Virginia Commerce Bancorp, Inc. (the “Company”), (Nasdaq: VCBI),
parent company of Virginia Commerce Bank (the “Bank”), today
reported its financial results for the fourth quarter and year
ended December 31, 2013.
Fourth Quarter 2013
Highlights
- Net Income Available to Common
Stockholders and Earnings per Diluted Common Share: Net income
available to common stockholders totaled $7.2 million, or $0.20 per
diluted common share, for the fourth quarter of 2013. This compares
to $4.2 million, or $0.12 per diluted common share, for the fourth
quarter of 2012, and $7.0 million, or $0.20 per diluted common
share, for the third quarter of 2013.
- Adjusted Operating Earnings (a
non-GAAP measure): Adjusted operating earnings totaled $7.9
million, or $0.22 per diluted common share, for the fourth quarter
of 2013. This compares to $5.3 million, or $0.16 per diluted common
share, for the fourth quarter of 2012, and $7.9 million, or $0.23
per diluted common share, for the third quarter of 2013.
- Quarterly Return on Average Assets
(ROAA) of 1.04% and Return on Average Equity (ROAE) of
10.60%
- Asset Quality: Non-performing
assets (“NPAs”) decreased 21.7%, from $50.2 million as of December
31, 2012, to $39.4 million at December 31, 2013, while sequentially
increasing $807 thousand, or 2.1%. Total troubled debt
restructurings (“TDRs”) declined $22.6 million, or 52.1%, from
December 31, 2012, to $20.8 million at December 31, 2013, and
declined $987 thousand, or 4.5%, from September 30, 2013.
- Net Interest Margin: The net
interest margin was 3.70% in the fourth quarter of 2013, compared
to 3.73% and 3.88% in the fourth quarter of 2012 and the sequential
quarter, respectively.
- Capital Strength and Book Value per
Common Share Growth: The ratio of tangible common equity (a
non-GAAP measure) improved to 9.84% at December 31, 2013, as
compared to 8.69% and 9.59% at December 31, 2012, and September 30,
2013, respectively. The book value per common share increased from
$7.68 at December 31, 2012, to $8.03 at December 31, 2013.
Sequentially, the book value per common share increased from $7.88
at September 30, 2013.
Full Year 2013
Highlights
- Net Income Available to Common
Stockholders and Earnings per Diluted Common Share: Net income
available to common stockholders totaled $27.6 million, or $0.78
per diluted common share, for 2013. This compares to $22.5 million,
or $0.67 per diluted common share, for 2012.
- Return on Average Assets (ROAA) of
0.98% and Return on Average Equity (ROAE) of 10.71%
- Net Interest Margin: The net
interest margin was 3.81% for 2013, compared to 3.74% for
2012.
SUMMARY REVIEW OF FINANCIAL PERFORMANCE
Net Income
For the three months ended December 31, 2013, the Company
recorded net income available to common stockholders of $7.2
million, or $0.20 per diluted common share, compared to net income
available to common stockholders of $4.2 million, or $0.12 per
diluted common share, for the three months ended December 31, 2012.
The year-over-year increase was primarily due to a decrease of $3.5
million in effective dividend to the U.S. Treasury on TARP
preferred stock and a decrease of $3.6 million in non-interest
expenses, partially offset by a decrease in net interest income
after provision for loan losses of $1.5 million and a decrease in
non-interest income of $2.8. The Company’s net income available to
common stockholders increased sequentially from $7.0 million, or
$0.20 per diluted common share, for the third quarter of 2013,
primarily due to a decrease in non-interest expenses of $1.6
million, partially offset by a decrease in net interest income
after provision for loan losses of $854 thousand.
For the twelve months ended December 31, 2013, the Company
reported net income available to common stockholders of $27.6
million, or $0.78 per diluted common share, compared to net income
available to common stockholders of $22.5 million, or $0.67 per
diluted common share, for the same period in 2012. The primary
factors driving the year-over-year increase include the Company’s
repurchase of all of its TARP preferred stock during the fourth
quarter of 2012, and related elimination of a $7.6 million
effective dividend on preferred stock for the twelve months ended
December 31, 2013, a $4.4 million decrease in non-interest
expenses, a $1.4 million increase in net interest income after
provision for loan losses and a decrease in provision for income
taxes of $1.0 million, partially offset by a decrease in
non-interest income of $9.3 million.
Adjusted operating earnings (a non-GAAP measure) for the three
months ended December 31, 2013, were $7.9 million, or $0.22 per
diluted common share, compared to $5.3 million, or $0.16 per
diluted common share, for the same period in 2012. The
year-over-year improvement in adjusted operating earnings was
largely attributable to the Company’s repurchase of all of its TARP
preferred stock during the fourth quarter of 2012, and related
elimination of a $3.5 million effective dividend on preferred stock
(which included $2.1 million acceleration of the accretion of the
preferred stock discount in the fourth quarter 2012) for the fourth
quarter of 2013 and a decrease of $3.6 million in non-interest
expenses (which includes $702 thousand of merger-related expenses
in the fourth quarter of 2013), partially offset by a decrease in
net interest income after provision for loan losses of $1.5 million
and a decrease in non-interest income of $2.8 (which includes the
impact of gains of $1.5 million generated by the sales of
investment securities in the fourth quarter of 2012). On a
sequential basis, adjusted operating earnings were down $52
thousand, for the three months ended December 31, 2013, primarily
due to a decrease in net interest income after provision for loan
losses of $854 thousand, a decrease in non-interest income of $198
thousand and an increase of $315 thousand in provision for income
taxes, partially offset by a decrease of $1.6 million in
non-interest expenses (which includes a sequential decrease of $453
thousand in merger-related expenses). The Company calculates
adjusted operating earnings by excluding impairment loss on
investment securities, realized gains and losses on sale of
investment securities, merger-related expenses, acceleration of the
accretion of the preferred stock discount, and certain other
non-recurring items from net income available to common
stockholders.
Asset Quality and Provision For Loan Losses
Total non-performing assets and loans 90+ days past due declined
$9.4 million, or 18.6%, from $50.2 million at December 31, 2012, to
$40.9 million at December 31, 2013, and increased $1.2 million
sequentially from $39.7 million at September 30, 2013. The
year-over-year improvement was primarily a result of net reductions
in loans on non-accrual status of $7.0 million due to sales of
underlying properties and note sales completed by the Company in
2013. Other real estate owned declined $3.9 million from December
31, 2012 to December 31, 2013, driven by the sale of large land
parcels located in Prince George’s County, Maryland and Prince
William County, Virginia. As a percentage of total assets,
non-performing assets and past due loans decreased from 1.78% at
December 31, 2012, to 1.49% at December 31, 2013, and increased
from 1.44% at September 30, 2013. As of December 31, 2013, the
allowance for loan losses represented 1.88% of total loans,
compared to 1.95% and 1.98% at December 30, 2012, and September 30,
2013, respectively. The allowance for loan losses covered 120.03%
of total non-performing loans as of December 31, 2013, compared to
112.77% and 137.52%, at December 31, 2012, and September 30, 2013,
respectively.
As of December 31, 2013, $9.8 million, or 31.8%, of
non-performing loans represented acquisition, development and
construction (“ADC”) loans; $7.8 million, or 25.1%, represented
non-farm, non-residential loans; $7.9 million, or 25.5%,
represented commercial and industrial (“C&I”) loans; and $5.4
million, or 17.6%, represented loans on one-to-four family
residential properties. As of December 31, 2013, specific reserves
of $19.8 million have been established for non-performing loans and
other loans determined to be impaired. The Company continues to
pursue an aggressive campaign to reduce non-performing and other
impaired loans and is implementing and executing various
disposition strategies on an ongoing basis. These strategies are
dependent upon project completion, permitting, satisfaction of
contract contingencies and other factors and in a number of cases
represent situations which require longer timeframes to obtain
optimal principal recovery.
Included in the loan portfolio at December 31, 2013, are loans
classified as troubled debt restructurings (“TDRs”), totaling $20.8
million, a 52.1% decrease from $43.4 million at December 31, 2012.
Sequentially, total TDRs decreased $987 thousand from $21.8 million
at September 30, 2013, as a result of TDR reductions of $1.9
million during the fourth quarter of 2013, led by a $1.2 million
curtailment received from third-party bond financing of a
restaurant property. TDRs are performing, accruing loans that
represent relationships for which a modification to the contractual
interest rate or repayment structure has been granted to address a
financial hardship. A significant portion of TDRs were performing
prior to modification. These loans make up 1.0% of the total loan
portfolio at December 31, 2013, and represent $8.0 million in ADC
loans, $10.7 million in non-farm, non-residential real estate
loans, $1.3 million in C&I loans and $768 thousand in
one-to-four family residential loans. At December 31, 2013, 40.3%
of the Company’s TDRs were reviewable TDRs and 59.7% were permanent
TDRs. Reviewable TDRs are loans that have been restructured at or
will return to a market rate of interest and can include a
temporary interest rate modification, partial deferral of interest
or principal, or an extension of term. They can return to
performing status upon six months of on-time payments following the
return to a market rate of interest, but only in the fiscal year
following the year of restructure. Permanent TDRs are loans that
have been restructured and include a permanent interest rate
reduction. They remain in a TDR status until the loan is paid
off.
