Exhibit 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE
Contact:
Jeffrey W. Farrar
Executive Vice President and CFO
(434) 964-2217
farrarj@vfgi.net
VIRGINIA FINANCIAL GROUP, INC.
ANNOUNCES 2006 EARNINGS
Culpeper, VA, January 22, 2007 - Virginia Financial Group, Inc. (NASDAQ: VFGI) (VFG) today reported annual 2006 earnings of $19.5 million, up 7.0% from $18.2 million for the same period in 2005. Net income per diluted share was $1.80, up 7.1% from $1.68 for the twelve months of 2005. VFG’s earnings for 2006 produced an annualized return on average assets (ROA) of 1.24% and an annualized return on average equity (ROE) of 13.57%, compared to prior year ratios of 1.23% and 13.86%, respectively. For the fourth quarter of 2006 net income was $4.7 million, a decrease of 5.7% compared to earnings of $5.0 million for the fourth quarter of 2005. Net income per diluted share was $.44, a decrease of 4.4% compared to $.46 for the same period in 2005. VFG’s earnings for the fourth quarter of 2006 produced an ROA of 1.16% and ROE of 12.57%, compared to prior year ratios of 1.31% and 14.59%, respectively.
O.R. Barham, Jr., President and CEO, commented, “We are quite pleased with our financial results for 2006, particularly in light of a difficult operating environment for the banking industry in general. We successfully added needed infrastructure, management depth and opened four full service retail branches during 2006, all while still achieving a respectable 7% growth in earnings over 2005. These investments in our future success, coupled with margin compression, did impact earnings for the fourth quarter. Asset quality continues to remain solid, while our mortgage and asset management units enjoyed another solid quarter of earnings contribution. Further margin compression is likely due to an inverted yield curve and competitive pressures. This market condition coupled with our growth initiatives will likely pressure 2007 earnings growth as compared to the growth we have enjoyed for the last several years. Nevertheless, we are excited about our plans for 2007 and look forward to executing our strategies with optimism and enthusiasm.”
Net Interest Income
Net interest income amounted to $14.9 million for the fourth quarter, down $346 thousand or 2.2% compared with $15.2 million for the same quarter in 2005. For the twelve months ended December 31, 2006, net interest income was $60.1 million, an increase of $3.3 million or 5.8% from $56.8 million for the same period in 2005. Improvements in the growth and mix of average earning assets were
offset by margin compression during the fourth quarter, but outpaced this compression for the year. The net interest margin for the fourth quarter of 2006 was 4.08%, down thirteen basis points sequentially compared to 4.21% for the third quarter of 2006, and down thirty-two basis points when compared to 4.40% for the fourth quarter of 2005. The net interest margin for the twelve month period ended December 31, 2006 was 4.24%, compared to 4.29% for the same period in 2005. Average cost of interest bearing deposits continue to rise, with the average cost increasing to 3.13% for the fourth quarter of 2006, as compared to 2.89% for the third quarter of 2006 and 2.19% for the fourth quarter of 2005. The Company’s strategy has included more aggressive pricing of deposits with durations of nine months or less to minimize exposure to a potential downward cycle in short term rates. Another strategy which has impacted margin is the issuance of commercial paper. Average balances in VFG commercial paper increased to $66.5 million for the fourth quarter of 2006 at a cost of 4.67%, compared to $56.1 million at a cost of 4.65% sequentially, and $20.0 million at a cost of 3.42% for the fourth quarter of 2005. Asset yields were fairly constant sequentially, with an average yield on assets of 6.82% for the fourth quarter of 2006, compared to 6.78% for the third quarter of 2006 and 6.29% for the fourth quarter of 2005.
Non-Interest Income
Total non-interest income was $4.0 million for the fourth quarter of 2006, up slightly compared with $3.8 million for the fourth quarter of 2005 and $3.9 million for the third quarter of 2006. Retail banking fee income increased $81 thousand or 4.7% to $1.8 million, compared to $1.7 million in the fourth quarter of 2005. Mortgage banking revenue amounted to $697 thousand, a decrease of $213 thousand or 23.4%, as compared to $910 thousand for the fourth quarter of 2005, and up sequentially $10 thousand or 1.5% from the third quarter of 2006. Revenues from trust and brokerage for the fourth quarter were $978 thousand, up $27 thousand or 2.9% compared to $951 thousand in the fourth quarter of 2005, and up sequentially $81 thousand or 9.1% from the third quarter of 2006. Fiduciary and brokerage assets under management were $597 million at December 31, 2006, representing an increase of $85.0 million or 16.6% growth rate for the twelve month period. Included in non-interest income during fourth quarter 2006 was a net gain on sale of foreclosed properties of $39 thousand and income associated with an investment in bank owned life insurance of $112 thousand.
