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 GROWTH IN EARNINGS
Culpeper, VA, October 23, 2006 - Virginia Financial Group, Inc. (NASDAQ: VFGI) (VFG) today reported third quarter 2006 earnings of $5.1 million, an increase of 7.4% compared to earnings of $4.7 million for the third quarter of 2005. Net income per diluted share was $.47, an increase of 9.3% compared to $.43 for the same period in 2005. VFG’s earnings for the third quarter of 2006 produced an annualized return on average assets (ROA) of 1.27% and an annualized return on average equity (ROE) of 13.88%, compared to prior year ratios of 1.26% and 14.03%, respectively. For the first nine months of 2006, net income was $14.8 million, up 11.9% from $13.2 million for the same period in 2005. Net income per diluted share was $1.36, up 11.5% from $1.22 for the first nine months of 2005. ROA and ROE for the nine month period was 1.27% and 13.91%, respectively, compared to 1.20% and 13.60% for the same period in 2005.
O.R. Barham, Jr., President and CEO, commented, “We are proud of our results for the quarter, particularly in light of a sharply cooled real estate market in several of our legacy markets. Margin pressure accelerated during the quarter, exacerbated by accelerating funding costs and disintermediation of core deposits into higher cost time deposits and VFG commercial paper, which represents sweep funds of significant commercial banking demand deposit customers. In spite of such trends, the net interest margin was a respectable 4.21% for the quarter. We continue to have improved earnings contribution from our Virginia Commonwealth Trust Company affiliate, which helped to offset slowing revenue growth associated with our banking affiliates. Asset quality continues to be solid. While we anticipate a continuation of challenging market dynamics during the fourth quarter, we remain confident in our ability to continue our success.”
Net Interest Income
Net interest income amounted to $15.2 million for the third quarter, up $512 thousand or 3.5% compared with $14.7 million for the same quarter in 2005. For the nine months ended September 30, 2006, net interest income was $45.3 million, an increase of $3.7 million or 8.8% from $41.6 million for the same period in 2005. Improvements in the growth and mix of average earning assets were primary contributors to this growth. The net interest margin for the third quarter of 2006 was 4.21%, down fourteen basis points
sequentially compared to 4.35% for the second quarter of 2006, and down fifteen basis points when compared to 4.36% for the third quarter of 2005. The net interest margin for the nine month period ended September 30, 2006 was 4.31%, compared to 4.25% for the same period in 2005. Further margin contraction is likely in the fourth quarter.
Non-Interest Income
Total non-interest income was $3.9 million for the third quarter of 2006, essentially flat with the $3.9 million for the third quarter of 2005 and the $3.9 million for the second quarter of 2006. Retail banking fee income increased $48 thousand or 2.8% to $1.8 million, compared to $1.7 million in the third quarter of 2005. Mortgage banking revenue amounted to $686 thousand, a decrease of $336 thousand or 32.9%, as compared to $1.0 million for the third quarter of 2005, and down sequentially $167 thousand or 19.6% from the second quarter of 2006. Revenues from trust and brokerage for the third quarter were $897 thousand, up $43 thousand or 5.0% compared to $854 thousand in the third quarter of 2005. Fiduciary and brokerage assets under management were $576 million at September 30, 2006, representing a 13.2% growth rate for the nine month period. Included in non-interest income during third quarter 2006 was a net gain on sale of real estate of $216 thousand and income associated with an investment in bank owned life insurance of $120 thousand.
Non-interest Expense
Non-interest expense for the third quarter of 2006 amounted to $11.8 million, up $665 thousand or 6.0% from $11.1 million for the same period in 2005, and up sequentially $304 thousand or 2.7% from the second quarter of 2006. For the nine month period ended September 30, 2006, non-interest expense amounted to $34.4 million, an increase of $2.0 million or 6.1% over $32.4 million for the same period in 2005. These increases reflect operating costs associated with the openings of the Seminole Trail, Mill Creek and Langhorne Road branches during the past nine months. Professional fees associated with business advisory services and recruiting fees also added to the increase for the quarter. VFG’s efficiency ratio was 60.8% for the quarter, compared to 58.3% for the same quarter in 2005. For both the nine month period ended September 30, 2006, and 2005 the efficiency ratio was 59.6%. Management anticipates some increase in operating expenses associated with the hiring of four additional commercial loan officers during the later stages of the third quarter, and the opening of our thirty-ninth and fortieth branches during the fourth quarter.