Classified loans were $139.5 million for the quarter ended
December 31, 2013, a $21.1 million decrease from $160.6 million at
December 31, 2012. Sequentially, classified loans increased $400
thousand from $139.1 million at September 30, 2013. The
year-over-year decrease in classified loans was largely due to
payoffs received from third-party refinancing of $10.5 million,
regular payments and curtailments of $10.2 million, note sales of
$3.3 million, credit upgrades totaling $1.6 million and charge-offs
before recoveries of $13.2 million, partially offset by additions
to classified loans totaling $17.7 million, substantially
concentrated in a relationship of $10.1 million to a government
contractor, primarily secured by real estate, and a relationship of
$3.6 million to a commercial business, $2.8 million of which is
secured by real estate.
Provision for loan losses was $1.3 million for the quarter ended
December 31, 2013, down $1.2 million, or 47.9%, compared to $2.6
million in the same period in 2012. Net charge-offs were $3.3
million for the three months ended December 31, 2013, compared to
$1.1 million and $2.1 million for the quarters ended December 31,
2012, and September 30, 2013, respectively. For the twelve months
ended December 31, 2013, provision for loan losses totaled $7.5
million, compared to $14.8 million for the prior-year period, with
twelve months ended December 31, 2013 net charge-offs amounting to
$11.4 million, compared to $20.8 million in the twelve months ended
December 31, 2012. The decrease in the allowance for loan losses as
a percentage of total loans from December 31, 2012, to December 31,
2013, is due to higher specific reserves related to certain
credits, partially offset by the decrease in total loans
outstanding. As a result, the fourth quarter analysis of the
adequacy of the loan loss reserve indicated that loan loss
provisioning of $1.3 million was sufficient to maintain appropriate
coverage. The $2.2 million increase in net charge-offs for the
three months ended December 31, 2013, compared to the same period
in 2012, was primarily due to net charge-offs of ADC loans
increasing $1.5 million and net recoveries of non-farm,
non-residential real estate loans decreasing $536 thousand.
Net Interest Income and Net Interest Margin
Net interest income was $23.9 million for the fourth quarter of
2013 and declined $2.7 million, or 10.2%, from the same quarter
last year. The net interest margin decreased three basis points
from 3.73% in the fourth quarter of 2012, to 3.70% for the same
period in 2013. The year-over-year decrease in the fourth quarter
net interest margin was mostly due to a lower average rate earned
on loans, net of unearned income, of 4.90%, as compared to 5.43%
for the fourth quarter of 2012, the impact of which was largely
offset by a reduction in the average time deposit rate from 1.80%
in the fourth quarter of 2012 to 1.62% in the fourth quarter 2013.
On a sequential basis, the net interest margin was down 18 basis
points from 3.88% in the third quarter of 2013. The sequential
decrease in the net interest margin was mostly due to a lower
average rate earned on loans, net of unearned income, of 4.90%, as
compared to 5.21% for the third quarter of 2013, the impact of
which was partially offset by an improvement in the mix of
interest-bearing deposits and a reduction in the average time
deposit rate from 1.70% in the third quarter of 2013 to 1.62% in
the fourth quarter 2013. Interest expense decreased $995 thousand
to $4.8 million generated on an average total interest-bearing
liability balance of $1.99 billion for the fourth quarter of 2013,
from $5.8 million generated on an average total interest-bearing
liability balance of $2.26 billion for the same period in 2012. The
decline in interest expense is mostly attributable to a series of
interest rate reductions on interest-bearing deposit products and
the continued repricing and run-off of higher cost deposits in the
time deposit portfolio. On a sequential basis, interest income
decreased $1.6 million to $28.7 million generated on an average
total interest-earning asset balance of $2.60 billion for the
fourth quarter of 2013, from $30.3 million generated on an average
total interest-earning asset balance of $2.62 billion for the third
quarter of 2013. The declines in interest income and net interest
margin were mostly attributable to the repricing of variable rate
and adjustable rate loans in the existing portfolio in the current
low interest rate environment, and the origination of new loans at
lower rates than the average yield of the existing loan portfolio.
The average rate received on total interest-earning assets was
4.44% for the fourth quarter of 2013, as compared to 4.53% for the
fourth quarter of 2012, and 4.65% for the third quarter of 2013.
The average rate paid on total interest-bearing liabilities was
0.96% for the fourth quarter of 2013, as compared to 1.02% for the
fourth quarter of 2012, and 1.00% for the third quarter of
2013.
Non-Interest Income
For the three months ended December 31 2013, the Company
recognized $1.6 million in non-interest income, compared to
non-interest income of $4.4 million for the same period in 2012,
and $1.8 million in the sequential quarter. Included in the fourth
quarter 2012 non-interest income was a gain on sale of securities
of $1.5 million, while the fourth quarter of 2013 and the
sequential quarter did not include a gain or loss on sale of
securities. The Company recognized non-interest income of $8.2
million for the twelve months ended December 31, 2013, compared to
non-interest income of $17.5 million for the same period in 2012.
For the twelve months ended December 31, 2012, non-interest income
included a gain on sale of securities of $7.4 million, while
non-interest income for the twelve months ended December 31, 2013,
did not include a gain or loss on sale of securities.
Fees and net gains on loans held-for-sale decreased in the
fourth quarter 2013, on a year-over-year basis, by $1.5 million and
on a sequential quarter basis decreased by $220 thousand. The
decrease can be attributed to a significantly lower volume of
mortgage loans originated for sale in the secondary market in
response to higher interest rates which decreased refinance
activity and a focus on one-to-four family residential loans held
in portfolio due to less competitive rates on mortgage products
offered by correspondents in the secondary mortgage market. For the
twelve months ended December 31, 2013, fees and net gains on loans
held-for-sale decreased $2.4 million, or 52.8%, compared to the
twelve months ended December 31, 2012. Income generated by
bank-owned life insurance increased $60 thousand and $810 thousand
for the three months ended December 31, 2013, and twelve months
ended December 31, 2013, respectively, compared to the same periods
in the prior year. The increase can be primarily attributed to
$30.0 million in bank-owned life insurance assets purchased during
the second half of 2012 that have contributed to earnings during
the full year end December 31, 2013.
Non-Interest Expense
Non-interest expense decreased $3.6 million, or 21.2%, from
$16.8 million in the fourth quarter of 2012, to $13.3 million in
the fourth quarter of 2013. Sequentially, non-interest expense
decreased $1.6 million, or 10.7%, from $14.9 million for the third
quarter in 2013. The year-over-year decrease was primarily related
to a decrease of $1.2 million in salaries and employee benefits, a
decrease of $210 thousand in FDIC insurance premiums, a decrease of
$2.0 million in loss on other real estate owned and a $548 thousand
decrease in other operating expense, partially offset by $702
thousand in merger-related expenses during the fourth quarter of
2013. The sequential decrease was primarily related to a decrease
in loss on other real estate owned of $292 thousand, a decrease of
$309 thousand in other real estate owned expenses and a decrease of
$453 thousand in merger-related expenses.
Investment Securities
Investment securities decreased $32.4 million, or 6.6%,
year-over-year to $461.0 million at December 31, 2013, and were
down $20.1 million sequentially from September 30, 2013. There was
no gain or loss on sale of investment securities during the fourth
quarter and twelve months ended December 31, 2013, compared to
gains on sale of investment securities of $1.5 million and $7.4
million during the three and twelve months ended December 31, 2012,
respectively. The investment portfolio contains two pooled trust
preferred investment securities with a book value of $5.1 million,
and a market value of $1.7 million at December 31, 2013, for which
the Company performs a quarterly analysis to determine whether any
other-than-temporary impairment exists. The analysis includes
stress tests on the underlying collateral and cash flow estimates
based on the current and projected future levels of deferrals,
defaults, and prepayments within each pool. There was no recorded
impairment loss for the three or twelve months ended December 31,
2013 and December 31, 2012.