Non-interest Expense
Non-interest expense for the fourth quarter of 2006 amounted to $12.1 million, up $779 thousand or 6.9% from $11.3 million for the same period in 2005, and up sequentially $298 thousand or 2.5% from the third quarter of 2006. For the twelve month period ended December 31, 2006, non-interest expense amounted to $46.9 million, an increase of $3.2 million or 7.4% over $43.7 million for the same period in 2005. These increases reflect operating costs associated with the openings of Mill Creek, Langhorne Road, Arlington Boulevard and South High Street branches during the past twelve months. Marketing costs associated with the opening of the Arlington Boulevard and South High Street branches also added to the increase for the quarter. VFG’s efficiency ratio was 62.2% for the quarter, compared to 57.8% for the same quarter in 2005. For the twelve month period ended December 31, 2006 and 2005 the efficiency ratio was 60.5% and 59.1%, respectively.
Loan Portfolio
Average loans for the fourth quarter were $1.21 billion, up $62.6 million or 5.4% from the fourth quarter of 2005, and up sequentially from $1.19 billion for the third quarter of 2006. Period end loans were up $12.8 million or 1.1% for the quarter and $74.3 million or 6.5% for the twelve month period. Commercial real estate construction and commercial industrial reflect the largest increases for the twelve month period, while construction loans represented the largest quarterly sequential increase.
Deposits and Borrowings
Average deposits for the fourth quarter were $1.29 billion, up $22.4 million or 1.8% from the fourth quarter of 2005, and up sequentially from $1.28 billion for the third quarter of 2006. Average borrowings for the fourth quarter amounted to $155.8 million, an increase of $58.6 million or 60.2% compared to the same period in 2005, and up sequentially $7.6 million or 5.1% from the third 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 $66.5 million for the quarter, compared to $20.0 million for the same period in 2005.
Capital
At December 31, 2006 VFG had total assets of $1.63 billion, compared to $1.51 billion at December 31, 2005. Shareholder’s equity at December 31, 2006 was $150.7 million, an increase of $14.5 million or 10.7% compared to December 31, 2005. Shareholder’s equity represented 9.27% of total assets at December 31, 2006, while tangible equity capital represented 8.27% of tangible assets at December 31, 2006. Book value at December 31, 2006 was $13.97 per share, compared to $12.65 at December 31, 2005.
Asset Quality
Asset quality remains strong, with VFG’s ratio of non-performing assets as a percentage of total assets amounting to .19% as of December 31, 2006, compared to .12% at December 31, 2005 and .18% at September 30, 2006. Net charge-offs (recoveries) as a percentage of average loans receivable amounted to none for the quarter and (.01)% for the year ended December 31, 2006, compared to (.01)% and .01% for the same periods in 2005. At December 31, 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 recorded a provision for loan losses for the fourth quarter of $140 thousand, compared to $417 thousand for the three months ended December 31, 2005 and none for the third quarter of 2006. Factors that lead to the reduction in provision included the receipt of loss recoveries of $134 thousand during the quarter, as well as reduced loan growth and continuing strong asset quality during the period.
Branching
VFG had two new branches and a loan production office open during the fourth quarter. Our Planters Bank affiliate opened a branch located at 1391 South High Street in Harrisonburg, Virginia. This branch represents the third entry into that market. Planters Bank also established a loan production operation in the greater Winchester market. Additionally, VFG’s Second Bank affiliate opened its third branch in Charlottesville, a leased facility located at 1924 Arlington Boulevard in Charlottesville, Virginia. Construction continues as scheduled for a new main office facility located on Route 1 in Fredericksburg, Virginia.
