 | 76,615 | 74,671 | |||||||||
| Trust Preferred Capital Notes | 10,310 | 10,310 | 10,310 | |||||||||
| Other liabilities | 4,752 | 5,137 | 4,025 | |||||||||
| Commitments and contingent liabilities | - | - | - | |||||||||
| TOTAL LIABILITIES | 527,283 | 495,529 | 528,460 | |||||||||
| Common stock, $4 par value; 15,000,000 shares authorized; | 20,427 | 20,427 | 21,524 | |||||||||
| 5,106,819, 5,106,819 and 5,380,981 shares issued and outstanding at June 30, 2008, December 31, 2007 and June 30, 2007, respectively. | ||||||||||||
| Capital surplus | 25,223 | 25,082 | 27,115 | |||||||||
| Retained earnings (deficit) | (2,766 | ) | 400 | 4,455 | ||||||||
| Accumulated other comprehensive (loss), net | (605 | ) | (176 | ) | (434 | ) | ||||||
| TOTAL STOCKHOLDERS' EQUITY | 42,279 | 45,733 | 52,660 | |||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 569,562 | $ | 541,262 | $ | 581,120 | ||||||
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* Unaudited financial results |
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| 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, | |||||||||||||||||
| 2008* | 2007* | 2008* | 2007* | |||||||||||||||||
| (Dollars in thousands, except per share) | ||||||||||||||||||||
| INTEREST INCOME: | ||||||||||||||||||||
| Loans | $ | 5,972 | $ | 7,877 | $ | 12,213 | $ | 15,619 | ||||||||||||
| Investment securities | 298 | 338 | 597 | 686 | ||||||||||||||||
| Trading securities | 987 | 1,525 | 2,096 | 3,393 | ||||||||||||||||
| Federal funds sold | 40 | 21 | 86 | 102 | ||||||||||||||||
| Total interest income | 7,297 | 9,761 | 14,992 | 19,800 | ||||||||||||||||
| INTEREST EXPENSE: | ||||||||||||||||||||
| Deposits | 3,335 | 2,965 | 6,594 | 6,028 | ||||||||||||||||
| Purchased funds and other borrowings | 807 | 2,236 | 2,074 | 4,479 | ||||||||||||||||
| Total interest expense | 4,142 | 5,201 | 8,668 | 10,507 | ||||||||||||||||
| Net interest income | 3,155 | 4,560 | 6,324 | 9,293 | ||||||||||||||||
| Provision for loan losses | 610 | 580 | 1,160 | 885 | ||||||||||||||||
| Net interest income after provision for loan losses | 2,545 | 3,980 | 5,164 | 8,408 | ||||||||||||||||
| OTHER INCOME: | ||||||||||||||||||||
| Insurance commissions | 753 | 928 | 1,816 | 1,824 | ||||||||||||||||
| Deposit account service charges | 66 | 67 | 144 | 177 | ||||||||||||||||
| Gain on sale of loans | 32 | 223 | 92 | 883 | ||||||||||||||||
| Net gain on sale of securities | 8 | - | 10 | 72 | ||||||||||||||||
| Trading activity and fair value adjustments | 166 | (784 | ) | (2,389 | ) | (641 | ) | |||||||||||||
| Other operating income | 24 | 37 | 67 | 90 | ||||||||||||||||
| Total other income | 1,049 | 471 | (260 | ) | 2,405 | |||||||||||||||
| OTHER EXPENSES: | ||||||||||||||||||||
| Salaries and employee benefits | 2,131 | 2,195 | 4,425 | 4,578 | ||||||||||||||||
| Occupancy expense | 546 | 461 | 1,091 | 971 | ||||||||||||||||
| Equipment expense | 242 | 258 | 477 | 508 | ||||||||||||||||
| Operating expenses | 2,424 | 1,580 | 3,814 | 3,036 | ||||||||||||||||
| Total other expenses | 5,343 | 4,494 | 9,807 | 9,093 | ||||||||||||||||
| INCOME (LOSS) BEFORE INCOME TAXES | (1,749 | ) | (43 | ) | (4,903 | ) | 1,720 | |||||||||||||
| Income tax expense (benefit) | (661 | ) | (47 | ) | (1,737 | ) | 509 | |||||||||||||
| NET INCOME (LOSS) | $ | (1,088 | ) | $ | 4 | $ | (3,166 | ) | $ | 1,211 | ||||||||||
| Net income (loss) per common share, basic | $ | (0.21 | ) | $ | 0.00 | $ | (0.62 | ) | $ | 0.22 | ||||||||||
| Net income (loss) per common share, diluted | $ | (0.21 | ) | $ | 0.00 | $ | (0.62 | ) | $ | 0.21 | ||||||||||
| Weighted average number of shares, basic | 5,106,819 | 5,525,720 | 5,106,819 | 5,538,599 | ||||||||||||||||
| Weighted average number of shares, diluted | 5,106,819 | 5,837,885 | 5,106,819 | 5,881,570 | ||||||||||||||||
| * Unaudited financial results | ||||||||||||||||||||
| ALLIANCE BANKSHARES CORPORATION | ||||||||
| Consolidated Statistical Information | ||||||||
| Performance Information | ||||||||
| June 30, | June 30, | |||||||
| 2008* | 2007* | |||||||
| (Dollars in thousands, except per share) | ||||||||
| Performance Information: | ||||||||
| For The Three Months Ended: | ||||||||
