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Central Virginia Bankshares Reports Third Quarter 2012 Financial Results

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POWHATAN, Va., Oct. 31, 2012 /PRNewswire/ -- Central Virginia Bankshares, Inc. (OTC: CVBK) and Central Virginia Bank announced that the Company recorded net income of $185 thousand for the third quarter of 2012, and after the effect of unpaid dividends of $161 thousand on preferred stock, net income available to common shareholders totaled $24 thousand or $0.01 per basic and diluted share.  This compares to third quarter of 2011 net income of $307 thousand, and after the effect of dividends of $161 thousand on preferred stock, net income available to common shareholders of $146 thousand or $0.05 per basic and diluted share.

For the nine months ended September 30, 2012, the Company recorded net income of $694 thousand, and after the effect of the unpaid preferred stock dividends of $481 thousand, net income available to common shareholders totaled $212 thousand or $0.08 per basic and diluted share.  This compares to the nine months ended September 30, 2011 net income of $658 thousand, and after the effect of unpaid preferred stock dividends of $481 thousand, a net income available to common shareholders of $177 thousand or $0.07 per basic and diluted share.

Herbert Marth, President and Chief Executive Officer commented that "CVBK's performance in the third quarter continued to strengthen the financial position of the Bank. Our results over the past several quarters have been steady as we progress through this slow growth economy. Strategically managing the risk in our investment and loan portfolios has contributed significantly to our "well capitalized" status, for regulatory purposes, at September 30, 2012. The Bank's continued commitment to developing and enhancing customer service and building strong customer relationships has resulted in 9% growth of our average core deposits over the past year."

Balance Sheet
The Company has successfully taken steps to restructure its balance sheet by reducing the risk in the investment portfolio and reducing the size of the loan portfolio, thereby improving its risk adjusted regulatory capital position. Due to the balance sheet improvements and increased profitability of the Company, the Bank has seen its total risk based capital ratio improve to 11.3% at September 30, 2012 from 9.4% at September 30, 2011. 

The following table provides information regarding the changes in the Company's average balances:

 

Dollars in 000's

Average Balances for the Three Months Ended


September 30, 2012

September 30, 2011

Percent Change





Investment securities(1)

$147,155

$115,222

28%

Loans

201,184

237,566

(15)%

Federal funds sold

9,438

19,123

(51)%

Average earning assets(1)

357,777

371,911

(4)%

Average assets

386,658

402,862

(4)%

Interest bearing deposits (2)

144,059

134,190

7%

Certificate of deposits

140,885

169,258

(17)%

Non-interest bearing deposits

38,299

34,963

10%

Borrowings

45,155

46,984

(4)%

Shareholders' equity

14,782

14,036

5%





(1) Average balances exclude market value adjustments

(2) Interest bearing deposits consist of interest checking, money market and savings account.

 


Dollars in 000's

Average Balances for the Nine Months Ended


September 30, 2012

September 30, 2011

Percent Change





Investment securities(1)

$134,098

$101,720

32%

Loans

210,564

246,824

(15)%

Federal funds sold

14,017

24,023

(42)%

Average earning assets(1)

358,679

372,567

(4)%

Average assets

388,787

403,350

(4)%

Interest bearing deposits (2)

141,049

129,179

9%

Certificate of deposits

146,622

174,769

(16)%

Non-interest bearing deposits

38,346

35,882

7%

Borrowings

45,321

47,248

(4)%

Shareholders' equity

14,026

12,719

10%





(1) Average balances exclude market value adjustments

(2) Interest bearing deposits consist of interest checking, money market and savings account.

 

Net Interest Income
Net interest income was $2.2 million for the third quarter of 2012 and $2.5 million for the third quarter of 2011. Net interest margin for the third quarter of 2012 was 2.45%, compared to 2.68% for the third quarter of 2011. Interest income for the third quarter of 2012 was $3.3 million compared to $4.1 million for the third quarter of 2011, a decline of 20%.  Interest expense for the third quarter of 2012 was $1.1 million compared to $1.6 million for the third quarter of 2011, a decline of 31%.  Net interest income has decreased as compared to the third quarter of 2011 as the average loan portfolio balance and yields have declined, and yields on the investment portfolio have decreased.  The decline in net interest income was partially offset by the reduction of the certificate of deposit balances and the strategic pricing decision to decrease interest rates paid on deposits. The loan portfolio has declined $36.4 million and certificates of deposit have declined $28.4 million when compared to September 30, 2011. 