Charter Consolidation Approval
VFG has received regulatory approval to combine its Second Bank & Trust (Culpeper) affiliate and Virginia Heartland Bank (Fredericksburg) affiliate. This transaction will consummate on February 20, 2006. The combined bank will retain the Second Bank & Trust name and charter, with 15 branches and pro forma assets of $723 million at December 31, 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 forty-one 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) | ||||||||||
12/31/2006 | 12/31/2005 | ||||||||||
INCOME STATEMENT | |||||||||||
Interest income - taxable equivalent | $ | 25,754 | $ | 22,324 | 15.36 | % | |||||
Interest expense | 10,370 | 6,688 | 55.05 | % | |||||||
Net interest income - taxable equivalent | 15,384 | 15,636 | -1.61 | % | |||||||
Less: taxable equivalent adjustment | 515 | 421 | 22.33 | % | |||||||
Net interest income | 14,869 | 15,215 | -2.27 | % | |||||||
Provision for loan and lease losses | 140 | 417 | -66.43 | % | |||||||
Net interest income after provision for loan and lease losses | 14,729 | 14,798 | -0.47 | % | |||||||
Noninterest income | 3,982 | 3,800 | 4.79 | % | |||||||
Noninterest expense | 12,057 | 11,279 | 6.90 | % | |||||||
Provision for income taxes | 1,929 | 2,306 | -16.35 | % | |||||||
Net income | $ | 4,725 | $ | 5,013 | -5.75 | % | |||||
PER SHARE DATA | |||||||||||
Basic earnings | $ | 0.44 | $ | 0.47 | -5.71 | % | |||||
Diluted earnings | $ | 0.44 | $ | 0.46 | -4.35 | % | |||||
Shares outstanding | 10,784,303 | 10,759,101 | |||||||||
Weighted average shares - | |||||||||||
Basic | 10,776,308 | 10,756,848 | |||||||||
Diluted | 10,852,495 | 10,837,445 | |||||||||
Dividends paid on common shares | $ | 0.16 | $ | 0.15 | |||||||
PERFORMANCE RATIOS | |||||||||||
Return on average assets | 1.16 | % | 1.31 | % | -11.45 | % | |||||
Return on average equity | 12.57 | % | 14.59 | % | -13.85 | % | |||||
Return on average realized equity (A) | 12.49 | % | 14.46 | % | -13.62 | % | |||||
Net interest margin (taxable equivalent) | 4.08 | % | 4.40 | % | -7.27 | % | |||||
Efficiency (taxable equivalent) (B) | 62.16 | % | 57.78 | % | 7.58 | % | |||||
ASSET QUALITY | |||||||||||
Allowance for loan losses | |||||||||||
Beginning of period | $ | 14,312 | $ | 13,128 | |||||||
Provision for loan losses | 140 | 417 | |||||||||
Charge offs | (86 | ) | (49 | ) | |||||||
Recoveries | 134 | 85 | |||||||||
End of period | $ | 14,500 | $ | 13,581 |
NOTES:
(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 Twelve Months Ended | Percent (Decrease) | ||||||||||
12/31/2006 | 12/31/2005 | ||||||||||
INCOME STATEMENT | |||||||||||
Interest income - taxable equivalent | $ | 97,601 | $ | 82,326 | 18.55 | % | |||||
Interest expense | 35,482 | 23,861 | 48.70 | % | |||||||
Net interest income - taxable equivalent | 62,119 | 58,465 | 6.25 | % | |||||||
Less: taxable equivalent adjustment | 1,974 | 1,620 | 21.85 | % | |||||||
Net interest income | 60,145 | 56,845 | 5.81 | % | |||||||
Provision for loan and lease losses | 750 | 2,012 | -62.72 | % | |||||||
Net interest income after provision for loan and lease losses | 59,395 | 54,833 | 8.32 | % | |||||||
Noninterest income | 15,485 | 15,443 | 0.27 | % | |||||||
Noninterest expense | 46,918 | 43,702 | 7.36 | % | |||||||
Provision for income taxes | 8,465 | 8,358 | 1.28 | % | |||||||
Net income | $ | 19,497 | $ | 18,216 | 7.03 | % | |||||
PER SHARE DATA | |||||||||||
