Alliance Bankshares Corporation (NASDAQ – ABVA) today reported a net loss of $170 thousand for the quarter ended September 30, 2012. Results during the quarter were primarily impacted by reduced interest income, merger-related expenses, OREO expenses and valuation write-downs, and a negative adjustment to the $25 million FHLB advance carried at fair value, the total of which offset gains on the sale of investment securities and favorable reductions in non-interest expenses, interest expense and the provision for loan losses. Due to improvement in the overall risk profile of the loan portfolio and a lower level of total loans, the Company released a portion of its allowance for loan losses into income and also did not recognize a provision expense during the quarter. On a year-to-date basis, the Company has experienced a loss of $1.52 million. The quarterly results represent a loss of $.03 per share versus a loss of $.10 per share for the same period in 2011, while the year-to-date results represent a loss of $.30 per share versus income of $.05 per share for the same period in 2011. Alliance’s regulatory capital ratios at September 30, 2012 remain above the levels necessary to be considered a “well capitalized” institution.
At September 30, 2012, total assets amounted to $521.9 million, an increase of 3% as compared to the level at December 31, 2011. Total loans were $288 million at September 30, 2012, reflecting a decline of 6.2% 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 $79.4 million as of September 30, 2012, a decline of $44.1 million from the December 31, 2011 level of $123.5 million. Total deposits at September 30, 2012, were $414.2, reflecting an 8.9% increase from the level at December 31, 2011. Strong growth in title agency-related deposits, coupled with a strategic shift of funding from repurchase agreements into deposits, contributed to the increase in overall deposits.
Non-performing assets (NPAs) of $15.9 million at September 30, 2012 were 11.6% lower when compared to $18.0 million at December 31, 2011. The overall decrease resulted largely from a reduction of 18.2% in non-accrual loans during the quarter as compared to year end 2011. NPAs-to-total assets declined from 3.51% at December 31, 2011, to 2.94% at September 30, 2012. At September 30, 2011, the allowance for loan losses stood at $4.9 million, or 1.69% of loans.
The Company’s net interest margin for the nine months was 3.10%, a decrease from 3.74% 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, a change in the mix of investments and lower reinvestment rates available in the market.
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, and in the SEC DEFM14A filed by the Company on November 9, 2012. The merger is expected to close during the fourth quarter 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 | ||||||||
September 30, | December 31, | |||||||
2012* | 2011 | |||||||
ASSETS | (Dollars in thousands) | |||||||
Cash and due from banks | $ | 115,515 | $ | 45,837 | ||||
Federal funds sold | 26,594 | 16,567 | ||||||
Trading securities, at fair value | 293 | 596 | ||||||
Investment securities available-for-sale, at fair value | 79,411 | 123,463 | ||||||
Restricted stock, at cost | 3,972 | 4,772 | ||||||
Loans, net of unearned discount and fees | 287,981 | 306,876 | ||||||
Less: allowance for loan losses | (4,866 | ) | (5,393 | ) | ||||
Loans, net | 283,115 | 301,483 | ||||||
Premises and equipment, net | 1,103 | 1,415 | ||||||
Other real estate owned (OREO) | 3,575 | 3,748 | ||||||
