Exhibit 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE
Contact:
Jeffrey W. Farrar
Executive Vice President and CFO
(540) 829-1603
farrarj@vfgi.net
VIRGINIA FINANCIAL GROUP, INC. ANNOUNCES 17%
GROWTH IN SECOND QUARTER EARNINGS
Culpeper, VA-Virginia Financial Group, Inc. (NASDAQ: VFGI) today reported second quarter 2006 earnings of $5.2 million, an increase of 17.2% compared to earnings of $4.5 million for the second quarter of 2005. Net income per diluted share was $.72, up 16.1% compared to $.62 for the same period in 2005. VFG’S earnings for the second quarter of 2006 produced an annualized return on average assets (ROA) of 1.35% and an annualized return on average equity (ROE) of 14.74%, compared to prior year ratios of 1.22% and 13.80%, respectively. For the first six months of 2006, net income was $9.7 million, up 14.4% from $8.5 million for the same period in 2005. Net income per diluted share was $1.34, up 13.6% from $1.18 for the first six months of 2005. ROA and ROE for the six month period was 1.27% and 13.93%, respectively, compared to 1.18% and 13.28% for the same period in 2005.
O.R. Barham, Jr., President and CEO, commented, “We are proud of our results for the quarter, particularly with earnings contributions from our Virginia Commonwealth Trust Company affiliate and our mortgage division. Our net interest margin for the quarter remained stable in a challenging rate environment, and asset quality continues to be excellent. Our real estate markets have slowed, impacting our loan growth for the quarter. While we anticipate a challenging environment during the remainder of the year, we accept the challenge and remain confident in our ability to continue our success.”
Revenues
Total revenue, comprised of net interest income and noninterest income, was $19.1 million for the second quarter of 2006, an increase of $993 thousand or 5.5% sequentially over the $18.1 million for the first quarter of 2006, and an increase of $1.2 million or 7.0% over $17.9 million in 2005. The largest component, net interest income, amounted to $15.2 million for the second quarter, up $1.4 million or 10.6% compared with $13.8 million for the same quarter in 2005. For the six months ended June 30, 2006, net interest income was $30.1 million, an increase of $3.1 million or 11.6% from $27.0 million for the same period in 2005. Improvements in the growth and mix of average earning assets, coupled with net interest
margin expansion, were primarily contributors to this growth. The net interest margin for the second quarter of 2006 was 4.35%, equal to the 4.35% for the first quarter of 2006, and up twelve basis points when compared to 4.23% for the second quarter of 2005. The net interest margin for the six month period ended June 30, 2006 was 4.35%, compared to 4.19% for the same period in 2005. Management continues to expect modest margin pressure for the second half of 2006 based on slowing loan growth and continued acceleration of funding costs.
Total noninterest income was $3.9 million for the second quarter of 2006, an increase of $616 thousand or 18.9% sequentially, and a decrease of $206 thousand or 5.0% compared to $4.1 million for the second quarter of 2005. Included in the 2005 results was a net gain on sale of securities available for sale of $295 thousand. Retail banking fees increased $160 thousand or 10.0% to $1.77 million sequentially, and decreased $43 thousand or 2.4% compared to $1.8 million for the second quarter of 2005. Mortgage banking revenue amounted to $853 thousand, an increase of $169 thousand or 24.7%, as compared to $684 thousand for the second quarter of 2005, and up sequentially $220 thousand or 34.8% from the first quarter of 2006.
Virginia Commonwealth Trust Company revenues from trust and brokerage for the second quarter were $951 thousand, down $16 thousand or 1.7% compared to $967 thousand in the second quarter of 2005. Net income for the quarter was $148 thousand, up $71 thousand or 92.2% compared to $77 thousand for the second quarter of 2005, on improved levels of operating expenses.
Noninterest Expense and Efficiency
Noninterest expense for the second quarter of 2006 amounted to $11.5 million, up $654 thousand or 6.1% from $10.8 million for the same period in 2005, and up sequentially $272 thousand or 2.4% from the first quarter of 2006. For the six month period ended June 30, 2006, noninterest expense amounted to $22.6 million, an increase of $1.3 million or 6.1% over $21.3 million the same period in 2005. These increases reflect new positions for the openings of the Seminole Trail, Graves Mill and Mill Creek branches during the past six months. VFG’s efficiency ratio improved to 58.5% for the quarter, compared to 59.5% in the first quarter of 2006 and 60.0% for the same quarter in 2005. For the six month period ended June 30, 2006, the efficiency ratio was 59.0%, compared to 60.4% for the same period in 2005. Management anticipates some increase in operating expenses with the anticipated hiring of additional loan officers, the opening of our thirty-eighth branch later this month, and up to two additional branch openings before the end of the year.