Basic earnings | $ | 1.81 | $ | 1.69 | 6.89 | % | |||||
Diluted earnings | $ | 1.80 | $ | 1.68 | 7.14 | % | |||||
Shares outstanding | 10,784,303 | 10,759,101 | |||||||||
Weighted average shares - | |||||||||||
Basic | 10,770,969 | 10,752,041 | |||||||||
Diluted | 10,843,356 | 10,823,940 | |||||||||
Dividends paid on common shares | $ | 0.61 | $ | 0.56 | |||||||
PERFORMANCE RATIOS | |||||||||||
Return on average assets | 1.24 | % | 1.23 | % | 0.81 | % | |||||
Return on average equity | 13.57 | % | 13.86 | % | -2.09 | % | |||||
Return on average realized equity (A) | 13.42 | % | 13.88 | % | -3.31 | % | |||||
Net interest margin (taxable equivalent) | 4.24 | % | 4.29 | % | -1.17 | % | |||||
Efficiency (taxable equivalent) (B) | 60.48 | % | 59.13 | % | 2.28 | % | |||||
ASSET QUALITY | |||||||||||
Allowance for loan losses | |||||||||||
Beginning of period | $ | 13,581 | $ | 11,706 | |||||||
Provision for loan losses | 750 | 2,012 | |||||||||
Charge offs | (400 | ) | (452 | ) | |||||||
Recoveries | 569 | 315 | |||||||||
End of period | $ | 14,500 | $ | 13,581 | |||||||
Non-performing assets: | |||||||||||
Non-accrual loans | $ | 2,999 | $ | 1,604 | |||||||
Loans 90+ days past due and still accruing | — | — | |||||||||
Other real estate owned | 38 | 75 | |||||||||
Troubled debt restructurings | — | 154 | |||||||||
Total non-performing assets | $ | 3,037 | $ | 1,833 | |||||||
to total assets: | 0.19 | % | 0.12 | % | |||||||
to total loans plus OREO: | 0.25 | % | 0.16 | % | |||||||
Allowance for loan losses to total loans | 1.19 | % | 1.19 | % | |||||||
Net charge-offs (recoveries) | $ | (169 | ) | $ | 137 | ||||||
Net charge-offs (recoveries) to average loans outstanding | -0.01 | % | 0.01 | % |
NOTES:
(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 (Decrease) | |||||||||||
12/31/2006 | 12/31/2005 | ||||||||||
SELECTED BALANCE SHEET DATA | |||||||||||
(Dollars in thousands) | |||||||||||
End of period balances | |||||||||||
Cash and cash equivalents | $ | 57,635 | $ | 48,016 | 20.03 | % | |||||
Securities available for sale | 268,922 | 243,364 | 10.50 | % | |||||||
Securities held to maturity | 3,328 | 4,287 | -22.37 | % | |||||||
Total securities | 272,250 | 247,651 | 9.93 | % | |||||||
Real estate - construction | 198,400 | 136,321 | 45.54 | % | |||||||
Real estate - 1-4 family residential | 300,259 | 307,351 | -2.31 | % | |||||||
Real estate - commercial and multifamily | 573,652 | 573,366 | 0.05 | % | |||||||
Commercial, financial and agricultural | 104,709 | 78,111 | 34.05 | % | |||||||
Consumer loans | 33,030 | 40,860 | -19.16 | % | |||||||
All other loans | 6,755 | 6,521 | 3.59 | % | |||||||
Total loans | 1,216,805 | 1,142,530 | 6.50 | % | |||||||
Deferred loan costs | 827 | 546 | 51.47 | % | |||||||
Allowance for loan losses | (14,500 | ) | (13,581 | ) | 6.77 | % | |||||
Net loans | 1,203,132 | 1,129,495 | 6.52 | % | |||||||
Bank owned life insurance | 10,231 | — | |||||||||
Other assets | 92,972 | 80,022 | 16.18 | % | |||||||
Total assets | 1,625,989 | 1,505,184 | 8.03 | % | |||||||
Noninterest bearing deposits | 239,672 | 249,775 | -4.04 | % | |||||||
Money market & interest checking | 367,132 | 360,656 | 1.80 | % | |||||||
Savings | 96,682 | 124,297 | -22.22 | % | |||||||
CD’s and other time deposits | 614,795 | 520,781 | 18.05 | % | |||||||
Total deposits | 1,318,281 | 1,255,509 | 5.00 | % | |||||||