Loan Portfolio
Average loans for the third quarter were $1.19 billion, up $56.1 million or 4.9% from the third quarter of 2005, and flat sequentially with the $1.19 billion for the second quarter of 2006. Period end loans were up $5.2 million for the quarter and $61.4 million for the nine month period. While pipelines are down significantly from peaks experienced in early 2006, activity and levels appear to have stabilized. In addition, the previously mentioned additions to our commercial lending staff should supplement some loan growth in the fourth quarter.
Deposits and Borrowings
Average deposits for the third quarter were $1.28 billion, up $26.8 million or 2.1% from the third quarter of 2005, and up sequentially from the $1.26 billion for the second quarter of 2006. Average borrowings for the third quarter amounted to $148.2 million, an increase of $67.0 million or 83.0% compared to the same period in 2005, and up sequentially $4.3 million or 3.0% from the second quarter of 2006. Average balances in VFG commercial paper, which represents sweep funds of significant commercial demand deposit customers of each affiliate bank, increased to $56.5 million for the quarter, compared to $10.8 million for the same period in 2005.
Capital
At September 30, 2006 VFG had total assets of $1.59 billion, compared to $1.50 billion at September 30, 2005. Shareholder’s equity at September 30, 2006 was $147.1 million, an increase of $13.0 million or 9.7% compared to September 30, 2005. Shareholder’s equity represented 9.24% of total assets at September 30, 2006, while tangible equity capital represented 8.21% of tangible assets at September 30, 2006. Book value at September 30, 2006 was $13.72 per share, compared to $12.47 at September 30, 2005.
Asset Quality
Asset quality remains strong, with VFG’s ratio of non-performing assets as a percentage of total assets amounting to .18% as of September 30, 2006, compared to .11% at September 30, 2005 and .16% at June 30, 2006. Net charge-offs (recoveries) as a percentage of average loans receivable amounted to (.02)% for the quarter and (.01)% for the nine month period ended September 30, 2006, compared to none and .02% for the same periods in 2005. At September 30, 2006, the allowance for loan losses was approximately five times the level of non-performing assets, while the allowance as a percentage of total loans amounted to 1.19%. VFG did not record a provision for loan losses for the third quarter, compared to $503 thousand for the three months ended September 30, 2005. Factors that lead to the reduction in provision included the receipt of loss recoveries of $357 thousand during the quarter, including a large unanticipated recovery of $289 thousand, as well as reduced loan growth and continuing strong asset quality during the period.
Charter Consolidation
VFG previously announced on October 16 that it will combine its Second Bank & Trust (Culpeper) affiliate and Virginia Heartland Bank (Fredericksburg) affiliate. The combined bank will retain the Second Bank & Trust name and charter, with 15 branches and pro forma assets of $715 million at September 30, 2006. The move is designed to create banks of sufficient size and depth to compete more effectively and accelerate growth prospects. The two banks to be combined are geographically contiguous, share increasingly similar market dynamics and offer the opportunity to create efficiencies and management depth. Pending regulatory approval, the banks will be combined in February 2007.
Branching
VFG had one new branch open during the third quarter, a Planters Bank branch located at 2102 Langhorne Rd. in Lynchburg, Virginia. This 14,000 square foot two story building will serve as a main office facility for several current and future sites in various stages of planning for that market. This branch represents the second entry into that market. Groundbreaking occurred as 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. Subsequent to the end of the quarter, VFG’s Second Bank affiliate opened its third branch in Charlottesville, a leased facility located at 1924 Arlington Boulevard in Charlottesville, Virginia. Planters Bank has also established a loan production operation in the greater Winchester market.
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-nine branches serving Central and Southwest Virginia. It also maintains five trust and investment service offices in its markets.