Deferred tax asset, net of allowance ($5,291 and $5,291) | 1,601 | 1,553 | ||||||
Other assets | 6,751 | 7,049 | ||||||
TOTAL ASSETS | $ | 521,930 | $ | 506,483 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Non-interest bearing deposits | $ | 145,295 | $ | 112,450 | ||||
Savings and NOW deposits | 84,058 | 51,475 | ||||||
Money market deposits | 18,123 | 23,370 | ||||||
Time deposits | 166,733 | 193,148 | ||||||
Total deposits | 414,209 | 380,443 | ||||||
Repurchase agreements, federal funds purchased and other borrowings | 22,558 | 40,420 | ||||||
Federal Home Loan Bank advances ($30,018 and $29,350 at fair value) | 45,018 | 44,350 | ||||||
Trust Preferred Capital Notes | 10,310 | 10,310 | ||||||
Other liabilities | 2,766 | 2,838 | ||||||
TOTAL LIABILITIES | 494,861 | 478,361 | ||||||
Common stock, $4 par value; 15,000,000 shares authorized; 5,109,969 shares issued and outstanding at September 30, 2012 and December 31, 2011 | 20,440 | 20,440 | ||||||
Capital surplus | 25,942 | 25,915 | ||||||
Retained (deficit) | (19,791 | ) | (18,269 | ) | ||||
Accumulated other comprehensive income , net | 478 | 36 | ||||||
TOTAL STOCKHOLDERS' EQUITY | 27,069 | 28,122 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 521,930 | $ | 506,483 | ||||
* 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, | |||||||||||||
2012* | 2011* | 2012* | 2011* | |||||||||||||
(Dollars in thousands, except per share) | ||||||||||||||||
INTEREST INCOME: | ||||||||||||||||
Loans | $ | 3,973 | $ | 4,574 | $ | 12,245 | $ | 13,674 | ||||||||
Trading securities | 9 | 12 | 27 | 57 | ||||||||||||
Investment securities | 155 | 802 | 810 | 3,290 | ||||||||||||
Federal funds sold | 33 | 10 | 72 | 32 | ||||||||||||
Total interest income | 4,170 | 5,398 | 13,154 | 17,053 | ||||||||||||
INTEREST EXPENSE: | ||||||||||||||||
Savings and NOW deposits | 30 | 26 | 89 | 88 | ||||||||||||
Time deposits | 629 | 877 | 2,070 | 2,845 | ||||||||||||
Money market deposits | 34 | 45 | 95 | 139 | ||||||||||||
Repurchase agreements, federal funds purchased and other borrowings | 11 | 54 | 117 | 194 | ||||||||||||
FHLB advances | 267 | 261 | 803 | 776 | ||||||||||||
Trust preferred capital notes | 128 | 93 | 359 | 278 | ||||||||||||
Total interest expense | 1,099 | 1,356 | 3,533 | 4,320 | ||||||||||||
Net interest income | 3,071 | 4,042 | 9,621 | 12,733 | ||||||||||||
Provision (recovery of) for loan losses | (222 | ) | 130 | 228 | 1,205 | |||||||||||
Net interest income after provision for loan losses | 3,293 | 3,912 | 9,393 | 11,528 | ||||||||||||
OTHER INCOME: | ||||||||||||||||
Deposit account service charges | 39 | 39 | 113 | 115 | ||||||||||||
Net gain (loss) on sale of available-for-sale securities | 168 | 2,120 | 171 | 3,034 | ||||||||||||
Gain (loss) on fair value adjustments on trading securities | 58 | (43 | ) | (113 | ) | (76 | ) | |||||||||
Fair value adjustments of FHLB advance | (459 | ) | (2,801 | ) | (668 | ) | (2,874 | ) | ||||||||
Other operating income | 41 | 34 | 119 | 153 | ||||||||||||
Total other income (loss) | (153 | ) | (651 | ) | (378 | ) | 352 | |||||||||
OTHER EXPENSES: | ||||||||||||||||
Salaries and employee benefits | 956 | 1,197 | 3,277 | 3,993 | ||||||||||||
Professional fees | 465 | 398 | 1,558 | 1,239 | ||||||||||||
Occupancy expense | 581 | 578 | 1,704 | 1,703 | ||||||||||||
Equipment expense | 121 | 163 | 391 | 486 | ||||||||||||
Other real estate owned expense | 245 | 26 | 340 | 77 | ||||||||||||
FDIC assessments | 202 | 220 | 633 | 860 | ||||||||||||
Merger Expense | 248 | 619 | 666 | 619 | ||||||||||||
Operating expenses | 648 | 866 | 2,195 | 2,577 | ||||||||||||
