Alliance Bankshares 3rd Quarter 2009 Results
Continued Progress in Reducing Nonperforming Assets; Positive Improvements in the Net Interest Margin; Strong Deposit Growth Seen in 2009
CHANTILLY, Va.--(BUSINESS WIRE)--Alliance Bankshares Corporation (NASDAQ:ABVA) today reported a third quarter loss of $896 thousand compared to the third quarter 2008 loss of $2.4 million. On a year-to-date basis the company reported a net loss of $1.9 million compared to a loss of $5.5 million for the same period in 2008. Despite the net loss, all regulatory capital ratios remain above the levels necessary to be considered a “well capitalized” institution.
“Our results, although improving, reflect the reality of where we are in the credit cycle. At the same time, the key drivers of our return to profitability are improving: a rising net interest margin, successful deposit gathering initiatives, well contained non-interest expense and declining levels of non-performing assets. Our team remains focused on the financial strategies we believe will return us to profitability,” said Thomas A. Young, Jr., President & CEO.
“The third quarter 2009 net interest margin improved to 3.01% and for the full year 2009 the net interest margin rose to 2.87%. Demand deposits were $120.9 million as of September 30, 2009, up over 60% since December 31, 2008. Non-interest expenses for the third quarter 2009 increased by a nominal 1.1% over the third quarter 2008 levels, while absorbing a variety of nonrecurring expenses. Nonperforming assets decreased to $14.6 million or 2.30% of total assets. Improving these performance metrics remains the primary focus of the management team,” he continued.
In accordance with the long term plan, management has made significant progress on a number of strategies:
- As part of the strategic initiative to reduce certain loan concentrations and adjust the portfolio mix, the loan portfolio declined from the December 31, 2008 level of $367.4 million to the September 30, 2009 level of $355.5 million. Meaningful reductions have been achieved in construction loans, land loans and HELOCs.
- The plan called for a significant reduction in trading assets. At September 30, 2009, trading assets amounted to $10.9 million or $71.7 million lower than the December 31, 2008 level of $82.6 million. Remaining are five private label collateralized mortgage obligations with a fair value of $4.3 million that are expected to cashflow out and a four agency callable bonds with a fair value of $6.6 million.
- Core deposit initiatives have resulted in growing total deposits to $501.9 million as of September 30, 2009 compared to $428.7 million as of December 31, 2008. As of September 30, 2009, demand deposits represented 24.1% of total deposits up from the 17.6% as of December 31, 2008.
“One can never predict with certainty when recessions will start or end. The management team and the board of directors remain focused on taking action that will add long-term franchise value yet managing through the current recession. The recent third quarter GDP announcement may serve as an indicator that the recession is nearing the end. As we continually decrease our exposure to nonperforming assets, improve our funding mix and net interest margin and take a careful approach towards overhead costs, we believe the foundation for the future is positive. We thank you for your continuous support in the most challenging banking environment since the great depression,” said William M. Drohan, Chairman of the Board of Directors.
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.
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 | ||||||||||||
|
September 30, |
December 31, | September 30, | ||||||||||
| 2009* | 2008 | 2008* | ||||||||||
| ASSETS | (Dollars in thousands) | |||||||||||
| Cash and due from banks | $ | 72,711 | $ | 12,205 | $ | 25,211 | ||||||
| Federal funds sold | 35,249 | 5,050 | 12,976 | |||||||||
| Trading securities, at fair value | 10,893 | 82,584 | 89,386 | |||||||||
| Investment securities available-for-sale, at fair value | 133,327 | 73,303 | 21,793 | |||||||||
