Community Bank of Northern Virginia Announces First Quarter 2004 Results.Business Editors STERLING, Va.--(BUSINESS WIRE)--April 23, 2004 Community Bank of Northern Virginia Northern Virginia (NoVA) consists of Arlington, Fairfax, Loudoun, and Prince William counties and the independent cities of Alexandria, Falls Church, Fairfax, Manassas, and Manassas Park. (Nasdaq:CBNV CBNV Community Bank of Northern Virginia ) today announced first quarter 2004 net income of $2.437 million, or $0.24 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. common share, compared to $2.619 million, or $0.25 per diluted common share for the same period last year. Return on average equity for the first quarter 2004 was 17.24% compared to 20.23% for the same period last year. Return on average assets for the first quarter 2004 was 1.26% compared to 1.61% for the same quarter last year. Income before discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. in the first quarter 2004 was $2.437 million, or $0.24 per diluted common share, compared to $2.342 million, or $0.23 per diluted common share for the same period last year. Discontinued operations represents the former wholesale residential mortgage origination Origination The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real business. David P. Summers, President and Chief Executive Officer, stated, "Our core business continues to register gains as evidenced by the 4% increase in income before discontinued operations. With the leveraging capacity provided by the addition of $10 million in regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. capital this quarter, we expect to continue to increase our loan production and generate core deposit growth in an effort to offset future margin compression." Key highlights of First Quarter 2004 vs. First Quarter 2003 -- Average assets increased $119 million, or 18%; average loans increased $136 million, or 32%; and average deposits increased $94 million, or 18%. Loan growth was concentrated primarily in two sectors, business loans secured by real estate and indirect consumer loans. Deposit growth was principally reflected in certificates of deposit, as customers preferred the flexibility and higher rate offered with our no-penalty product. Additional funding for the loan growth was provided by wholesale borrowings from the Federal Home Loan Bank. -- Asset quality continued to improve as nonperfoming assets to total assets declined to 0.38% at March 31, 2004 from 0.56% at March 31, 2003 and from 0.47% at December December: see month. 31, 2003. Annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. net charge-offs to average loans held for investment remained steady at 0.14%. -- Dividends per share Dividends per share Dividend paid for the past 12 months divided by the number of common shares outstanding, as reported by a company. The number of shares often is determined by a weighted average of shares outstanding over the reporting term. increased $0.04 to $0.09, an increase of 80% compared with the same period last year. -- In March 2004, the Bank added $10.0 million in Tier II capital with the successful execution of a floating-rate subordinated debt offering. This efficient and cost-effective cost-effective, n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. method of raising capital provides the means to support continued asset growth consistent with the Bank's strategic plan. -- Income before discontinued operations, or core income, increased $95 thousand, or 4%, in the first quarter 2004 compared to the same period last year. Comparing the first quarter 2004 with the first quarter 2003, net interest income increased $826 thousand or 12.6% despite a 20 basis point decline in margin. The provision for loan losses increased $80 thousand due to the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. loan growth. Other income declined $143 thousand attributable in large measure to a reduction in gains on the sale of investment securities partially offset by an increase in OREO gains. Securities gains declined $324 thousand and net OREO gains increased $140 thousand. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. increased $567 thousand, or 16.5% due primarily to increases in salaries and benefits related to increased staffing levels and increases in incentive-based compensation. In the first quarter of 2003, $277 thousand in income from discontinued operations was recognized. Community Bank of Northern Virginia (http://www.cbnv.com/) began banking activities in 1992 upon receiving its charter from the Virginia Virginia, state, United States Virginia, state of the south-central United States. It is bordered by the Atlantic Ocean (E), North Carolina and Tennessee (S), Kentucky and West Virginia (W), and Maryland and the District of Columbia (N and NE). State Corporation Commission through the acquisition of assets Acquisition of assets A merger or consolidation in which an acquirer purchases the selling firm's assets. and liabilities of an existing bank. Community Bank is a full-service full-ser·vice adj. Associated with or offering complete service: full-service gasoline pumps; full-service banks. banking institution that operates thirteen branch offices and fifteen automated teller machines automated teller machine (ATM), device used by bank customers to process account transactions. Typically, a user inserts into the ATM a special plastic card that is encoded with information on a magnetic strip. . The primary services offered by its 123 full-time equivalent Full-time equivalent (FTE) is a way to measure a worker's involvement in a project, or a student's enrollment at an educational institution. An FTE of 1.0 means that the person is equivalent to a full-time worker, while an FTE of 0.5 signals that the worker is only half-time. employees include retail, mortgage, commercial, and home banking. This press release contains certain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. with respect to the plans, objectives, future performance and business of Community Bank of Northern Virginia. These forward-looking statements involve certain risks and uncertainties. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following possibilities: (1) competitive pressure in the banking industry increase significantly; (2) changes in the interest rate environment reduce margins or favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. changes in interest rates do not occur; (3) general economic conditions either nationally or regionally are less favorable than expected, resulting in, among other things, a deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in credit quality; (4) changes occur in the regulatory environment; (5) changes occur in business conditions; (6) changes occur in the securities markets; (7) the Bank's loan loss reserve to address credit quality concerns may be inadequate, and additional reserves are necessary; (8) strategies to enhance earnings and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. shareholder value are not implemented or fail to have the effects anticipated; (9) recent bank merger activity may not result in the Bank's realizing its goals of increased market share and additional branch expansion; and (10) litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the Bank's second mortgage lending Second mortgage lending Loans secured by real estate previously pledged in a first mortgage. does not have the effects anticipated and liabilities resulting from the litigation are greater than expected.
