Virginia Financial Group, Inc. Announces 5% Growth In First Quarter
Earnings CULPEPER, Va., April 19 /PRNewswire-FirstCall/ -- Virginia
Financial Group, Inc. today reported first quarter 2004 earnings of
$3.5 million or $.48 per diluted share, an increase of 4.9%
compared to earnings of $3.3 million or $.46 per diluted share for
the first quarter of 2003. Diluted earnings per share growth
represented an increase of 4.4% compared to first quarter 2003
results. VFG'S earnings for the first quarter of 2004 produced an
annualized return on average assets of .99% and an annualized
return on average equity of 11.51%, compared to prior year ratios
of 1.20% and 11.62%, respectively. Total revenues for the first
quarter of 2004 were $15.9 million, an increase of $2.0 million or
14.4% over the $13.9 million in 2003. The largest component, net
interest income, amounted to $12.5 million for the first quarter,
up $2.2 million or 21.5% compared with $10.3 million for the same
quarter in 2003. Continuing loan growth and contributions from
eight new branches purchased late in 2003 were primarily
contributors to this growth. The net interest margin for the first
quarter of 2004 was 4.09%, an improvement of .18% when compared to
3.91% for the fourth quarter of 2003, but down .18% when compared
to 4.27% for the first quarter of 2003. Total noninterest income
was $3.5 million for the first quarter of 2004, a decrease of $202
thousand or 5.5% compared to $3.7 million for the first quarter of
2003. Lower revenues from VFG's mortgage operations where the
primary contributor to this decline. Fees and net gains from
mortgages sold were $645 thousand for the first quarter of 2004, a
decrease of $418 thousand or 39.3% from the first quarter of 2003.
Originations were down $20.9 million or 32.9%, from $63.5 million
for the three months ended March 31, 2003 to $42.6 million for the
three months ended March 31, 2004. Refinance loans represented
$51.2 million or 80.6% and $27.7 million or 65.1% of total
originations for the three-month periods ended March 31, 2003 and
2004, respectively. Offsetting much of this decline were retail
banking fees, which increased $301 thousand to $1.5 million,
compared to $1.2 million in 2003. Noninterest expense for the first
quarter of 2004 amounted to $10.4 million, an increase of $1.3
million or 14.0% compared $9.2 million for the same period in 2003.
This increase is largely attributable to the Company's expansion
efforts, and the incremental costs associated with the eight
purchased branches, loan production offices in Charlottesville and
Lynchburg and a de novo branch in Fishersville, Virginia. The
Company continues to see improvement in its asset mix, with loan
growth of $249.0 million or 34.8% from $716.1 million at March 31,
2003 to $965.2 million at March 31, 2004, and growth of $42.1
million or 4.4% for the first quarter of 2004 from $923.1 million
at December 31, 2003. Total asset growth was $275.1 million or
24.2% from $1.14 billion at March 31, 2003, to $1.41 billion at
March 31, 2004, and growth of $23.7 million or 1.7% from $1.39
billion at December 31, 2003. Deposits grew $229.5 million or 23.4%
from $980.2 million at March 31, 2003 to $1.21 billion at March 31,
2004, and remained essentially flat for the first quarter of 2004.
A significant component of the twelve month growth relates to the
branch purchase in September 2003, which initially accounted for
approximately $201 million in asset and deposit growth, and $79
million in loan growth for the period. The major component of loan
growth during the past twelve months occurred in the
non-residential real estate portfolio, which grew $115.4 million or
37.6% from $306.5 million at March 31, 2003 to $421.9 million at
March 31, 2004. Construction lending represented the largest
percentage increase, with growth of $44.6 million or 74.0% from
$60.2 million to $104.8 million. Commercial lending and residential
real estate portfolios also experience double-digit growth year to
year. For the quarter ended March 31, 2004, real estate
construction loans increased $10.4 million or 11.1%, residential
real estate loans decreased $1.5 million or .5%, nonresidential
real estate loans increased $17.6 million or 4.4% and commercial
loans increased $6.3 million or 8.6%. The Company's asset quality
remains sound, with VFG's ratio of non- performing assets as a
percentage of total assets amounting to .49% as of March 31, 2004,
compared to .79% at March 31, 2003 and .53% at December 31, 2003.