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 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)
For the Three Months Ended | Percent Increase (Decrease) | ||||||||||
9/30/2006 | 9/30/2005 | ||||||||||
INCOME STATEMENT | |||||||||||
Interest income - taxable equivalent | $ | 25,246 | $ | 21,091 | 19.70 | % | |||||
Interest expense | 9,582 | 6,040 | 58.64 | % | |||||||
Net interest income - taxable equivalent | 15,664 | 15,051 | 4.07 | % | |||||||
Less: taxable equivalent adjustment | 495 | 394 | 25.63 | % | |||||||
Net interest income | 15,169 | 14,657 | 3.49 | % | |||||||
Provision for loan and lease losses | — | 503 | -100.00 | % | |||||||
Net interest income after provision for loan and lease losses | 15,169 | 14,154 | 7.17 | % | |||||||
Noninterest income | 3,898 | 3,870 | 0.72 | % | |||||||
Noninterest expense | 11,759 | 11,094 | 5.99 | % | |||||||
Provision for income taxes | 2,239 | 2,211 | 1.27 | % | |||||||
Net income | $ | 5,069 | $ | 4,719 | 7.42 | % | |||||
PER SHARE DATA | |||||||||||
Basic earnings | $ | 0.47 | $ | 0.44 | 6.82 | % | |||||
Diluted earnings | $ | 0.47 | $ | 0.43 | 8.46 | % | |||||
Shares outstanding | 10,771,272 | 10,756,242 | |||||||||
Weighted average shares - | |||||||||||
Basic | 10,771,661 | 10,755,788 | |||||||||
Diluted | 10,856,835 | 10,828,869 | |||||||||
Dividends paid on common shares | $ | 0.15 | $ | 0.14 | |||||||
PERFORMANCE RATIOS | |||||||||||
Return on average assets | 1.27 | % | 1.26 | % | 0.79 | % | |||||
Return on average equity | 13.88 | % | 14.03 | % | -1.07 | % | |||||
Return on average realized equity (A) | 13.75 | % | 14.03 | % | -2.00 | % | |||||
Net interest margin (taxable equivalent) | 4.21 | % | 4.36 | % | -3.44 | % | |||||
Efficiency (taxable equivalent) (B) | 60.77 | % | 58.29 | % | 4.25 | % | |||||
ASSET QUALITY | |||||||||||
Allowance for loan losses | |||||||||||
Beginning of period | $ | 14,043 | $ | 12,664 | |||||||
Provision for loan losses | — | 503 | |||||||||
Charge offs | (88 | ) | (83 | ) | |||||||
Recoveries | 357 | 44 | |||||||||
End of period | $ | 14,312 | $ | 13,128 | |||||||
Non-performing assets: | |||||||||||
Non-accrual loans | $ | 2,757 | $ | 1,422 | |||||||
Loans 90+ days past due and still accruing | — | — | |||||||||
Other real estate owned | 123 | 41 | |||||||||
Troubled debt restructurings | — | 173 | |||||||||
Total non-performing assets | $ | 2,880 | $ | 1,636 | |||||||
to total assets: | 0.18 | % | 0.11 | % | |||||||
to total loans plus OREO: | 0.24 | % | 0.14 | % | |||||||
Allowance for loan losses to total loans | 1.19 | % | 1.13 | % | |||||||
Net charge-offs (recoveries) | $ | (269 | ) | $ | 39 | ||||||
Net charge-offs (recoveries) to average loans outstanding | -0.02 | % | 0.00 | % |
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)
For the Nine Months Ended | Percent (Decrease) | ||||||||||
9/30/2006 | 9/30/2005 | ||||||||||
INCOME STATEMENT | |||||||||||
Interest income - taxable equivalent | $ | 71,847 | $ | 60,002 | 19.74 | % | |||||
Interest expense | 25,112 | 17,173 | 46.23 | % | |||||||
Net interest income - taxable equivalent | 46,735 | 42,829 | 9.12 | % | |||||||
Less: taxable equivalent adjustment | 1,459 | 1,199 | 21.68 | % | |||||||
Net interest income | 45,276 | 41,630 | 8.76 | % | |||||||
Provision for loan and lease losses | 610 | 1,595 | -61.76 | % | |||||||
Net interest income after provision for loan and lease losses | 44,666 | 40,035 | 11.57 | % | |||||||