The following table provides the yield earned on average earning assets, rates on average interest bearing liabilities, and net interest margin for the three months and nine months ended September 30, 2012 and 2011:

 

Dollars in 000's

For the Three Months Ended


September 30, 2012


September 30, 2011


Interest

Yield(1)


Interest

Yield(1)

Interest Income:






Loans

$2,665

5.30%


$3,349

5.64%

Investment securities

605

1.64%


696

2.42%

Fed funds sold

5

0.21%


10

0.21%

Total

3,275

3.66%


4,055

4.36%

Interest Expense:






Interest bearing deposits

180

0.50%


236

0.70%

Certificate of deposits

487

1.38%


917

2.17%

Borrowings

414

3.67%


411

3.49%

Total

1,081

1.31%


1,564

1.78%







Net interest income

$2,194

2.35%


$2,491

2.58%







Net interest margin(2)

2.45%



2.68%








(1) Yield percentages are annualized.

(2) Net interest margin is calculated as interest income less interest expense divided by average earning assets.

 

Dollars in 000's

For the Nine Months Ended


September 30, 2012


September 30, 2011


Interest

Yield(1)


Interest

Yield(1)

Interest Income:






Loans

$8,664

5.49%


$10,522

5.68%

Investment securities

2,295

2.28%


2,413

3.16%

Fed funds sold

22

0.21%


34

0.19%

Total

10,981

4.08%


12,969

4.64%

Interest Expense:






Interest bearing deposits

535

0.51%


688

0.71%

Certificate of deposits

1,655

1.51%


2,977

2.27%

Borrowings

1,235

3.63%


1,294

3.65%

Total

3,425

1.37%


4,959

1.88%







Net interest income

$7,556

2.71%


$8,010

2.76%







Net interest margin(2)

2.81%



2.87%








(1) Yield percentages are annualized.

(2) Net interest margin is calculated as interest income less interest expense divided by average earning assets.

 

Non-interest income
Total non-interest income for the third quarter of 2012 was $1.6 million, an increase of $100 thousand or 7% compared to $1.5 million for the third quarter of 2011. The increase was due primarily to the gain on sale of an unused former branch building of $150,000 for the third quarter of 2012. 

Non-interest expense
Total non-interest expense for the third quarter of 2012 was $3.1 million, an increase of $100 thousand or 3% compared to $3.0 million for the third quarter of 2011. The increase in non-interest expense for the third quarter of 2012 compared to the third quarter of 2011 is primarily due to increases in occupancy, professional services and consulting expenses as well as net OREO expenses.  The Company continues to manage all expense categories to identify opportunities where savings may be recognized. Reducing expenses will benefit current and future periods and is consistent with the goal of improving the Company's efficiency ratio.

Asset Quality
Total non-performing assets at the end of the third quarter were $40.3 million, a decrease of $1.4 million or 3% compared to $41.7 million at September 30, 2011 and a decrease of $2.5 million or 6% compared to $42.8 million at December 31, 2011. The change from September 30, 2011 to September 30, 2012 resulted from a decrease in non-accrual loans and foreclosed property, partially offset by an increase in restructured loans. The Company continues to focus on reducing non-performing assets. 

The reserve for loan losses was $7.3 million or 3.70% of loans at September 30, 2012, compared to $9.3 million or 4.16% of loans at December 31, 2011 and $9.9 million or 4.24 % of loans at September 30, 2011.  The reserve for loan loss as a percentage of non-performing loans was 32% at September 30, 2012, compared to 38% at December 31, 2011 and 38% at September 30, 2011.

At the end of the third quarter of 2012, all of the Bank's regulatory capital ratios were above levels to be "well capitalized".

About Central Virginia Bankshares, Inc.

Central Virginia Bankshares, Inc. is the parent of Central Virginia Bank, a 39 year old $385 million community bank with its headquarters and main office in Powhatan County, and six additional branch offices; two branches in the adjacent County of Cumberland, three branches in western Chesterfield County, and one branch in western Henrico County. Central Virginia Bankshares, Inc. trades under the symbol CVBK (OTC).

Cautionary Statement about Forward-Looking Information
In accordance with the Private Securities Litigation Reform Act of 1995, we caution you that this news release contains forward-looking statements about our future financial performance and business. We make forward-looking statements when we use words such as "believe," "expect," "anticipate," "estimate," "should," "may," "can," "will," "outlook," "project," "appears" or similar expressions.  Forward-looking statements in this news release include, among others, statements about our future capital raise.

