Access National Corporation (NASDAQ: ANCX) (the
“Corporation” or “Access”), parent company for Access National Bank
(the “Bank”) and Middleburg Investment Group, reported third
quarter 2018 net income of $9.6 million, or $0.46 per diluted
share. This represents the Corporation’s 73rd consecutive quarterly
profit over its 75 quarter history. Consistent with management’s
objective of a 40% dividend payout ratio against level and
sustainable earnings, the Board of Directors declared a dividend of
$0.17 per share for common shareholders of record as of November
08, 2018 and payable on November 23, 2018. This dividend reflects a
$0.01 increase from the prior quarter.
Highlights
- For the three month period ended
September 30, 2018, net income increased 7.2% compared to the
preceding period and 37.2% compared to the same period of the prior
year;
- Gross loans held for investment
increased $110.1 million (22.2% annualized) during the three-month
period to $2.1 billion at September 30, 2018;
- Excluding brokered deposits, customer
deposits increased $131.8 million (25.0% annualized) during the
three month period ended September 30, 2018 to $2.2 billion;
- Demand deposits of $1.2 billion at
September 30, 2018 comprised 52.9% of total deposits, inclusive of
$757.9 million of non-interest bearing demand deposits or 33.0% of
the deposit portfolio. Non-interest bearing demand deposits
increased $38.0 million and $47.2 million during the three month
and twelve month periods ended September 30, 2018, respectively;
and
- Tangible book value1 per common share
was $12.33 at September 30, 2018, an increase of $0.34 from the
linked quarter.
According to CEO Michael Clarke, “Third quarter 2018 reflects
strong performance against our stated strategic growth and
profitability measures as customer deposits and loans exceeded a
linked quarter growth rate in excess of $200 million per annum. We
experienced strong increases in nominal earnings during the period
and exceeded our strategic profitability measures with Return on
Tangible Common Average Equity (ROTCAE) of 15.20% compared to the
target of 13.25%, and Return on Average Assets of 1.30% compared to
the target of 1.25%.” Mr. Clarke continued, “The announced merger
with Union Bankshares Corporation (“Union”) will enable us to
further accelerate growth and opportunity in our markets. We are
excited about being an important part of the Union team and the
combined positioning as Virginia’s regional bank.”
On a linked quarter basis, the mortgage segment margins
increased while origination volume decreased, resulting in pretax
earnings of $1.0 million for the three months ended September 30,
2018 compared to $0.9 million for the linked quarter.
During the period, we evaluated the accounting for our low
income housing tax credits as well as investments in small business
investment company funds (SBICs) and elected to change the policy
for these investments. We believe the change better reflects our
economic interest in these investments. We believe that the results
of this change are immaterial to the results of our operations and
they were recorded through the current period as a one-time
after-tax gain of $882 thousand or $0.04 per share on a fully
diluted basis. This includes $608 thousand ($445 thousand pre-tax
credit to income with a $163 thousand credit to income tax
provision) related to low income housing tax credits and a $466
thousand pre-tax gain related to equity investments.
The Corporation’s efficiency ratio has improved each quarter
during 2018 and is within the stated strategic target threshold of
65% or better at September 30, 2018 at 60.19%.
The net interest margin on a fully tax equivalent (non-GAAP)
basis remained consistent at 3.67% when comparing third quarter
2018 to the linked quarter. Net purchase mark accretion included in
net interest income was $634 thousand for the third quarter 2018
and $781 thousand for the linked quarter.
Gross loans Held for Investment increased $110.1 million during
the quarter to $2.1 billion at September 30, 2018. As of September
30, 2018, commercial and industrial loans as well as owner occupied
commercial real estate loans combined to account for 49% of the
loan portfolio, reflecting the Corporation’s continued focus on
lower-middle-market businesses. The Corporation’s priority focus
remains on expanding borrowers in these portfolios as a driver of
future growth in the loan portfolio, along with related core
deposits.
Noninterest-bearing deposits at September 30, 2018 were $757.9
million, an increase of $38.0 million compared to the second
quarter of 2018. Noninterest-bearing deposits remain the largest
and most attractive source of funding for the Corporation,
comprising 33% of the deposit portfolio. When combined with
interest-bearing demand deposit accounts, total transaction
accounts comprise 53% of the total deposit portfolio, reducing
reliance of non-core and more price sensitive funding.
Total deposits at September 30, 2018 were $2.3 billion, an
increase of $168.1 million from the $2.1 billion at June 30, 2018.
The increase in interest-bearing deposits was most pronounced in
the savings and interest-bearing deposits category. The
Corporation’s strategy places a high priority on the maintenance
and expansion of core deposits, particularly transaction accounts.
Premium interest rates are targeted to existing high value core
depositors and used offensively to acquire new accounts in
selective market segments.
Short-term borrowings decreased $77.4 million during the three
months ended September 30, 2018. This decrease is primarily
attributable to the increase in core deposit accounts seen during
the quarter.
Asset quality remained strong for the quarter. Non-performing
assets (“NPAs”) increased to $6.1 million at September 30, 2018
from $6.0 million at June 30, 2018, representing 0.20% and 0.21% of
total assets, respectively. Included in the NPA total is $644
thousand in other real estate owned. The allowance for loan loss
was $17.3 million and $15.8 million at September 30, 2018 and
December 31, 2017, respectively, and represented 0.83% of total
loans held for investment at the end of the third quarter 2018.