Balance Sheet
Average loans for the second quarter were $1.19 billion, up $85.0 million or 7.7% from the second quarter of 2005, and average total assets were $1.59 billion, up $93.7 million or 6.4% from the second quarter of 2005. Loans receivable were $1.20 billion at June 30, 2006, up $56.3 million or 4.9% from December 31, 2005. Loan growth for the first and second quarters of 2006 was $46.1 million or 4% and $10.2 million or 0.9%, respectively.
Average deposits for the second quarter were $1.26 billion, up $19.2 million or 1.5% from the same quarter of 2005. Deposit growth was $17.5 million or 1.4% and $23.7 million or 1.9% for the first and second quarters of 2006, respectively. Certificate of deposit balances were up $31.9 million or 5.6% for the quarter, reflecting industry-wide mix shift and the purchase of brokered CDs of $12.7 million for the quarter. Interest checking and savings accounts decreased during the quarter while money market accounts increased slightly. Noninterest bearing demand deposits were up $3.1 million or 1.2% for the quarter, and represent 20.1% of total deposits at June 30, 2006.
At June 30, 2006 VFG had total assets of $1.59 billion, compared to $1.47 billion at June 30, 2005.
Shareholder’s equity at June 30, 2006 was $142.2 million, an increase of $10.7 million or 8.2% compared to June 30, 2005. Shareholder’s equity represented 8.92% of total assets at June 30, 2006, while tangible equity capital represented 7.80% of tangible assets at June 30, 2006. Book value at June 30, 2006 was $19.81 per share, compared to $18.34 at June 30, 2005.
Asset Quality
Asset quality remains strong, with VFG’s ratio of non-performing assets as a percentage of total assets amounting to .16% as of June 30, 2006, compared to .11% at June 30, 2005 and .13% at March 31, 2006. Net charge-offs as a percentage of average loans receivable amounted to .00% for the quarter and .01% for the six month period ended June 30, 2006, compared to .01% and .01% for the same periods in 2005. At June 30, 2006, the allowance for loan losses was approximately six times the level of non-performing assets, while the allowance as a percentage of total loans amounted to 1.17%. The Company decreased its provision for loan losses by $446 thousand or 81.7%, from $546 thousand for the three months ended June 30, 2005 compared to $100 thousand for the three months ended June 30, 2006, consistent with a decreased rate of loan growth and continuing strong asset quality during the period.
Branching
VFG had one new branch open during the second quarter, a Second Bank branch located at 1330 Parham Circle, one block east of the Mill Creek Road/Avon Street intersection in Charlottesville, Virginia. VFG’s Planters Bank affiliate plans to open its main office located at 2102 Langhorne Rd. in Lynchburg, Virginia within the next thirty days. This branch will be a 10,000 square foot two story building and serve as a main office facility for several future sites in various stages of planning for that market. These branches represent the second entry into each of these markets. Groundbreaking is scheduled for two additional locations, including a branch at 1391 South High Street in Harrisonburg, Virginia, and a new main office facility for our Virginia Heartland affiliate located on Route 1 in Fredericksburg, Virginia. VFG’s Second Bank affiliate has leased an existing branch facility at 1924 Arlington Boulevard in Charlottesville, Virginia with opening tentatively scheduled for early fall.
Investment in VFG Title
VFG purchased a 70% interest in VFG Financial Title Agency, LLC “VFG Title” during the quarter. VFG Title is a joint venture with Investors Title Company headquartered in Chapel Hill, N.C., engaged through its subsidiaries in the business of issuing and underwriting title insurance policies. Policies are issued through 29 branch offices and a network of agents located across 23 states and the District of Columbia. Over the last 30 years, Investor Title has put more than 500 financial institutions in the business of selling title insurance through 50 bank-owned agencies. Investors Title Company provides management services to VFG Title and continues to be a minority owner. Each of VFG bank affiliates now offer title and settlement services exclusively through VFG Title.
Dividends
VFG previously announced on July 19, 2006 the declaration of a 3-for-2 stock split in the form of a 50% stock dividend, to be paid on September 6, 2006 to shareholders of record on August 14, 2006. VFG also announced a quarterly cash dividend of $.23 per share, payable on August 28, 2006 to shareholders of record on August 7, 2006.
About VFG
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 Company is a traditional community banking provider, offering a full range of business and consumer banking services including trust and asset management service via its trust company affiliate. The organization maintains a network of thirty-seven branches serving Central and Southwest Virginia. It also maintains five trust and investment service offices in its markets, and loan production offices located in Charlottesville and Lynchburg.