Loans
Loans, net of allowance for loan losses, decreased $115.2
million, or 5.4%, from $2.14 billion at December 31, 2012, to $2.03
billion at December 31, 2013. Non-farm, non-residential real estate
loans decreased $70.5 million, or 6.1%; C&I loans decreased
$44.4 million, or 17.0%; ADC loans decreased $20.3 million, or
7.2%; while multifamily real estate loans increased $2.6 million,
or 3.4%; one-to-four family residential loans increased $12.7
million, or 3.2%; consumer loans increased $672 thousand, or 8.1%;
and farmland loans increased $372 thousand, or 7.6%, from December
31, 2012 to December 31, 2013. Sequentially, loans, net of
allowance for loan losses, increased $8.7 million, or 0.43%
primarily as a result of a $6.6 million, or 1.6%, increase in
one-to-four family residential loans and a $10.7 million, or 15.2%,
increase in multi-family real estate loans, partially offset by a
$5.4 million, or 0.5%, decline in non-farm, non-residential loans,
a $3.5 million, or 1.3%, decline in ADC loans and a $1.5 million,
or 0.7%, decline in C&I loans. The year-over-year and
sequential decreases in non-farm, non-residential real estate and
ADC loans were driven by a highly competitive loan origination
environment which drove increased refinancing activity and
strategic loan sales and problem loan workouts initiated to improve
asset quality. The year-over-year and sequential decrease in
C&I loans was attributable to lower borrowing activity due to
the impact of sequestration on government contracting sector
borrowers and pay downs resulting from problem loan resolution
activities. The year-over-year and sequential increases in
one-to-four family residential loans were due to an increased
emphasis on portfolio lending as a result of less competitive
product offerings from secondary market correspondents.
Deposits
Total deposits at December 31, 2013, were $2.05 billion, a
decrease of $192.9 million, or 8.6%, compared to December 31, 2012,
with demand deposits increasing $33.0 million, or 7.9%, savings and
interest-bearing demand deposits decreasing $128.9 million, or
10.7%, and time deposits decreasing $96.9 million, or 15.4%. As of
December 31, 2013, non-interest bearing demand deposits represented
21.9% of total deposits, compared to 18.5% at December 31, 2012. On
a linked quarter basis, deposits decreased $43.1 million, or 2.1%,
with demand deposits increasing $3.8 million, or 0.85%, savings and
interest-bearing demand accounts decreasing $31.7 million, or 2.9%,
and time deposits decreasing $15.2 million, or 2.8%. The reduction
in interest-bearing and time deposits has been intentional,
resulting from a series of interest rate reductions that continued
throughout 2013. As a result of deposit rate decreases and an
improving deposit mix, the cost of total interest-bearing deposits
and total deposits declined from 0.84% and 0.68%, respectively, for
the quarter ended December 31, 2012, and 0.75% and 0.60% for the
quarter ended September 30, 2013, to 0.73% and 0.57% for the
quarter ended December 31, 2013.
Capital Levels and Stockholders’ Equity
Stockholders’ equity increased $24.7 million, or 10.1%, from
$245.3 million at December 31, 2012, to $270.0 million at December
31, 2013, due to $27.6 million in retained earnings from net income
available to common stockholders during 2013 and $8.1 million in
capital surplus from proceeds and tax benefits related to the
exercise of warrants and options during 2013, partially offset by a
decrease in other comprehensive income of $12.6 million from
December 31, 2012 to December 31, 2013. The decrease in other
comprehensive income is directly related to the reduction in fair
market value of marketable securities resulting from the rise in
long term interest rates during 2013. As a result of these changes,
the Company’s Tier 1 capital ratio increased from 13.25% at
December 31, 2012, to 15.96% at December 31, 2013, and its total
qualifying capital ratio increased from 14.51% to 17.21% over the
same period. Sequentially, the Company’s Tier 1 ratio was up 38
basis points and the total qualifying capital ratio was up 37 basis
points, attributable to net income available to common stockholders
of $7.2 million in the fourth quarter of 2013. The Company’s
tangible common equity ratio increased from 8.69% at December 31,
2012, and 9.59% at September 30, 2013, to 9.84% at December 31,
2013. The 115 basis point increase in tangible common equity ratio
from December 31, 2012, to December 31, 2013, is primarily due to
$27.6 million in retained net income available to common
stockholders during the twelve months ended December 31, 2013.
Sequentially, the 25 basis point increase in tangible common equity
ratio is primarily related to $7.2 million in retained net income
available to common stockholders for the fourth quarter of 2013 and
a decrease of $11.1 million in total tangible assets during the
fourth quarter of 2013, partially offset by a decrease of $2.9
million in other comprehensive income.
ABOUT VIRGINIA COMMERCE BANCORP,
INC.
Virginia Commerce Bancorp, Inc. is the parent bank holding
company for Virginia Commerce Bank, a Virginia state chartered bank
that commenced operations in May 1988. The Bank pursues a
traditional community banking strategy, offering a full range of
business and consumer banking services through twenty-eight branch
offices, one residential mortgage office and one wealth management
services office, principally to individuals and small-to-medium
size businesses in Northern Virginia and the Metropolitan
Washington, D.C. area.
On October 17, 2013, the Company’s stockholders approved a
merger agreement pursuant to which the Company will be acquired by
a subsidiary of United Bankshares, Inc. (“United” and such merger,
the “Merger”). On October 21, 2013, the shareholders of United also
approved the Merger. The Company and United have received
regulatory approval for the Merger from the Board of Governors of
the Federal Reserve System and the Virginia State Corporation
Commission. The Company and United intend to consummate the Merger
on January 31, 2014, subject to the satisfaction or waiver of
certain customary closing conditions. For more information about
this Merger, see the Company’s Current Report on Form 8-K filed
with the Securities and Exchange Commission (the “SEC”) on January
31, 2013, the Company’s Annual Report on Form 10-K filed with the
SEC on March 14, 2013, the registration statement filed by United
with the SEC on Form S-4 on May 29, 2013 (and all subsequent
amendments thereof and prospectus supplements thereunder), and the
Company’s other filings with the SEC that are available on the
SEC’s website, www.sec.gov.
NON-GAAP PRESENTATIONS
The Company prepares its financial statements under accounting
principles generally accepted in the United States, or “GAAP”.
However, this press release also refers to certain non-GAAP
financial measures that we believe, when considered together with
GAAP financial measures, provide investors with important
information regarding our operational performance. An analysis of
any non-GAAP financial measure should be used in conjunction with
results presented in accordance with GAAP.