Tangible book value2 per common share increased to $12.33 at
September 30, 2018 from $11.52 at December 31, 2017. The tangible
common equity ratio for Access National Corporation and its
subsidiary bank was 9.09% at September 30, 2018, within the
Corporation’s target range of 8.50% to 9.50%.
Access National Corporation is the parent company of Access
National Bank and Middleburg Investment Group serving Northern and
Central Virginia. Additional information is available on our
website at www.AccessNationalBank.com. Shares of Access National
Corporation are traded on the NASDAQ Global Market under the symbol
"ANCX".
Access National Corporation will hold a conference call on
Friday, October 26, 2018 at 9:00 a.m. Eastern Time during which
management will review earnings and performance trends. Callers
wishing to participate may call toll-free by dialing (844)
348-3796; international callers wishing to participate may do so by
dialing (213) 358-0951. The conference ID number is 6696465.
Forward-Looking Statements
Certain statements in this press release may constitute
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements include, without limitation, projections, predictions,
expectations, or beliefs about future events or results and are not
statements of historical fact. Such statements also include
statements as to the anticipated impact of the acquisition by Union
Bankshares Corporation (“Union”) of Access. Such forward-looking
statements are based on various assumptions as of the time they are
made, and are inherently subject to known and unknown risks,
uncertainties and other factors that may cause actual results,
performance or achievements to be materially different from any
future results, performance or achievements expressed or implied by
such forward-looking statements. Forward-looking statements are
often accompanied by words that convey projected future events or
outcomes such as “expect,” “believe,” “estimate,” “plan,”
“project,” “anticipate,” “intend,” “will,” “may,” “view,”
“opportunity,” “potential,” or words of similar meaning or other
statements concerning opinions or judgment of Access or its
management about future events. Although Access believes that its
expectations with respect to forward-looking statements are based
upon reasonable assumptions within the bounds of its existing
knowledge of its business and operations, there can be no assurance
that actual results, performance, or achievements of Access will
not differ materially from any projected future results,
performance, or achievements expressed or implied by such
forward-looking statements. Actual future results performance, or
achievements may differ materially from historical results or those
anticipated depending on a variety of factors, including but not
limited to, changes in asset quality and credit risk, changes in
interest rates and capital markets, competitive conditions, the
businesses of Union and Access may not be integrated successfully
or such integration may be more difficult, time-consuming or costly
than expected, expected revenue synergies and cost savings from the
proposed acquisition may not be fully realized or realized within
the expected time frame, revenues following the proposed
acquisition may be lower than expected, customer and employee
relationships and business operations may be disrupted by the
proposed acquisition, the diversion of management time on
acquisition-related issues, changes in Union’s share price before
closing, risks relating to the potential dilutive effect of shares
of Union common stock to be issued in the proposed transaction, the
ability to obtain regulatory, shareholder or other approvals or
other conditions to closing on a timely basis or at all, the
ability to close the proposed acquisition on the expected
timeframe, or at all, and that closing may be more difficult,
time-consuming or costly than expected, the reaction to the
proposed acquisition of the companies’ customers, employees and
counterparties, and other risk factors, many of which are beyond
the control of Union and Access. We refer you to the “Risk Factors”
and “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” sections of Access’s Annual Report on
Form 10-K for the year ended December 31, 2017 and comparable “risk
factors” sections of Access’s Quarterly Reports on Form 10-Q and
other filings, which have been filed with the SEC and are available
on the SEC’s website at www.sec.gov. All of the forward-looking
statements made in this press release are expressly qualified by
the cautionary statements contained or referred to herein. The
actual results or developments anticipated may not be realized or,
even if substantially realized, they may not have the expected
consequences to or effects on Access or its business or operations.
Readers are cautioned not to rely too heavily on the
forward-looking statements contained in this press release.
Forward-looking statements speak only as of the date they are made
and Access does not undertake any obligation to update, revise or
clarify these forward-looking statements, whether as a result of
new information, future events or otherwise.
Important Additional Information will be Filed with the
SEC
As previously disclosed, Access and Union have entered into an
Agreement and Plan of Reorganization pursuant to which Access will
merge with and into Union. Union will be the surviving corporation
in the merger.
This press release does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval with respect to the proposed acquisition by
Union of Access. No offer of securities shall be made except by
means of a prospectus meeting the requirements of the Securities
Act of 1933, as amended, and no offer to sell or solicitation of an
offer to buy shall be made in any jurisdiction in which such offer,
solicitation or sale would be unlawful.
In connection with the proposed acquisition, Union will file
with the Securities and Exchange Commission (the “SEC”) a
Registration Statement on Form S-4 that will include a joint proxy
statement of Access and Union and a prospectus of Union (the “Joint
Proxy/Prospectus”), and each of Access and Union may file with the
SEC other relevant documents concerning the proposed transaction. A
definitive Joint Proxy/Prospectus will be sent to the shareholders
of Access and Union. Investors and shareholders of Access and
Union are urged to read carefully and in their entirety the
Registration Statement and Joint Proxy/Prospectus when they become
available and any other relevant documents filed with the SEC by
Access and Union, as well as any amendments or supplements to those
documents, because they will contain important information about
the proposed transaction.