Total other expenses | 3,466 | 4,067 | 10,764 | 11,554 | ||||||||||||
Income before income taxes | (326 | ) | (806 | ) | (1,749 | ) | 326 | |||||||||
Income tax expense (benefit) | (156 | ) | (303 | ) | (227 | ) | 70 | |||||||||
NET INCOME (LOSS) | $ | (170 | ) | $ | (503 | ) | $ | (1,522 | ) | $ | 256 | |||||
Net income (loss) per common share, basic | $ | (0.03 | ) | $ | (0.10 | ) | $ | (0.30 | ) | $ | 0.05 | |||||
Net income (loss) per common share, diluted | $ | (0.03 | ) | $ | (0.10 | ) | $ | (0.30 | ) | $ | 0.05 | |||||
Weighted average number of shares, basic | 5,109,969 | 5,108,821 | 5,109,969 | 5,108,616 | ||||||||||||
Weighted average number of shares, diluted | 5,109,969 | 5,108,969 | 5,109,969 | 5,129,311 | ||||||||||||
* Unaudited financial results | ||||||||||||||||
ALLIANCE BANKSHARES CORPORATION | ||||||||
Consolidated Statistical Information | ||||||||
Performance Information | ||||||||
September 30, | September 30, | |||||||
2012* | 2011* | |||||||
(Dollars in thousands, except per share) | ||||||||
Performance Information: | ||||||||
For The Three Months Ended: | ||||||||
Average loans | $ | 288,421 | $ | 320,004 | ||||
Average earning assets | 407,523 | 446,088 | ||||||
Average assets | 476,907 | 485,386 | ||||||
Average non-interest bearing deposits | 113,770 | 89,101 | ||||||
Average total deposits | 365,115 | 354,348 | ||||||
Average interest-bearing liabilities | 333,119 | 357,429 | ||||||
Average stockholder equity | 27,243 | 36,285 | ||||||
Net interest margin (1) | 3.02 | % | 3.61 | % | ||||
Net income (loss) per share, basic | $ | (0.03 | ) | $ | (0.10 | ) | ||
Net income (loss) per share, diluted | $ | (0.03 | ) | $ | (0.10 | ) | ||
For The Nine Months Ended: | ||||||||
Average loans | $ | 294,498 | $ | 321,981 | ||||
Average earning assets | 417,270 | 457,547 | ||||||
Average assets | 470,394 | 495,897 | ||||||
Average non-interest bearing deposits | 98,038 | 89,369 | ||||||
Average total deposits | 348,725 | 358,021 | ||||||
Average interest-bearing liabilities | 340,270 | 369,136 | ||||||
Average stockholder equity | 29,546 | 34,839 | ||||||
Net interest margin (1) | 3.10 | % | 3.74 | % | ||||
Net income (loss) per share, basic | $ | (0.30 | ) | $ | 0.05 | |||
Net income (loss) per share, diluted | (0.30 | ) | 0.05 | |||||
* 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, | ||||||||||
2012* | 2011 | 2011* | ||||||||||
(Dollars in thousands) | ||||||||||||
Credit Quality Information: | ||||||||||||
Non-performing assets: | ||||||||||||
Non-accrual loans | 10,853 | 13,264 | 10,657 | |||||||||
OREO | 3,575 | 3,748 | 4,102 | |||||||||
Other impaired loans | $ | 560 | $ | - | $ | - | ||||||
Troubled debt restructured | 897 | 956 | 501 | |||||||||
Total non-performing assets | $ | 15,885 | $ | 17,968 | $ | 15,260 | ||||||
Specific reserves associated with impaired loans | $ | 1,711 | $ | 2,271 | $ | 1,370 | ||||||
Non-performing assets to assets | 3.04 | % | 3.55 | % | 2.85 | % | ||||||
Largest components of the nonperforming assets listed above: | ||||||||||||
September 30, 2012 non-accrual loans (92% of the total) | ||||||||||||
$2.5 million secured by commercial land in Dulles, VA. | ||||||||||||
$2.2 million secured by residential land in Loudoun VA. | ||||||||||||
$2.2 million secured by a 17 unit condominium project in Washington, DC. | ||||||||||||
$983 thousand secured by commercial land in Sterling VA. | ||||||||||||
$892 thousand secured by commercial equipment and receivables. | ||||||||||||
$559 thousand secured by a residential property and lot in Warrenton VA. | ||||||||||||