Net charge-offs as a percentage of average loans receivable
amounted to .01% for the quarter ended March 31, 2004, compared to
.02% for the quarter ended March 31, 2003 and .03% for the previous
quarter ended December 31, 2003. At March 31, 2004, the allowance
for loan losses as a percentage of non-performing assets was
148.5%, while the allowance as a percentage of total loans amounted
to 1.07%. The Company increased its provision for loan losses by
$358 thousand or over 100%, from $323 thousand for the three months
ended March 31, 2003 to $681 thousand for the three months ended
March 31, 2004, consistent with the loan growth experienced for the
period. VFG is the holding company for Planters Bank & Trust
Company of Virginia - in Staunton; Second Bank & Trust - in
Culpeper; Virginia Heartland Bank - in Fredericksburg and Virginia
Commonwealth Trust Company - in Culpeper. The organization
maintains a network of thirty-seven branches serving Central and
Southwest Virginia. It also has loan production offices located in
Charlottesville and Lynchburg. This press release contains
forward-looking statements as defined by federal securities laws.
These statements may address certain results that are expected or
anticipated to occur or otherwise state the company's predictions
for the future. These particular forward-looking statements and all
other statements that are not historical facts are subject to a
number of risks and uncertainties, and actual results may differ
materially. Such factors include but are not limited to: general
economic conditions, significant fluctuations in interest rates
that could reduce net interest margin; difficulties in executing
integration plans: reduction of fee income from existing products
due to market conditions; and the amount of growth in the company's
general and administrative expenses. Consequently, these cautionary
statements qualify all forward-looking statements made herein.
Please refer to VFG's filings with the Securities and Exchange
Commission for additional information, which may be accessed at
http://www.vfgi.net/. QUARTERLY PERFORMANCE SUMMARY Virginia
Financial Group, Inc. (NASDAQ:VFGI) (Dollars in thousands, except
per share data) For the Three Percent Months Ended Increase
03/31/2004 03/31/2003 (Decrease) INCOME STATEMENT Interest income -
taxable equivalent $ 17,842 $ 15,860 12.50% Interest expense 4,888
4,991 -2.06% Net interest income - taxable equivalent 12,954 10,869
19.18% Less: taxable equivalent adjustment 462 588 -21.43% Net
interest income 12,492 10,281 21.51% Provision for loan and lease
losses 681 323 110.84% Net interest income after provision for loan
and lease losses 11,811 9,958 18.61% Noninterest income 3,457 3,659
-5.52% Noninterest expense 10,435 9,150 14.04% Provision for income
taxes 1,378 1,173 17.48% Net income $ 3,455 $ 3,294 4.89% PER SHARE
DATA Basic earnings $ 0.48 $ 0.46 4.35% Diluted earnings $ 0.48 $
0.46 4.35% Shares Outstanding 7,155,519 7,161,234 Weighted average
shares - Basic 7,153,348 7,168,741 Diluted 7,202,328 7,202,137
Dividends paid on common shares $ 0.19 $ 0.18 PERFORMANCE RATIOS
Return on average assets 0.99% 1.20% -17.50% Return on average
equity 11.51% 11.62% -0.95% Return on average realized equity(A)
11.98% 12.35% -3.00% Net yield on earning assets (taxable
equivalent) 4.09% 4.27% -4.22% Efficiency (taxable equivalent)(B)
63.54% 62.89% 1.03% ASSET QUALITY Allowance for loan losses
Beginning of period $ 9,743 $ 9,180 Provision for loan losses 681
323 Charge offs (176) (175) Recoveries 35 39 End of period $ 10,283
$ 9,367 Non-performing assets: Non-accrual loans $ 2,121 $ 1,085
Loans 90+ days past due and still accruing 78 46 Other real estate
owned 241 576 Troubled debt restructurings 4,483 7,041 Total
non-performing assets $ 6,923 $ 8,748 NOTES: Applicable ratios are
annualized (A) Excludes the effect on average shareholders' equity
of unrealized gains (losses) that result from changes in market
values of securities and other comprehensive pension expense. (B)
Excludes foreclosed property expense and non-recurring items for