Noninterest income | 11,041 | 11,643 | -5.17 | % | |||||||
Noninterest expense | 34,400 | 32,424 | 6.09 | % | |||||||
Provision for income taxes | 6,535 | 6,051 | 8.00 | % | |||||||
Net income | $ | 14,772 | $ | 13,203 | 11.88 | % | |||||
PER SHARE DATA | |||||||||||
Basic earnings | $ | 1.37 | $ | 1.23 | 11.68 | % | |||||
Diluted earnings | $ | 1.36 | $ | 1.22 | 11.48 | % | |||||
Shares outstanding | 10,771,272 | 10,756,242 | |||||||||
Weighted average shares - | |||||||||||
Basic | 10,769,170 | 10,750,421 | |||||||||
Diluted | 10,851,158 | 10,822,208 | |||||||||
Dividends paid on common shares | $ | 0.45 | $ | 0.41 | |||||||
PERFORMANCE RATIOS | |||||||||||
Return on average assets | 1.27 | % | 1.20 | % | 5.83 | % | |||||
Return on average equity | 13.91 | % | 13.60 | % | 2.28 | % | |||||
Return on average realized equity (A) | 13.74 | % | 13.67 | % | 0.51 | % | |||||
Net interest margin (taxable equivalent) | 4.31 | % | 4.25 | % | 1.41 | % | |||||
Efficiency (taxable equivalent) (B) | 59.60 | % | 59.64 | % | -0.07 | % | |||||
ASSET QUALITY | |||||||||||
Beginning of period | $ | 13,581 | $ | 11,706 | |||||||
Provision for loan losses | 610 | 1,595 | |||||||||
Charge offs | (314 | ) | (403 | ) | |||||||
Recoveries | 435 | 230 | |||||||||
End of period | $ | 14,312 | $ | 13,128 | |||||||
Non-performing assets: | |||||||||||
Non-accrual loans | $ | 2,757 | $ | 1,422 | |||||||
Loans 90+ days past due and still accruing | — | — | |||||||||
Other real estate owned | 123 | 41 | |||||||||
Troubled debt restructurings | — | 173 | |||||||||
Total non-performing assets | $ | 2,880 | $ | 1,636 | |||||||
to total assets: | 0.18 | % | 0.11 | % | |||||||
to total loans plus OREO: | 0.24 | % | 0.14 | % | |||||||
Allowance for loan losses to total loans | 1.19 | % | 1.13 | % | |||||||
Net charge-offs (recoveries) | $ | (121 | ) | $ | 173 | ||||||
Net charge-offs (recoveries) to average loans outstanding | -0.01 | % | 0.02 | % |
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) | |||||||||||
9/30/2006 | 9/30/2005 | ||||||||||
SELECTED BALANCE SHEET DATA | |||||||||||
End of period balances | |||||||||||
Cash and cash equivalents | $ | 44,803 | $ | 52,874 | -15.26 | % | |||||
Securities available for sale | 267,789 | 215,070 | 24.51 | % | |||||||
Securities held to maturity | 3,326 | 4,284 | -22.36 | % | |||||||
Total securities | 271,115 | 219,354 | 23.60 | % | |||||||
Real estate - construction | 192,113 | 132,073 | 45.46 | % | |||||||
Real estate - 1-4 family residential | 302,706 | 325,860 | -7.11 | % | |||||||
Real estate - commercial and multifamily | 566,497 | 577,243 | -1.86 | % | |||||||
Commercial, financial and agricultural | 101,920 | 84,951 | 19.98 | % | |||||||
Consumer loans | 34,134 | 41,943 | -18.62 | % | |||||||
All other loans | 6,585 | 2,496 | 163.82 | % | |||||||
Total loans | 1,203,955 | 1,164,566 | 3.38 | % | |||||||
Deferred loan costs | 858 | 477 | 79.87 | % | |||||||
Allowance for loan losses | (14,312 | ) | (13,128 | ) | 9.02 | % | |||||
Net loans | 1,190,501 | 1,151,915 | 3.35 | % | |||||||
Other assets | 86,135 | 80,750 | 6.67 | % | |||||||
Total assets | 1,592,554 | 1,504,893 | 5.83 | % | |||||||
Noninterest bearing deposits | 241,666 | 257,019 | -5.97 | % | |||||||
Money market & interest checking | 347,851 | 379,579 | -8.36 | % | |||||||
Savings | 100,462 | 129,051 | -22.15 | % | |||||||
CD’s and other time deposits | 595,543 | 503,180 | 18.36 | % | |||||||
Total deposits | 1,285,522 | 1,268,829 | 1.32 | % | |||||||