Non-GAAP Financial Measures
This report refers to the efficiency ratio, which is computed by dividing non-interest expense by the sum of net interest income on a tax equivalent basis and non-interest income excluding gain (loss) on sale of securities. This is a non-GAAP financial measure that we believe provides investors with important information regarding our operational efficiency. Such information is not in accordance with generally accepted accounting principles (GAAP) and should not be construed as such. Management believes such financial information is meaningful to the reader in understanding operating performance, but cautions that such information not be viewed as a substitute for GAAP. VFG, in referring to its net income, is referring to income under generally accepted accounting principles, or “GAAP”.
Forward Looking Statements
In addition to historical information, this press release contains forward-looking statements. The forward-looking statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from historical results, or those anticipated. When we use words such as “believes”, “expects”, “anticipates” or similar expressions, we are making forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date thereof. VFG wishes to caution the reader that factors, such as those listed below, in some cases have affected and could affect VFG’s actual results, causing actual results to differ materially from those in any forward looking statement. These factors include: (i) expected cost savings from VFG’s acquisitions and dispositions, (ii) competitive pressure in the banking industry or in VFG’s markets may increase significantly, (iii) changes in the interest rate environment may reduce margins, (iv) general economic conditions, either nationally or regionally, may be less favorable than expected, resulting in, among other things, credit quality deterioration, (v) changes may occur in banking legislation and regulation, (vi) changes may occur in general business conditions and (vii) changes may occur in the securities markets. Please refer to VFG’s filings with the Securities and Exchange Commission for additional information, which may be accessed atwww.vfgi.net.
QUARTERLY PERFORMANCE SUMMARY
Virginia Financial Group, Inc. (NASDAQ: VFGI)
(Dollars in thousands, except per share data)
Percent Increase (Decrease) | |||||||||||
For the Three Months Ended | |||||||||||
6/30/2006 | 6/30/2005 | ||||||||||
INCOME STATEMENT | |||||||||||
Interest income - taxable equivalent | $ | 23,970 | $ | 19,904 | 20.43 | % | |||||
Interest expense | 8,222 | 5,718 | 43.79 | % | |||||||
Net interest income - taxable equivalent | 15,748 | 14,185 | 11.02 | % | |||||||
Less: taxable equivalent adjustment | 506 | 398 | 27.14 | % | |||||||
Net interest income | 15,242 | 13,787 | 10.55 | % | |||||||
Provision for loan and lease losses | 100 | 546 | -81.68 | % | |||||||
Net interest income after provision for loan and lease losses | 15,142 | 13,241 | 14.36 | % | |||||||
Noninterest income | 3,879 | 4,085 | -5.04 | % | |||||||
Noninterest expense | 11,455 | 10,801 | 6.05 | % | |||||||
Provision for income taxes | 2,326 | 2,054 | 13.24 | % | |||||||
Net income | $ | 5,240 | $ | 4,471 | 17.20 | % | |||||
PER SHARE DATA | |||||||||||
Basic earnings | $ | 0.73 | $ | 0.62 | 17.74 | % | |||||
Diluted earnings | $ | 0.72 | $ | 0.62 | 16.13 | % | |||||
Shares outstanding | 7,181,185 | 7,169,929 | |||||||||
Weighted average shares - | |||||||||||
Basic | 7,180,371 | 7,166,969 | |||||||||
Diluted | 7,236,068 | 7,214,171 | |||||||||
Dividends paid on common shares | $ | 0.23 | $ | 0.21 | |||||||
PERFORMANCE RATIOS | |||||||||||
Return on average assets | 1.35 | % | 1.22 | % | 10.66 | % | |||||
Return on average equity | 14.74 | % | 13.80 | % | 6.81 | % | |||||
Return on average realized equity (A) | 14.48 | % | 13.80 | % | 4.93 | % | |||||
Net interest margin (taxable equivalent) | 4.35 | % | 4.23 | % | 2.84 | % | |||||
Efficiency (taxable equivalent) (B) | 58.53 | % | 60.00 | % | -2.45 | % | |||||
ASSET QUALITY | |||||||||||
Allowance for loan losses | |||||||||||
Beginning of period | $ | 13,941 | $ | 12,181 | |||||||
Provision for loan losses | 100 | 546 | |||||||||
Charge offs | (53 | ) | (130 | ) | |||||||