| Loans held for sale | 589 | 347 | 989 | |||||||||
| Loans, net of unearned discount and fees | 355,500 | 367,371 | 370,768 | |||||||||
| Less: allowance for loan losses | (5,295 | ) | (5,751 | ) | (6,000 | ) | ||||||
| Loans, net | 350,205 | 361,620 | 364,768 | |||||||||
| Premises and equipment, net | 2,153 | 1,888 | 1,861 | |||||||||
| Other real estate owned (OREO) | 9,808 | 11,749 | 13,379 | |||||||||
| Intangible assets | 2,016 | 2,331 | 2,415 | |||||||||
| Goodwill | 3,569 | 3,569 | 3,869 | |||||||||
| Other assets | 15,210 | 18,203 | 16,172 | |||||||||
| TOTAL ASSETS | $ | 635,730 | $ | 572,849 | $ | 552,819 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||
| Non-interest bearing deposits | $ | 120,941 | $ | 75,448 | $ | 74,167 | ||||||
| Interest-bearing deposits ($9,233, $24,180 and $41,329 at fair value) | 380,943 | 353,276 | 327,281 | |||||||||
| Total deposits | 501,884 | 428,724 | 401,448 | |||||||||
| Repurchase agreements, federal funds purchased and other borrowings | 32,907 | 40,711 | 46,318 | |||||||||
| Federal Home Loan Bank advances ($25,908, $26,361 and $26,111 at fair value) | 50,908 | 51,361 | 51,111 | |||||||||
| Trust Preferred Capital Notes | 10,310 | 10,310 | 10,310 | |||||||||
| Other liabilities | 3,387 | 4,576 | 4,379 | |||||||||
| Commitments and contingent liabilities | - | - | - | |||||||||
| TOTAL LIABILITIES | 599,396 | 535,682 | 513,566 | |||||||||
|
Common stock, $4 par value; 15,000,000 shares authorized; 5,106,819, 5,106,819 and 5,106,819 shares issued and outstanding at September 30, 2009, December 31, 2008 and September 30, 2008, respectively. |
20,427 | 20,427 | 20,427 | |||||||||
| Capital surplus | 25,724 | 25,364 | 25,293 | |||||||||
| Retained earnings (deficit) | (10,488 | ) | (8,620 | ) | (5,137 | ) | ||||||
| Accumulated other comprehensive income (loss), net | 671 | (4 | ) | (1,330 | ) | |||||||
| TOTAL STOCKHOLDERS' EQUITY | 36,334 | 37,167 | 39,253 | |||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 635,730 | $ | 572,849 | $ | 552,819 | ||||||
| * Unaudited financial results | ||||||||||||
| ALLIANCE BANKSHARES CORPORATION | ||||||||||||||||
| Consolidated Income Statements | ||||||||||||||||
| Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | |||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2009* | 2008* | 2009* | 2008* | |||||||||||||
| (Dollars in thousands, except per share) | ||||||||||||||||
| INTEREST INCOME: | ||||||||||||||||
| Loans | $ | 5,319 | $ | 5,897 | $ | 15,781 | $ | 18,110 | ||||||||
| Trading securities | 242 | 986 | 1,345 | 3,082 | ||||||||||||
| Investment securities | 1,719 | 253 | 4,333 | 850 | ||||||||||||
| Federal funds sold | 16 | 28 | 44 | 114 | ||||||||||||
| Total interest income | 7,296 | 7,164 | 21,503 | 22,156 | ||||||||||||
| INTEREST EXPENSE: | ||||||||||||||||
| Deposits | 2,670 | 3,166 | 8,220 | 9,760 | ||||||||||||
| Purchased funds and other borrowings | 516 | 788 | 1,652 | 2,862 | ||||||||||||
| Total interest expense | 3,186 | 3,954 | 9,872 | 12,622 | ||||||||||||
| Net interest income | 4,110 | 3,210 | 11,631 | 9,534 | ||||||||||||
| Provision for loan losses | 1,421 | 2,200 | 2,695 | 3,360 | ||||||||||||
| Net interest income after provision for loan losses | 2,689 | 1,010 | 8,936 | 6,174 | ||||||||||||
| OTHER INCOME: | ||||||||||||||||
| Insurance commissions | 611 | 681 | 2,301 | 2,497 | ||||||||||||
| Deposit account service charges | 75 | 65 | 218 | 209 | ||||||||||||
| Gain on sale of loans | 12 | 29 | 87 | 121 | ||||||||||||
| Net gain on sale of securities | 507 | (56 | ) | 1,370 | (46 | ) | ||||||||||
| Trading activity and fair value adjustments | (4 | ) | (142 | ) | (143 | ) | (2,531 | ) | ||||||||
| Other operating income | 47 | 24 | 94 | 91 | ||||||||||||
| Total other income (loss) | 1,248 | 601 | 3,927 | 341 | ||||||||||||
| OTHER EXPENSES: | ||||||||||||||||
| Salaries and employee benefits | 2,156 | 2,270 | 6,534 | 6,695 | ||||||||||||
| Occupancy expense | 661 | 623 | 1,933 | 1,714 | ||||||||||||
| Equipment expense | 238 | 254 | 682 | 731 | ||||||||||||
| Other real estate owned expense | 519 | 715 | 1,134 | 1,289 | ||||||||||||