Federal funds purchased and securities sold under agreements to repurchase | — | 15,890 | -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 | 58,632 | 24,480 | 139.51 | % | |||||||
Other borrowed funds | 561 | 842 | -33.37 | % | |||||||
Other liabilities | 12,244 | 11,739 | 4.30 | % | |||||||
Total liabilities | 1,475,337 | 1,369,079 | 7.76 | % | |||||||
Total stockholders’ equity | $ | 150,652 | $ | 136,105 | 10.69 | % | |||||
Accumulated comprehensive loss | $ | (1,026 | ) | $ | (2,013 | ) | -49.03 | % | |||
Average balances | |||||||||||
For the Twelve Months Ended | Percent Increase (Decrease) | ||||||||||
12/31/2006 | 12/31/2005 | ||||||||||
Total assets | $ | 1,570,778 | $ | 1,477,718 | 6.30 | % | |||||
Total stockholders’ equity | $ | 143,722 | $ | 131,437 | 9.35 | % | |||||
For the Three Months Ended | |||||||||||
12/31/2006 | 12/31/2005 | ||||||||||
Total assets | $ | 1,609,823 | $ | 1,515,012 | 6.26 | % | |||||
Total stockholders’ equity | $ | 149,171 | $ | 136,282 | 9.46 | % |
QUARTERLY PERFORMANCE SUMMARY
Virginia Financial Group, Inc. (NASDAQ: VFGI)
(Dollars in thousands)
For the Three Months Ended | Percent (Decrease) | ||||||||||
12/31/2006 | 12/31/2005 | ||||||||||
Interest Income | |||||||||||
Interest and fees on loans | $ | 22,118 | $ | 19,211 | 15.13 | % | |||||
Interest on deposits in other banks | 4 | 30 | -86.67 | % | |||||||
Interest and dividends on securities: | |||||||||||
Taxable | 1,975 | 1,493 | 32.28 | % | |||||||
Tax-exempt | 873 | 695 | 25.61 | % | |||||||
Dividends | 129 | 136 | -5.15 | % | |||||||
Interest income on federal funds sold | 140 | 338 | -58.58 | % | |||||||
Total interest income | 25,239 | 21,903 | 15.23 | % | |||||||
Interest Expense | |||||||||||
Interest on deposits | 8,339 | 5,593 | 49.10 | % | |||||||
Interest on federal funds repurchased and securities sold under agreements to repurchase | 45 | 145 | -68.97 | % | |||||||
Interest on Federal Home Loan Bank advances | 770 | 415 | — | ||||||||
Interest on trust preferred capital notes | 427 | 356 | 19.94 | % | |||||||
Interest on commercial paper | 783 | 172 | 355.23 | % | |||||||
Interest on other borrowings | 6 | 7 | -14.29 | % | |||||||
Total interest expense | 10,370 | 6,688 | 55.05 | % | |||||||
Net interest income | 14,869 | 15,215 | -2.27 | % | |||||||
Provision for loan losses | 140 | 417 | -66.43 | % | |||||||
Net interest income after provision for loan losses | 14,729 | 14,798 | -0.47 | % | |||||||
Noninterest Income | |||||||||||
Retail banking fees | 1,816 | 1,735 | 4.67 | % | |||||||
Commissions and fees from fiduciary activities | 788 | 747 | 5.49 | % | |||||||
Brokerage fee income | 191 | 204 | -6.37 | % | |||||||
Other operating income | 466 | 266 | 75.19 | % | |||||||
Losses on sale of fixed assets | (18 | ) | (62 | ) | -70.97 | % | |||||
Gains on securities available for sale | 3 | — | — | ||||||||
Gains on sale of other real estate owned | 39 | — | — | ||||||||
Gain on sale of mortgage loans | 697 | 910 | -23.41 | % | |||||||
Total noninterest income | 3,982 | 3,800 | 4.79 | % | |||||||
Noninterest Expense | |||||||||||
Compensation and employee benefits | 6,615 | 6,732 | -1.74 | % | |||||||
Net occupancy | 890 | 601 | 48.09 | % | |||||||
Supplies and equipment | 1,085 | 929 | 16.79 | % | |||||||
Amortization-intangible assets | 160 | 158 | 1.27 | % | |||||||
Marketing | 448 | 133 | 236.84 | % | |||||||
State franchise tax | 257 | 208 | 23.56 | % | |||||||
Data processing | 365 | 447 | -18.34 | % | |||||||
Telecommunications | 231 | 248 | -6.85 | % | |||||||