Adjusted operating earnings is a non-GAAP financial measure that
reflects net income available to common stockholders excluding
impairment loss on investment securities, realized gains and losses
on sale of investment securities, merger-related expenses,
acceleration of the accretion of the preferred stock discount, and
certain other non-recurring items. These excluded items are
difficult to predict and we believe that adjusted operating
earnings provides the Company and investors with a valuable measure
of the Company’s operational performance and a valuable tool to
evaluate the Company’s financial results. Calculation of adjusted
operating earnings for the three months ended December 31, 2013,
December 31, 2012, and September 30, 2013, is as follows:
Three Months
Ended
December 31,
Three Months
Ended
September 30,
(Dollars in thousands)
2013 2012 2013
Net Income Available to Common Stockholders $ 7,183 $
4,230 $ 6,953 Adjustments to net income available to common
stockholders: Realized gain on sale of investment securities --
(1,454 ) -- Merger-related expenses 702 -- 1,155 Net tax effect
adjustment 5 509 (166 ) Acceleration of the accretion of the
preferred stock discount
--
2,061 --
Adjusted Operating Earnings $ 7,890 $ 5,346 $ 7,942
Earnings per common share-diluted $ 0.20 $ 0.12 $
0.20 Adjustments to earnings per common share-diluted Realized gain
on sale of investment securities, net tax affect -- $ (0.02 ) --
Merger-related expenses, net tax affect $ 0.02 -- $ 0.03
Acceleration of the accretion of the preferred stock discount
-- $ 0.06
-- Adjusted operating earnings
per common share-diluted $ 0.22 $ 0.16 $ 0.23
The adjusted efficiency ratio is a non-GAAP financial measure
that is computed by dividing non-interest expense excluding
merger-related expenses, by the sum of net interest income on a tax
equivalent basis, and non-interest income excluding realized gains
and losses on sale of investment securities, merger-related
expenses and certain other non-recurring items. We believe that
this measure provides investors with important information about
our operating efficiency. Comparison of our adjusted efficiency
ratio with those of other companies may not be possible because
other companies may calculate the adjusted efficiency ratio
differently. Calculation of the adjusted efficiency ratio for the
three and twelve months ended December 31, 2013 and 2012 is as
follows:
Three Months Ended Twelve Months Ended
(Dollars in thousands)
December 31, December 31,
2013 2012
2013 2012 Summary Operating
Results: Non-interest expense $ 13,268 $ 16,843 $
59,818 $ 64,239 Merger-related expenses
702
-- 2,723
-- Adjusted non-interest expense
$ 12,566 $ 16,843 $ 57,095 $ 64,239 Net interest income $
23,898 $ 26,603 $ 100,737 $ 106,667 Non-interest income
1,624 4,375 8,200 17,470 Gain on sale of investment securities
-- (1,454
) --
(7,430 ) Adjusted non-interest income $
1,624 $ 2,921 $ 8,200 $ 10,040 Tax equivalent adjustment $
292 $ 355 $ 1,345 $ 1,446 Total net interest income and
non-interest income,
adjusted
$ 25,814 $ 29,879 $ 110,282 $ 118,153
Efficiency Ratio,
adjusted 48.68 % 56.37 % 51.77 % 54.37 %
The tangible common equity ratio is a non-GAAP financial measure
representing the ratio of tangible common equity to tangible
assets. Tangible common equity and tangible assets are non-GAAP
financial measures derived from GAAP-based amounts. We calculate
tangible common equity for the Company by excluding the balance of
intangible assets and outstanding preferred stock issued to the
U.S. Treasury from total stockholders’ equity. We calculate
tangible assets by excluding the balance of intangible assets from
total assets. We had no intangible assets for the periods
presented, and no preferred stock was outstanding during the
periods presented. We believe that this is consistent with the
treatment by regulatory agencies, which exclude intangible assets
from the calculation of regulatory capital ratios. Accordingly, we
believe that these non-GAAP financial measures provide information
that is important to investors and that is useful in understanding
our capital position and ratios. However, these non-GAAP financial
measures are supplemental and are not substitutes for an analysis
based on a GAAP measure. As other companies may use different
calculations for non-GAAP measures, our presentation may not be
comparable to other similarly titled measures reported by other
companies. Calculation of the Company’s tangible common equity
ratio as of December 31, 2013, December 31, 2012, September 30,
2013 and June 30, 2013 is as follows:
(Dollars in thousands)
As of December
31 September 30, June 30, 2013
2012 2013 2013 Tangible common equity:
Total stockholders’ equity $ 270,038 $ 245,309 $ 264,253 $
253,764 Less: Outstanding TARP senior preferred stock -- --
-- -- Intangible assets
--
-- --
-- Tangible common equity $ 270,038 $ 245,309 $
264,253 $ 253,764 Total tangible assets $ 2,745,269 $
2,823,692 $ 2,756,322 $ 2,836,235
Tangible common equity
ratio 9.84 % 8.69 % 9.59 % 8.95 %
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This press release contains forward-looking statements within
the meaning of the Securities and Exchange Act of 1934, as amended,
including statements of goals, intentions, and expectations as to
future trends, plans, events or results of Company operations and
policies, including but not limited to potential benefits and
impacts of a merger between the Company and United Bankshares,
Inc., our outlook on earnings, including our future net interest
margin, and statements regarding asset quality, our loan and
investment security portfolios, our deposit portfolio and
anticipated changes to our deposit costs and balances, projected
growth, capital position, capital strategies, our plans regarding
and expected future levels of our non-performing assets, business
opportunities in our market and other strategic initiatives or
transactions, and general economic conditions. When we use words
such as “may”, “will”, “anticipates”, “believes”, “expects”,
“plans”, “estimates”, “potential”, “continue”, “should”, and
similar words or phrases, you should consider them as identifying
forward-looking statements. These forward-looking statements are
not guarantees of future performance. These statements are based
upon current and anticipated economic conditions, nationally and in
the Company’s market, interest rates and interest rate policy,
competitive factors, and other conditions which by their nature,
are not susceptible to accurate forecast, and are subject to
significant uncertainty. Because of these uncertainties and the
assumptions on which this release and the forward-looking
statements are based, actual future operations and results may
differ materially from those indicated herein. Readers are
cautioned against placing undue reliance on any such
forward-looking statements. The Company’s past results are not
necessarily indicative of future performance. For additional
information regarding factors that could affect the Company's
operations and results, see the Company’s Annual Report on Form
10-K for the year ended December 31, 2012, and other reports filed