Recoveries | 55 | 67 | |||||||||
End of period | $ | 14,043 | $ | 12,664 | |||||||
Non-performing assets: | |||||||||||
Non-accrual loans | $ | 2,339 | $ | 1,347 | |||||||
Loans 90+ days past due and still accruing | — | — | |||||||||
Other real estate owned | 38 | — | |||||||||
Troubled debt restructurings | 113 | 193 | |||||||||
Total non-performing assets | $ | 2,490 | $ | 1,540 | |||||||
to total assets: | 0.16 | % | 0.11 | % | |||||||
to total loans plus OREO: | 0.21 | % | 0.14 | % | |||||||
Allowance for loan losses to total loans | 1.17 | % | 1.14 | % | |||||||
Net charge-offs (recoveries) | $ | (1 | ) | $ | 62 | ||||||
Net charge-offs to average loans outstanding | 0.00 | % | 0.01 | % |
NOTES: Applicable ratios are annualized
(A) | Excludes the effect on average stockholders’ equity of unrealized gains (losses) that result from changes in market values of securities and other comprehensive pension expense. |
(B) | Excludes securities gains (losses) and foreclosed property expense for all periods. |
(C) | Individual amounts shown above are calculated from actual, not rounded amounts in the thousands, which appear above. |
QUARTERLY PERFORMANCE SUMMARY
Virginia Financial Group, Inc. (NASDAQ: VFGI)
(Dollars in thousands, except per share data)
Percent Increase (Decrease) | |||||||||||
For the Six Months Ended | |||||||||||
6/30/2006 | 6/30/2005 | ||||||||||
INCOME STATEMENT | |||||||||||
Interest income - taxable equivalent | $ | 46,601 | $ | 38,895 | 19.81 | % | |||||
Interest expense | 15,530 | 11,116 | 39.71 | % | |||||||
Net interest income - taxable equivalent | 31,071 | 27,779 | 11.85 | % | |||||||
Less: taxable equivalent adjustment | 964 | 806 | 19.60 | % | |||||||
Net interest income | 30,107 | 26,973 | 11.62 | % | |||||||
Provision for loan and lease losses | 610 | 1,092 | -44.14 | % | |||||||
Net interest income after provision for loan and lease losses | 29,497 | 25,881 | 13.97 | % | |||||||
Noninterest income | 7,142 | 7,779 | -8.19 | % | |||||||
Noninterest expense | 22,638 | 21,335 | 6.11 | % | |||||||
Provision for income taxes | 4,297 | 3,841 | 11.87 | % | |||||||
Net income | $ | 9,704 | $ | 8,484 | 14.38 | % | |||||
PER SHARE DATA | |||||||||||
Basic earnings | $ | 1.35 | $ | 1.18 | 14.41 | % | |||||
Diluted earnings | $ | 1.34 | $ | 1.18 | 13.56 | % | |||||
Shares outstanding | 7,181,185 | 7,169,929 | |||||||||
Weighted average shares - | |||||||||||
Basic | 7,178,603 | 7,165,128 | |||||||||
Diluted | 7,233,432 | 7,212,554 | |||||||||
Dividends paid on common shares | $ | 0.45 | $ | 0.41 | |||||||
PERFORMANCE RATIOS | |||||||||||
Return on average assets | 1.27 | % | 1.18 | % | 7.63 | % | |||||
Return on average equity | 13.93 | % | 13.28 | % | 4.89 | % | |||||
Return on average realized equity (A) | 13.74 | % | 13.37 | % | 2.77 | % | |||||
Net interest margin (taxable equivalent) | 4.35 | % | 4.19 | % | 3.82 | % | |||||
Efficiency (taxable equivalent) (B) | 59.00 | % | 60.37 | % | -2.27 | % | |||||
ASSET QUALITY | |||||||||||
Allowance for loan losses | |||||||||||
Beginning of period | $ | 13,581 | $ | 11,706 | |||||||
Provision for loan losses | 610 | 1,092 | |||||||||
Charge offs | (226 | ) | (319 | ) | |||||||
Recoveries | 78 | 185 | |||||||||
End of period | $ | 14,043 | $ | 12,664 | |||||||
Non-performing assets: | |||||||||||
Non-accrual loans | $ | 2,339 | $ | 1,347 | |||||||
Loans 90+ days past due and still accruing | — | — | |||||||||
Other real estate owned | 38 | — | |||||||||
Troubled debt restructurings | 113 | 193 | |||||||||
Total non-performing assets | $ | 2,490 | $ | 1,540 | |||||||
to total assets: | 0.16 | % | 0.11 | % | |||||||
to total loans plus OREO: | 0.21 | % | 0.14 | % | |||||||
Allowance for loan losses to total loans | 1.17 | % | 1.14 | % | |||||||
Net charge-offs (recoveries) | $ | 148 | $ | 133 | |||||||
Net charge-offs to average loans outstanding | 0.01 | % | 0.01 | % |
NOTES: Applicable ratios are annualized
(A) | Excludes the effect on average stockholders’ equity of unrealized gains (losses) that result from changes in market values of securities and other comprehensive pension expense. |
(B) | Excludes securities gains (losses) and foreclosed property expense for all periods. |
