Community Bank of Northern Virginia Announces Fourth Quarter 2004 and Record 2004 Net Income.STERLING, Va. -- 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 fourth quarter 2004 net income of $2.419 million, or $0.23 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 $2.143 million, or $0.21 per diluted common share for the same period last year, an increase of 13%. Return on average equity for the fourth quarter 2004 was 16.02% compared to 15.60% for the same period last year. Return on average assets for the fourth quarter 2004 was 1.08% compared to 1.13% for the same quarter last year. For the year ended December December: see month. 31, 2004, record net income of $9.119 million, or $0.88 per diluted common share, was achieved compared to $7.878 million, or $0.77 per diluted common share for the same period last year, an increase of 16%. Return on average equity for 2004 was 15.76% compared to 14.63% for 2003. Return on average assets for 2004 was 1.08% compared to 1.11% for the same period last year. Commenting on 2004 results, David P. Summers, President and Chief Executive Officer, stated, "We are pleased to report record net income for 2004. We achieved strong loan and deposit growth even as competitive pressures became more intense in our marketplace. This milestone “Milemarker” redirects here. For the American indie rock band, see Milemarker (band). A milestone or kilometre sign is one of a series of numbered markers placed along a road at regular intervals, typically at the side of the road or in a median. was also achieved despite a higher than normal net charge-off Eliminate or write off. The term charge-off is used to describe the process of removing from the records of a company something that was once regarded as an asset but has subsequently become worthless. ratio. With asset quality improved at year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 2004 and plans underway to further expand our Northern Virginia footprint The amount of geographic space covered by an object. A computer footprint is the desk or floor surface it occupies. A satellite's footprint is the earth area covered by its downlink. See form factor. 1. , 2005 is expected to be another year of strong performance." Key highlights of 2004 vs. 2003 --Average assets increased $141 million, or 20%; average loans increased $131 million, or 27%; and average deposits increased $85 million, or 16%. 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. The loan to deposit ratio increased to 101% as deposit growth did not keep pace with loan growth. Additional funding for the asset growth was provided by wholesale borrowings from the Federal Home Loan Bank. Average borrowings increased $52 million or 49%. --Operating efficiency ratio remained at 48.6%, evidencing effective control of 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. . --Dividends per share increased from $0.30 to $0.39, an increase of 30% compared with the same period last year. --Annualized net charge-offs to average loans held for investment increased to 0.67% from 0.26% while nonperforming assets Nonperforming asset An asset that is not effectively producing income, such as an overdue loan. nonperforming asset An asset that produces no income. to total assets declined to 0.23% from 0.47%. Net charge-offs for 2004 were $4.077 million compared to $1.252 million for the same period last year as the bank experienced its first significant commercial loan charge-offs since 2001. Management believes that asset quality has been stabilized sta·bi·lize v. sta·bi·lized, sta·bi·liz·ing, sta·bi·liz·es v.tr. 1. To make stable or steadfast. 2. and does not view the higher charge-offs experienced in 2004 as indicative indicative: see mood. of any systemic systemic /sys·tem·ic/ (sis-tem´ik) pertaining to or affecting the body as a whole. sys·tem·ic adj. 1. Of or relating to a system. 2. issues or trend. --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. , or core income, decreased $470 thousand, or 5%, in 2004 compared to 2003 primarily due to a higher provision for loan losses. Comparing 2004 to 2003, net interest income increased $3.1 million or 11% despite a 28 basis point decline in net interest margin. The provision for loan losses increased $2.3 million due to a higher level of charge-offs and loan growth. Other income declined $318 thousand attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk in large measure to a reduction in gains on the sale of investment securities and the effects of OREO sales. Income from investment securities sales declined $734 thousand while income from OREO sales increased $116 thousand. Operating expenses increased $1.8 million, or 13% due primarily to increases in personnel costs, professional fees, collection costs, data processing data processing or information processing, operations (e.g., handling, merging, sorting, and computing) performed upon data in accordance with strictly defined procedures, such as recording and summarizing the financial transactions of a , and insurance. Also this morning, Mercantile Relating to trade or commerce; commercial; having to do with the business of buying and selling; relating to merchants. A mercantile agency is an individual or company in the business of collecting data about the financial status, ability, and credit of individuals Bankshares Corporation (Nasdaq:MRBK) and Community Bank of Northern Virginia announced that they had entered into a definitive agreement pursuant to which Community Bank of Northern Virginia will merge See mail merge and concatenate. with Mercantile Safe-Deposit and Trust Company, a subsidiary of Mercantile Bankshares Corporation. Details of the transaction are available in a separate press release issued today. 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 134 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 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. 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)
