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Virginia Heritage Bank Announces Second Quarter 2010 Earnings

^{Published on 2010-07-23 03:21:07 - Market Wire}
 

FAIRFAX, Va.--([ BUSINESS WIRE ])--Virginia Heritage Bank (OTCBB: VGBK), reported net income before taxes of $960 thousand in the second quarter of 2010, compared to $265 thousand for the same period in 2009. The increase in net income for the three months ended June 30, 2010 was primarily due to the $1.1 million increase in net interest income representing strong balance sheet growth. On a per share basis, the second quarter net income after taxes was $0.16 per share (basic and diluted), compared to $0.07 per share (basic and diluted) for the second quarter of 2009.

Net income before taxes for the six months ended June 30, 2010 was $1.7 million, compared to $482 thousand for the six months ended June 30, 2009. The increase is primarily driven by a $2.1 million increase in net interest income representing strong balance sheet growth and continued improvement in net interest margin percentage. For the same periods, the yield on interest earning assets increased by 12 basis points while the cost of liabilities decreased by 22 basis points.

Net income after tax benefit was $3.3 million for the six months ended June 30 2010. The significant increase in net income for the six months ended June 30, 2010 was due to the recognition of a one-time deferred income tax benefit of $2.2 million ($0.58 per share) relating to net operating loss carry-forwards from the Banka™s early stage losses and other timing differences in the recognition of income and expense for tax purposes. The net income per share (basic and diluted) was $0.87 per share (basic and diluted), compared to $0.13 per share (basic and diluted) for the six months ended June 30, 2009.

The Bank had significant balance sheet growth with total assets of $405 million at June 30, 2010, representing an increase of $114 million compared to total assets at June 30, 2009. Total gross loans were $344 million, excluding loans held for sale, at June 30, 2010, an increase of $96 million over total gross loans at June 30, 2009. Total deposits were $334 million at June 30, 2010 compared to $217 million at June 30, 2009

Nonperforming assets, including other real estate owned, as a percentage of total assets, increased to 0.58% at June 30, 2010, compared to 0.52% at June 30, 2009. Annualized net charge-offs were 0.01% of average loans for the second quarter of 2010, down from 0.14% for the same period in 2009.

The allowance for loan losses was $4.3 million as of June 30, 2010, or 1.26% of gross loans outstanding, excluding loans held for sale. This allowance covers 551% of total non-performing loans. Asset quality remained significantly better than peers at June 30, 2010 with non-accrual loans of $786 thousand, loans past due 90 days or more but still accruing interest of $62 thousand and other real estate owned of $1.6 million. The Banka™s capital ratios, as set forth in the attached Financial Highlights schedule, are substantially in excess of regulatory requirements.

David P. Summers, Chairman and Chief Executive Officer of the Bank said:

aWe are encouraged by the Banka™s second quarter performance. Balance sheet growth, asset quality and earnings exceeded our internal projections in spite of a stagnant local economy. In the current business climate, we continue to exercise caution as we evaluate new client opportunities. The current recession is troubling as improvements in economic indicators are inconsistent and positive trends are modest at best. The lack of significant employment growth appears to be weighing on the economy as a whole and until this trend improves, business conditions will in all likelihood remain subdued. We are also evaluating staff additions and branch expansion critically as we digest the impact of the recently passed Dodd-Frank Wall Street Reform and Consumer Protection Act.

In spite of these troubling conditions, the Banka™s management team and Board are focused on building the franchise to continue to be one of the best performing community banks in the region.a

Virginia Heritage Bank is headquartered in Fairfax City, Virginia. The Bank has four full service offices in Fairfax City, Chantilly, Gainesville and Vienna, Virginia. A 5^th full service office in Loudoun County is in the planning stages and is expected to open late this year subject to regulatory approval. The Bank also has a mortgage division located in Chantilly, Virginia.

This release contains forward-looking statements, including our expectations with respect to future events that are subject to various risks and uncertainties.Factors that could cause actual results to differ materially from managementa™s projections, forecasts, estimates and expectations include: fluctuation in market rates of interest and loan and deposit pricing, adverse changes in the overall national economy as well as adverse economic conditions in our specific market areas, maintenance and development of well-established and valued client relationships and referral source relationships, and acquisition or loss of key production personnel.Other risks that can affect the Bank are detailed from time to time in our quarterly and annual reports filed with the Board of Governors of the Federal Reserve System.We caution readers that the list of factors above is not exclusive.The forward-looking statements are made as of the date of this release, and we may not undertake steps to update the forward-looking statements to reflect the impact of any circumstances or events that arise after the date the forward-looking statements are made.In addition, our past results of operations are not necessarily indicative of future performance.