Federal funds purchased and securities sold under agreements to repurchase | — | 15,650 | -100.00 | % | |||||||
Federal Home Loan Bank advances | 65,000 | 40,000 | 62.50 | % | |||||||
Trust preferred capital notes | 20,619 | 20,619 | 0.00 | % | |||||||
Commercial paper | 61,632 | 15,965 | 286.04 | % | |||||||
Other borrowed funds | 1,335 | 866 | 54.16 | % | |||||||
Other liabilities | 11,306 | 8,855 | 27.68 | % | |||||||
Total liabilities | 1,445,414 | 1,370,784 | 5.44 | % | |||||||
Total stockholders’ equity | $ | 147,140 | $ | 134,109 | 9.72 | % | |||||
Accumulated comprehensive loss | $ | (1,137 | ) | $ | (480 | ) | 136.88 | % | |||
Average balances | |||||||||||
For the Nine Months Ended | Percent Increase (Decrease) | ||||||||||
9/30/2006 | 9/30/2005 | ||||||||||
Total assets | $ | 1,557,652 | $ | 1,465,144 | 6.31 | % | |||||
Total stockholders’ equity | $ | 141,955 | $ | 129,799 | 9.37 | % | |||||
For the Three Months Ended | |||||||||||
9/30/2006 | 9/30/2005 | ||||||||||
Total assets | $ | 1,587,664 | $ | 1,480,148 | 7.26 | % | |||||
Total stockholders’ equity | $ | 144,848 | $ | 133,444 | 8.55 | % | |||||
OTHER DATA | |||||||||||
End of period full time employees | 569 | 504 |
QUARTERLY PERFORMANCE SUMMARY
Virginia Financial Group, Inc. (NASDAQ: VFGI)
(Dollars in thousands)
For the Three Months Ended | Percent (Decrease) | ||||||||
9/30/2006 | 9/30/2005 | ||||||||
Interest Income | |||||||||
Interest and fees on loans | $ | 21,618 | $ | 18,335 | 17.91 | % | |||
Interest on deposits in other banks | 5 | 4 | 25.00 | % | |||||
Interest and dividends on securities: | |||||||||
Taxable | 1,772 | 1,532 | 15.67 | % | |||||
Tax-exempt | 844 | 641 | 31.67 | % | |||||
Dividends | 131 | 79 | 65.82 | % | |||||
Interest income on federal funds sold | 381 | 106 | 259.43 | % | |||||
Total interest income | 24,751 | 20,697 | 19.59 | % | |||||
Interest Expense | |||||||||
Interest on deposits | 7,601 | 5,195 | 46.31 | % | |||||
Interest on federal funds repurchased and securities sold under agreements to repurchase | 25 | 135 | -81.48 | % | |||||
Interest on Federal Home Loan Bank advances | 860 | 297 | 189.56 | % | |||||
Interest on trust preferred capital notes | 434 | 328 | 32.32 | % | |||||
Interest on commercial paper | 658 | 80 | 722.50 | % | |||||
Interest on other borrowings | 4 | 5 | -20.00 | % | |||||
Total interest expense | 9,582 | 6,040 | 58.64 | % | |||||
Net interest income | 15,169 | 14,657 | 3.49 | % | |||||
Provision for loan losses | — | 503 | -100.00 | % | |||||
Net interest income after provision for loan losses | 15,169 | 14,154 | 7.17 | % | |||||
Noninterest Income | |||||||||
Retail banking fees | 1,793 | 1,745 | 2.75 | % | |||||
Commissions and fees from fiduciary activities | 728 | 696 | 4.60 | % | |||||
Brokerage fee income | 169 | 158 | 6.96 | % | |||||
Other operating income | 306 | 247 | 23.89 | % | |||||
Gain on sale of fixed assets | 216 | 2 | 10700.00 | % | |||||
Gain (loss) on securities available for sale | — | — | — | ||||||
Gains (losses) on sale of other real estate owned | — | — | — | ||||||
Gain on sale of mortgage loans | 686 | 1,022 | -32.88 | % | |||||
Total noninterest income | 3,898 | 3,870 | 0.72 | % | |||||
Noninterest Expense | |||||||||
Compensation and employee benefits | 6,636 | 6,456 | 2.79 | % | |||||
Net occupancy expense | 750 | 787 | -4.70 | % | |||||
Supplies and equipment expenses | 1,042 | 919 | 13.38 | % | |||||
Amortization-intangible assets | 161 | 158 | 1.90 | % | |||||