---------------------------------
%
Operations 12/31/04 12/31/03 Change
-------------- ----------- ----------- ---------
Interest income $12,104 $10,763 12.5
Interest expense 4,244 3,187 33.2
----------- ----------- ---------
Net interest income 7,860 7,576 3.7
Provision for loan losses 1,150 750 53.3
----------- ----------- ---------
Net interest income after
provision for loan losses 6,710 6,826 -1.7
Other income 457 462 -1.1
Operating expenses 4,352 4,110 5.9
----------- ----------- ---------
Income before income taxes and
discontinued operations 2,815 3,178 -11.4
Income taxes 684 905 -24.4
----------- ----------- ---------
Income before discontinued
operations 2,131 2,273 -6.2
Income (loss) from discontinued
operations 288 (130) 321.5
----------- ----------- ---------
Net income $2,419 $2,143 12.9
=========== ----------- ---------
Per Share Data
------------------
Basic earnings per share before
discontinued operations $0.21 $0.23 -8.7
Basic earnings per share $0.24 $0.21 14.3
Diluted earnings per share before
discontinued operations $0.21 $0.22 -4.5
Diluted earnings per share $0.23 $0.21 9.5
Dividends per share $0.10 $0.08 25.0
Book value per share $5.94 $5.50 8.0
Closing stock price $18.00 $18.66 -3.5
Weighted average shares - Basic 10,166,577 10,122,740
Weighted average shares -
Diluted 10,345,756 10,299,419
Selected Balance Sheet Data
-------------------------------
Investments $191,143 $187,163 2.1
Gross Loans $653,853 $558,764 17.0
Total Assets $879,919 $779,883 12.9
Deposits $649,413 $594,750 9.2
Borrowings $162,385 $119,663 36.1
Stockholders' Equity $60,360 $55,660 8.4
Ratios
----------
Return on average assets before
discontinued operations 0.95% 1.20%
Return on average assets 1.08% 1.13%
Return on average equity before
discontinued operations 14.11% 16.55%
Return on average equity 16.02% 15.60%
Gross loans to deposits 100.68% 93.95%
Net interest margin (tax
equivalent) 3.72% 4.20%
Overhead ratio before
discontinued operations 1.74% 1.93%
Operating efficiency before
discontinued operations(1) 51.22% 50.93%
Non-performing assets to total
assets 0.23% 0.47%
Net charge-offs to average loans
held for investment (annualized) 1.45% 0.15%
Allowance for possible loan
losses to loans held for
investment 1.04% 1.12%
Regulatory Capital Ratios
-----------------------------
Tier 1 risk-based capital ratio 8.48% 9.20%
Total risk-based capital ratio 10.86% 10.43%
Leverage ratio 6.82% 7.32%
Balance Sheet (averages)
----------------------------
Investments $205,268 $186,033 10.3
Gross Loans $650,442 $538,639 20.8
Total Assets $888,350 $751,863 18.2
Deposits $639,432 $562,984 13.6
Borrowings $183,860 $128,253 43.4
Stockholders' Equity $60,065 $54,506 10.2
Year Ended
(000's except share data)
----------------------------------------------------------------------
%
Operations 12/31/04 12/31/03 Change
---------------- ------------- ----------- --------
Interest income $45,948 $40,634 13.1
Interest expense 15,094 12,911 16.9
------------- ----------- --------
Net interest income 30,854 27,723 11.3
Provision for loan losses 4,600 2,300 100.0
------------- ----------- --------
Net interest income after
provision for loan losses 26,254 25,423 3.3
Other income 1,920 2,238 -14.2
Operating expenses 16,186 14,391 12.5
------------- ----------- --------
Income before income taxes and
discontinued operations 11,988 13,270 -9.7
Income taxes 3,303 4,115 -19.7
------------- ----------- --------
Income before discontinued
operations 8,685 9,155 -5.1
Income (loss) from discontinued
operations 434 (1,277) 134.0
------------- ----------- --------
Net income $9,119 $7,878 15.8
============= =========== ========
Per Share Data
------------------
Basic earnings per share before
discontinued operations $0.86 $0.91 -5.5
Basic earnings per share $0.90 $0.78 15.4
Diluted earnings per share before
discontinued operations $0.84 $0.89 -5.6
Diluted earnings per share $0.88 $0.77 14.3
Dividends per share $0.39 $0.30 30.0
Book value per share $5.94 $5.50 8.0
Closing stock price $18.00 $18.66 -3.5
Weighted average shares - Basic 10,158,048 10,087,466
Weighted average shares - Diluted 10,343,967 10,283,350
Selected Balance Sheet Data
------------------------------------
Investments
Gross Loans
Total Assets
Deposits
Borrowings
Stockholders' Equity
Ratios
------------------------------------
Return on average assets before
discontinued operations 1.02% 1.30%
Return on average assets 1.08% 1.11%
Return on average equity before
discontinued operations 15.01% 17.01%
Return on average equity 15.76% 14.63%
Gross loans to deposits 100.68% 93.95%
Net interest margin (tax
equivalent) 3.84% 4.12%
Overhead ratio before
discontinued operations 1.68% 1.72%
Operating efficiency before
discontinued operations(1) 48.60% 48.61%
Non-performing assets to total
assets 0.23% 0.47%
Net charge-offs to average loans
held for investment (annualized) 0.67% 0.26%
Allowance for possible loan
losses to loans held for
investment 1.04% 1.12%
Regulatory Capital Ratios
-----------------------------
Tier 1 risk-based capital ratio 8.48% 9.20%
Total risk-based capital ratio 10.86% 10.43%
Leverage ratio 6.82% 7.32%
Balance Sheet (averages)
----------------------------
Investments $208,319 $202,291 3.0
Gross Loans $610,357 $479,752 27.2
Total Assets $848,368 $707,017 20.0
Deposits $625,697 $540,611 15.7
Borrowings $159,759 $107,476 48.6
Stockholders' Equity $57,858 $53,842 7.5
(1) Excludes securities gains and OREO gains (losses).
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