Investors and shareholders may obtain free copies of the
Registration Statement and the Joint Proxy/Prospectus (when
available) and other documents filed with the SEC by Access and
Union through the website maintained by the SEC at www.sec.gov.
Free copies of the Registration Statement and the Joint
Proxy/Prospectus and other documents filed with the SEC also may be
obtained by directing a request by telephone or mail to Access
National Corporation, 1800 Robert Fulton Drive, Suite 300, Reston,
VA 20191. Attention: Sheila Linton (telephone: (703) 871-2100) or
Union Bankshares Corporation, 1051 East Cary Street, Suite 1200,
Richmond, Virginia 23219, Attention: Investor Relations (telephone:
(804) 633-5031), or by accessing Access’s website at
www.accessnationalbank.com under “Investor Relations” or Union’s
website at www.bankatunion.com under “Investor Relations.” The
information on Access’s and Union’s websites is not, and shall not
be deemed to be, a part of this Form 8-K or incorporated into other
filings either company makes with the SEC.
Participants in the Solicitation
Access, Union and their respective directors and certain of
their executive officers and employees may be deemed to be
participants in the solicitation of proxies from the shareholders
of Access or Union in connection with the proposed transaction.
Information about the directors and executive officers of Access
and their ownership of Access Common Stock is set forth in the
proxy statement for Access’s 2018 annual meeting of shareholders,
which was filed with the SEC on April 12, 2018. Information about
the directors and executive officers of Union and their ownership
of Union Common Stock is set forth in the proxy statement for
Union’s 2018 annual meeting of shareholders, which was filed with
the SEC on March 21, 2018. Information regarding the persons who
may, under the rules of the SEC, be deemed participants in the
proxy solicitation and a description of their direct and indirect
interests, by security holdings or otherwise, will be contained in
the Joint Proxy/Prospectus and other relevant materials to be filed
with the SEC when they become available. Free copies of these
documents may be obtained as described above.
___________________________________
1
Non-GAAP financial information. See “Reconciliation of
Non-GAAP Financial Measures” at end of release. 2 Non-GAAP
financial information. See “Reconciliation of Non-GAAP Financial
Measures” at end of release.
Access National Corporation Consolidated Balance Sheet -
Unaudited
September 30, June 30, December 31, September 30, (In
Thousands Except for Share and Per Share Data) 2018
2018 2017 2017
ASSETS Cash and
due from banks $ 14,062 $ 17,346 $ 29,855 $ 12,774
Interest-bearing balances and federal funds sold 110,308 105,626
92,458 117,159 Investment securities: Available-for-sale, at
fair value 436,484 421,975 406,067 393,650 Marketable equity, at
fair value - 1,340 1,379 1,390 Held-to-maturity, amortized cost
(fair value of $16,368, $16,419, $16,379, and $16,416,
respectively) 16,314 16,350
15,721 15,778
Total investment securities
452,798 439,665 423,167 410,818 Restricted Stock, at
amortized cost 21,192 23,742 16,572 14,447 Loans held for
sale - at fair value 36,600 51,365 31,999 26,234
Loans held for investment net of allowance
for loan losses of $17,349, $16,543, $15,805, and $15,692,
respectively
2,076,921 1,967,646 1,963,104 1,953,968 Premises, equipment
and land, net 27,768 28,082 27,797 26,400 Goodwill and
intangible assets, net 184,028 184,838 185,161 182,156 Other
assets 97,646 102,275 103,781 129,113
Total assets $ 3,021,323 $
2,920,585 $ 2,873,894 $ 2,873,069
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES Noninterest-bearing deposits $ 757,900 $ 719,873
$ 744,960 $ 710,691 Interest-bearing demand deposits 481,676
477,329 496,677 490,759 Savings and interest-bearing