| Average loans | $ | 375,545 | $ | 399,047 | ||||
| Average earning assets | 502,857 | 556,224 | ||||||
| Average assets | 558,105 | 584,642 | ||||||
| Average non-interest bearing deposits | 69,049 | 86,408 | ||||||
| Average total deposits | 396,373 | 351,074 | ||||||
| Average interest-bearing liabilities | 443,079 | 442,084 | ||||||
| Average equity | 43,612 | 54,743 | ||||||
| Return on average assets | NM | 0.00 | % | |||||
| Return on average equity | NM | 0.03 | % | |||||
| Net interest margin (1) | 2.59 | % | 3.34 | % | ||||
| Earnings per share, basic | $ | (0.21 | ) | $ | 0.00 | |||
| Earnings per share, diluted | (0.21 | ) | 0.00 | |||||
| For The Six Months Ended: | ||||||||
| Average loans | $ | 382,565 | $ | 394,313 | ||||
| Average earning assets | 505,234 | 572,684 | ||||||
| Average assets | 552,526 | 603,763 | ||||||
| Average non-interest bearing deposits | 67,186 | 93,163 | ||||||
| Average total deposits | 383,230 | 367,897 | ||||||
| Average interest-bearing liabilities | 437,807 | 451,067 | ||||||
| Average equity | 44,319 | 55,117 | ||||||
| Return on average assets | NM | 0.40 | % | |||||
| Return on average equity | NM | 4.43 | % | |||||
| Net interest margin (1) | 2.58 | % | 3.33 | % | ||||
| Earnings per share, basic (2) | $ | (0.62 | ) | $ | 0.22 | |||
| Earnings per share, diluted (2) | (0.62 | ) | 0.21 | |||||
| * Unaudited financial results | ||||||||
| (1) On a fully-tax equivalent basis assuming a 34% federal tax rate. | ||||||||
| NM = Not Meaningful | ||||||||
| ALLIANCE BANKSHARES CORPORATION | ||||||||||||
| Consolidated Statistical Information | ||||||||||||
| Credit Quality Information | ||||||||||||
| June 30, | March 31, | December 31, | June 30, | |||||||||
| 2008* | 2008* | 2007 | 2007* | |||||||||
| (Dollars in thousands) | ||||||||||||
| Credit Quality Information: | ||||||||||||
| Nonperforming assets: | ||||||||||||
| Impaired loans (performing loans with a specific allowance) | $ | 4,616 | $ | 6,385 | $ | 2,928 | $ | 1,555 | ||||
| Non-accrual loans | 2,834 | 4,009 | 17,082 | 3,352 | ||||||||
| OREO | 14,495 | 14,200 | 4,277 | 367 | ||||||||
| Total nonperforming assets & past due loans | $ | 21,945 | $ | 24,594 | $ | 24,287 | $ | 5,274 | ||||
| Specific reserves associated with impaired loans | $ | 1,283 | $ | 1,262 | $ | 2,163 | $ | 441 | ||||
| Largest components of the nonperforming assets listed above: | ||||||||||||
| June 30, 2008 impaired loans (94.6% of the total) | ||||||||||||
| $2.6 million which is a single family residence under construction in Northern Virginia. | ||||||||||||
| $932 thousand which is a first and second trust on an office condominium in Northern Virginia. | ||||||||||||
| $837 thousand which is a commercial office property in Fredericksbury, Virginia. | ||||||||||||
| June 30, 2008 non-accrual loans (100% of the total) | ||||||||||||
| $1.2 million which is a series of equipment loans and a line of credit to a single borrower involved in real estate development activities. (Impaired at $1.6 million as of 3/31/08) | ||||||||||||
| $962 thousand to six borrowers which are consumer HELOCs. | ||||||||||||
| $679 thousand which is secured by a commercial building and assets of a retail hardware and lumber company. | ||||||||||||
| June 30, 2008 OREO (98% of the total) | ||||||||||||
| $3.5 million which consists of three land loans all to one borrower in Northern Virginia. (Non-accrual as of 12/31/07; OREO 3/31/08) | ||||||||||||
| $2.6 million on building lots in Northern Virginia. (Non-accrual as of 12/31/07;OREO 3/31/08) | ||||||||||||
| $2.3 million which is farmland/development acreage in the Winchester Virginia area. (Non-accrual as of 12/31/07;OREO 3/31/08) | ||||||||||||
| $2.1 million which is secured by residential building lots in Northern Virginia. (Non-accrual as of 3/31/08; OREO 6/30/08) | ||||||||||||
| $2.0 million secured by a completed available for sale single family residence | ||||||||||||
| in Northern Virginia. (Non-accrual as of 12/31/07;OREO 3/31/08) | ||||||||||||
| $675 thousand which is a single family residence in Northern Virginia. (OREO as of 6/30/08) | ||||||||||||
| $585 thousand which is a two unit office condominium in Richmond, Virginia. (OREO as of 12/31/07) | ||||||||||||