all periods. Consolidated Balance Sheets Selected Balance Sheet
Data Virginia Financial Group, Inc. (NASDAQ:VFGI) (Dollars in
thousands) Percent Increase 03/31/2004 03/31/2003 (Decrease) End of
period balances Securities available for sale $ 325,001 $ 308,580
5.32% Securities held to maturity 5,840 7,053 -17.20% Total
securities 330,841 315,633 4.82% Real estate - construction 104,804
60,243 73.97% Real estate - 1-4 family residential 307,097 219,682
39.79% Real estate - commercial and multifamily 421,887 306,510
37.64% Commercial, financial and agricultural 80,173 66,363 20.81%
Consumer loans 47,428 51,109 -7.20% All other loans 3,761 12,211
-69.20% Total loans 965,150 716,118 34.78% Allowance for loan
losses (10,283) (9,367) 9.78% Other earning assets 8,935 37,696
-76.30% Total earning assets 1,304,926 1,069,447 22.02% Total
assets 1,410,928 1,135,793 24.22% Non-interest bearing deposits
219,413 181,807 20.68% Money market & interest checking 361,498
286,395 26.22% Savings 139,807 109,210 28.02% CD's and other time
deposits 488,979 402,800 21.39% Total deposits 1,209,697 980,212
23.41% Short-term borrowed funds 34,038 21,938 55.16% Trust
preferred capital notes 20,000 - 100.00% Federal Home Loan Bank
advances 14,120 9,140 54.49% Total interest-bearing liabilities
1,058,442 849,483 24.60% Total shareholders' equity 123,429 115,566
6.80% Average balances Total assets 1,403,681 1,110,692 26.38%
Total shareholder's equity $ 120,732 $ 115,058 4.93% Consolidated
Statements of Income Virginia Financial Group, Inc. (NASDAQ:VFGI)
(Dollars in thousands) For the Three Months Ended 03/31/2004
03/31/2003 Interest Income Interest and fees on loans $ 14,055 $
12,208 Interest on deposits in other banks 1 2 Interest on
investment securities: Taxable 95 114 Interest and dividends on
securities available for sale: Taxable 2,431 1,920 Nontaxable 749
894 Dividends 47 55 Interest income on federal funds sold 2 79
Total Interest Income 17,380 15,272 Interest Expense Interest on
deposits 4,534 4,750 Interest on trust preferred capital notes 28 -
Interest on Federal Home Loan Bank advances 155 192 Interest on
federal funds repurchased and securities sold under agreements to
repurchase 100 48 Interest on other short-term borrowings 71 1
Total Interest Expense 4,888 4,991 Net Interest Income 12,492
10,281 Provision for loan losses 681 323 Net Interest Income after
Provision for Loan Losses 11,811 9,958 Other Income Retail banking
fees 1,549 1,248 Fees from fiduciary activities 776 779 Brokerage
services 198 233 Other operating income 289 312 Gains (losses) on
securities available for sale - 24 Gains (losses) on other real
estate owned - - Gains (losses) on sale of fixed assets - - Fees on
mortgage loans sold 645 1,063 Total Other Income 3,457 3,659 Other
Expense Compensation and employee benefits 5,860 5,258 Net
occupancy expense 706 570 Supplies and equipment 1,044 948
Amortization-intangible assets 173 39 Computer services 299 341
Professional fees 201 212 Other operating expenses 2,152 1,782
Total Other Expense 10,435 9,150 Income Before Income Tax Expense
4,833 4,467 Income tax expense 1,378 1,173 Net Income $ 3,455 $
3,294 CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES VIRGINIA
FINANCIAL GROUP, INC. (NASDAQ:VFGI) THREE MONTHS ENDED MARCH 31,
2004 AND 2003 2004 Interest Average Income/ Average Dollars in
thousands Balance Expense Rates Assets Loans receivable, net $
942,969,430 $ 14,114,179 6.02% Investment securities Taxable
257,815,886 2,573,977 4.02% Tax exempt 70,909,182 1,151,963 6.53%
Total Investments 328,725,068 3,725,940 4.56% FHLB interest bearing
548,712 754 0.55% Federal funds sold 858,579 2,085 0.98%
330,132,359 3,728,779 4.54% Total Earning Assets $1,273,101,789
17,842,958 5.64% Liabilities and Stockholders' Equity Time and
savings deposits Interest-bearing transaction accounts $
196,532,271 $ 385,099 0.79% Money market deposit accounts
169,228,844 405,823 0.96% Passbook savings accounts 137,018,701
248,569 0.73% Certificates of deposit >$100k 115,851,857 986,679
3.43% Certificates of deposit
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