| Operating expenses | 1,748 | 1,400 | 5,456 | 4,640 | ||||||||||||
| Total other expenses | 5,322 | 5,262 | 15,739 | 15,069 | ||||||||||||
| INCOME (LOSS) BEFORE INCOME TAXES | (1,385 | ) | (3,651 | ) | (2,876 | ) | (8,554 | ) | ||||||||
| Income tax expense (benefit) | (489 | ) | (1,280 | ) | (1,008 | ) | (3,017 | ) | ||||||||
| NET INCOME (LOSS) | $ | (896 | ) | $ | (2,371 | ) | $ | (1,868 | ) | $ | (5,537 | ) | ||||
| Net income (loss) per common share, basic | $ | (0.18 | ) | $ | (0.46 | ) | $ | (0.37 | ) | $ | (1.08 | ) | ||||
| Net income (loss) per common share, diluted | $ | (0.18 | ) | $ | (0.46 | ) | $ | (0.37 | ) | $ | (1.08 | ) | ||||
| Weighted average number of shares, basic | 5,106,819 | 5,106,819 | 5,106,819 | 5,106,819 | ||||||||||||
| Weighted average number of shares, diluted | 5,106,819 | 5,106,819 | 5,106,819 | 5,106,819 | ||||||||||||
| * Unaudited financial results | ||||||||||||||||
| ALLIANCE BANKSHARES CORPORATION | ||||||||
| Consolidated Statistical Information | ||||||||
| Performance Information | ||||||||
| September 30, | September 30, | |||||||
| 2009* | 2008* | |||||||
| (Dollars in thousands, except per share) | ||||||||
| Performance Information: | ||||||||
| For The Three Months Ended: | ||||||||
| Average loans | $ | 357,196 | $ | 371,206 | ||||
| Average earning assets | 552,103 | 494,278 | ||||||
| Average assets | 600,098 | 548,307 | ||||||
| Average non-interest bearing deposits | 100,753 | 65,432 | ||||||
| Average total deposits | 468,596 | 387,156 | ||||||
| Average interest-bearing liabilities | 461,199 | 438,462 | ||||||
| Average equity | 35,409 | 41,828 | ||||||
| Net interest margin (1) | 3.01 | % | 2.65 | % | ||||
| Earnings per share, basic | $ | (0.18 | ) | $ | (0.46 | ) | ||
| Earnings per share, diluted | (0.18 | ) | (0.46 | ) | ||||
| For The Nine Months Ended: | ||||||||
| Average loans | $ | 362,480 | $ | 378,751 | ||||
| Average earning assets | 552,455 | 501,555 | ||||||
| Average assets | 598,341 | 551,037 | ||||||
| Average non-interest bearing deposits | 96,540 | 66,597 | ||||||
| Average total deposits | 451,356 | 384,548 | ||||||
| Average interest-bearing liabilities | 462,707 | 438,027 | ||||||
| Average equity | 36,294 | 43,482 | ||||||
| Net interest margin (1) | 2.87 | % | 2.60 | % | ||||
| Earnings per share, basic (2) | $ | (0.37 | ) | $ | (1.08 | ) | ||
| Earnings per share, diluted (2) | (0.37 | ) | (1.08 | ) | ||||
| * 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) | |||||||||
| September 30, | December 31, | September 30, | |||||||
| 2009* | 2008 | 2008* | |||||||
| (Dollars in thousands) | |||||||||
| Credit Quality Information: | |||||||||
| Nonperforming assets: | |||||||||
| Impaired loans (performing loans with a specific allowance) | $ | 541 | $ | 1,428 | $ | 6,082 | |||
| Non-accrual loans | 4,277 | 3,467 | 2,803 | ||||||
| OREO | 9,808 | 11,749 | 13,379 | ||||||
| Total nonperforming assets & past due loans | $ | 14,626 | $ | 16,644 | $ | 22,264 | |||
| Specific reserves associated with impaired & non-accrual loans | $ | 1,312 | $ | 1,148 | $ | 1,714 | |||
| Largest components of the nonperforming assets listed above: |
| September 30, 2009 impaired loans (100% of the total) |
| $541 thousand on building lots in Northern Virginia. |
| September 30, 2009 non-accrual loans (93.9% of the total) |
| $1.7 million which is secured by 1-4 family residential properties to a variety of borrowers. |
| $783 thousand which is secured by business assets in Northern Virginia. |
| $655 thousand on building lots in Northern Virginia. |
| $400 thousand which is secured by a commercial real estate property in Winchester, Virginia. |
| (Non-accrual as of 3/31/09) |
| $373 thousand which is secured by a residential condominium project in Virginia Beach, Virginia. |
| (Non-accrual as of 9/30/08) |
| $130 thousand which is a consumer HELOCs to one borrower. |
| September 30, 2009 OREO (95.0% of the total) |
| $2.6 million which is multi-family land in Northern Virginia. |
| (OREO as of 9/30/09) |
| $2.1 million which is farmland/development acreage in the Winchester Virginia area. |
| (OREO as of 3/31/08) |