deposits 711,262 625,120 623,889 658,799 Time deposits
344,026 304,398
368,622 425,963 Total deposits
2,294,864 2,126,720 2,234,148 2,286,212 Short-term
borrowings 212,561 289,934 145,993 79,527 Long-term
borrowings 45,000 45,000 40,000 60,000 Trust preferred
debentures 3,942 3,922 3,883 3,863 Other liabilities and
accrued expenses 23,013 20,727 28,246 23,294
Total Liabilities 2,579,380
2,486,303 2,452,270
2,452,896
SHAREHOLDERS'
EQUITY
Common stock $0.835 par value; 60,000,000
authorized; issued and outstanding, 20,920,262, 20,796,193,
20,534,163, and 20,449,738, respectively
17,468 17,365 17,146 17,076 Additional paid in capital
317,626 314,367 307,670 305,682 Retained earnings 115,973
109,690 98,584 98,607 Accumulated other comprehensive loss,
net (9,124 ) (7,140 ) (1,776 ) (1,192 )
Total shareholders' equity 441,943
434,282 421,624
420,173
Total liabilities and shareholders' equity $
3,021,323 $ 2,920,585 $ 2,873,894
$ 2,873,069
Access National Corporation Consolidated Statement
of Operations - Unaudited
Three Months Ended Nine
Months Ended (In Thousands Except for Share and Per Share Data)
September 30, 2018 June 30, 2018 September 30,
2017 September 30, 2018 September 30, 2017
INTEREST INCOME Interest and fees on loans $ 25,687 $ 24,143
$ 24,306 $ 73,241 $ 60,251 Interest on federal funds sold
and bank balances 578 437 394 1,532 746 Interest and
dividends on securities 3,047 2,642 2,992
8,369 7,388 Total interest income 29,312 27,222
27,692 83,142 68,385
INTEREST EXPENSE Interest on
deposits 3,902 3,017 2,639 9,717 6,560 Interest on other
borrowings 1,345 1,190 459 3,100
1,366 Total interest expense 5,247 4,207 3,098
12,817 7,926 Net interest income 24,065 23,015 24,594
70,325 60,459 Provision for loan losses 700
652 900 2,102 3,200 Net interest income after
provision for loan losses 23,365 22,363 23,694 68,223 57,259
NONINTEREST INCOME Service charges and fees 485 494 560
1,456 1,509 Gain on sale of loans 4,465 4,196 5,594 11,453
14,985 Other Income 2,494 4,400 2,369
11,020 6,917 Total noninterest income 7,444 9,090
8,523 23,929 23,411
NONINTEREST EXPENSE Salaries and
benefits 11,113 12,529 11,100 35,370 31,800 Occupancy and
equipment 2,000 1,640 3,019 5,881 5,820 Other operating
expense 5,853 6,257 8,674 18,115
23,594 Total noninterest expense 18,966 20,426
22,793 59,366 61,214 Income before income tax 11,843
11,027 9,424 32,786 19,456 Income tax expense 2,233
2,065 2,422 6,128 6,001
NET
INCOME 9,610 8,962 7,002 26,658
13,455 Earnings per common share: Basic $ 0.46 $ 0.43
$ 0.34 $ 1.28 $ 0.77 Diluted $ 0.46 $ 0.43 $ 0.34 $ 1.28 $ 0.77
Average outstanding shares: Basic 20,847,319 20,736,727
20,409,696 20,734,621 17,156,521 Diluted 20,925,247 20,822,853
20,508,875 20,821,096 17,273,367
Performance and Capital Ratios -
Unaudited
Three
Months Three Months Three Months Three
Months Nine Months Nine Months Twelve
Months Ended Ended Ended Ended
Ended Ended Ended September 30, June
30, March 31, September 30, September 30,
September 30, December 31 (Dollars In Thousands)
2018 2018 2018
2017 2018 2017
2017 Return on average assets (annualized) 1.30 %
1.26 % 1.13 % 0.96 % 1.23 % 0.75 % 0.67 % Return on average
tangible equity (annualized) (1) 15.20 % 14.73 % 13.57 % 11.47 %
14.52 % 9.33 % 8.15 % Net interest margin - fully tax equivalent
basis (1) 3.67 % 3.67 % 3.70 % 3.86 % 3.68 % 3.91 % 3.88 % Net
interest margin 3.62 % 3.62 % 3.65 % 3.76 % 3.63 % 3.84 % 3.81 %
Cost of funds 1.17 % 0.98 % 0.79 % 0.70 % 0.98 % 0.73 % 0.73 %
Access National Bank efficiency ratio (2) 53.14 % 57.36 % 59.65 %
57.56 % 56.45 % 57.41 % 55.72 % Access National Corporation
efficiency ratio (2) 60.19 % 63.62 % 65.19 % 68.82 % 62.99 % 72.99
% 69.61 % Total average equity to earning assets 16.47 % 16.86 %
16.59 % 16.00 % 16.64 % 18.10 % 14.82 % Tangible common equity
