Community Bank of Northern Virginia Announces Second Quarter Earnings up 28%.Business Editors STERLING, Va.--(BUSINESS WIRE)--July 17, 2003 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 second quarter 2003 net income of $1,871,213, or $0.18 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 $1,457,272, or $0.14 per diluted common share for the same period last year. Return on average equity for the second quarter 2003 was 13.87% compared to 12.83% for the same period last year. Return on average assets for the second quarter 2003 was 1.08% compared to 0.98% for the same quarter last year. During the second quarter 2003, the Bank reduced its reserves associated with potential recourse obligations and established reserves for expenses associated with 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. , the net effect of which reduced pre-tax earnings by $375,000, or $0.02 per diluted common share. Comparing the second quarter of 2003 and 2002, net interest income increased 9.3% as the net interest margin declined from 4.32% in 2002 to 4.03% in 2003. The provision for possible loan losses declined by $1.246 million, reflecting the effect of the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. reduction in reserves for potential recourse obligations recorded in the second quarter 2003. Both other income and 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. declined dramatically in the second quarter 2003 compared to the same period in 2002 as a consequence of the Bank's exit from the 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. Other income in the second quarter 2003 includes securities gains of $240,000 compared to securities gains of $67,000 in the second quarter 2002. Operating expenses in the second quarter 2003 include the effects of the reserves established for ongoing litigation previously mentioned. Operating expenses in the same period in 2002 included exit costs of $799,000 associated with the closure of the wholesale mortgage operation as well as the Bank's Rockville retail mortgage operation. David P. Summers, President and Chief Executive Officer, stated, "We are pleased to report another quarter of solid earnings despite the continued prevailing weak economic conditions and compressing com·press tr.v. com·pressed, com·press·ing, com·press·es 1. To press together: compressed her lips. 2. To make more compact by or as if by pressing. 3. net interest margin due to the historically low interest rate environment we are currently experiencing." Year-to-date net income for 2003 totaled $4,489,723, or $0.43 per diluted common share compared to 2002 year-to-date net income of $2,527,847, or $0.26 per diluted common share, an increase of 78%. Year-to-date 2003 return on average assets and return on average equity was 1.33% and 16.98%, respectively, compared to 0.84% and 12.06%, respectively, for the same period last year. Asset quality continues to improve as the Bank's non-performing asset ratio stood at 0.29% at June 30 2003, compared to 1.01% at June 30, 2002 and 0.69% at December 31, 2002. The allowance for possible loan losses to loans held for investment stood at 1.19% at June 30, 2003 compared to 1.17% at June 30, 2002. The Bank continues to maintain a separate valuation allowance related to off-balance sheet recourse exposure that stood at $1.2 million at June 30, 2003. Total assets as of June 30, 2003, were $715.5 million, an increase of 16% from June 30, 2002. Total loans held for investment increased 22% to $462.1 million from June 30, 2002 to June 30, 2003 while total deposits increased 7% over the same period. Stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. totaled approximately $54.9 million at June 30, 2003. During the second quarter 2003 the Bank opened its Chantilly, Virginia Chantilly is an unincorporated community located in western Fairfax County and southeastern Loudoun County of Northern Virginia. Recognized by the U.S. Census Bureau as a census designated place (CDP), the community population was 41,041 as of the 2000 census. office and expects to open its Reston, Virginia Reston is an internationally known planned community whose goal was to revolutionize post-World War II concepts of land use and residential/corporate development in American suburbia. office in the third quarter 2003. Based upon the planned branch expansion and the recent bank merger activity in the region, Community Bank may be afforded an opportunity for increased market share. On July 8, 2003, the shareholders held their annual meeting and elected Class 1 directors to serve on the Board of Community Bank for a term of three years. Class 1 directors are David A. Dickens, Norman C. Hardee and Otis R. Pool. In addition, the shareholders ratified rat·i·fy tr.v. rat·i·fied, rat·i·fy·ing, rat·i·fies