with and furnished to the Securities and Exchange Commission, and
the registration statement filed by United with the SEC on Form S-4
on May 29, 2013 (and all subsequent amendments thereof and
prospectus supplements thereunder).
Virginia Commerce Bancorp, Inc. Financial Highlights
(Dollars in thousands, except per share data) (Unaudited)
Three Months Ended December 31, Twelve Months
Ended December 31, 2013 2012 % Change 2013
2012 % Change
Summary Financial Results:
Interest and dividend income $
28,727 $ 32,427 -11.4 % $ 121,298 $ 132,938 -8.8 % Interest expense
4,829 5,824 -17.1 % 20,561 26,271 -21.7 % Net interest income
23,898 26,603 -10.2 % 100,737 106,667 -5.6 % Provision for loan
losses 1,333 2,559 -47.9 % 7,540 14,826 -49.1 % Non-interest income
1,624 4,375 -62.9 % 8,200 17,470 -53.1 % Non-interest expense
13,268 16,843 -21.2 % 59,818 64,239 -6.9 % Income before income
taxes 10,921 11,576 -5.7 % 41,579 45,072 -7.7 % Net income $ 7,183
$ 7,752 -7.3 % $ 27,635 $ 30,100 -8.2 % Effective dividend on
preferred stock $ -- $ 3,522 -100.0 % $ -- $ 7,612 -100.0 % Net
income available to common stockholders $ 7,183 $ 4,230 69.8 % $
27,635 $ 22,488 22.9 %
Performance Ratios: Return on
average assets 1.04 % 1.03 % 0.98 % 1.01 % Return on average equity
10.60 % 10.20 % 10.71 % 10.11 % Net interest margin 3.70 % 3.73 %
3.81 % 3.74 % Efficiency ratio, adjusted 48.68 % 56.37 % 51.77 %
54.37 %
Per Share Data: Earnings per common
share-basic $ 0.21 $ 0.13 61.5 % $ 0.84 $ 0.71 18.3 % Earnings per
common share-diluted $ 0.20 $ 0.12 66.7 % $ 0.78 $ 0.67 16.4 %
Average number of shares outstanding: Basic 33,616,647 31,864,436
32,931,283 31,750,958 Diluted 35,964,198 33,874,852 35,454,002
33,702,769 As of December 31, As of 2013
2012 % Change 09/30/13 % Change
Selected
Balance Sheet Data: Loans, net of allowance for loan losses $
2,027,694 $ 2,142,872 -5.4 % $ 2,018,996 0.4 % Investment
securities 461,046 493,424 -6.6 % 481,177 -4.2 % Assets 2,745,269
2,823,692 -2.8 % 2,756,322 -0.4 % Deposits 2,052,501 2,245,392 -8.6
% 2,095,584 -2.1 % Stockholders’ equity 270,038 245,309 10.1 %
264,253 2.2 % Book value per common share $ 8.03 $ 7.68 4.6 % $
7.88 1.9 %
Capital Ratios (% of risk weighted
assets): Tier 1 capital: Company 15.96 % 13.25 % 15.58 % Bank 14.45
% 12.82 % 14.93 % Total qualifying capital: Company 17.21 % 14.51 %
16.84 % Bank 15.71 % 14.08 % 16.19 % Tier 1 leverage: Company 12.56
% 10.29 % 12.07 % Bank 11.55 % 10.05 % 11.80 % Tangible common
equity: Company 9.84 % 8.69 % 9.59 %
(Dollars in thousands) As of December 31, As of 2013
2012 9/30/2013 6/30/2013
Asset Quality:
Non-performing assets: Non-accrual loans: Commercial $ 7,893 $
3,317 $ 2,663 $ 7,249 Real estate-one-to-four family residential:
Permanent first and second 3,239 3,606 2,655 2,884 Home equity
loans and lines
2,206
2,498 2,382
2,230 Total real estate-one-to-four family
residential $ 5,445 $ 6,104 $ 5,037 $ 5,114 Real
estate-multi-family residential -- -- -- -- Real estate-non-farm,
non-residential: Owner-occupied 4,560 1,791 4,571 5,302
Non-owner-occupied
3,195
3,864 3,239
3,309 Total real estate-non-farm,
non-residential $ 7,755 $ 5,655 $ 7,810 $ 8,611 Real
estate-construction: Residential 4,236 16,976 4,112 4,628
Commercial
5,563
5,860 8,976
8,978 Total real estate-construction $ 9,799 $
22,836 $ 13,088 $ 13,606 Consumer
14
17 23
16 Total non-accrual loans $ 30,906 $ 37,929 $
28,621 $ 34,596 OREO
8,445
12,302 9,923
11,290 Total non-performing assets $ 39,351 $
50,231 $ 38,544 $ 45,886 Loans 90+ days past due and still
accruing: Commercial $ 580 $ -- $ 250 $ -- Real estate-one-to-four
family residential: Permanent first and second 949 -- 876 1,074
Home equity loans and lines
--
-- --
-- Total real estate-one-to-four family
residential $ 949 $ -- $ 876 $ 1,074 Real estate-multi-family
residential -- -- -- -- Real estate-non-farm, non-residential:
Owner-occupied -- -- -- -- Non-owner-occupied
-- --
-- -- Total real
estate-non-farm, non-residential $ -- $ -- $ -- $ -- Real
estate-construction: Residential -- -- -- -- Commercial
-- --
-- -- Total real
estate-construction $ -- $ -- $ -- $ -- Consumer
-- --
-- -- Total loans
90+ days past due and still accruing $ 1,529 $ -- $ 1,126 $ 1,074
Total non-performing assets and past due loans $ 40,880 $
50,231 $ 39,670 $ 46,960 Troubled debt restructurings $
20,807 $ 43,448 $ 21,794 $ 26,890 Non-performing assets to
total loans: 1.90 % 2.29 % 1.87 % 2.14 % to total assets: 1.43 %
1.78 % 1.40 % 1.62 % Non-performing assets and past due loans to
total loans: 1.98 % 2.29 % 1.92 % 2.19 % to total assets: 1.49 %
1.78 % 1.44 % 1.66 % Allowance for loan losses to total loans 1.88
% 1.95 % 1.98 % 1.92 % Allowance for loan losses to non-performing
loans 120.03 % 112.77 % 137.52 % 115.31 % Total allowance
for loan losses $ 38,932 $ 42,773 $ 40,909 $ 41,131
(Dollars in thousands) As of December 31 As of 2013
2012 9/30/13 6/30/13 Loans 30 to 89 days past
due and still accruing Commercial $ 3,214 $ 366 $ 6,292 $ 8,165
Real estate-one-to-four family residential: Permanent first and
second 1,401 2,089 3,920 3,817 Home equity loans and lines
239 223
150 198 Total real
estate-one-to-four family residential $ 1,640 $ 2 ,312 $ 4,070 $
4,015 Real estate-multi-family residential -- -- -- -- Real
estate-non-farm, non-residential: Owner-occupied 1,452 1,688 3,542
2,094 Non-owner-occupied
780
1,661 2,463
1,572 Total real estate-non-farm,
non-residential $ 2,232 $ 3,349 $ 6,005 $ 3,666 Real
estate-construction: Residential 240 -- 283 530 Commercial
-- --
-- -- Total real
estate-construction $ 240 $ -- $ 283 $ 530 Consumer 39 39 46 3
Farmland
-- --
-- --
Total loans 30 to 89 days past due $ 7,365 $ 6,066 $ 16,696 $
16,379
For the three months ended
For the twelve months ended
December 31,
December 31,
2013 2012 2013 2012 Net charge-offs Commercial
$ 366 $ (106 ) $ 2,737 $ 4,869 Real estate-one-to-four family
residential: Permanent first and second $ (43 ) 189 $ (12 ) 1,480
Home equity loans and lines
66
94 294
1,945 Total real estate-one-to-four family
residential $ 23 $ 283 $ 282 $ 3,425 Real estate-multi-family
residential -- -- -- ($118 ) Real estate-non-farm, non-residential:
Owner-occupied $ (1 ) -- $ 152 2,820 Non-owner-occupied
(502 ) (1,039
) 1,040
2,486 Total real estate-non-farm,
non-residential $ (503 ) $ (1,039 ) $ 1,192 $ 5,306 Real
estate-construction: Residential $ 104 $ 1,961 $ 310 $ 6,489
Commercial
3,308 (19
) 6,809
559 Total real estate-construction $ 3,412 $
1,942 $ 7,119 $ 7,048 Consumer 12 (7 ) 50 251 Farmland
-- --
-- -- Total net
charge-offs $ 3,310 $ 1,073 $ 11,380 $ 20,781 Net charge-offs to
average loans outstanding 0.16 % 0.05 % 0.53 % 0.95 % Total
provision for loan losses $ 1,333 $ 2,559 $ 7,540 $ 14,826
Classes of total loans by risk rating as of December 31, 2013,
are summarized as follows (dollars in thousands):
Special
Total Internal Risk Rating Grades Pass
Watch Mention Substandard
Doubtful Loans Commercial $
156,975 $ 26,395 $ 7,789 $ 24,083 $ 1,415 $ 216,657 Real
estate-one-to-four family residential: Permanent first and second
261,441 10,294 13,003 18,888 -- 303,626 Home equity loans and lines
99,495 2,649
1,537 3,752
1,483 108,916 Total real