$336 thousand secured by a residential building lot in Warrenton VA. | ||||||||||||
September 30, 2012 OREO (82% of the total) | ||||||||||||
$951 thousand which are residential lots in Stephens City, VA. | ||||||||||||
$851 thousand which is a residential property in Annandale, VA. | ||||||||||||
$790 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 Nine Months Ended: | September 30, | September 30, | ||||||||||||
2012* | 2011* | |||||||||||||
(Dollars in thousands) | ||||||||||||||
Balance, beginning of period | $ | 5,393 | $ | 5,281 | ||||||||||
Provision for loan losses | 228 | 1,205 | ||||||||||||
Loans charged off | (894 | ) | (1,556 | ) | ||||||||||
Recoveries of loans charged off | 139 | 248 | ||||||||||||
Net charge-offs | (755 | ) | (1,308 | ) | ||||||||||
Balance, end of period | $ | 4,866 | $ | 5,178 | ||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||
2012* | 2012* | 2012* | 2011 | 2011* | ||||||||||
Ratios: | ||||||||||||||
Allowance for loan losses to total loans | 1.69% | 1.72% | 1.71% | 1.76% | 1.62% | |||||||||
Allowance for loan losses to non-accrual loans | 0.45X | 0.48X | 0.45X | 0.41X | 0.49X | |||||||||
Allowance for loan losses to nonperforming assets | 0.31X | 0.33X | 0.30X | 0.30X | 0.34X | |||||||||
Nonperforming assets to total assets | 3.04% | 3.05% | 3.37% | 3.51% | 2.85% | |||||||||
Net charge-offs to average loans | 0.26% | 0.28% | 0.26% | 0.45% | 0.54% | |||||||||
* 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 | |||||||||||||||
September 30, 2012* | December 31, 2011 | ||||||||||||||
Fair | Fair | ||||||||||||||
Trading Security | Value | Yield | Value | Yield | |||||||||||
(Dollars in thousands) | |||||||||||||||
PCMO 1 | $ | 293 | 5.43 | % | $ | 596 | 5.44 | % | |||||||
Total | $ | 293 | 5.43 | % | $ | 596 | 5.44 | % | |||||||
1 As of September 30, 2012 trading security 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. | |
September 30, 2012* | December 31, 2011 | |||||||||
Fair | Fair | |||||||||
Fair Value Asset and Liabilities | Value | Value | ||||||||
(Dollars in thousands) | ||||||||||
Trading security | $ 293 | $ 596 | ||||||||
FHLB advances | $ 30,018 | $ 29,350 | ||||||||
* Unaudited financial results | ||||||||||
ALLIANCE BANKSHARES CORPORATION | ||||||||
Consolidated Statistical Information | ||||||||
Capital Information | ||||||||
September 30, | December 31, | |||||||
2012* | 2011 | |||||||
(Dollars in thousands, except per share) | ||||||||
Capital Information: | ||||||||
Book value per share | $ | 5.30 | $ | 5.50 | ||||
Tier I risk-based capital ratio | 12.1 | % | 12.3 | % | ||||
Total risk-based capital ratio | 13.7 | % | 13.8 | % | ||||
Leverage capital ratio | 7.4 | % | 7.4 | % | ||||
Total equity to total assets ratio | 5.2 | % | 5.6 | % | ||||
* Unaudited financial results | ||||||||
ALLIANCE BANKSHARES CORPORATION | |||||||||||
Components of Stockholder Equity | |||||||||||
on a Book Value per Share Basis | |||||||||||
Nine Months | Twelve Months | Nine Months | |||||||||
Ended September 30, | Ended December 31, | Ended September 30, | |||||||||
2012* | 2011 | 2011* | |||||||||
Book Value Per Share, beginning of the period | $ | 5.50 | $ | 6.60 | $ | 6.60 | |||||
Net income (loss) per common share | (0.30 | ) | (1.17 | ) | 0.05 | ||||||
Effects of Changes in Other Comprehensive Income 1 | 0.10 | 0.07 | 0.10 | ||||||||
Book Value Per Share, end of the period | $ | 5.30 | $ | 5.50 | $ | 6.75 | |||||
* 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:
William E. Doyle, Jr., 703-814-7200