To approve and give formal sanction to; confirm. See Synonyms at approve. the Board's appointment of Grant Thornton LLP  This article or section is written like an .Please help [ rewrite this article] from a neutral point of view. Mark blatant advertising for , using . to continue as the independent auditors Independent Auditor An external auditor with a certified public accounting designation that qualifies him or her to provide an auditor's report. Notes: These auditors aren't affiliated with the company being audited. of the Bank. The Bank was added to the Russell 3000(R) index as of June 30, 2003. The Russell 3000(R) contains the largest 3,000 companies incorporated in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and its territories based on market capitalization Market Capitalization A measure of a public company's size. Market capitalization is the total dollar value of all outstanding shares. It's calculated by multiplying the number of shares times the current market price. This term is often referred to as market cap. . Community Bank of Northern Virginia (http://www.cbnv.com/) began banking activities in 1992 upon receiving its charter from the Virginia 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 banking institution that operates twelve 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 116 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 banking, home banking and commercial 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; (3) general economic conditions either nationally or regionally are less favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. 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; and (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 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 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 Year to Date
--------------------------- ---------------------------
6/30/03 6/30/02 6/30/03 6/30/02
------------- ------------- ------------- -------------
Book value per
share $5.45 $4.69 $5.45 $4.69
Weighted
average shares
outstanding 10,081,352 9,941,342 10,051,944 9,589,897
Potential
dilutive
common shares 10,389,379 10,224,808 10,346,728 9,875,876
Balance Sheet
(averages)
---------------
Investments $215,479,982 $129,549,613 $212,230,346 $114,944,013
Gross Loans $457,593,377 $441,853,826 $443,596,762 $462,233,363
Deposits $527,668,089 $507,078,936 $522,402,044 $517,414,674
Total Assets $696,733,983 $594,834,627 $679,298,700 $604,046,442
Operations
---------------
Interest
income $9,981,791 $10,334,265 $19,898,504 $21,039,698
Interest
expense 3,310,356 4,231,362 6,666,054 9,222,475
------------- ------------- ------------- -------------
Net interest
income 6,671,435 6,102,903 13,232,450 11,817,223
Provision
for
possible
loan losses (574,130) 671,531 (717,130) 2,111,031
------------- ------------- ------------- -------------
Net interest
income
after
provision
for
possible
loan losses 7,245,565 5,431,372 13,949,580 9,706,192
Other income 502,961 9,739,969 1,696,957 21,747,734
Operating
expenses 5,019,064 13,086,822 9,046,745 27,755,702
------------- ------------- ------------- -------------
Income
before
taxes 2,729,462 2,084,519 6,599,792 3,698,224
Applicable
income
taxes 858,249 627,247 2,110,069 1,170,377
------------- ------------- ------------- -------------
Net income $1,871,213 $1,457,272 $4,489,723 $2,527,847
============= ============= ============= =============
Basic earnings
per share of
common stock $0.19 $0.15 $0.45 $0.26
Diluted
earnings per
share of
common stock $0.18 $0.14 $0.43 $0.26
Dividends per
share $0.07 $0.03 $0.14 $0.08
Ratios
---------------
Return on
average
assets 1.08% 0.98% 1.33% 0.84%
Return on
average
equity 13.87% 12.83% 16.98% 12.06%
Gross loans
to deposits 83.25% 82.52% 83.25% 82.52%
Net interest
margin (tax
equivalent) 4.03% 4.32% 4.12% 4.16%
Overhead
ratio (1) 1.74% 2.26% 1.74% 2.01%
Operating
efficiency
(2) 49.98% 82.46% 51.94% 82.44%
Non-
performing
assets to
total
assets 0.29% 1.01% 0.29% 1.01%
Net charge-
offs to
average
loans held
for
investment
(annualized) 0.38% 0.11% 0.27% 0.13%
Allowance
for
possible
loan losses
To loans
held for
investment 1.19% 1.17% 1.19% 1.17%
Regulatory
Capital Ratios
---------------
Tier 1 risk-
based
capital
ratio 10.47% 9.96% 10.47% 9.96%
Total risk-
based
capital
ratio 11.57% 10.95% 11.57% 10.95%
Leverage
ratio 7.61% 7.66% 7.61% 7.55%
STOCK TRADING PRICE
------------------------------------
Bid Ask
---------
06/30/03 $11.64 $11.79
03/31/03 $18.89 $19.03
12/31/02 $11.25 $11.28
06/30/02 $10.15 $10.74
(1) Excludes non-recurring charge of $1.5 million in second
quarter 2003.
(2) Excludes securities gains, OREO gains (losses) and
nonrecurring charge of $1.5 million in second quarter 2003.
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