estate-one-to-four family residential $ 360,936 $ 12,943 $ 14,540 $
22,640 $ 1,483 $ 412,542 Real estate-multi-family residential
77,562 3,475 -- -- -- 81,037 Real estate-non-farm, non-residential:
Owner-occupied 336,322 34,107 26,192 30,433 -- 427,054
Non-owner-occupied
524,883
78,938 20,957
32,936 --
657,714 Total real estate-non-farm, non-residential $
861,205 $ 113,045 $ 47,149 $ 63,369 -- $ 1,084,768 Real
estate-construction: Residential 123,030 9,077 18,751 6,097 --
156,955 Commercial
64,152
15,135 5,121
20,355 --
104,763 Total real estate-construction $ 187,182 $
24,212 $ 23,872 $ 26,452 -- $ 261,718 Consumer 8,456 195 181 106 --
8,938 Farmland 2,303 2,957
-- -- -- 5,260
Total $ 1,654,619 $
183,222 $ 93,531 $
136,650 $ 2,898 $
2,070,920
Classes of total loans by risk rating as of December 31, 2012,
are summarized as follows (dollars in thousands):
Special
Total Internal Risk Rating Grades Pass
Watch Mention Substandard
Doubtful Loans Commercial $
202,088 $ 25,048 $ 11,976 $ 19,822 $ 2,073 $ 261,007 Real
estate-one-to-four family residential: Permanent first and second
235,672 15,585 12,233 19,038 112 282,640 Home equity loans and
lines
106,872 2,724
1,871 4,165
1,543 117,175 Total real
estate-one-to-four family residential $ 342,544 $ 18,309 $ 14,104 $
23,203 $ 1,655 $ 399,815 Real estate-multi-family residential
73,317 5,080 -- -- -- 78,397 Real estate-non-farm, non-residential:
Owner-occupied 384,923 46,123 35,675 19,757 -- 486,478
Non-owner-occupied
488,415
108,868 30,094
41,378 --
668,755 Total real estate-non-farm, non-residential $
873,338 $ 154,991 $ 65,769 $ 61,135 $ -- $ 1,155,233 Real
estate-construction: Residential 104,835 17,651 20,720 26,771 --
169,977 Commercial
41,336
18,645 26,281
25,800 --
112,062 Total real estate-construction $ 146,171 $
36,296 $ 47,001 $ 52,571 $ -- $ 282,039 Consumer 7,744 208 219 95
-- 8,266 Farmland 1,000 3,888
-- -- -- 4,888
Total $ 1,646,202 $
243,820 $ 139,069 $
156,826 $ 3,728 $
2,189,645
Classes of total loans by risk rating as of September 30, 2013,
are summarized as follows (dollars in thousands):
Special
Total Internal Risk Rating Grades Pass
Watch Mention Substandard
Doubtful Loans Commercial $
162,914 $ 21,739 $ 8,257 $ 23,497 $ 1,790 $ 218,197 Real
estate-one-to-four family residential: Permanent first and second
253,358 9,222 14,197 19,333 -- 296,110 Home equity loans and lines
100,070 2,606
1,800 3,881
1,487 109,844 Total real
estate-one-to-four family residential $ 353,428 $ 11,828 $ 15,997 $
23,214 $ 1,487 $ 405,954 Real estate-multi-family residential
66,782 3,548 -- -- -- 70,330 Real estate-non-farm, non-residential:
Owner-occupied 353,479 36,235 23,069 26,198 -- 438,981
Non-owner-occupied
505,643
91,680 20,785
33,098 --
651,206 Total real estate-non-farm, non-residential $
859,122 $ 127,915 $ 43,854 $ 59,296 $ -- $ 1,090,187 Real
estate-construction: Residential 124,733 11,634 18,402 5,919 --
160,688 Commercial
64,946
15,201 584
23,777 --
104,508 Total real estate-construction $ 189,679 $
26,835 $ 18,986 $ 29,696 $ -- $ 265,196 Consumer 8,307 183 175 119
-- 8,784 Farmland 2,328 3,232
-- -- -- 5,560
Total $ 1,642,560 $
195,280 $ 87,269 $
135,822 $ 3,277 $
2,064,208
Classes of total loans by risk rating as of June 30, 2013, are
summarized as follows (dollars in thousands):
Special
Total Internal Risk Rating Grades Pass
Watch Mention Substandard
Doubtful Loans Commercial $
180,358 $ 24,555 $ 10,389 $ 30,830 $ 1,790 $ 247,922 Real
estate-one-to-four family residential: Permanent first and second
252,596 9,390 14,671 20,416 111 297,184 Home equity loans and lines
101,633 2,875
1,541 3,729
1,489 111,267 Total real
estate-one-to-four family residential $ 354,229 $ 12,265 $ 16,212 $
24,145 $ 1,600 $ 408,451 Real estate-multi-family residential
64,416 5,026 -- -- -- 69,442 Real estate-non-farm, non-residential:
Owner-occupied 364,632 46,316 34,076 18,797 -- 463,821
Non-owner-occupied
492,768
115,700 20,863
39,625 --
668,956 Total real estate-non-farm, non-residential $
857,400 $ 162,016 $ 54,939 $ 58,422 $ -- $ 1,132,777 Real
estate-construction: Residential 124,428 13,330 19,179 6,732 --
163,669 Commercial
36,520
10,701 32,503
23,611 --
103,335 Total real estate-construction $ 160,948 $
24,031 $ 51,682 $ 30,343 $ -- $ 267,004 Consumer 8,503 192 172 149
-- 9,016 Farmland 2,350 3,732
-- -- -- 6,082
Total $ 1,628,204 $
231,817 $ 133,394 $
143,889 $ 3,390 $
2,140,694 Troubled Debt
Restructurings (TDRs) -
By Loan Type
As of December 31, 2013 Reviewable TDRs Permanent
TDRs Total TDRs (Dollars in thousands) # of
As % of # of As % of # of
As % of Loans Balance Balance Loans Balance
Balance Loans Balance Balance
Loan
Type: Commercial -- -- 0.0 % 2 $ 1,332 10.7 % 2 $ 1,332
6.4 %
Real estate-one-to-four family residential: Permanent
first and second 2 768 9.2 % -- -- 0.0 % 2 768 3.7 % Home equity
loans and lines
-- --
0.0 % --
-- 0.0 % --
-- 0.0 % Total real
estate-one-to-four family residential 2 $ 768 9.2 % -- -- 0.0 % 2 $
768 3.7 %
Real estate-multi-family residential -- -- 0.0 %
-- -- 0.0 % -- -- 0.0 %
Real estate-non-farm,
non-residential: Owner-occupied 4 6,836 81.5 % -- -- 0.0 % 4
6,836 32.9 % Non-owner-occupied
1
780 9.3 % 3
3,077 24.8 %
4 3,857 18.5
% Total real estate-non-farm, non-residential 5 $
7,616 90.8 % 3 $ 3,077 24.8 % 8 $ 10,693 51.4 %
Real
estate-construction: Residential -- -- 0.0 % -- -- 0.0 % -- --
0.0 % Commercial
-- --
0.0 % 4
8,014 64.5 % 4
8,014 38.5 % Total
real estate-construction -- -- 0.0 % 4 $ 8,014 64.5 % 4 $ 8,014
38.5 %
Consumer -- -- 0.0 % -- -- 0.0 % -- -- 0.0 %
Farmland -- --
0.0 % --
-- 0.0 % --
-- 0.0 % Total
7 $ 8,384 100.0 % 9 $ 12,423 100.0 % 16 $ 20,807 100.0 %
Troubled Debt Restructurings (TDRs) -
By Quarterly Review / Maturity
Date
As of December 31, 2013 Reviewable TDRs Permanent
TDRs Total TDRs # of As % of # of
As % of # of As % of Loans Balance
Balance Loans Balance Balance Loans
Balance Balance
Review / Maturity by Quarter:
2014 1st Quarter 2 768 9.2 % -- -- 0.0 % 2 768 3.7 % 2nd
Quarter 2 1,678 20.0 % 1 1,026 8.3 % 3 2,704 13.0 % 3rd Quarter 2
5,582 66.6 % -- -- 0.0 % 2 5,582 26.8 % 4th Quarter
--
-- 0.0 %
1 5,400 43.4
% 1 5,400
26.0 % Total 2014: 6 $ 8,028 95.8 % 2 $
6,426 51.7 % 8 $ 14,454 69.5 %
2015 & beyond
1 $ 356 4.2
% 7 $ 5,997
48.3 % 8 $
6,353 30.5 % Total
Loans 7 $ 8,384 100.0 % 9 $ 12,423 100.0 % 16 $ 20,807 100.0 %
Troubled Debt Restructurings (TDRs) - Migration by
Quarter As of December 31, 2013 (Dollars in
thousands) 4/1/09 to 7/1/09 to 10/1/09 to
1/1/10 to 4/1/10 to 7/1/10 to 10/1/10
to 1/1/11 to 6/30/09 9/30/09
12/31/09 3/31/10 6/30/10 9/30/10
12/31/10 3/31/11 Period Beginning Balance -- $
33,309 $ 37,425 $ 71,885 $ 80,993 $ 96,976 $ 105,617 $ 102,996
Additions: New Loans Added $ 33,309 $ 5,226 $ 37,663
$ 23,477 $ 21,720 $ 12,698 $ 12,377 $ 3,188 Loan Advances
-- 974
348 219
472 220
531 486 Subtotal Additions:
$ 33,309 $ 6,200 $ 38,011 $ 23,696 $ 22,192 $ 12,918 $ 12,908 $
3,674
Deductions: Sales Proceeds -- $ 944 $ 1,783 $
1,218 $ 761 -- $ 125 $ 367 Payments -- 317 174 50 1,202 1,138 433
1,989 Reviews -- -- 229 75 3,714 2,468 -- 5,731 Upgrades -- -- --
-- -- -- 11,000 -- Partial C/Os w/Continuing TDRs -- -- -- -- -- --
-- 5,656 Charge-offs w/Loans Sold or Settled -- -- 56 -- -- -- --
