For the year ended December 31, 2011, the Bank reported a net loss of $4.5 million, or ($0.39) per share, an improvement of $4.7 million when compared to the loss of $9.2 million for the year ended December 31, 2010. The loss in 2011 was primarily a result of a $2.7 million provision for loan losses recorded in the first three quarters and a $1.3 million decline in net interest income due to a winnowing of the loan portfolio while the Bank's new credit team was put in place.
"The Bank undertook a complete revamping in 2011, recruiting new executives to head credit, lending, finance and operations," stated Jack Zoeller, Chairman and CEO. "Our primary goals were to identify and address the Bank's asset quality issues and establish a new culture oriented to shareholder value. These objectives have been met. In the fourth quarter we turned our focus to restoring the Bank's profitability. We launched a $40 million local business loan campaign, hired two new commercial lenders, and realigned our marketing and technology resources to better target and serve the Bank's business borrowers," continued Mr. Zoeller.
Review of the income statement
The Bank's net interest income decreased by $1.3 million, or 20%, to $5.1 million in 2011, compared to $6.4 million in 2010, mainly due to the declining loan balances in 2011. The Bank's net interest margin for 2011 also declined, decreasing 22 basis points to 2.87% from 3.09% in 2010. The decline in net interest margin was primarily the result of a decrease of $28.3 million in average loans, from $155.9 million in 2010 to $127.6 million in 2011.
Non-interest income declined $365,000 to $492,000 in 2011 from $857,000 in 2010, mainly due to lower net gains realized on available-for-sale securities, which declined $415,000 from $544,000 in 2010 to $129,000 in 2011. Non-interest expense totaled $7.3 million for 2011, a slight decline from $7.4 million in 2010.
Review of the balance sheet
The Bank's total assets decreased $43.7 million, or 20.9%, to $165.5 million at December 31, 2011 from December 31, 2010's total of $209.2 million. The main element in the reduction of assets was the $36.2 million, or 24.7%, decline in loans from $146.6 million at December 31, 2010 to $110.3 million at December 31, 2010. The decline in loan balances was attributable to loan pay downs, charge-offs and transfers to other real estate owned in the absence of significant new lending, as new management and lenders focused on addressing asset quality issues and regulatory demands. Securities available for sale declined $9.4 million or 26.8% to $25.6 million at December 31, 2011 from $35 million at December 31, 2010.
On the liability side of the balance sheet, total deposits were $147.2 million at December 31, 2011, down from $181.2 million at year end 2010, a drop of $34 million, or 18.8%. Time deposits balances fell $39.5 million from $140.2 million at December 31, 2010 to $100.7 million at December 31, 2011. The Bank paid off a maturing $5 million borrowing in October. These reductions in liabilities were intended to track with the Bank's decline in assets while reducing the average rates paid on deposits and other borrowings. Total liabilities were $152.8 million and $192.2 million at December 31, 2011 and 2010, respectively.
Stockholders' equity totaled $12.7 million at December 31, 2011, a decline of $4.3 million when compared to the December 31, 2010 balance of $17 million. The Bank is considered well capitalized by federal regulatory standards.
About Bank of Virginia
Bank of Virginia, a Virginia state chartered bank headquartered in Midlothian, Virginia, currently operates four full-service offices in the counties of Chesterfield and Henrico, Virginia. Bank of Virginia's common stock is traded on the NASDAQ stock market under the quotation symbol "BOVA". Additional investor relations information can be found on the internet at www.bankofva.com. Bank of Virginia is a member of the FDIC and Equal Housing Lender.
This news release may include forward-looking statements. These forward-looking statements are based on current expectations that involve risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may differ materially. These risks include: changes in business or other market conditions; the timely development, production and acceptance of new products and services; the challenge of managing asset/liability levels; the management of credit risk and interest rate risk; the difficulty of keeping expense growth at modest levels while increasing revenues; and other risks detailed from time to time in the Bank's periodic filings with the Board of Governors of the Federal Reserve System, including the Bank's annual report on Form 10-K as filed with the Board of Governors of the Federal Reserve. Pursuant to the Private Securities Litigation Reform Act of 1995, the Bank does not undertake to update forward-looking statements contained within this news release.
|BANK OF VIRGINIA|
|Condensed Balance Sheets|
|(dollars in thousands)||December 31,||December 31,|
|Cash and due from banks||$ 4,152||$ 25,200|
|Federal funds sold and interest-bearing deposits with banks||22,544||484|
|Securities available for sale, at fair market value||25,578||34,956|
|Loans, net of allowance for loan losses of $5,672 and $6,832 in 2011 and 2010, respectively||104,662||139,740|
|Other real estate owned, net of valuation allowance||1,262||551|
|Total assets||$ 165,465||$ 209,190|
|Non-interest-bearing||$ 16,833||$ 14,506|
|Savings and interest-bearing demand||29,686||26,489|
|Accrued expenses and other liabilities||557||970|
|Preferred stock, $5 par value, 5,000,000 shares authorized, none issued||--||--|
|Common stock, $1 par value, 40,000,000 shares authorized, 11,333,182 (5,000 unvested) and 11,328,182 shares issued and outstanding in 2011 and 2010, respectively||11,328||11,328|
|Additional paid-in capital||24,622||24,611|
|Accumulated other comprehensive income||446||318|
|Total stockholders' equity||12,667||16,979|
|Total liabilities and stockholders' equity||$ 165,465||$ 209,190|
|BANK OF VIRGINIA|
|Condensed Statements of Operations|
|For the Years Ended December 31, 2011 and 2010|
|(dollars in thousands, except per share data)||2011||2010|
|Interest and fees on loans||$ 7,497||$ 9,314|
|Interest on federal funds sold and deposits with banks||47||17|
|Total interest income||8,262||10,832|
|Interest on deposits||2,766||4,009|
|Interest on FHLB borrowings||392||443|
|Total interest expense||3,158||4,452|
|Net Interest Income||5,104||6,380|
|Provision for loan losses||2,786||9,018|
|Net interest income (loss) after provision||2,318||(2,638)|
|Net gain on sale of available for sale securities||129||544|
|Service charges and other fee income||363||313|
|Total non-interest income||492||857|
|Other operating expenses||3,915||3,944|
|Total non-interest expenses||7,262||7,370|
|Net loss||$ (4,452)||$ (9,151)|
|Loss per share, basic and diluted||$ (0.39)||$ (1.85)|
|Tier 1 leverage||7.3 %||7.9 %|
|Tier 1 capital to risk-weighted assets||10.6 %||10.9 %|
|Total regulatory capital to risk-weighted assets||12.1 %||12.2 %|
|Total equity to total assets||7.7 %||8.1 %|
|Credit quality ratios:|
|Allowance for loan losses to total loans||5.14 %||4.66 %|
|Nonperforming loans to total loans||8.05 %||4.72 %|
|Nonperforming assets to total assets||6.13 %||5.09 %|
CONTACT: Jack Zoeller, Chairman and CEO, 804-763-1333
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