Access National Surpasses $1 Billion in Assets, Reports Third Quarter Earnings and Increases Dividend

Access National Corporation (NASDAQ: ANCX), parent company for Access National Bank (Bank), reported third quarter 2014 net income of $4.9 million, or $0.47 per common share. This represents the Corporation’s 57th consecutive quarterly profit over its 59 quarter history. Consistent with management’s stated objective of a 40%-50% payout ratio against core earnings, the Board of Directors declared a cash dividend of $0.14 per share for holders of record as of November 03, 2014 and payable on November 25, 2014. This 7th increase in routine dividends over the last 2-years reflects Management’s continued favorable outlook on performance and capital.

Michael Clarke, CEO, is quoted as saying: “We take great satisfaction in having our 15-year old start-up successfully turn $10 million into $1 billion of assets. More importantly, our leadership and hard-working associates have touched the lives of thousands of business owners who provide real jobs and run successful businesses throughout the capital region. Our bank is about quality, not quantity. However, this ’quantity’ measure signals a validation that our value proposition is sustainable and resonates loudly with mid-sized businesses in our market. We are very grateful for and value our client relationships.”

Third quarter 2014 pretax earnings were impacted by two nonrecurring items, one being a $3.25 million release in the mortgage segment’s loan loss reserve while the other was a $707 thousand impairment recorded in connection with land held by Access Real Estate (ARE). The net impact of these two items created an increase in pretax earnings of $2.5 million and added $0.15 to the after-tax earnings per common share. The release in reserves was in connection with management’s on-going analysis of reserve requirements as well as information obtained by management during the third quarter of 2014 which led management to determine the amount of reserves on hand for the repurchase of mortgage loans sold in the secondary market was over funded. The write-down of the ARE property was in response to management’s intent to sell land that had originally been bought back in 2007 as a potential banking center. The impairment was effective upon receipt of an appraisal received in the third quarter of 2014.

Excluding the release of mortgage reserves and the write-down of the ARE property, net income before taxes increased $1.2 million when comparing the three months ended September 30, 2014 to the same period in 2013. This is the result of an increase in the banking segment pretax earnings of $698 thousand and an increase in mortgage segment pretax earnings of $533 thousand. The increase in the banking segment was due mainly to an increase in net interest income after provision for loan losses of $1.5 million when comparing the three month period ended September 30, 2014 to the same period in 2013. This increase in net interest income was offset by a decrease of $720 thousand in noninterest income due mainly to the gain on sale of SBA loans of $926 thousand that occurred in the third quarter 2013. The mortgage segment recorded pretax earnings of $482 thousand in the third quarter of 2014 excluding the mortgage reserve release compared to near breakeven performance in the third quarter of 2013.

Net interest margin for the first nine months of 2014 decreased from 3.83% to 3.78% when compared to the same period in 2013. On a linked quarter basis, the margin decreased to 3.78% for the three months ended September 30, 2014 compared to 3.80% for the three months ended June 30, 2014.

On a consolidated basis, the Corporation reported annualized return on average assets of 1.98% and 1.48% for the three and nine month periods ended September 30, 2014, respectively. Meanwhile, the annualized return on average equity was 20.37% and 14.65% for the three and nine months ended September 30, 2014, respectively.

Total assets at September 30, 2014 amounted to $1.02 billion compared to $847.2 million at December 31, 2013, an overall increase of $167.8 million. An increase in loans held for investment of $40.0 million, a $45.2 million increase in interest-bearing balances, a $48.9 million growth in investment securities, a growth in loans held for sale of $17.9 million, and a $17.5 million increase in other assets due to a $15 million BOLI purchase accounted for the majority of this increase. The third quarter of 2014 reflected loan growth in the commercial real estate – owner occupied, commercial real estate – non-owner occupied, and residential real estate categories of the loans held for investment portfolio.

Total deposits at September 30, 2014 increased $159.1 million from December 31, 2013 due mainly to an increase in demand deposits of $81.3 million, an increase in interest-bearing demand deposits of $41.2 million, and an increase in Certificate of Deposit Account Registry Service (CDARS) deposits totaling $49.2 million. Management continues to focus on expanding business banking relationships as evidenced by the 44.44% year-to-date growth in demand deposits.

Non-performing assets (NPAs) decreased 28.0% to $1.8 million at September 30, 2014 from $2.5 million at December 31, 2013, representing 0.18% and 0.30% of total assets, respectively. The Bank did not have other real estate owned at September 30, 2014 while ARE, as previously mentioned, had other real estate owned with a fair market value less costs to sell of $500 thousand. The allowance for loan losses was $13.2 million and $13.1 million or 1.82% and 1.91% of total loans held for investment as of September 30, 2014 and December 31, 2013, respectively.

Book value per common share increased from $8.79 at December 31, 2013 to $9.55 at September 30, 2014. The ratio of total equity to total assets for Access National Corporation and its subsidiary bank was 9.8% at September 30, 2014, within the Corporation’s target range of 8.00% to 10.50%.

Access National Corporation is the parent company of Access National Bank, an independent, nationally chartered bank serving the business community of the greater Washington DC Metropolitan area. Additional information is available on our website at www.AccessNationalBank.com. Shares of Access National Corporation are traded on the NASDAQ Global Market under the symbol "ANCX".

This press release contains “forward-looking statements” within the meaning of the federal securities laws. These statements may be identified as “may”, “could”, “expect”, “believe”, anticipate”, “intend”, “plan” or variations thereof. These forward-looking statements may contain information related to those matters such as the Company’s intent, belief, or expectation with respect to matters such as financial performance. Such statements are necessarily based on assumptions and estimates and are inherently subject to a variety of risks and uncertainties concerning the Company’s operations and business environment, which are difficult to predict and beyond control of the Company. Such risks and uncertainties could cause the actual results of the Company to differ materially from those matters expressed or implied in such forward-looking statements. For an explanation of certain risks and uncertainties associated with forward-looking statements, please refer to the Company’s Annual Report on Form 10-K and other SEC filings.