251 Transfer to NPA
--
823 1,309
13,245 532
671 3,971
800 Subtotal Deductions: -- $ 2,084 $ 3,551 $ 14,588 $
6,209 $ 4,277 $ 15,529 $ 14,794
Net Increase /
(Decrease) $ 33,309 $ 4,116 $ 34,460 $ 9,108 $ 15,983 $ 8,641
($ 2,621 ) ($ 11,120 )
% Increase / (Decrease) from
Preceding Period 12.4 % 92.1 % 12.7 % 19.7 % 8.9 % (2.5 %)
(10.8 %)
Period Ended Balance $ 33,309 $ 37,425 $
71,885 $ 80,993 $ 96,976 $ 105,617 $ 102,996 $ 91,876
4/1/11 to 7/1/11 to 10/1/11 to 1/1/12
to 4/1/12 to 7/1/12 to 10/1/12 to
1/1/13 to 6/30/11 9/30/11 12/31/11
3/31/12 6/30/12 9/30/12 12/31/12
3/31/13 Period Beginning Balance $ 91,876 $ 81,070 $
71,686 $ 52,264 $ 42,426 $ 43,054 $ 44,892 $ 43,448
Additions: New Loans Added $ 116 $ 984 $ 753 $ 541 $ 1,345 $
8,804 $ 6,771 $ 231 Loan Advances
197
53 40
236 186
46 65
-- Subtotal Additions: $ 313 $ 1,037 $ 793 $ 777 $
1,531 $ 8,850 $ 6,836 $ 231
Deductions: Sales
Proceeds $ 126 $ 4,597 $ 6,168 $ 5,098 $ 247 $ 531 $ 3,904 $ --
Payments 1,715 532 990 226 158 785 72 64 Reviews 640 4,292 10,111
3,888 498 1,465 635 9,689 Upgrades -- -- -- -- -- -- 3392 --
Partial C/Os w/Continuing TDRs 3,000 -- -- -- -- 2,587 0 --
Charge-offs w/Loans Sold or Settled -- -- 2,946 604 -- -- 0 --
Transfer to NPA
5,638
1,000 --
799 --
1,644 277
-- Subtotal Deductions: $ 11,119 $ 10,421 $ 20,215 $
10,615 $ 903 $ 7,012 $ 8,280 $ 9,753
Net Increase /
(Decrease) ($10,806 ) ($9,384 ) ($19,422 ) ($9,838 ) $ 628 $
1,838 ($1,444 ) ($9,522 )
% Increase / (Decrease) from
Preceding Period (11.8 %) (11.6 %) (27.1 %) (18.8 %) 1.5 % 4.3
% (3.20 %) (21.9 %)
Period Ended Balance $ 81,070 $
71,686 $ 52,264 $ 42,426 $ 43,054 $ 44,892 $ 43,448 $ 33,926
Troubled Debt Restructurings (TDRs)
-
Migration by Quarter
As of December 31, 2013 (Dollars in thousands)
4/1/13 to 7/1/13 to 10/1/13 to 6/30/13
9/30/13 12/31/13 TOTAL Period Beginning
Balance $ 33,926 $ 26,890 $ 21,794
Additions: New
Loans Added $ 1,063 $ 1,123 $ 900 $ 172,289 Loan Advances
-- --
-- 4,073 Subtotal
Additions: $ 1,063 $ 1,123 $ 900 $ 176,362
Deductions: Sales Proceeds $ 46 $ -- $ -- $ 25,915 Payments
28 5,003 1,223 16,099 Reviews 663 600 -- 44,698 Upgrades -- -- --
14,392 Partial C/Os w/Continuing TDRs -- -- -- 11,243 Charge-offs
w/Loans Sold or Settled 27 616 -- 4,500 Transfer to NPA
7,335 --
664 38,708 Subtotal
Deductions: $ 8,099 $ 6,219 $ 1,887 $ 155,555
Net
Increase / (Decrease) ($7,036 ) ($5,096 ) ($988 )
%
Increase / (Decrease) from Preceding Period (20.7 %) (18.9 %)
(4.5 %)
Period Ended Balance $ 26,890 $ 21,794 $
20,807 $ 20,807 (Dollars in thousands)
As of December 31, As of 2013 2012
% Change 9/30/13 % Change
Loan
Portfolio: Commercial $ 216,657 $ 261,007 -17.0 % $ 218,197
-0.71 % Real estate-one to four family residential: Permanent first
and second 303,626 282,640 7.4 % 296,110 2.5 % Home equity loans
and lines
108,916 117,175
-7.0 % 109,844
-0.8 % Total real estate-one-to-four
family residential $ 412,542 $ 399,815 3.2 % $ 405,954 1.6 % Real
estate-multifamily residential 81,037 78,397 3.4 % 70,330 15.22 %
Real estate-non-farm, non-residential: Owner-occupied 427,054
486,478 -12.2 % 438,981 -2.72 % Non-owner-occupied
657,714 668,755 -1.7
% 651,206 1.00
% Total real estate-non-farm, non-residential $
1,084,768 $ 1,155,233 -6.1 % $ 1,090,187 -0.50 % Real
estate-construction: Residential 156,955 169,977 -7.7 % 160,688
-2.32 % Commercial
104,763
112,062 -6.5 %
104,508 0.24 % Total real
estate-construction: $ 261,718 $ 282,039 -7.2 % $ 265,196 -1.31 %
Consumer 8,938 8,266 8.1 % 8,784 1.75 % Farmland
5,260 4,888 7.6
% 5,560 -5.40
% Total loans $ 2,070,920 $ 2,189,645 -5.4 % $
2,064,208 0.33 % Less unearned income 4,294 4,000 7.3 % 4,303 -0.21
% Less allowance for loan losses
38,932
42,773 -9.0 %
40,909 -4.83 % Loans, net $
2,027,694 $ 2,142,872 -5.4 % $ 2,018,996 0.43 %
(Dollars in thousands) As of December 31, 2013
Residential, Acquisition, Development
and Construction
Non-accruals
Net charge-
Total Percentage Non-accrual as a % of
offs as a % of
By County/Jurisdiction of Origination: Outstandings
of Total Loans Outstandings Outstandings District of
Columbia $ 1,445 0.9 % $ 300 0.2 % -- Montgomery, MD -- 0.0 % -- --
-- Prince Georges, MD 7,180 4.6 % 3,182 2.0 % -- Other Counties in
MD 1,985 1.3 % 54 -- -- Arlington/Alexandria, VA 37,106 23.6 % 700
0.4 % 0.4 % Fairfax, VA 27,717 17.7 % -- -- -- Culpeper/Fauquier,
VA 10,726 6.8 % -- -- -- Frederick, VA -- 0.0 % -- -- -0.1 %
Henrico, VA 930 0.6 % -- -- -- Loudoun, VA 13,767 8.8 % -- -- --
Prince William, VA 28,309 18.0 % -- -- -- Spotsylvania, VA 648 0.4
% -- -- -- Stafford, VA 20,452 13.0 % -- -- -- Other Counties in VA
4,382 2.8 % -- -- -0.1 % Outside VA, D.C. & MD
2,308 1.5 %
-- -- -- $
156,955 100.0 % $ 4,236 2.6 % 0.2 % (Dollars
in thousands) As of December 31, 2013
Commercial, Acquisition, Development
and Construction
Non-accruals
Net charge-
Total Percentage Non-accrual as a % of
offs as a % of
By County/Jurisdiction of Origination: Outstandings
of Total Loans Outstandings Outstandings District of
Columbia $ 3,330 3.2 % $ -- -- -- Montgomery, MD 2,000 1.9 % -- --
-- Prince Georges, MD 6,307 6.0 % -- -- -- Other Counties in MD
2,009 1.9 % -- -- -- Arlington/Alexandria, VA 495 0.5 % 495 0.5 %
-- Fairfax, VA 1,592 1.5 % -- -- 0.2 % Culpeper/Fauquier, VA 1,348
1.3 % 1,108 1.1 % 1.0 % Frederick, VA 2,000 1.9 % -- -- -- Henrico,
VA -- -- -- -- -- Loudoun, VA 14,442 13.8 % -- -- -- Prince
William, VA 43,525 41.6 % -- -- -- Spotsylvania, VA 1,550 1.5 % --
-- -- Stafford, VA 20,788 19.8 % 3,125 2.9 % 5.4 % Other Counties
in VA 5,377 5.1 % 835 0.8 % -- Outside VA, D.C. & MD
-- -- --
-- -- $ 104,763 100.0 % $
5,563 5.3 % 6.6 % (Dollars in thousands) As of
December 31, 2013
Non-Farm/Non-Residential Non-accruals
Net charge-
Total Percentage Non-accrual as a % of
offs as a % of
By County/Jurisdiction of Origination: Outstandings
of Total Loans Outstandings Outstandings District of
Columbia $ 66,537 6.1 % $ -- -- -- Montgomery, MD 16,237 1.5 %
1,646 0.2 % -- Prince Georges, MD 62,394 5.8 % -- -- -- Other
Counties in MD 51,148 4.7 % -- -- -- Arlington/Alexandria, VA
144,249 13.3 % 910 0.1 % -- Fairfax, VA 250,459 23.1 % -- -- 0.1 %
Culpeper/Fauquier, VA 4,740 0.4 % 1,549 0.1 % -- Frederick, VA
7,524 0.7 % -- -- -- Henrico, VA 18,518 1.7 % -- -- -- Loudoun, VA
135,204 12.5 % 3,650 0.3 % -- Prince William, VA 200,110 18.4 % --
-- -- Spotsylvania, VA 31,113 2.9 % -- -- -- Stafford, VA 19,093
1.8 % -- -- 0.1 % Other Counties in VA 68,772 6.3 % -- -- --
Outside VA, D.C. & MD
8,668
0.8 % --
-- -- $ 1,084,768 100.0 % $
7,755 0.7 % 0.2 %
Of this total of $1.1 billion in non-farm/non-residential real
estate loans, approximately $140.8 million will mature in 2014,
$66.5 million in 2015 and $108.0 million in 2016.
As of December 31, As of
(Dollars in thousands) 2013 2012 %
Change 9/30/13 % Change
Investment Securities (at
book value): Available-for-sale (AFS): U.S. government agency
obligations $ 370,051 $ 392,867 -5.8 % $ 386,475 -4.2 %
Pooled trust preferred securities 1,665 357 366.4 % 1,612 3.3 %
Obligations of states and political subdivisions
89,330 100,200 -10.8
% 93,090 -4.0
% Total Investment Securities $ 461,046 $ 493,424 -6.6
% $ 481,177 -4.2 % Virginia Commerce Bancorp, Inc.