ratio (1) 9.09 % 9.12 % 9.10 % 8.85 % 9.09 % 8.85 % 8.79 %
Averages Assets $ 2,953,987 $ 2,848,307 $ 2,856,201 $
2,922,105 $ 2,886,998 $ 2,396,103 $ 2,453,894 Loans held for
investment, gross 2,038,292 1,935,422 1,950,077 2,002,842 1,974,914
1,614,893 1,704,040 Loans held for sale 36,672 41,515 21,257 28,734
33,205 27,165 27,881 Interest-bearing deposits & federal funds
sold 110,140 110,800 136,969 136,222 119,205 105,360 104,566
Investment securities 461,708 444,779 434,003 437,628 446,932
343,360 362,614 Earning assets 2,656,213 2,541,454 2,548,836
2,617,443 2,582,555 2,101,947 2,212,020 Interest-bearing deposits
1,502,982 1,440,998 1,517,030 1,566,286 1,486,956 1,257,364
1,327,262 Total deposits 2,201,473 2,114,617 2,215,222 2,277,760
2,177,107 1,810,139 1,922,249 Repurchase agreements & federal
funds purchased 50,135 56,693 57,344 58,149 54,698 46,209 48,378
FHLB short term borrowings 193,784 180,348 91,002 59,697 155,421
67,774 67,907 FHLB long-term borrowings 45,000 42,088 40,000 82,790
42,381 73,040 66,329 Trust Preferred debt 3,930 3,911 3,891 3,029
3,911 2,289 2,691 Equity 437,398 428,590 422,780 418,678 429,642
380,378 327,738 Tangible equity (1) $ 252,864 $ 243,232 $ 238,381 $
243,974 $ 244,868 $ 192,150 $ 202,408 Allowance for loan
losses $ 17,349 $ 16,543 $ 15,928 $ 15,692 $ 17,349 $ 15,692 $
15,805 Allowance for loan losses/loans held for investment 0.83 %
0.83 % 0.83 % 0.80 % 0.83 % 0.80 % 0.80 % Remaining purchase marks
on performing loans $ 8,838 $ 9,615 $ 10,415 $ 12,444 $ 8,838 $
12,444 $ 11,241 Purchased credit impaired loans $ 4,509 $ 4,632 $
4,702 $ 5,184 $ 4,509 $ 5,184 $ 4,969 Remaining purchase marks on
credit impaired loans $ 1,592 $ 1,720 $ 1,749 $ 694 $ 1,592 $ 694 $
1,175 Total NPA $ 6,106 $ 6,049 $ 7,453 $ 7,817 $ 6,106 $ 7,817 $
5,270 NPA to total assets 0.20 % 0.21 % 0.26 % 0.27 % 0.20 % 0.27 %
0.18 % Mortgage loan originations and brokered loans $
85,087 $ 123,157 $ 84,411 $ 107,706 $ 292,655 $ 319,164 $ 432,678
Gain on sale of mortgage loans net hedging activity $ 4,137 $ 4,251
$ 3,273 $ 5,371 $ 11,661 $ 14,208 $ 19,192 Allowance for losses on
mortgage loans sold $ 953 $ 953 $ 953 $ 987 $ 953 $ 987 $ 953
Wealth Services segment - assets under management $
2,012,526 $ 1,949,992 $ 1,942,526 $ 1,935,780 $ 2,012,526 $
1,935,780 $ 1,955,720 Book value per common share $ 21.13 $
20.88 $ 20.62 $ 20.55 $ 21.13 $ 20.55 $ 20.53 Tangible book
value per common share (1) $ 12.33 $ 11.99 $ 11.65 $ 11.64 $ 12.33
$ 11.64 $ 11.52
(1) Non-GAAP financial information. See "Reconciliation of Non-GAAP
Financial Measures" at end of release. (2) Efficiency ratio is
non-interest expense divided by the sum of net interest income and
non-interest income
Composition of Loan Portfolio -
Unaudited
September 30,
2018 June 30, 2018 March 31, 2018
December 31, 2017 September 30, 2017
(Dollars In Thousands)
Amount
Percentageof Total
Amount
Percentageof Total
Amount
Percentageof Total
Amount
Percentageof Total
Amount
Percentageof Total
Commercial real estate - owner occupied $ 525,047
25.07 % $ 478,928 24.13 % $ 462,298 24.02 % $ 467,082 23.60 % $
443,128 22.50 % Commercial real estate - non-owner occupied 467,495
22.32 457,940 23.08 419,139 21.77 436,083 22.04 435,181 22.09
Residential real estate 459,989 21.96 460,269 23.20 476,366 24.75
489,669 24.74 512,621 26.03 Commercial 507,269 24.22 464,270 23.40
437,287 22.72 463,652 23.43 449,450 22.82 Real estate construction
113,790 5.43 99,164 5.00 104,528 5.43 97,481 4.93 104,193 5.29
Consumer 20,680 1.00 23,618 1.19
25,293 1.31 24,942 1.26
25,087 1.27
Total loans $
2,094,270 100.00 % $ 1,984,189 100.00 $ 1,924,911 100.00 % $
1,978,909 100.00 % $ 1,969,660 100.00 % Less allowance for loan
losses 17,349 16,543 15,928 15,805
15,692 $ 2,076,921 $ 1,967,646 $ 1,908,983 $ 1,963,104 $
1,953,968
Composition of Deposits - Unaudited
September 30, 2018 June 30, 2018