Marketing | 329 | 296 | 11.15 | % | |||||
State franchise tax | 252 | 208 | 21.15 | % | |||||
Data processing | 333 | 315 | 5.71 | % | |||||
Telecommunications | 223 | 273 | -18.32 | % | |||||
Professional fees | 355 | 232 | 53.02 | % | |||||
Other operating expenses | 1,678 | 1,450 | 15.72 | % | |||||
Total noninterest expense | 11,759 | 11,094 | 5.99 | % | |||||
Income before income taxes | 7,308 | 6,930 | 5.45 | % | |||||
Income tax expense | 2,239 | 2,211 | 1.27 | % | |||||
Net income | $ | 5,069 | $ | 4,719 | 7.42 | % |
QUARTERLY PERFORMANCE SUMMARY
Virginia Financial Group, Inc. (NASDAQ: VFGI)
(Dollars in thousands)
For the Nine Months Ended | Percent Increase (Decrease) | |||||||||
9/30/2006 | 9/30/2005 | |||||||||
Interest Income | ||||||||||
Interest and fees on loans | $ | 61,885 | $ | 51,501 | 20.16 | % | ||||
Interest on deposits in other banks | 70 | 11 | 536.36 | % | ||||||
Interest and dividends on securities: | ||||||||||
Taxable | 4,782 | 4,967 | -3.72 | % | ||||||
Tax-exempt | 2,504 | 1,937 | 29.27 | % | ||||||
Dividends | 357 | 261 | 36.78 | % | ||||||
Interest income on federal funds sold | 790 | 126 | 526.98 | % | ||||||
Total interest income | 70,388 | 58,803 | 19.70 | % | ||||||
Interest Expense | ||||||||||
Interest on deposits | 20,157 | 14,815 | 36.06 | % | ||||||
Interest on federal funds repurchased and securities soldunder agreements to repurchase | 173 | 423 | -59.10 | % | ||||||
Interest on Federal Home Loan Bank advances | 2,065 | 936 | 120.62 | % | ||||||
Interest on trust preferred capital notes | 1,209 | 904 | 33.74 | % | ||||||
Interest on commercial paper | 1,491 | 82 | 1718.29 | % | ||||||
Interest on other borrowings | 17 | 13 | 30.77 | % | ||||||
Total interest expense | 25,112 | 17,173 | 46.23 | % | ||||||
Net interest income | 45,276 | 41,630 | 8.76 | % | ||||||
Provision for loan losses | 610 | 1,595 | -61.76 | % | ||||||
Net interest income after provision for loan losses | 44,666 | 40,035 | 11.57 | % | ||||||
Noninterest Income | ||||||||||
Retail banking fees | 5,166 | 5,219 | -1.02 | % | ||||||
Commissions and fees from fiduciary activities | 2,321 | 2,207 | 5.17 | % | ||||||
Brokerage fee income | 566 | 519 | 9.06 | % | ||||||
Other operating income | 722 | 799 | -9.64 | % | ||||||
Gain on sale of fixed assets | 292 | 1 | 29100.00 | % | ||||||
Gain (loss) on securities available for sale | (199 | ) | 296 | -167.23 | % | |||||
Gain on sale of branches | — | 421 | — | |||||||
Gain on sale of mortgage loans | 2,173 | 2,181 | -0.37 | % | ||||||
Total noninterest income | 11,041 | 11,643 | -5.17 | % | ||||||
Noninterest Expense | ||||||||||
Compensation and employee benefits | 19,833 | 18,552 | 6.90 | % | ||||||
Net occupancy expense | 2,248 | 2,184 | 2.93 | % | ||||||
Supplies and equipment expenses | 3,035 | 3,127 | -2.94 | % | ||||||
Amortization-intangible assets | 417 | 485 | -14.02 | % | ||||||
Marketing | 762 | 754 | 1.06 | % | ||||||
State franchise tax | 716 | 662 | 8.16 | % | ||||||
Data processing | 1,024 | 942 | 8.70 | % | ||||||
Telecommunications | 770 | 770 | 0.00 | % | ||||||
Professional fees | 634 | 629 | 0.79 | % | ||||||
Other operating expenses | 4,961 | 4,319 | 14.86 | % | ||||||
Total noninterest expense | 34,400 | 32,424 | 6.09 | % | ||||||
Income before income taxes | 21,307 | 19,254 | 10.66 | % | ||||||
Income tax expense | 6,535 | 6,051 | 8.00 | % | ||||||
Net income | $ | 14,772 | $ | 13,203 | 11.88 | % |
VIRGINIA FINANCIAL GROUP INC.