(C) | Individual amounts shown above are calculated from actual, not rounded amounts in the thousands, which appear above. |
QUARTERLY PERFORMANCE SUMMARY
Virginia Financial Group, Inc. (NASDAQ: VFGI)
(Dollars in thousands, except per share data)
6/30/2006 | 6/30/2005 | Percent Increase (Decrease) | |||||||||
SELECTED BALANCE SHEET DATA | |||||||||||
End of period balances | |||||||||||
Cash and cash equivalents | $ | 84,225 | $ | 50,978 | 65.22 | % | |||||
Securities available for sale | 246,667 | 229,435 | 7.51 | % | |||||||
Securities held to maturity | 3,323 | 4,856 | -31.57 | % | |||||||
Total securities | 249,990 | 234,291 | 6.70 | % | |||||||
Real estate - construction | 178,835 | 126,288 | 41.61 | % | |||||||
Real estate - 1-4 family residential | 300,935 | 315,290 | -4.55 | % | |||||||
Real estate - commercial and multifamily | 574,285 | 540,888 | 6.17 | % | |||||||
Commercial, financial and agricultural | 102,220 | 87,075 | 17.39 | % | |||||||
Consumer loans | 35,597 | 41,122 | -13.44 | % | |||||||
All other loans | 6,936 | 2,414 | 187.32 | % | |||||||
Total loans | 1,198,808 | 1,113,077 | 7.70 | % | |||||||
Deferred loan costs | 617 | 610 | 1.15 | % | |||||||
Allowance for loan losses | (14,043 | ) | (12,664 | ) | 10.89 | % | |||||
Net loans | 1,185,382 | 1,101,023 | 7.66 | % | |||||||
Other assets | 74,652 | 79,605 | -6.22 | % | |||||||
Total assets | 1,594,249 | 1,465,897 | 8.76 | % | |||||||
Noninterest bearing deposits | 260,067 | 265,137 | -1.91 | % | |||||||
Money market & interest checking | 332,407 | 352,092 | -5.59 | % | |||||||
Savings | 106,150 | 132,557 | -19.92 | % | |||||||
CD’s and other time deposits | 598,084 | 499,385 | 19.76 | % | |||||||
Total deposits | 1,296,708 | 1,249,171 | 3.81 | % | |||||||
Federal Home Loan Bank advances | 75,000 | 30,020 | 149.83 | % | |||||||
Trust preferred capital notes | 20,619 | 20,619 | 0.00 | % | |||||||
Other borrowed funds | 48,872 | 25,676 | 90.34 | % | |||||||
Other liabilities | 10,811 | 8,907 | 21.38 | % | |||||||
Total liabilities | 1,452,010 | 1,334,393 | 8.81 | % | |||||||
Total stockholders’ equity | $ | 142,239 | $ | 131,504 | 8.16 | % | |||||
Accumulated comprehensive income (loss) | $ | (2,539 | ) | $ | 205 | -1338.54 | % | ||||
Average balances | |||||||||||
Percent Increase (Decrease) | |||||||||||
For the Three Months Ended | |||||||||||
6/30/2006 | 6/30/2005 | ||||||||||
Total assets | $ | 1,559,265 | $ | 1,465,571 | 6.39 | % | |||||
Total stockholders’ equity | $ | 142,583 | $ | 129,972 | 9.70 | % | |||||
For the Six Months Ended | |||||||||||
6/30/2006 | 6/30/2005 | ||||||||||
Total assets | $ | 1,542,399 | $ | 1,455,971 | 5.94 | % | |||||
Total stockholders’ equity | $ | 140,485 | $ | 128,868 | 9.01 | % | |||||
OTHER DATA | |||||||||||
End of period full time employees | 558 | 515 |
QUARTERLY PERFORMANCE SUMMARY
Virginia Financial Group, Inc. (NASDAQ: VFGI)
(Dollars in thousands)
Percent Increase (Decrease) | ||||||||||
For the Three Months Ended | ||||||||||
6/30/2006 | 6/30/2005 | |||||||||
Interest Income | ||||||||||
Interest and fees on loans | $ | 20,834 | $ | 17,123 | 21.67 | % | ||||
Interest on deposits in other banks | 29 | 3 | 866.67 | % | ||||||
Interest and dividends on securities: | ||||||||||
Taxable | 1,512 | 1,601 | -5.56 | % | ||||||
Tax-exempt | 845 | 641 | 31.83 | % | ||||||
Dividends | 111 | 125 | -11.20 | % | ||||||
Interest income on federal funds sold | 133 | 12 | 1008.33 | % | ||||||
Total interest income | 23,464 | 19,505 | 20.30 | % | ||||||
Interest Expense | ||||||||||
Interest on deposits | 6,594 | 4,868 | 35.46 | % | ||||||
Interest on federal funds repurchased and securities sold under agreements to repurchase | 64 | 144 | -55.56 | % | ||||||
Interest on Federal Home Loan Bank advances | 623 | 361 | 72.58 | % | ||||||
Interest on trust preferred capital notes | 402 | 294 | 36.73 | % | ||||||
Interest on other borrowings | 539 | 51 | 956.86 | % | ||||||
Total interest expense | 8,222 | 5,718 | 43.79 | % | ||||||
Net interest income | 15,242 | 13,787 | 10.55 | % | ||||||
Provision for loan losses | 100 | 546 | -81.68 | % | ||||||
Net interest income after provision for loan losses | 15,142 | 13,241 | 14.36 | % | ||||||
Noninterest Income | ||||||||||
Retail banking fees | 1,767 | 1,810 | -2.38 | % | ||||||