Professional fees | 187 | 174 | 7.47 | % | |||||||
Other operating expenses | 1,819 | 1,649 | 10.31 | % | |||||||
Total noninterest expense | 12,057 | 11,279 | 6.90 | % | |||||||
Income before income taxes | 6,654 | 7,319 | -9.09 | % | |||||||
Income tax expense | 1,929 | 2,306 | -16.35 | % | |||||||
Net income | $ | 4,725 | $ | 5,013 | -5.75 | % |
QUARTERLY PERFORMANCE SUMMARY
Virginia Financial Group, Inc. (NASDAQ: VFGI)
(Dollars in thousands)
For the Twelve Months Ended | Percent (Decrease) | ||||||||||
12/31/2006 | 12/31/2005 | ||||||||||
Interest Income | |||||||||||
Interest and fees on loans | $ | 84,003 | $ | 70,712 | 18.80 | % | |||||
Interest on deposits in other banks | 74 | 41 | 80.49 | % | |||||||
Interest and dividends on securities: | |||||||||||
Taxable | 6,757 | 6,447 | 4.81 | % | |||||||
Tax-exempt | 3,377 | 2,645 | 27.67 | % | |||||||
Dividends | 486 | 397 | 22.42 | % | |||||||
Interest income on federal funds sold | 930 | 464 | 100.43 | % | |||||||
Total interest income | 95,627 | 80,706 | 18.49 | % | |||||||
Interest Expense | |||||||||||
Interest on deposits | 28,496 | 20,408 | 39.63 | % | |||||||
Interest on federal funds repurchased and securities sold under agreements to repurchase | 219 | 568 | -61.44 | % | |||||||
Interest on Federal Home Loan Bank advances | 2,834 | 1,351 | 109.77 | % | |||||||
Interest on trust preferred capital notes | 1,636 | 1,260 | 29.84 | % | |||||||
Interest on commercial paper | 2,275 | 255 | 792.16 | % | |||||||
Interest on other borrowings | 22 | 19 | 15.79 | % | |||||||
Total interest expense | 35,482 | 23,861 | 48.70 | % | |||||||
Net interest income | 60,145 | 56,845 | 5.81 | % | |||||||
Provision for loan losses | 750 | 2,012 | -62.72 | % | |||||||
Net interest income after provision for loan losses | 59,395 | 54,833 | 8.32 | % | |||||||
Noninterest Income | |||||||||||
Retail banking fees | 6,982 | 6,954 | 0.40 | % | |||||||
Commissions and fees from fiduciary activities | 3,108 | 2,954 | 5.21 | % | |||||||
Brokerage fee income | 756 | 723 | 4.56 | % | |||||||
Other operating income | 1,652 | 1,065 | 55.12 | % | |||||||
Gains (losses) on sale of fixed assets | 274 | (61 | ) | -549.18 | % | ||||||
Gains (losses) on securities available for sale | (196 | ) | 296 | -166.22 | % | ||||||
Gains on sale of other real estate owned | 40 | — | — | ||||||||
Gains on sale of branches | — | 421 | -100.00 | % | |||||||
Gain on sale of mortgage loans | 2,869 | 3,091 | -7.18 | % | |||||||
Total noninterest income | 15,485 | 15,443 | 0.27 | % | |||||||
Noninterest Expense | |||||||||||
Compensation and employee benefits | 26,607 | 25,284 | 5.23 | % | |||||||
Net occupancy | 3,147 | 2,888 | 8.97 | % | |||||||
Supplies and equipment | 4,141 | 4,056 | 2.10 | % | |||||||
Amortization-intangible assets | 578 | 643 | -10.11 | % | |||||||
Marketing | 1,214 | 887 | 36.87 | % | |||||||
State franchise tax | 973 | 870 | 11.84 | % | |||||||
Data processing | 1,389 | 1,389 | 0.00 | % | |||||||
Professional fees | 823 | 804 | 2.36 | % | |||||||
Telecommunications | 1,006 | 1,017 | -1.08 | % | |||||||
Other operating expenses | 7,040 | 5,864 | 20.05 | % | |||||||
Total noninterest expense | 46,918 | 43,702 | 7.36 | % | |||||||
Income before income taxes | 27,962 | 26,574 | 5.22 | % | |||||||
Income tax expense | 8,465 | 8,358 | 1.28 | % | |||||||
Net income | $ | 19,497 | $ | 18,216 | 7.03 | % |
VIRGINIA FINANCIAL GROUP INC.