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES
THREE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
(Dollars in thousands)
Three months ended September 30, | ||||||||||||||||||
2006 | 2005 | |||||||||||||||||
Dollars in thousands | Average Balance | Interest Inc/Exp | Average Rates | Average Balance | Interest Inc/Exp | Average Rates | ||||||||||||
Assets | ||||||||||||||||||
Loans receivable, net | $ | 1,192,675 | $ | 21,658 | 7.20 | % | $ | 1,130,355 | $ | 18,383 | 6.45 | % | ||||||
Investment securities | ||||||||||||||||||
Taxable | 171,150 | 1,903 | 4.41 | % | 164,792 | 1,610 | 3.88 | % | ||||||||||
Tax exempt | 84,315 | 1,299 | 6.11 | % | 61,207 | 988 | 6.40 | % | ||||||||||
Total investments | 255,465 | 3,202 | 4.97 | % | 225,999 | 2,598 | 4.56 | % | ||||||||||
Interest bearing deposits | 575 | 5 | 3.45 | % | 823 | 4 | 1.93 | % | ||||||||||
Federal funds sold | 28,174 | 381 | 5.37 | % | 12,422 | 106 | 3.39 | % | ||||||||||
284,214 | 3,588 | 5.01 | % | 239,244 | 2,708 | 4.49 | % | |||||||||||
Total earning assets | 1,476,889 | 25,246 | 6.78 | % | 1,369,599 | 21,091 | 6.11 | % | ||||||||||
Total nonearning assets | 110,775 | 110,549 | ||||||||||||||||
Total assets | $ | 1,587,664 | $ | 1,480,148 | ||||||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||||
Interest-bearing deposits | ||||||||||||||||||
Interest checking | $ | 166,206 | $ | 240 | 0.57 | % | $ | 189,899 | $ | 202 | 0.42 | % | ||||||
Money market | 170,955 | 1,020 | 2.37 | % | 176,364 | 601 | 1.35 | % | ||||||||||
Savings | 104,623 | 179 | 0.68 | % | 130,959 | 222 | 0.67 | % | ||||||||||
Time deposits: | ||||||||||||||||||
Less than $100,000 | 406,289 | 4,040 | 3.95 | % | 363,943 | 2,883 | 3.14 | % | ||||||||||
$100,000 and more | 194,008 | 2,122 | 4.34 | % | 138,015 | 1,287 | 3.70 | % | ||||||||||
Total interest-bearing deposits | 1,042,081 | 7,601 | 2.89 | % | 999,180 | 5,195 | 2.06 | % | ||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 1,829 | 25 | 5.42 | % | 17,607 | 135 | 3.04 | % | ||||||||||
Federal Home Loan Bank advances | 69,348 | 860 | 4.92 | % | 32,018 | 297 | 3.68 | % | ||||||||||
Trust preferred capital notes | 20,619 | 434 | 8.35 | % | 20,619 | 328 | 6.31 | % | ||||||||||
Commercial paper | 56,092 | 658 | 4.65 | % | 10,345 | 80 | 3.07 | % | ||||||||||
Other borrowings | 374 | 4 | 4.24 | % | 444 | 5 | 4.47 | % | ||||||||||
148,262 | 1,981 | 5.30 | % | 81,033 | 845 | 4.14 | % | |||||||||||
Total interest-bearing liabilities | 1,190,343 | 9,582 | 3.19 | % | 1,080,213 | 6,040 | 2.22 | % | ||||||||||
Total noninterest-bearing liabilities | 252,473 | 266,491 | ||||||||||||||||
Total liabilities | 1,442,816 | 1,346,704 | ||||||||||||||||
Stockholders’ equity | 144,848 | 133,444 | ||||||||||||||||
Total liabilities and stockholders’ equity | $ | 1,587,664 | $ | 1,480,148 | ||||||||||||||
Net interest income (tax equivalent) | $ | 15,664 | $ | 15,051 | ||||||||||||||
Average interest rate spread | 3.59 | % | 3.89 | % | ||||||||||||||
Interest expense as percentage of average earning assets | 2.57 | % | 1.75 | % | ||||||||||||||
Net interest margin | 4.21 | % | 4.36 | % |
VIRGINIA FINANCIAL GROUP INC.