Commissions and fees from fiduciary activities | 781 | 787 | -0.76 | % | ||||||
Brokerage fee income | 170 | 180 | -5.56 | % | ||||||
Other operating income | 246 | 329 | -25.23 | % | ||||||
Gain on sale of fixed assets | 80 | — | — | |||||||
Gain (loss) on securities available for sale | (18 | ) | 295 | -106.10 | % | |||||
Gains (losses) on sale of other real estate owned | — | — | — | |||||||
Gain on sale of mortgage loans | 853 | 684 | 24.71 | % | ||||||
Total noninterest income | 3,879 | 4,085 | -5.04 | % | ||||||
Noninterest Expense | ||||||||||
Compensation and employee benefits | 6,596 | 6,049 | 9.04 | % | ||||||
Net occupancy expense | 732 | 706 | 3.68 | % | ||||||
Supplies and equipment expenses | 1,016 | 1,092 | -6.96 | % | ||||||
Amortization-intangible assets | 157 | 159 | -1.26 | % | ||||||
Marketing | 307 | 309 | -0.65 | % | ||||||
State franchise tax | 216 | 223 | -3.14 | % | ||||||
Data processing | 308 | 313 | -1.60 | % | ||||||
Telecommunications | 272 | 229 | 18.78 | % | ||||||
Professional fees | 148 | 267 | -44.57 | % | ||||||
Other operating expenses | 1,703 | 1,454 | 17.13 | % | ||||||
Total noninterest expense | 11,455 | 10,801 | 6.05 | % | ||||||
Income before income taxes | 7,566 | 6,525 | 15.95 | % | ||||||
Income tax expense | 2,326 | 2,054 | 13.24 | % | ||||||
Net income | $ | 5,240 | $ | 4,471 | 17.20 | % |
QUARTERLY PERFORMANCE SUMMARY
Virginia Financial Group, Inc. (NASDAQ: VFGI)
(Dollars in thousands)
Percent Increase (Decrease) | ||||||||||
For the Six Months Ended | ||||||||||
6/30/2006 | 6/30/2005 | |||||||||
Interest Income | ||||||||||
Interest and fees on loans | $ | 40,268 | $ | 33,166 | 21.41 | % | ||||
Interest on deposits in other banks | 65 | 7 | 828.57 | % | ||||||
Interest and dividends on securities: | ||||||||||
Taxable | 3,010 | 3,407 | -11.65 | % | ||||||
Tax-exempt | 1,659 | 1,297 | 27.91 | % | ||||||
Dividends | 226 | 192 | 17.71 | % | ||||||
Interest income on federal funds sold | 409 | 20 | 1945.00 | % | ||||||
Total interest income | 45,637 | 38,089 | 19.82 | % | ||||||
Interest Expense | ||||||||||
Interest on deposits | 12,556 | 9,620 | 30.52 | % | ||||||
Interest on federal funds repurchased and securities sold under agreements to repurchase | 148 | 288 | -48.61 | % | ||||||
Interest on Federal Home Loan Bank advances | 1,205 | 428 | 181.54 | % | ||||||
Interest on trust preferred capital notes | 776 | 559 | 38.82 | % | ||||||
Interest on other borrowings | 845 | 221 | 282.35 | % | ||||||
Total interest expense | 15,530 | 11,116 | 39.71 | % | ||||||
Net interest income | 30,107 | 26,973 | 11.62 | % | ||||||
Provision for loan losses | 610 | 1,092 | -44.14 | % | ||||||
Net interest income after provision for loan losses | 29,497 | 25,881 | 13.97 | % | ||||||
Noninterest Income | ||||||||||
Retail banking fees | 3,375 | 3,475 | -2.88 | % | ||||||
Commissions and fees from fiduciary activities | 1,592 | 1,511 | 5.36 | % | ||||||
Brokerage fee income | 396 | 361 | 9.70 | % | ||||||
Other operating income | 416 | 566 | -26.50 | % | ||||||
Gain on sale of fixed assets | 76 | — | — | |||||||
Gain (loss) on securities available for sale | (199 | ) | 296 | -167.23 | % | |||||
Gain on sale of branches | — | 411 | — | |||||||
Gain on sale of mortgage loans | 1,486 | 1,159 | 28.21 | % | ||||||
Total noninterest income | 7,142 | 7,779 | -8.19 | % | ||||||
Noninterest Expense | ||||||||||
Compensation and employee benefits | 13,197 | 12,096 | 9.10 | % | ||||||
Net occupancy expense | 1,498 | 1,457 | 2.81 | % | ||||||
Supplies and equipment expenses | 1,992 | 2,206 | -9.70 | % | ||||||
Amortization-intangible assets | 257 | 327 | -21.41 | % | ||||||
Marketing | 432 | 448 | -3.57 | % | ||||||
State franchise tax | 463 | 454 | 1.98 | % | ||||||
Data processing | 691 | 627 | 10.21 | % | ||||||
Telecommunications | 547 | 497 | 10.06 | % | ||||||
Professional fees | 279 | 397 | -29.72 | % | ||||||
Other operating expenses | 3,282 | 2,826 | 16.14 | % | ||||||
Total noninterest expense | 22,638 | 21,335 | 6.11 | % | ||||||
Income before income taxes | 14,001 | 12,325 | 13.60 | % | ||||||
Income tax expense | 4,297 | 3,841 | 11.87 | % | ||||||
Net income | $ | 9,704 | $ | 8,484 | 14.38 | % |
VIRGINIA FINANCIAL GROUP INC.