March 31, 2018 December 31, 2017
September 30, 2017 (Dollars In Thousands)
Amount
Percentageof Total
Amount
Percentageof Total
Amount
Percentageof Total
Amount
Percentageof Total
Amount
Percentageof Total
Demand deposits $ 757,900 33.03 % $ 719,873 33.85 % $ 706,128 32.14
% $ 744,960 33.34 % $ 710,691 31.09 % Interest-bearing demand
deposits 455,769 19.86 462,355 21.74 501,745 22.84 486,621 21.78
480,620 21.02 Savings and money market 670,497 29.22 585,673 27.54
616,879 28.08 580,827 26.00 616,596 26.97 CDARS time deposits
17,050 0.74 13,666 0.64 17,247 0.78 21,582 0.97 37,836 1.65
CDARS/ICS non-maturity deposits 66,604 2.90 53,233 2.50 50,233 2.29
48,011 2.15 47,219 2.07 Brokered deposits 53,900 2.35 17,590 0.83
23,244 1.06 51,028 2.28 71,090 3.11 Time deposits 273,144
11.90 274,330 12.90
281,452 12.81 301,119
13.48 322,160 14.09 Total
Deposits $ 2,294,864 100.00 % $ 2,126,720
100.00 % $ 2,196,928 100.00 % $ 2,234,148
100.00 % $ 2,286,212 100.00 %
Yield on Average Earning Assets and Rates
on Average Interest-Bearing Liabilities Three Months Ended -
Unaudited September 30, 2018
June 30, 2018
September 30, 2017 Average Income / Yield
/ Average Income / Yield / Average
Income / Yield / (Dollars In Thousands)
Balance Expense Rate
Balance Expense
Rate Balance
Expense Rate Assets:
Interest-earning assets: Securities $ 471,109 $ 3,047 2.59 %
$ 453,717 $ 2,642 2.33 % $ 449,645 $ 2,992 2.66 % Loans held for
sale 36,672 450 4.91 % 41,515 477 4.59 % 28,734 299 4.16 % Loans(1)
2,038,292 25,237 4.95 % 1,935,422 23,666 4.89 % 2,002,842 24,007
4.79 % Interest-bearing balances and federal funds sold
110,140 578 2.10 %
110,800 437 1.59 %
136,222 394 1.16 %
Total interest-earning assets 2,656,213
29,312 4.41 %
2,541,454 27,222
4.28 %
2,617,443 27,692 4.23 %
Noninterest-earning assets: Cash and due from banks 15,050
15,953 36,260 Premises, land and equipment 27,996 28,087 30,382
Other assets 271,592 279,127 253,424 Less: allowance for loan
losses (16,864 ) (16,314 ) (15,404 )
Total
noninterest-earning assets 297,774
306,853 304,662 Total
Assets $ 2,953,987 $
2,848,307 $ 2,922,105
Liabilities and Shareholders' Equity: Interest-bearing
deposits: Interest-bearing demand deposits $ 494,436 $ 797 0.64
% $ 490,619 $ 680 0.55 % $ 483,370 $ 412 0.34 % Money market
deposit accounts 507,888 1,483 1.17 % 466,538 1,047 0.90 % 435,241
821 0.75 % Savings accounts 165,937 242 0.58 % 174,392 233 0.53 %
199,109 90 0.18 % Time deposits 334,721
1,380 1.65 % 309,449
1,057 1.37 %
448,566 1,316 1.17 %
Total
interest-bearing deposits 1,502,982 3,902 1.04 %
1,440,998 3,017 0.84 %
1,566,286 2,639
0.67 %
Borrowings: FHLB short-term borrowings 193,784 976
2.01 % 180,348 866 1.92 % 59,697 207 1.39 % Securities sold under
agreements to repurchase and federal funds purchased 50,135 13 0.10
% 56,693 14 0.10 % 58,149 16 0.11 % Subordinated debentures 3,930
87 8.81 % 3,911 84 8.63 % 3,029 35 4.62 % FHLB long-term borrowings
45,000 269 2.39 %
42,088 226 2.14 %
82,790 201 0.97 %
Total borrowings 292,849
1,345 1.84 %
283,040 1,190 1.68 %
203,665
459 0.90 %
Total interest-bearing deposits and
borrowings 1,795,831 5,247 1.17 %
1,724,038 4,207 0.98 %
1,769,951 3,098
0.70 %
Noninterest-bearing liabilities: Demand deposits
698,491 673,619 711,474 Other liabilities 22,267
22,060 22,002
Total liabilities
2,516,589 2,419,717 2,503,427 Shareholders'
Equity 437,398 428,590 418,678
Total Liabilities and Shareholders' Equity $
2,953,987 $ 2,848,307 $
2,922,105 Interest Spread(2) 3.25 % 3.30 %
3.53 % Net Interest Margin(3) $ 24,065 3.62 % $
23,015 3.62 % $ 24,594 3.76 %
(1)
Loans placed on nonaccrual status are
included in loan balances.
(2)
Interest spread is the average yield
earned on earning assets, less the average rate incurred on
interest-bearing liabilities.
(3)
Net interest margin is net interest
income, expressed as a percentage of average earning assets.
