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Virginia Heritage Bank Announces Third Quarter Results for 2011

^{Published on 2011-10-21 03:52:10 - Market Wire}
 

FAIRFAX, Va.--([ BUSINESS WIRE ])--Virginia Heritage Bank (OTCBB: VGBK), reported net income after taxes of $1.5 million for the third quarter of 2011, compared to $1.0 million for the same period in 2010. The increase in net income for the quarter ended September 30, 2011 was primarily due to the $1.0 million increase in net interest income representing strong balance sheet growth. Net income after taxes was $0.35 per share for the third quarter of 2011 (basic) and $0.34 per share (diluted), compared to $0.27 per share (basic and diluted) for the third quarter of 2010.

Net income after taxes was $3.4 million for the nine months ended September 30, 2011, compared to $4.3 million for the same period in 2010. The higher after tax earnings for 2010 was due to the recognition of a one-time deferred income tax benefit of $2.2 million (recognized in the first quarter of 2010) 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. For comparative purposes, the pre-tax net income for the nine months ended September 30, 2011 was $5.2 million versus $3.3 million for the same period in 2010. The net income after taxes was $0.79 per share (basic and diluted) for the nine months ended September 30, 2011, compared to $1.14 per share (basic and diluted) for the nine months ended September 30, 2010.

The Bank had significant balance sheet growth with total assets of $550 million at September 30, 2011, representing an increase of $118 million compared to total assets at September 30, 2010. Total gross loans were $412 million, excluding loans held for sale, at September 30, 2011, an increase of $45 million over total gross loans at September 30, 2010. Total deposits were $471 million at September 30, 2011 compared to $362 million at September 30, 2010.

Nonperforming assets, including other real estate owned, as a percentage of total assets, decreased to 0.23% at September 30, 2011, compared to 0.62% at September 30, 2010. Annualized net charge-offs were 0.09% of average loans for the quarter ended September 30, 2011, down from 0.24% for the same period in 2010.

The allowance for loan losses was $5.5 million as of September 30, 2011, or 1.39% of gross loans outstanding, excluding loans held for sale. Asset quality remained significantly better than peers at September 30, 2011 with non-accrual loans of $435 thousand, loans past due 90 days or more but still accruing interest totaling $276 thousand and other real estate owned of $820 thousand. At September 30, 2011, the Banka�s non-performing loans to total assets amounted to 0.13%.

The Banka�s capital ratios, as set forth in the attached Financial Highlights schedule, are well in excess of regulatory minimums to be classified as well capitalized under the Federal Reservea�s Risk-based Capital Guidelines. All three capital measures at September 30, 2011 (Total Risk-based Capital, Tier 1 Risk-based Capital, and Leverage) include $15.3 million of preferred equity issued to the U.S. Treasury under the Small Business Lending Fund program (SBLF). The Bank was one of the first institutions to participate in the SBLF program and received the funding on June 30, 2011.

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

aWe are encouraged by the continued expansion of our net interest income and non-interest income compared to prior quarters. We are operating in a historically low interest rate environment which has put significant pressure on core loan and deposit pricing decisions as we strive to maintain adequate operating income levels. We are anticipating an extended period of low interest rates and therefore, net interest margin expansion is unlikely. However, we anticipate further balance sheet growth and improved operating efficiency which should offset the compression expected from low interest rates. We are also maintaining a conservative posture as we underwrite and approve new loans with our goal being to reduce credit costs by minimizing problem loans and losses. As evidenced by our most recent performance, these strategies have served us well.

We are also preparing to relocate our corporate headquarters to 8245 Boone Boulevard, Tysons Corner, Virginia. Our administrative, finance, lending, credit and retail banking staff are scheduled to move in the latter part of the 4^th quarter. Tysons Corner will provide us with a more central location from which to serve our customers throughout the Washington metro area.a

Virginia Heritage Bank is headquartered in Fairfax City, Virginia. The Bank has five full service offices in Fairfax City, Chantilly, Gainesville, Tysons Corner and Dulles, Virginia. 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.