| $1.4 million which is residential building lots in Northern Virginia. |
| (OREO as of 6/30/08) |
| $1.2 million on building lots in Northern Virginia. |
| (OREO as of 3/31/08) |
| $911 thousand which consists of two parcels of land in Northern Virginia. |
| (OREO as of 3/31/08) |
| $667 thousand which is two office condominium units in Northern Virginia. |
| (OREO as of 3/31/09; sold in October 2009) |
| $527 thousand which is a two unit office condominium in Richmond, Virginia. |
| (OREO as of 12/31/07) |
| * 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 | ||||||||
| Credit Quality Information (1) | ||||||||
| For The Nine Months Ended: | September 30, | September 30, | ||||||
| 2009* | 2008* | |||||||
| (Dollars in thousands) | ||||||||
| Balance, beginning of period | $ | 5,751 | $ | 6,411 | ||||
| Provision for loan losses | 2,695 | 3,360 | ||||||
| Loans charged off | (3,289 | ) | (4,242 | ) | ||||
| Recoveries of loans charged off | 138 | 471 | ||||||
| Net charge-offs | (3,151 | ) | (3,771 | ) | ||||
| Balance, end of period | $ | 5,295 | $ | 6,000 | ||||
| September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||
| 2009* | 2009* | 2009* | 2008 | 2008* | |||||||||||
| Ratios: | |||||||||||||||
| Allowance for loan losses to total loans | 1.49 | % | 1.47 | % | 1.42 | % | 1.57 | % | 1.62 | % | |||||
| Allowance for loan losses to non-accrual loans | 1.2X | 0.9X | 2.3X | 1.7X | 2.1X | ||||||||||
| Allowance for loan losses to nonperforming assets | 0.4X | 0.3X | 0.4X | 0.3X | 0.3X | ||||||||||
| Nonperforming assets to total assets | 2.30 | % | 2.41 | % | 2.42 | % | 2.91 | % | 4.03 | % | |||||
| Net charge-offs to average loans | 0.88 | % | 0.50 | % | 0.30 | % | 1.43 | % | 1.00 | % | |||||
|
* 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 | ||||||||||||||||||||
| September 30, 2009 | December 31, 2008 | September 30, 2008 | ||||||||||||||||||
| Fair | Fair | Fair | ||||||||||||||||||
| Trading Securities | Value | Yield | Value | Yield | Value | Yield | ||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||
| U.S. government corporations & agencies | $ | 6,562 | 5.18 | % | $ | 35,947 | 5.25 | % | $ | 40,292 | 5.32 | % | ||||||||
| PCMOs 1 | 4,331 | 5.36 | % | 12,251 | 5.42 | % | 12,569 | 5.40 | % | |||||||||||
| SBA securities 2 | - | 0.00 | % | 34,386 | 2.99 | % | 36,525 | 3.03 | % | |||||||||||
| Totals | $ | 10,893 | 5.26 | % | $ | 82,584 | 4.37 | % | $ | 89,386 | 4.44 | % | ||||||||
| 1 All PCMOs were rated AAA by at least one service on the purchase date. The current portfolio has a variety of ratings. | ||||||||||||||||||||
| All instruments are performing as expected. | ||||||||||||||||||||
|
2 SBA securities are U.S. government agency securities. For presentation purposes they are separated out on the table above. |
||||||||||||||||||||
| September 30, 2009 | December 31, 2008 | September 30, 2008 | ||||||||||||||||||
| Fair | Fair | Fair | ||||||||||||||||||
| Fair Value Assets and Liabilities | Value | Value | Value | |||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||
| Trading securities | $ | 10,893 | $ | 82,584 | $ | 89,386 | ||||||||||||||
| Interest-bearing deposits (brokered certificates of deposit) | $ | 9,233 | $ | 24,180 | $ | 41,329 | ||||||||||||||
| FHLB advances | 25,908 | 26,361 | 26,111 | |||||||||||||||||
| Total fair value liabilities | $ | 35,141 | $ | 50,541 | $ | 67,440 | ||||||||||||||
| ALLIANCE BANKSHARES CORPORATION | ||||||||||||
| Consolidated Statistical Information | ||||||||||||
| Capital Information | ||||||||||||
| September 30, | December 31, | September 30, | ||||||||||
| 2009* | 2008 | 2008* | ||||||||||
| (Dollars in thousands, except per share) | ||||||||||||
| Capital Information: | ||||||||||||
| Book value per share | $ | 7.11 | $ | 7.28 | $ | 7.69 | ||||||
| Tier I risk-based capital ratio | 10.0 | % | 9.6 | % | 10.0 | % | ||||||
| Total risk-based capital ratio | 11.2 | % | 10.9 | % | 11.3 | % | ||||||
| Leverage capital ratio | 6.7 | % | 7.6 | % | 8.2 | % | ||||||
| * Unaudited financial results | ||||||||||||
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