Yield on Average Earning Assets and Rates on
Average Interest-Bearing Liabilities Nine Months Ended -
Unaudited
September 30, 2018 September 30, 2017
Average Income / Yield /
Average Income / Yield /
(Dollars In Thousands)
Balance Expense
Rate Balance Expense
Rate Assets: Interest-earning
assets: Securities $ 455,231 $ 8,369 2.45 % $ 354,529 $ 7,388
2.78 % Loans held for sale 33,205 1,154 4.63 % 27,165 846 4.15 %
Loans(1) 1,974,914 72,087 4.87 % 1,614,893 59,405 4.90 %
Interest-bearing balances and federal funds sold 119,205
1,532 1.71 % 105,360
746 0.94 %
Total interest-earning
assets 2,582,555 83,142 4.29 %
2,101,947 68,385 4.34 %
Noninterest-earning assets: Cash and due from banks 16,409
21,552 Premises, land and equipment 28,138 21,692 Other assets
276,307 265,578 Less: allowance for loan losses (16,411 )
(14,666 )
Total noninterest-earning assets
304,442 294,156 Total
Assets $ 2,886,998 $
2,396,103 Liabilities and Shareholders'
Equity: Interest-bearing deposits: Interest-bearing
demand deposits $ 495,862 $ 2,067 0.56 % $ 352,647 $ 910 0.34 %
Money market deposit accounts 489,764 3,460 0.94 % 352,525 1,644
0.62 % Savings accounts 171,256 684 0.53 % 146,773 392 0.36 % Time
deposits 330,074 3,506 1.42 %
405,419 3,614 1.19 %
Total
interest-bearing deposits 1,486,956 9,717 0.87 %
1,257,364 6,560 0.70 %
Borrowings: FHLB
short-term borrowings 155,421 2,192 1.88 % 67,774 593 1.17 %
Securities sold under agreements to repurchase and federal funds
purchased 54,698 41 0.10 % 46,209 58 0.17 % Subordinated debentures
3,911 246 8.37 % 2,289 146 8.50 % FHLB long-term borrowings
42,381 621 1.95 % 73,040
569 1.04 %
Total borrowings
256,412 3,100 1.61 %
189,312 1,366 0.96
%
Total interest-bearing deposits and borrowings
1,743,367 12,817 0.98 %
1,446,676 7,926
0.73 %
Noninterest-bearing liabilities: Demand deposits
690,151 552,775 Other liabilities 23,838
16,274
Total liabilities 2,457,356
2,015,725 Shareholders' Equity 429,642
380,378
Total Liabilities and Shareholders' Equity
$ 2,886,998 $ 2,396,103
Interest Spread(2) 3.31 % 3.61 % Net Interest
Margin(3) $ 70,325 3.63 % $ 60,459 3.84 %
(1)
Loans placed on nonaccrual status are
included in loan balances.
(2)
Interest spread is the average yield
earned on earning assets, less the average rate incurred on
interest-bearing liabilities.
(3)
Net interest margin is net interest
income, expressed as a percentage of average earning assets.
Segment Reporting - Unaudited
Three Months Ended
Commercial Mortgage Trust & Wealth
Consolidated September 30, 2018 Banking
Banking Management Other Eliminations
Totals (In Thousands) Revenues: Interest income $ 28,957 $
450
$
4 $ 10
$
(109 ) $ 29,312 Gain on sale of loans - 4,465 - - - 4,465 Other
revenues 2,152 (743 ) 1,688 219
(337 ) 2,979 Total revenues 31,109
4,172 1,692 229
(446 ) 36,756 Expenses: Interest expense 5,169 41 -
146 (109 ) 5,247 Salaries and employee benefits 7,800 2,284 979 -
50 11,113 Other expenses 6,684 819 552
885 (387 ) 8,553 Total operating
expenses 19,653 3,144 1,531
1,031 (446 ) 24,913 Income
(loss) before income taxes $ 11,456 $ 1,027 $ 161 $
(802 ) $ - $ 11,843 Total assets $ 2,978,843 $
38,763 $ 13,166 $ 26,808
$ (36,257 ) $ 3,021,323
Three Months Ended
Commercial Mortgage Trust & Wealth
Consolidated June 30, 2018 Banking
Banking Management Other Eliminations
Totals (In Thousands) Revenues: Interest income $ 26,841 $
477 $ 3 $ 6 $ (105 ) $ 27,222 Gain on sale of loans - 4,196 - - -
4,196 Other revenues 1,634 373 2,726
491 (330 ) 4,894 Total revenues
28,475 5,046 2,729 497
(435 ) 36,312 Expenses: Interest
expense 4,130 39 - 143 (105 ) 4,207 Salaries and employee benefits
8,324 3,130 1,075 - - 12,529 Other expenses 6,292 971
660 956 (330 )
8,549 Total operating expenses 18,746 4,140
1,735 1,099 (435 ) 25,285
Income (loss) before income taxes $ 9,729 $ 906 $ 994
$ (602 ) $ - $ 11,027 Total assets $ 2,871,045
$ 40,293 $ 12,301 $ 23,435
$ (26,489 ) $ 2,920,585
Three Months
Ended Commercial Mortgage Trust &
Wealth Consolidated September 30, 2017
Banking Banking Management Other
Eliminations Totals (In Thousands) Revenues: Interest
income $ 27,429 $ 299 $ 4 $ 5 $ (45 ) $ 27,692 Gain on sale of
loans - 5,594 - - - 5,594 Other revenues 1,977 (740 )
1,617 312 (237 ) 2,929
Total revenues 29,406 5,153 1,621
317 (282 ) 36,215
Expenses: Interest expense 3,072 (25 ) - 96 (45 ) 3,098 Salaries
and employee benefits 7,334 2,898 868 - - 11,100 Other expenses
