WashingtonFirst Bankshares, Inc. Reports Net Income Growth of 60% Over 2015 Q2 Results; Record Performance for First Six Months

WashingtonFirst Bankshares, Inc. (NASDAQ: WFBI) (the "Company"), announced today consolidated net income of $4.4 million and $8.3 million (or $0.35 and $0.67 per diluted common share) for the three and six months ended June 30, 2016, respectively. Net income during the second quarter of 2016 increased 60.3% over the $2.7 million in net income (or $0.28 per diluted common share) earned during the three months ended June 30, 2015, and increased 12.1% over the prior quarter ended March 31, 2016. Year to date earnings for the six months ended June 30, 2016, increased 51.1% over the $5.5 million (or $0.57 per diluted common share) earned during the six months ended June 30, 2015. Additionally, the Company paid its 11th consecutive quarterly dividend of $0.06 on July 1, 2016.

Shaza Andersen, the Company’s President and CEO, said, “We made the strategic decision this year to focus on increasing our return on assets, and so far we’ve been successful. Our ROA was 0.98% for the second quarter 2016, compared to 0.78% for the same period last year. Earnings per share are trending positively as well, enhanced by the mortgage and wealth management operations acquired last year from 1st Portfolio. Both businesses are performing at or above our initial expectations. As always, asset quality remains a key priority for us - we reduced our NPAs from 0.87% as of December 31, 2015, to 0.71% as of June 30, 2016. And in June, we were added to the Russell 2000, an index of the largest public companies by market capitalization in the country! As we turn toward the second half of the year, we remain focused on premier customer service and strong financial performance, core principles that will continue to produce long-term value for our shareholders.”

The net interest margin was 3.37% and 3.44% for the three and six months ended June 30, 2016, respectively, as compared to 3.75% and 3.74% for the same periods in 2015. This decrease is primarily attributable to the addition of $25 million in subordinated debt added in the fourth quarter of 2015 and competitive pressure for incremental loans and deposits. On a linked quarter basis, the net interest margin decreased 14 basis points during the three months ended June 30, 2016, from a net interest margin of 3.51% for the three months ended March 31, 2016. The Company remains focused on its pricing discipline on both sides of the balance sheet and on all factors contributing to net income.

In June, the Company executed on a strategic deleveraging activity. The Company prepaid a long-term FHLB advance that was assumed during the Alliance acquisition which was completed in late 2012. This $25 million advance had a coupon interest rate of 3.99% but an effective cost of 2.04% after considering the purchase accounting mark on the instrument. The instrument had a final maturity of February 26, 2021. The effective cost (prepayment penalty less release of the purchase accounting mark) to terminate the debt instrument was $1.04 million. The Company sold approximately $29.7 million of investment securities at a gain of $1.08 million during the quarter to offset the cost of the prepayment penalty. The overall objectives of these transactions was to delever the balance sheet, produce a net neutral effect of the termination penalty and aid long-term performance metrics. The Company anticipates positive contributions to its net interest margin and return on average assets in future quarters as a result.

Non-interest income grew during both the three and six months ended June 30, 2016, by $7.9 million and $12.1 million, respectively, compared to the same periods ended June 30, 2015, as a result of the successful integration of the 1st Portfolio companies acquired in July 2015. The mortgage subsidiary acquired in the 1st Portfolio acquisition contributed $5.3 million and $8.0 million to non-interest income via gain on sale of loans, respectively, during the three and six months ended June 30, 2016, compared to $0.1 million and $0.2 million generated by the Bank's legacy mortgage operation for the same periods ending June 30, 2015. Additional fee income of $1.4 million and $2.6 million was generated by the mortgage subsidiary for the quarter and six months ended June 30, 2016, respectively. Wealth management activities began as a result of the 1st Portfolio acquisition. During the three and six months ended June 30, 2016, $0.4 million and $0.9 million, respectively, of non-interest income was derived from the wealth division. Prior to July 2015, no such income was generated. In addition, the gain on sale of available-for-sale investment securities was $1.08 million for the three months ended June 30, 2016, bringing the total to $1.2 million for the six months ended June 30, 2016. As previously discussed, the significant gains during the current quarter were part of a strategic deleveraging activity noted above.

Non-interest expense grew during both the three and six months ended June 30, 2016, by $6.9 million and $11.6 million, respectively, compared to the same periods ended June 30, 2015, as a result of the new mortgage and wealth companies that resulted from the 1st Portfolio acquisition and further expansion of the retail branch banking footprint across our market. In addition, the Company incurred a debt termination expense of $1.4 million during the second quarter of 2016 related to the strategic deleveraging activity noted above.