Do not unduly rely on forward-looking statements as actual results could differ materially from expectations. Forward-looking statements speak only as of the date made, and we do not undertake to update them to reflect changes or events that occur after that date. Several factors could cause actual results to differ materially from expectations including: current and future economic and market conditions, including the effects of further declines in housing prices and high unemployment rates; our capital requirements and our ability to generate capital internally or raise capital on favorable terms; the terms of capital investments or other financial assistance provided by the U.S. government; financial services reform; recognition of other than-temporary impairment on securities held in our available-for-sale portfolio; the effect of changes in interest rates on our net interest margin; our ability to sell more products to our customers; the effect of the economic recession on the demand for our products and services; changes in our accounting policies or in accounting standards or in how accounting standards are to be applied; mergers and acquisitions; federal and state regulations; reputational damage from negative publicity, fines, penalties and other negative consequences from regulatory violations; the loss of checking and saving account deposits to other investments such as the stock market; and fiscal and monetary policies of the Federal Reserve Board. There is no assurance that our allowance for credit losses will be adequate to cover future credit losses, especially if credit markets, housing prices, and unemployment do not improve. Increases in loan charge-offs or in the allowance for credit losses and related provision expense could materially adversely affect our financial results and condition. For more information about factors that could cause actual results to differ materially from our expectations, refer to our reports filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2011, including the discussions under "Risk Factors" in that report, as filed with the SEC and available on the SEC's website at www.sec.gov. Any factor described above or in our SEC reports could, by itself or together with one or more other factors, adversely affect our financial results and condition.

Website: www.centralvabank.com

 

SELECTED FINANCIAL DATA FOR CENTRAL VIRGINIA BANKSHARES, INC.


Dollars in 000's, except  per share data

Three Months Ended

(unaudited)

Nine Months Ended

(unaudited)


September 30,

2012


September 30,

2011

September 30,

2012


September 30,

2011








Net income

$185


$307

$694


$658

Net income available to common shareholders

24


146

212


177

Interest income & fees on loans

2,665


3,349

8,664


10,522

Interest income on investments

605


696

2,295


2,413

Interest income on fed funds sold

5


10

22


34

Interest expense on deposits

667


1,153

2,190


3,665

Interest expense on borrowings

414


411

1,235


1,294

Net interest income

2,194


2,491

7,556


8,010

Loan loss provision

524


660

2,074


1,860

Non-interest income

1,615


1,470

4,466


3,808

Non-interest expense

3,100


2,994

9,254


9,300

Period End Balances

Investment securities

$126,316


$110,596




Fed funds sold

29,306


25,487




Loans (net of unearned discount)

198,276


233,964




Allowance for loan and lease losses

7,335


9,910




Assets

385,879


401,711




Non-interest bearing deposits

38,353


35,098




Total deposits

322,564


338,208




Borrowings

45,155


47,240




Shareholders' equity

14,710


12,810




Average shares outstanding – basic

2,673


2,674

2,673


2,664

Average shares outstanding – diluted

2,673


2,674

2,673


2,664

Asset Quality

Non-accrual loans

$22,624


$25,126




Loans past due 90 days and still accruing

2


743




Loans restructured(1)

8,812


5,671




Other real estate owned

5,513


6,202




Other non-performing assets

3,382


3,977




Total non-performing assets

40,333


41,719




Charge-offs

1,303


644

4,184


2,512

Recoveries

43


7

124


38

Per Share Data & Ratios

Net income available to common shareholders-basic

$0.01


$0.05

$0.08


$0.07

Net income available to common shareholders-diluted

$0.01


$0.05

$0.08


$0.07

Book value per common share

$5.50


$4.79




Tangible common equity per common share

$1.14


$0.46




Return on average assets(2)

0.19%


0.30%

0.24%


0.22%

Return on average equity(2)

5.00%


8.75%

6.60%


6.90%

Efficiency ratio (3)

81.4%


75.6%

77.0%


78.7%

Average loans to average deposits(4)

62.2%


70.2%

64.5%


72.6%

Allowance for loan and lease losses/Loans EOP

3.70%


4.24%




   (1) Loans restructured, accruing and in compliance with modified terms.

   (2) Calculation excludes the effective dividend on preferred stock

   (3) The efficiency ratio is a non-GAAP measure calculated by dividing noninterest expense by net interest income plus noninterest income.

   (4) Excludes mortgage loans held for resale

Reconciliation of Efficiency Ratio

Non-interest expense

$3,100


$2,994

$9,254


$9,300

Net interest income plus non-interest income

3,809


3,961

12,022


11,818

Efficiency Ratio

81.4%


75.6%

77.0%


78.7%

 

SOURCE Central Virginia Bankshares, Inc.

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