8,724 1,149 1,850 1,107
(237 ) 12,593 Total operating expenses
19,130 4,022 2,718 1,203
(282 ) 26,791 Income (loss) before income
taxes $ 10,276 $ 1,131 $ (1,097 ) $ (886 ) $ - $
9,424 Total assets $ 2,810,037 $ 26,485
$ 41,002 $ 19,756 $ (24,211 ) $
2,873,069 Segment Reporting - Unaudited
Nine Months Ended
Commercial Mortgage Trust & Wealth
Consolidated September 30, 2018 Banking
Banking Management Other Eliminations
Totals Revenues: Interest income $ 82,085 $ 1,154 $ 9
$ 22 $ (128 ) $ 83,142 Gain on sale of loans - 11,453 - - - 11,453
Other revenues 5,291 899 6,155
1,128 (997 ) 12,476 Total revenues
87,376 13,506 6,164 1,150
(1,125 ) 107,071 Expenses: Interest
expense 12,593 (72 ) - 424 (128 ) 12,817 Salaries and employee
benefits 24,052 8,291 3,002 - 25 35,370 Other expenses
20,261 2,496 1,694 2,669
(1,022 ) 26,098 Total operating expenses
56,906 10,715 4,696 3,093
(1,125 ) 74,285 Income (loss) before income
taxes $ 30,470 $ 2,791 $ 1,468 $ (1,943 ) $ -
$ 32,786 Total assets $ 2,978,843 $ 38,763
$ 13,166 $ 26,808 $ (36,257 ) $
3,021,323
Nine Months Ended Commercial
Mortgage Trust & Wealth Consolidated
September 30, 2017 Banking Banking
Management Other Eliminations Totals
Revenues: Interest income $ 67,740 $ 846 $ 7 $ 17 $ (225 ) $
68,385 Gain on sale of loans - 14,985 - - - 14,985 Other revenues
4,445 (306 ) 4,195 975
(883 ) 8,426 Total revenues 72,185
15,525 4,202 992 (1,108 )
91,796 Expenses: Interest expense 7,796 18 - 337 (225
) 7,926 Salaries and employee benefits 19,992 9,122 2,686 - -
31,800 Other expenses 20,173 3,246
2,541 7,537 (883 ) 32,614 Total
operating expenses 47,961 12,386 5,227
7,874 (1,108 ) 72,340
Income (loss) before income taxes $ 24,224 $ 3,139 $ (1,025
) $ (6,882 ) $ - $ 19,456 Total assets $ 2,810,037
$ 26,485 $ 41,002 $ 19,756
$ (24,211 ) $ 2,873,069
Reconciliation of Non-GAAP Financial
Measures - Unaudited
The press release contains certain financial information
determined by methods other than in accordance with generally
accepted accounting policies in the United States (GAAP). These
non-GAAP financial measures are “tangible book value per common
shares”, “tangible common equity ratio”, and “net interest margin
on a fully tax equivalent basis.” This non-GAAP disclosure has
limitations as an analytical tool and should not be considered in
isolation or as a substitute for analysis of the Corporation’s
results as reported under GAAP, nor is it necessarily comparable to
non-GAAP performance measures that may be presented by other
companies. Management uses these non-GAAP measures in its analysis
of our performance because it believes these measures are material
and will be used as a measure of our performance by investors.
Three
Months Three Months Three Months Three
Months Nine Months Nine Months Twelve
Months Ended Ended Ended Ended
Ended Ended Ended September 30, June
30, March 31, September 30, September 30,
September 30, December 31, (Dollars In Thousands)
2018 2018 2018
2017 2018 2017
2017 Book value per common share $ 21.13 $
20.88 $ 20.62 $ 20.55 $ 21.13 $ 20.55 $ 20.53 Effect of intangible
assets $ (8.80 ) $ (8.89 ) $ (8.97 ) $ (8.91 ) $ (8.80 ) $ (8.91 )
$ (9.01 ) Tangible book value per common share $ 12.33 $ 11.99 $
11.65 $ 11.64 $ 12.33 $ 11.64 $ 11.52 Common equity
ratio 14.63 % 14.87 % 15.06 % 14.62 % 14.63 % 14.62 % 14.68 %
Effect of intangible assets -5.54 % -5.75 %
-5.96 % -5.77 % -5.54 % -5.77 % -5.89 %
Tangible common equity ratio 9.09 % 9.12 % 9.10 % 8.85 % 9.09 %
8.85 % 8.79 % Net interest margin 3.62 % 3.62 % 3.65
% 3.76 % 3.63 % 3.84 % 3.81 % Effect of tax exempt securities and
loans 0.05 % 0.05 % 0.05 % 0.10 %
0.05 % 0.07 % 0.07 % Net interest margin -
fully tax equivalent basis 3.67 % 3.67 % 3.70 % 3.86 % 3.68 % 3.91
% 3.88 % Return on average equity 8.79 % 8.36 % 7.65
% 6.68 % 8.27 % 4.71 % 5.03 % Effect of intangible assets
6.41 % 6.37 % 5.92 % 4.79 % 6.25 %
4.62 % 3.12 % Return on average tangible equity 15.20
% 14.73 % 13.57 % 11.47 % 14.52 % 9.33 % 8.15 %
Average equity $ 437,398 $ 428,590 $ 422,780 $ 418,678 $ 429,642 $
380,378 $ 327,738 Effect of average intangible assets $ 184,534
$ 185,358 $ 184,399 $ 174,704 $ 184,774
$ 188,228 $ 125,330 Average tangible equity $
252,864 $ 243,232 $ 238,381 $ 243,974 $ 244,868 $ 192,150 $ 202,408
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Access National CorporationMichael W. ClarkeCEO703-871-2100
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