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES
THREE MONTHS ENDED DECEMBER 31, 2006 AND 2005
(Dollars in thousands)
Three months ended December 31, | ||||||||||||||||||
2006 | 2005 | |||||||||||||||||
Dollars in thousands | Average Balance | Interest Inc/Exp | Average Rates | Average Balance | Interest Inc/Exp | Average Rates | ||||||||||||
Assets | ||||||||||||||||||
Loans receivable, net | $ | 1,213,929 | $ | 22,162 | 7.24 | % | $ | 1,146,423 | $ | 19,258 | 6.66 | % | ||||||
Investment securities | ||||||||||||||||||
Taxable | 181,710 | 2,104 | 4.59 | % | 159,606 | 1,628 | 4.05 | % | ||||||||||
Tax exempt | 90,711 | 1,344 | 5.88 | % | 67,135 | 1,070 | 6.32 | % | ||||||||||
Total investments | 272,421 | 3,448 | 5.03 | % | 226,741 | 2,698 | 4.72 | % | ||||||||||
Interest bearing deposits | 431 | 4 | 3.68 | % | 3,135 | 30 | 3.80 | % | ||||||||||
Federal funds sold | 10,791 | 140 | 5.15 | % | 32,408 | 338 | 4.14 | % | ||||||||||
283,643 | 3,592 | 5.03 | % | 262,284 | 3,066 | 4.64 | % | |||||||||||
Total earning assets | 1,497,572 | 25,754 | 6.82 | % | 1,408,707 | 22,324 | 6.29 | % | ||||||||||
Total nonearning assets | 112,251 | 106,305 | ||||||||||||||||
Total assets | $ | 1,609,823 | $ | 1,515,012 | ||||||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||||
Interest-bearing deposits | ||||||||||||||||||
Interest checking | $ | 160,517 | $ | 81 | 0.20 | % | $ | 187,417 | $ | 206 | 0.44 | % | ||||||
Money market | 189,015 | 1,335 | 2.80 | % | 189,142 | 781 | 1.64 | % | ||||||||||
Savings | 100,276 | 305 | 1.21 | % | 126,811 | 215 | 0.67 | % | ||||||||||
Time deposits: | ||||||||||||||||||
Less than $100,000 | 404,378 | 4,265 | 4.18 | % | 362,229 | 3,019 | 3.31 | % | ||||||||||
$100,000 and more | 203,022 | 2,353 | 4.60 | % | 147,962 | 1,372 | 3.68 | % | ||||||||||
Total interest-bearing deposits | 1,057,208 | 8,339 | 3.13 | % | 1,013,561 | 5,593 | 2.19 | % | ||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 3,348 | 45 | 5.33 | % | 16,209 | 145 | 3.55 | % | ||||||||||
Federal Home Loan Bank advances | 65,000 | 770 | 4.70 | % | 40,000 | 415 | 4.12 | % | ||||||||||
Trust preferred capital notes | 20,619 | 427 | 8.22 | % | 20,619 | 356 | 6.85 | % | ||||||||||
Commercial paper | 66,518 | 783 | 4.67 | % | 19,951 | 172 | 3.42 | % | ||||||||||
Other borrowings | 355 | 6 | 6.71 | % | 502 | 7 | 5.53 | % | ||||||||||
155,840 | 2,031 | 5.17 | % | 97,281 | 1,095 | 4.47 | % | |||||||||||
Total interest-bearing liabilities | 1,213,048 | 10,370 | 3.39 | % | 1,110,340 | 6,688 | 2.39 | % | ||||||||||
Total noninterest-bearing liabilities | 247,604 | 268,390 | ||||||||||||||||
Total liabilities | 1,460,652 | 1,378,730 | ||||||||||||||||
Stockholders’ equity | 149,171 | 136,282 | ||||||||||||||||
Total liabilities and stockholders’ equity | $ | 1,609,823 | $ | 1,515,012 | ||||||||||||||
Net interest income (tax equivalent) | $ | 15,384 | $ | 15,636 | ||||||||||||||
Average interest rate spread | 3.43 | % | 3.90 | % | ||||||||||||||
Interest expense as percentage of average earning assets | 2.75 | % | 1.88 | % | ||||||||||||||
Net interest margin | 4.08 | % | 4.40 | % |
VIRGINIA FINANCIAL GROUP INC.