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES
THREE MONTHS ENDED JUNE 30, 2006 AND 2005
(Dollars in thousands)
Three months ended June 30, | ||||||||||||||||||
2006 | 2005 | |||||||||||||||||
Dollars in thousands | Average Balance | Interest Inc/Exp | Average Rates | Average Balance | Interest Inc/Exp | Average Rates | ||||||||||||
Assets | ||||||||||||||||||
Loans receivable, net | $ | 1,188,071 | $ | 20,886 | 7.05 | % | $ | 1,102,991 | $ | 17,171 | 6.24 | % | ||||||
Investment securities | ||||||||||||||||||
Taxable | 154,145 | 1,622 | 4.22 | % | 179,428 | 1,726 | 3.86 | % | ||||||||||
Tax exempt | 84,328 | 1,300 | 6.18 | % | 61,415 | 985 | 6.43 | % | ||||||||||
Total investments | 238,473 | 2,922 | 4.91 | % | 240,843 | 2,711 | 4.52 | % | ||||||||||
Interest bearing deposits | 3,842 | 29 | 3.03 | % | 220 | 3 | 5.47 | % | ||||||||||
Federal funds sold | 22,605 | 133 | 2.36 | % | 1,368 | 12 | 3.52 | % | ||||||||||
264,920 | 3,084 | 4.67 | % | 242,431 | 2,726 | 4.52 | % | |||||||||||
Total earning assets | 1,452,991 | 23,970 | 6.62 | % | 1,345,422 | 19,897 | 5.93 | % | ||||||||||
Total nonearning assets | 106,274 | 120,149 | ||||||||||||||||
Total assets | $ | 1,559,265 | $ | 1,465,571 | ||||||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||||
Interest-bearing deposits | ||||||||||||||||||
Interest checking | $ | 175,080 | $ | 243 | 0.56 | % | $ | 195,952 | $ | 204 | 0.42 | % | ||||||
Money market | 156,687 | 679 | 1.74 | % | 166,521 | 461 | 1.11 | % | ||||||||||
Savings | 109,907 | 173 | 0.63 | % | 132,431 | 221 | 0.67 | % | ||||||||||
Time deposits: | ||||||||||||||||||
Less than $100,000 | 392,281 | 3,609 | 3.69 | % | 363,045 | 2,827 | 3.12 | % | ||||||||||
$100,000 and more | 184,713 | 1,890 | 4.10 | % | 134,441 | 1,155 | 3.45 | % | ||||||||||
Total interest-bearing deposits | 1,018,668 | 6,594 | 2.60 | % | 992,390 | 4,868 | 1.97 | % | ||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 18,884 | 64 | 1.36 | % | 21,397 | 144 | 2.70 | % | ||||||||||
Federal Home Loan Bank advances | 55,496 | 623 | 4.50 | % | 20,389 | 249 | 4.90 | % | ||||||||||
Trust preferred capital notes | 20,619 | 402 | 7.82 | % | 20,619 | 294 | 5.72 | % | ||||||||||
Other borrowings | 48,919 | 539 | 4.42 | % | 19,165 | 163 | 3.41 | % | ||||||||||
143,918 | 1,628 | 4.54 | % | 81,570 | 850 | 4.18 | % | |||||||||||
Total interest-bearing liabilities | 1,162,586 | 8,222 | 2.84 | % | 1,073,960 | 5,718 | 2.14 | % | ||||||||||
Total noninterest-bearing liabilities | 254,096 | 261,639 | ||||||||||||||||
Total liabilities | 1,416,682 | 1,335,599 | ||||||||||||||||
Stockholders’ equity | 142,583 | 129,972 | ||||||||||||||||
Total liabilities and stockholders’ equity | $ | 1,559,265 | $ | 1,465,571 | ||||||||||||||
Net interest income (tax equivalent) | $ | 15,748 | $ | 14,179 | ||||||||||||||
Average interest rate spread | 3.78 | % | 3.79 | % | ||||||||||||||
Interest expense as percentage of average earning assets | 2.27 | % | 1.70 | % | ||||||||||||||
Net interest margin | 4.35 | % | 4.23 | % |
VIRGINIA FINANCIAL GROUP INC.