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES
NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
(Dollars in thousands)
Nine months ended Septermber 30, | ||||||||||||||||||
2006 | 2005 | |||||||||||||||||
Dollars in thousands | Average Balance | Interest Inc/Exp | Average Rates | Average Balance | Interest Inc/Exp | Average Rates | ||||||||||||
Assets | ||||||||||||||||||
Loans receivable, net | $ | 1,179,781 | $ | 61,996 | 7.03 | % | $ | 1,102,011 | $ | 51,650 | 6.27 | % | ||||||
Investment securities | ||||||||||||||||||
Taxable | 159,480 | 5,139 | 4.31 | % | 178,407 | 5,216 | 3.91 | % | ||||||||||
Tax exempt | 83,102 | 3,852 | 6.20 | % | 61,645 | 2,999 | 6.50 | % | ||||||||||
Total investments | 242,582 | 8,991 | 4.96 | % | 240,052 | 8,215 | 4.58 | % | ||||||||||
Interest bearing deposits | 3,439 | 70 | 2.72 | % | 524 | 11 | 2.81 | % | ||||||||||
Federal funds sold | 27,148 | 790 | 3.89 | % | 6,417 | 126 | 2.63 | % | ||||||||||
273,169 | 9,851 | 4.83 | % | 246,993 | 8,352 | 4.53 | % | |||||||||||
Total earning assets | 1,452,950 | 71,847 | 6.62 | % | 1,349,004 | 60,002 | 5.95 | % | ||||||||||
Total nonearning assets | 104,702 | 116,140 | ||||||||||||||||
Total assets | $ | 1,557,652 | $ | 1,465,144 | ||||||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||||
Interest-bearing deposits | ||||||||||||||||||
Interest checking | $ | 173,469 | $ | 683 | 0.53 | % | $ | 194,863 | $ | 601 | 0.41 | % | ||||||
Money market | 164,785 | 2,399 | 1.95 | % | 172,382 | 1,544 | 1.20 | % | ||||||||||
Savings | 111,483 | 548 | 0.66 | % | 132,972 | 665 | 0.67 | % | ||||||||||
Time deposits: | ||||||||||||||||||
Less than $100,000 | 390,365 | 10,833 | 3.71 | % | 365,460 | 8,454 | 3.09 | % | ||||||||||
$100,000 and more | 184,747 | 5,693 | 4.12 | % | 133,570 | 3,551 | 3.55 | % | ||||||||||
Total interest-bearing deposits | 1,024,849 | 20,156 | 2.63 | % | 999,247 | 14,815 | 1.98 | % | ||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 12,074 | 173 | 1.92 | % | 22,868 | 423 | 2.47 | % | ||||||||||
Federal Home Loan Bank advances | 60,470 | 2,065 | 4.57 | % | 30,715 | 936 | 4.07 | % | ||||||||||
Trust preferred capital notes | 20,619 | 1,210 | 7.85 | % | 20,619 | 904 | 5.86 | % | ||||||||||
Commercial paper | 45,142 | 1,491 | 4.42 | % | 3,603 | 82 | 3.04 | % | ||||||||||
Other borrowings | 365 | 17 | 6.23 | % | 1,098 | 13 | 1.58 | % | ||||||||||
138,670 | 4,956 | 4.78 | % | 78,903 | 2,358 | 4.00 | % | |||||||||||
Total interest-bearing liabilities | 1,163,519 | 25,112 | 2.89 | % | 1,078,150 | 17,173 | 2.13 | % | ||||||||||
Total noninterest-bearing liabilities | 252,178 | 257,195 | ||||||||||||||||
Total liabilities | 1,415,697 | 1,335,345 | ||||||||||||||||
Stockholders’ equity | 141,955 | 129,799 | ||||||||||||||||
Total liabilities and stockholders’ equity | $ | 1,557,652 | $ | 1,465,144 | ||||||||||||||
Net interest income (tax equivalent) | $ | 46,735 | $ | 42,829 | ||||||||||||||
Average interest rate spread | 3.73 | % | 3.82 | % | ||||||||||||||
Interest expense as percentage of average earning assets | 2.31 | % | 1.70 | % | ||||||||||||||
Net interest margin | 4.31 | % | 4.25 | % |