Consolidated Balance Sheets (Dollars in thousands, except per share
data) (Unaudited, except as of December 31, 2012)
As of December 31, 2013 2012
Assets
Cash and due from banks $ 43,637 $ 49,531 Investment
securities, AFS 461,046 493,424 Restricted stocks, at cost 11,828
10,147 Interest bearing deposits in other banks 95,000 1,000 Loans
held-for-sale 1,241 15,195 Loans, net of allowance for loan losses
of $38,932 and $42,773 2,027,694 2,142,872 Bank premises and
equipment, net 8,423 10,072 Accrued interest receivable 7,532 8,563
Other real estate owned, net of valuation allowance of $1,973 and
$6,374 8,445 12,302 Bank owned life insurance 45,579 44,393 Other
assets 34,844 36,193 Total assets $ 2,745,269
$ 2,823,692
Liabilities and Stockholders’
Equity Deposits Demand deposits $ 449,050 $ 416,091
Savings and interest-bearing demand deposits 1,071,455 1,200,397
Time deposits 531,996 628,904 Total deposits $
2,052,501 $ 2,245,392 Securities sold under agreement to repurchase
290,899 250,718 Other borrowed funds 60,000 7,000 Trust preferred
capital notes 67,019 66,827 Accrued interest payable 1,507 1,885
Other liabilities 3,304 6,561 Total
liabilities $ 2,475,231 $ 2,578,383
Stockholders’ Equity
Common stock, $1.00 par value per share, 50,000,000 shares
authorized, issued and outstanding December 2013, 33,632,232
including 179,727 in unvested restricted stock issued; December
2012, 31,920,756 including 110,215 in unvested restricted stock
issued $ 33,452 $ 31,811 Surplus 126,588 118,508 Warrants 8,520
8,520 Retained earnings 111,123 83,487 Accumulated other
comprehensive income (loss), net (9,645 ) 2,983 Total
stockholders’ equity $ 270,038 $ 245,309 Total liabilities
and stockholders’ equity $ 2,745,269 $ 2,823,692
Virginia Commerce Bancorp, Inc. Consolidated Statements of
Operations (Dollars in thousands except per share data) (Unaudited)
Three Months Ended Twelve Months Ended
December 31 December 31, 2013 2012 2013 2012
Interest and dividend income: Interest and
fees on loans $ 25,670 $ 29,429 $ 109,995 $ 120,297 Interest and
dividends on investment securities: Taxable 2,377 2,210 8,503 9,538
Tax-exempt 535 563 2,206 2,311 Dividends on restricted stocks 119
118 459 428 Interest on deposits in other banks 26
107 135 364 Total interest and
dividend income $ 28,727 $ 32,427 $ 121,298 $
132,938
Interest expense: Deposits $ 2,975 $ 3,880 $ 13,020
$ 17,548 Securities sold under agreement to repurchase and federal
funds purchased 938 973 3,712 4,041 Other borrowed funds 29 -- 83
779 Trust preferred capital notes 887
971 3,746 3,903 Total interest expense $ 4,829
$ 5,824 $ 20,561 $ 26,271
Net interest
income $ 23,898 $ 26,603 $ 100,737 $ 106,667 Provision for loan
losses 1,333 2,559 7,540
14,826 Net interest income after provision for loan losses $
22,565 $ 24,044 $ 93,197 $ 91,841
Non-interest income: Service charges and other fees $ 920 $
919 $ 3,656 $ 3,557 Non-deposit investment services commissions 210
181 985 886 Fees and net gains on loans held-for-sale 101 1,572
2,119 4,485 Gain on sale of investment securities -- 1,454 -- 7,430
Bank owned life insurance 277 217 1,186 376 Other 116
32 254 736 Total non-interest
income $ 1,624 $ 4,375 $ 8,200 $ 17,470
Non-interest expense: Salaries and employee benefits $ 6,223
$ 7,407 $ 27,550 $ 29,924 Occupancy expense 2,263 2,358 9,301 9,500
FDIC insurance premiums 407 617 1,943 3,105 Loss on other real
estate owned (363 ) 1,615 1,349 3,181 Other real estate owned
expenses 97 92 976 994 Franchise tax expense 748 936 2,995 3,371
Data processing expense 691 770 2,795 2,762 Merger-related expenses
702 -- 2,723 -- Other operating expense 2,500
3,048 10,186 11,402 Total non-interest
expense $ 13,268 $ 16,843 $ 59,818 $ 64,239
Income before taxes $ 10,921 $ 11,576 $ 41,579 $ 45,072 Provision
for income taxes 3,738 3,824
13,944 14,972
Net income $ 7,183
$ 7,752 $ 27,635 $ 30,100 Effective dividend on preferred
stock -- $ 3,522 -- $ 7,612
Net income available to common stockholders $ 7,183 $ 4,230
$ 27,635 $ 22,488 Earnings per common share, basic $ 0.21 $ 0.13 $
0.84 $ 0.71 Earnings per common share, diluted $ 0.20 $ 0.12 $ 0.78
$ 0.67 Virginia Commerce Bancorp, Inc. Consolidated
Average Balances, Yields, and Rates Three Months Ended December 31,
(Unaudited) 2013 2012
(Dollars in thousands)
Average
Balance
Interest
Income-
Expense
Average
Yields
/Rates
Average
Balance
Interest
Income-
Expense
Average
Yields
/Rates
Assets Investment securities (1)
$ 475,154 $ 2,912 2.69 % $ 543,120 $ 2,773 2.26 % Restricted stock
11,696 119 4.04 % 10,794 118 4.34 % Loans, net of unearned income
(2) 2,078,726 25,670 4.90 % 2,160,768 29,429 5.43 %
Interest-bearing deposits in other banks 29,451
26 0.36 % 163,655 107
0.26 %
Total interest-earning assets $ 2,595,027 $ 28,727
4.44 % $ 2,878,337 $ 32,427 4.53 % Other assets 149,462
107,447
Total Assets $ 2,744,489 $ 2,985,784
Liabilities and Stockholders’ Equity Interest-bearing
deposits: NOW accounts $ 412,218 $ 271 0.26 % $ 424,114 $ 363 0.34
% Money market accounts 226,215 173 0.30 % 237,037 195 0.33 %
Savings accounts 446,446 334 0.30 % 541,836 442 0.32 % Time
deposits 537,414 2,197 1.62 %
637,926 2,880 1.80 % Total interest-bearing
deposits $ 1,622,293 $ 2,975 0.73 % $ 1,840,913 $ 3,880 0.84 %
Securities sold under agreement to repurchase and federal funds
purchased(3) 245,164 938 1.52 % 356,590 973 1.08 % Other borrowed
funds 57,065 29 0.20 % -- -- -- Trust preferred capital notes
67,019 887 5.18 % 66,791
971 5.69 %
Total interest-bearing liabilities
$ 1,991,541 $ 4,829 0.96 % $ 2,264,294 $ 5,824 1.02 % Demand
deposits and other liabilities 484,088 420,026
Total liabilities $ 2,475,629 $ 2,684,320 Stockholders’
equity 268,860 301,464
Total liabilities and
stockholders’ equity $ 2,744,489 $ 2,985,784 Interest rate
spread 3.48 % 3.51 % Net interest income and margin $ 23,898 3.70 %
$ 26,603 3.73 %
(1)
Yields on investment securities available-for-sale have been
calculated on the basis of historical cost and do not give effect
to changes in the fair value of those investment securities, which
are reflected as a component of stockholders’ equity. Average
yields on investment securities are stated on a tax equivalent
basis, using a 35% rate. (2) Loans placed on non-accrual status are
included in the average balances. Net loan fees and late charges
included in interest income on loans totaled $1.9 million and $1.6
million for the three months ended December 31, 2013 and 2012,
respectively. (3) The securities sold under agreement to repurchase
related to customers had an average balance of $170.2 million at an
average rate of 0.19% for the three months ended December 31, 2013,
and $281.6 million at an average rate of 0.17% for the same period
2012. Also, included are wholesale agreements with an average
balance of $75.0 million at an average rate of 4.51% for the three
months ended December 31, 2013, and $75.0 million at an average
rate of 4.52% for the same period for 2012. Virginia
Commerce Bancorp, Inc. Consolidated Average Balances, Yields, and
Rates Twelve Months Ended December 31, (Unaudited)
2013 2012 (Dollars in thousands)
Average
Balance
Interest
Income-
Expense
Average
Yields
/Rates
Average
Balance
Interest
Income-
Expense
Average
Yields
/Rates
Assets Investment securities (1)
$ 486,316 $ 10,709 2.44 % $ 571,763 $ 11,849 2.28 % Restricted
stock 10,953 459 4.19 % 11,139 428 3.84 % Loans, net of unearned
income (2) 2,137,617 109,995 5.15 % 2,169,441 120,297 5.56 %
Interest-bearing deposits in other banks 42,700
135 0.31 % 140,631 364
0.26 %
Total interest-earning assets $ 2,677,586 $ 121,298
4.58 % $ 2,892,974 $ 132,938 4.65 % Other assets 129,923
76,452
Total Assets $ 2,807,509 $ 2,969,426
Liabilities and Stockholders’ Equity Interest-bearing
deposits: NOW accounts $ 426,038 $ 1,205 0.28 % $ 371,740 $ 1,335
0.36 % Money market accounts 226,674 688 0.30 % 229,748 899 0.39 %
Savings accounts 474,930 1,431 0.30 % 585,229 2,443 0.42 % Time
deposits 576,631 9,696 1.68 %
692,269 12,871 1.86 % Total interest-bearing
deposits $ 1,704,273 $ 13,020 0.76 % $ 1,878,986 $ 17,548 0.93 %
Securities sold under agreement to
repurchase and federal funds purchased(3)
272,040 3,712 1.36 % 330,598 4,041 1.22 % Other borrowed funds
37,258 83 0.22 % 18,052 779 4.25 % Trust preferred capital notes
66,946 3,746 5.60 % 66,695
3,903 5.85 %
Total interest-bearing
liabilities $ 2,080,517 $ 20,561 0.99 % $ 2,294,331 $ 26,271
1.15 % Demand deposits and other liabilities 468,956
377,357
Total liabilities $ 2,549,474 $ 2,671,688
Stockholders’ equity 258,035 297,738
Total
liabilities and stockholders’ equity $ 2,807,509 $ 2,969,426
Interest rate spread 3.59 % 3.50 % Net interest income and margin $
100,737 3.81 % $ 106,667 3.74 % (1) Yields on
investment securities available-for-sale have been calculated on
the basis of historical cost and do not give effect to changes in
the fair value of those investment securities, which are reflected
as a component of stockholders’ equity. Average yields on
investment securities are stated on a tax equivalent basis, using a
35% rate. (2) Loans placed on non-accrual status are included in
the average balances. Net loan fees and late charges included in
interest income on loans totaled $5.6 million and $5.3 million for
the twelve months ended December 31, 2013, and 2012, respectively.
(3) The sold under agreement to repurchase related to customers had
an average balance of $197.0 million at an average rate of 0.16%
for the twelve months ended December 31, 2013, and $255.6 million
at an average rate of 0.25% for the same period 2012. Also,
included are wholesale agreements with an average balance of $75.0
million at an average rate of 4.51% for the twelve months ended
December 31, 2013, and $75.0 million at an average rate of 4.52%
for the same period for 2012.
Virginia Commerce Bancorp, Inc.Mark S. MerrillChief Financial
Officer703-633-6120mmerrill@vcbonline.com
Virginia Commerce Bancorp (MM) (NASDAQ:VCBI)
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