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES
SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(Dollars in thousands)
Six Months ended June 30, | ||||||||||||||||||
2006 | 2005 | |||||||||||||||||
Dollars in thousands | Average Balance | Interest Inc/Exp | Average Rates | Average Balance | Interest Inc/Exp | Average Rates | ||||||||||||
Assets | ||||||||||||||||||
Loans receivable, net | $ | 1,173,227 | $ | 40,338 | 6.93 | % | $ | 1,087,577 | $ | 33,267 | 6.17 | % | ||||||
Investment securities | ||||||||||||||||||
Taxable | 153,548 | 3,236 | 4.25 | % | 185,563 | 3,599 | 3.91 | % | ||||||||||
Tax exempt | 82,485 | 2,553 | 6.24 | % | 61,868 | 1,995 | 6.50 | % | ||||||||||
Total investments | 236,033 | 5,789 | 4.95 | % | 247,431 | 5,594 | 4.56 | % | ||||||||||
Interest bearing deposits | 4,895 | 65 | 2.68 | % | 370 | 7 | 3.82 | % | ||||||||||
Federal funds sold | 26,627 | 409 | 3.10 | % | 1,246 | 20 | 3.24 | % | ||||||||||
267,555 | 6,263 | 4.72 | % | 249,047 | 5,621 | 4.55 | % | |||||||||||
Total earning assets | 1,440,782 | 46,601 | 6.52 | % | 1,336,624 | 38,888 | 5.87 | % | ||||||||||
Total nonearning assets | 101,616 | 119,347 | ||||||||||||||||
Total assets | $ | 1,542,398 | $ | 1,455,971 | ||||||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||||
Interest-bearing deposits | ||||||||||||||||||
Interest checking | $ | 177,160 | $ | 443 | 0.50 | % | $ | 197,385 | $ | 399 | 0.41 | % | ||||||
Money market | 161,649 | 1,380 | 1.72 | % | 170,358 | 943 | 1.12 | % | ||||||||||
Savings | 114,970 | 369 | 0.65 | % | 133,996 | 443 | 0.67 | % | ||||||||||
Time deposits: | ||||||||||||||||||
Less than $100,000 | 382,272 | 6,794 | 3.58 | % | 366,258 | 5,588 | 3.08 | % | ||||||||||
$100,000 and more | 180,040 | 3,570 | 4.00 | % | 131,310 | 2,247 | 3.45 | % | ||||||||||
Total interest-bearing deposits | 1,016,091 | 12,556 | 2.49 | % | 999,307 | 9,620 | 1.94 | % | ||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 17,281 | 148 | 1.73 | % | 22,203 | 288 | 2.62 | % | ||||||||||
Federal Home Loan Bank advances | 55,959 | 1,205 | 4.34 | % | 17,241 | 428 | 5.01 | % | ||||||||||
Trust preferred capital notes | 20,619 | 776 | 7.59 | % | 20,619 | 559 | 5.47 | % | ||||||||||
Other borrowings | 39,937 | 845 | 4.27 | % | 14,418 | 221 | 3.09 | % | ||||||||||
133,796 | 2,974 | 4.48 | % | 74,481 | 1,496 | 4.05 | % | |||||||||||
Total interest-bearing liabilities | 1,149,887 | 15,530 | 2.72 | % | 1,073,788 | 11,116 | 2.09 | % | ||||||||||
Total noninterest-bearing liabilities | 252,026 | 253,315 | ||||||||||||||||
Total liabilities | 1,401,913 | 1,327,103 | ||||||||||||||||
Stockholders’ equity | 140,485 | 128,868 | ||||||||||||||||
Total liabilities and stockholders’ equity | $ | 1,542,398 | $ | 1,455,971 | ||||||||||||||
Net interest income (tax equivalent) | $ | 31,071 | $ | 27,772 | ||||||||||||||
Average interest rate spread | 3.80 | % | 3.78 | % | ||||||||||||||
Interest expense as percentage of average earning assets | 2.17 | % | 1.68 | % | ||||||||||||||
Net interest margin | 4.35 | % | 4.19 | % |