COMMUNITY BANK OF NORTHERN VIRGINIA
FINANCIAL HIGHLIGHTS
(Unaudited)
----------------------------------------------------------------------
Quarter Ended
(000's except share
data)
-----------------------
3/31/04 3/31/03 % Change
----------- ----------- ---------
Operations
----------
Interest income $10,715 $9,917 8.0
Interest expense 3,328 3,356 -0.8
----------- ----------- ---------
Net interest income 7,387 6,561 12.6
Provision for possible loan losses 480 400 20.0
----------- ----------- ---------
Net interest income after
provision for possible loan
losses 6,907 6,161 12.1
Other income 585 728 -19.6
Operating expenses 4,005 3,438 16.5
----------- ----------- ---------
Income before income taxes and
discontinued operations 3,487 3,451 1.0
Income taxes 1,050 1,109 -5.3
----------- ----------- ---------
Income before discontinued
operations 2,437 2,342 4.1
Income (loss) from discontinued
operations ---- 277 --
----------- ----------- ---------
Net income $2,437 $2,619 -6.9
=========== =========== =========
Per Share Data
--------------
Basic earnings per share before
discontinued operations $0.24 $0.23 4.3
Basic earnings per share $0.24 $0.26 -7.7
Diluted earnings per share before
discontinued operations $0.24 $0.23 4.3
Diluted earnings per share $0.24 $0.25 -4.0
Dividends per share $0.09 $0.05 80.0
Book value per share $5.73 $5.25 9.1
Closing stock price $17.00 $18.89 -10.0
Weighted average shares - Basic 10,139,659 10,022,210
Weighted average shares - Diluted 10,335,374 10,300,689
Selected Balance Sheet Data
---------------------------
Investments $215,269 $236,263 -8.9
Gross Loans $572,927 $438,003 30.8
Total Assets $826,532 $704,658 17.3
Deposits $645,273 $549,159 17.5
Borrowings $113,836 $95,798 18.8
Stockholders' Equity $58,140 $52,912 9.9
Ratios
------
Return on average assets before
discontinued operations 1.26% 1.44%
Return on average assets 1.26% 1.61%
Return on average equity before
discontinued operations 17.24% 18.10%
Return on average equity 17.24% 20.23%
Gross loans to deposits 88.79% 79.76%
Net interest margin (tax
equivalent) 4.02% 4.22%
Overhead ratio before discontinued
operations 1.76% 1.66%
Operating efficiency before
discontinued operations (1) 50.32% 48.97%
Non-performing assets to total
assets 0.38% 0.56%
Net charge-offs to average loans
held for investment (annualized) 0.14% 0.14%
Allowance for possible loan losses
to loans held for investment 1.15% 1.25%
Regulatory Capital Ratios
-------------------------
Tier 1 risk-based capital ratio 9.15% 10.70%
Total risk-based capital ratio 11.95% 11.83%
Leverage ratio 7.27% 7.83%
Balance Sheet (averages)
------------------------
Investments $187,845 $208,945 -10.1
Gross Loans $565,358 $429,445 31.6
Total Assets $780,250 $661,670 17.9
Deposits $611,360 $517,077 18.2
Borrowings $105,734 $87,547 20.8
Stockholders' Equity $56,852 $52,485 8.3
(1) Excludes securities gains and OREO gains (losses).
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