As of June 30, 2016, the Company reported total assets of $1.9 billion, compared to $1.7 billion as of December 31, 2015, and $1.5 billion as of June 30, 2016. Total loans held for investment increased $83.4 million or 6.4% to $1.4 billion as of June 30, 2016. This increase is attributable to organic loan growth from our existing lending team. During the first two quarters of 2016, total deposits increased $215.6 million or 16.2% to $1.5 billion. The increase in deposits is due to core deposit growth in our branch network and commercial customers.

During the first six months of 2016, total shareholders’ equity increased $9.7 million from $178.6 million to $188.3 million an increase driven primarily by retained earnings offset by dividends of $1.5 million. Tangible book value per common share increased to $14.30 as of June 30, 2016, compared to $13.55 as of December 31, 2015, and $12.44 as of June 30, 2015. The capital ratios as of June 30, 2016 are listed below. The Company remains "well-capitalized" under the regulatory framework for prompt corrective action.

Overall, non-performing assets continue to decline, however, during the three months ended June 30, 2016, we charged off $0.7 million in non-performing loans which were fully reserved in previous periods. Our team continues to focus diligently on the management of criticized assets, and as such, our ratio of non-performing assets to total assets has decreased from 0.87% as of December 31, 2015, to 0.71% as of June 30, 2016.

In connection with various past acquisition activities, the Company recorded acquired loans at fair market value which consisted of pricing and credit marks. The credit marks are negative purchase marks which are comparable to an allowance for loan losses. Therefore, the non-GAAP adjusted allowance for loan losses to non-GAAP adjusted total loans held for investment, which considers these marks similar to allowance for loan losses, was 1.22% as of June 30, 2016, compared to 1.30% and 1.36% as of December 31, 2015 and June 30, 2015, respectively. A reconciliation of the allowance for loan losses and related ratios to the non-GAAP adjusted allowance for loan losses and related ratios as of June 30, 2016, December 31, 2015, and June 30, 2015, is below.

During the three and six months ended June 30, 2016, the mortgage subsidiary originated $216.9 million and $339.6 million, respectively, of total loan volume. Assets under management grew to $245.1 million as of June 30, 2016, at the wealth management subsidiary. The Company did not have segments during the first half of 2015.

About The Company

WashingtonFirst Bankshares, Inc., headquartered in Reston, Virginia, is the holding company for WashingtonFirst Bank, which operates 19 full-service banking offices throughout the Washington, DC, metropolitan area. In addition, the Company provides wealth management services through its subsidiary, 1st Portfolio Wealth Advisors, and mortgage banking services through the Bank's subsidiary, WashingtonFirst Mortgage Corporation. The Company's common stock is traded on the NASDAQ Stock Market under the quotation symbol "WFBI" and is included in the ABA NASDAQ Community Bank Index and the Russell 2000® index. For more information about the Company, please visit: www.wfbi.com.

Cautionary Statements About Forward-Looking Information

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements of the goals, intentions, and expectations of the Company as to future trends, plans, events, results of operations and policies and regarding general economic conditions. Forward-looking information is inherently subject to risks and uncertainties, and actual results could differ materially from those currently anticipated due to a number of factors which include, but are not limited to, factors discussed in our Annual Report on Form 10-K and in other documents we file with the Securities and Exchange Commission from time to time. In some cases, forward-looking statements can be identified by use of words such as “may,” “will,” “anticipates,” “believes,” “expects,” “plans,” “estimates,” “potential,” “continue,” “should,” and similar words or phrases. These statements are based upon the beliefs of the management of the Company as to the expected outcome of future events, current and anticipated economic conditions, nationally and in the Company’s market, and their impact on the operations, assets and earnings of the Company, interest rates and interest rate policy, competitive factors, judgments about the ability of the Company to successfully integrate its operations following significant transactions including, but not limited to, mergers and acquisitions, the ability to avoid customer dislocation during the period leading up to and following such transactions, and other conditions which by their nature, are not susceptible to accurate forecast and are subject to significant uncertainty. Readers are cautioned against placing undue reliance on such forward-looking statements. The Company assumes no obligation to revise, update, or clarify forward-looking statements to reflect events or conditions after the date of this release.

Additional documents are available free of charge at the SEC’s website, www.sec.gov and on the Company’s website at www.wfbi.com under the tab “Investor Relations” or by contacting the Company’s Investor Relations Department at 11921 Freedom Drive, Suite 250, Reston, VA 20190. You may also read and copy any reports, statements and other information filed with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. Information about the operation of the SEC Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330.

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