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES
TWELVE MONTHS ENDED DECEMBER 31, 2006 AND 2005
(Dollars in thousands)
Twelve months ended December 31, | ||||||||||||||||||
2006 | 2005 | |||||||||||||||||
Dollars in thousands | Average Balance | Interest Inc/Exp | Average Rates | Average Balance | Interest Inc/Exp | Average Rates | ||||||||||||
Assets | ||||||||||||||||||
Loans receivable, net | $ | 1,188,388 | $ | 84,159 | 7.08 | % | $ | 1,113,206 | $ | 70,908 | 6.37 | % | ||||||
Investment securities | ||||||||||||||||||
Taxable | 165,083 | 7,243 | 4.39 | % | 173,668 | 6,844 | 3.94 | % | ||||||||||
Tax exempt | 85,020 | 5,195 | 6.11 | % | 63,029 | 4,069 | 6.46 | % | ||||||||||
Total investments | 250,103 | 12,438 | 4.98 | % | 236,697 | 10,913 | 4.61 | % | ||||||||||
Interest bearing deposits | 2,681 | 74 | 2.76 | % | 1,256 | 41 | 3.26 | % | ||||||||||
Federal funds sold | 23,025 | 930 | 4.04 | % | 12,968 | 464 | 3.58 | % | ||||||||||
275,809 | 13,442 | 4.88 | % | 250,921 | 11,418 | 4.55 | % | |||||||||||
Total earning assets | 1,464,197 | 97,601 | 6.67 | % | 1,364,127 | 82,326 | 6.04 | % | ||||||||||
Total nonearning assets | 106,581 | 113,591 | ||||||||||||||||
Total assets | $ | 1,570,778 | $ | 1,477,718 | ||||||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||||
Interest-bearing deposits | ||||||||||||||||||
Interest checking | $ | 170,204 | $ | 764 | 0.45 | % | $ | 192,987 | $ | 807 | 0.42 | % | ||||||
Money market | 170,892 | 3,734 | 2.19 | % | 176,606 | 2,325 | 1.32 | % | ||||||||||
Savings | 108,659 | 853 | 0.79 | % | 131,420 | 880 | 0.67 | % | ||||||||||
Time deposits: | ||||||||||||||||||
Less than $100,000 | 393,897 | 15,099 | 3.83 | % | 364,645 | 11,473 | 3.15 | % | ||||||||||
$100,000 and more | 189,353 | 8,045 | 4.25 | % | 137,197 | 4,923 | 3.59 | % | ||||||||||
Total interest-bearing deposits | 1,033,005 | 28,495 | 2.76 | % | 1,002,855 | 20,408 | 2.03 | % | ||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 9,875 | 219 | 2.22 | % | 21,189 | 568 | 2.68 | % | ||||||||||
Federal Home Loan Bank advances | 61,612 | 2,834 | 4.60 | % | 33,056 | 1,351 | 4.09 | % | ||||||||||
Trust preferred capital notes | 20,619 | 1,637 | 7.94 | % | 20,619 | 1,260 | 6.11 | % | ||||||||||
Commercial paper | 50,530 | 2,275 | 4.50 | % | 7,724 | 255 | 3.30 | % | ||||||||||
Other borrowings | 363 | 22 | 6.06 | % | 947 | 19 | 2.01 | % | ||||||||||
142,999 | 6,987 | 4.89 | % | 83,535 | 3,453 | 4.13 | % | |||||||||||
Total interest-bearing liabilities | 1,176,004 | 35,482 | 3.02 | % | 1,086,390 | 23,861 | 2.20 | % | ||||||||||
Total noninterest-bearing liabilities | 251,052 | 259,891 | ||||||||||||||||
Total liabilities | 1,427,056 | 1,346,281 | ||||||||||||||||
Stockholders’ equity | 143,722 | 131,437 | ||||||||||||||||
Total liabilities and stockholders’ equity | $ | 1,570,778 | $ | 1,477,718 | ||||||||||||||
Net interest income (tax equivalent) | $ | 62,119 | $ | 58,465 | ||||||||||||||
Average interest rate spread | 3.65 | % | 3.84 | % | ||||||||||||||
Interest expense as percentage of average earning assets | 2.43 | % | 1.75 | % | ||||||||||||||
Net interest margin | 4.24 | % | 4.29 | % |