| $435 thousand which is a single family residence for sale in Fredericksburg, Virginia. (OREO as of 12/31/07) | ||||||||||||
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ALLIANCE BANKSHARES CORPORATION |
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Consolidated Statistical Information |
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Credit Quality Information |
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| For The Six Months Ended: | June 30, | June 30, | ||||||
| 2008* | 2007* | |||||||
| (Dollars in thousands) | ||||||||
| Balance, beginning of period | $ | 6,411 | $ | 4,377 | ||||
| Provision for loan losses | 1,160 | 885 | ||||||
| Loans charged off | (2,269 | ) | (420 | ) | ||||
| Recoveries of loans charged off | 200 | 57 | ||||||
| Net charge-offs | (2,069 | ) | (363 | ) | ||||
| Balance, end of period | $ | 5,502 | $ | 4,899 | ||||
| June 30, | March 31, | December 31, | June 30, | |||||
| 2008* | 2008* | 2007 | 2007* | |||||
| Ratios: | ||||||||
| Allowance for loan losses to total loans | 1.48% | 1.43% | 1.61% | 1.26% | ||||
| Allowance for loan losses to non-accrual loans | 1.9X | 1.4X | 0.4X | 1.5X | ||||
| Allowance for loan losses to nonperforming assets | 0.3X | 0.2X | 0.3X | 0.9X | ||||
| Nonperforming assets to total assets | 3.85% | 4.44% | 4.48% | 0.91% | ||||
| Net charge-offs to average loans | 0.54% | 0.40% | 0.95% | 0.09% | ||||
| * 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 and loans past due 90 days or more and still accruing interest. | ||||||||
| ALLIANCE BANKSHARES CORPORATION | ||||||||||||||||||
| Consolidated Statistical Information | ||||||||||||||||||
| Trading Asset & Liability Summary | ||||||||||||||||||
| June 30, 2008 | December 31, 2007 | June 30, 2007 | ||||||||||||||||
| Fair | Fair | Fair | ||||||||||||||||
| Trading Securities | Value | Yield | Value | Yield | Value | Yield | ||||||||||||
| (Dollars in thousands) | ||||||||||||||||||
| U.S. government corporations & agencies | $ | 46,037 | 5.42 | % | $ | 19,547 | 6.11 | % | $ | 19,623 | 4.87 | % | ||||||
| U.S. government CMOs | - | 0.00 | % | - | 0.00 | % | 9,810 | 4.47 | % | |||||||||
| U.S. government MBS | - | 0.00 | % | - | 0.00 | % | 6,570 | 4.20 | % | |||||||||
| PCMOs 1 | 13,159 | 5.39 | % | 20,669 | 5.33 | % | 43,102 | 5.23 | % | |||||||||
| SBA securities 2 | 39,318 | 3.14 | % | 44,734 | 5.65 | % | 32,912 | 6.15 | % | |||||||||
| Totals | $ | 98,514 | 4.55 | % | $ | 84,950 | 5.68 | % | $ | 112,017 | 5.28 | % | ||||||
| 1 All PCMOs are rated AAA by Moody's, S&P or Fitch. | ||||||||||||||||||
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2 SBA securities are U.S. government agency securities. For presentation purposes they are separated out on the table above. |
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| June 30, 2008 | December 31, 2007 | June 30, 2007 | ||||||||||||||||
| Fair | Fair | Fair | ||||||||||||||||
| Fair Value Assets and Liabilities | Value | Value | Value | |||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||
| Trading securities | $ | 98,514 | $ | 84,950 | $ | 112,017 | ||||||||||||
| Interest-bearing deposits (brokered certificates of deposit) | $ | 78,964 | $ | 110,665 | $ | 97,620 | ||||||||||||
| FHLB advances | 25,871 | 76,615 | 74,671 | |||||||||||||||
| Total fair value liabilities | $ | 104,835 | $ | 187,280 | $ | 172,291 | ||||||||||||
| ALLIANCE BANKSHARES CORPORATION | ||||||||||||
| Consolidated Statistical Information | ||||||||||||
| Capital Information | ||||||||||||
| June 30, | December 31, | June 30, | ||||||||||
| 2008* | 2007 | 2007* | ||||||||||
| (Dollars in thousands, except per share) | ||||||||||||
| Capital Information: | ||||||||||||
| Book value per share | $ | 8.28 | $ | 8.96 | $ | 9.79 | ||||||
| Tier I risk-based capital ratio | 10.5 | % | 11.7 | % | 12.7 | % | ||||||
| Total risk-based capital ratio | 11.7 | % | 12.9 | % | 13.8 | % | ||||||
| Leverage capital ratio | 8.4 | % | 9.0 | % | 9.7 | % | ||||||
| Total equity to total assets ratio | 7.4 | % | 8.5 | % | 9.1 | % | ||||||
| * Unaudited financial results | ||||||||||||
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