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 FOURTH
QUARTER EARNINGS OF $4.1 MILLION, 2007 ANNUAL
EARNINGS OF $17.0 MILLION
Charlottesville, VA, January 23, 2008 - Virginia Financial Group, Inc. (NASDAQ: VFGI) (VFG) today reported fourth quarter 2007 earnings totaled $4.1 million, down 12.8% from $4.7 million for the fourth quarter of 2006. Net income per diluted share was $0.38, down 13.6% from $0.44 for the same period in 2006. For the full year 2007, VFG’s earnings totaled $17.0 million, down 12.8% from $19.5 million for the full year 2006. Net income per diluted share was $1.57, down 12.8% from $1.80 for the year ended December 31, 2006.
O.R. Barham, Jr., President and CEO commented, “We are pleased with our earnings in spite of a difficult operating environment for banks in 2007. We experienced a significant charge-off and foreclosure related to a single lending relationship during the fourth quarter which, in addition to continued weakness in our real estate markets, necessitated an increase in both provision and allowance for loan losses. While non-performing assets declined from third quarter and past dues continue to be low, we are experiencing a volatile credit cycle and slowing economy, and have appropriately increased our allowance for loan losses as a percentage of loan receivable in anticipation that we will have further increases in non-performing assets and net charge-offs in 2008.”
“We certainly had some positives in the fourth quarter. We realized a sizable gain on the sale of some recently closed branch properties. We continued to see good momentum in fee income and new accounts associated with our High Performance Checking Account Program. Our Trust Company continued to provide significant earnings contribution and posted record earnings for the year. Lastly, we saw a 5.3% and 2.7% reduction in noninterest expenses compared to third quarter of 2007 and fourth quarter of last year, reflecting our efforts to improve overall efficiency in the face of contracting revenues.”
Financial Performance
VFG’s earnings for 2007 produced an annualized return on average assets (ROA) of 1.07% and an annualized return on average equity (ROE) of 10.92%, compared to prior year ratios of 1.24% and 13.57%, respectively. VFG’s earnings for the fourth quarter of 2007 produced an ROA of 1.04% and ROE of 10.17%, compared to prior year ratios of 1.16% and 12.57%, respectively.
Net Interest Income
Net interest income amounted to $14.1 million for the quarter ended December 31, 2007, down $773 thousand or 5.2% compared with $14.9 million for the same period in 2006.The net interest margin for the fourth quarter of 2007 was 3.98%, down ten basis points when compared to 4.08% for the fourth quarter of 2006. On a sequential basis, the net interest margin was down eight basis points from the 4.06% for the third quarter. This drop was due in most part to a decrease in asset yields, with an average yield on assets of 6.78% for the fourth quarter of 2007, compared to 6.87% for the third quarter of 2007 and 6.82% for the fourth quarter of 2006. Loan yields were impacted by prepayment activity, the Federal Open Market Committee recent reduction of the Fed funds target rate which led to a seventy-five basis point decrease in the prime rate during the last several months and an increase in non-accruals for the period. On a linked quarter basis, the average cost of interest bearing liabilities dropped two basis points from 3.43% for the third quarter 2007 to 3.41% for the fourth quarter of 2007 and increased three basis points when compared to 3.38% for the fourth quarter of 2006. VFG’s interest rate sensitivity continues to project modest margin compression if short term rates continue to decrease, while such contraction is deemed manageable.
Net interest income amounted to $57.8 million for the year ended December 31, 2007, down $2.3 million or 4.0% compared with $60.1 million for the same period in 2006. The net interest margin for the twelve month period ended December 31, 2007 was 4.08%, down seventeen basis points compared to 4.25% for the same period in 2006. Increased funding costs associated with competition for deposits in local markets which resulted in heavier reliance on wholesale funding, a lower rate of growth in loans receivable and average earning assets, combined with the Federal Open Market Committee reduction of the Fed funds target rate during the second half of the year led to this decrease in net interest margin and revenues.
Non-Interest Income
Total non-interest income was $5.0 million for the fourth quarter of 2007 and up 24.8% compared with $4.0 million for the fourth quarter of 2006. Included in non-interest income is a gain of $1.2 million on sale of real estate associated with three branches that were closed during the third quarter. Retail banking fee income increased $236 thousand or 13.0% to $2.1 million, compared to $1.8 million in the fourth quarter of 2006. The increase in retail banking fee income is attributable to increased NSF fees and debit card fee income, partly attributable to the High Performance Checking Account Program initiative. Mortgage banking revenue amounted to $593 thousand, a decrease of $104 thousand or 14.9%, as compared to $697 thousand for the fourth quarter of 2006, and down sequentially $9 thousand or 1.5% from the third quarter of 2007. Revenues from trust and brokerage for fourth quarter of 2007 were $1.0 million, up $30 thousand or 3.1% compared to $979 thousand in the fourth quarter of 2006, and essentially flat with third quarter 2007. Fiduciary and brokerage assets under management were $595 million at December 31, 2007, essentially flat when compared to $597 million at December 31, 2006. Included in other non-interest income during fourth quarter of 2007 was income associated with an investment in bank owned life insurance of $126 compared to $112 thousand for the same period in 2006.
Non-interest Expense
Non-interest expense for the fourth quarter of 2007 amounted to $11.7 million, down $324 thousand or 2.7% from $12.1 million for the same period in 2006, and down sequentially $655 thousand or 5.3% from the third quarter of 2007. Compensation and benefits decreased $483 thousand or 7.3% compared to fourth quarter 2006, reflecting reductions associated with the combination of two bank charters in the first quarter, five branch closings during the third quarter and other initiatives to improve efficiency. Marketing decreased $29 thousand or 6.5% to $480 thousand as compared to the fourth quarter of 2006, the difference attributable to marketing costs associated with the opening of the Arlington Boulevard and South High Street branches in the fourth quarter of 2006. Professional fees increased $111 thousand or 59.4% when compared to the same period in the prior year. Much of this increase can be attributed to professional fees related to the High Performance Checking Account Program discussed above. VFG’s efficiency ratio was 63.2% for the quarter, compared to 62.2% for the same quarter in 2006. For the twelve month period ended December 31, 2007 and 2006 the efficiency ratio was 64.4% and 60.5%, respectively.
Loan Portfolio
Average loans for the fourth quarter of 2007 was $1.21 billion, essentially flat with fourth quarter 2006, and up $15 million or 1.3% sequentially from $1.20 billion from the third quarter of 2007. Period end loans were up $16.3 million or 1.3% for the quarter and up $9.8 million or 0.8% over the last twelve months. The commercial and industrial segment of the portfolio increased $7.9 million or 6.7% sequentially from the third quarter of 2007, and increased $20.7 million or 19.8% over year end 2006. Commercial real estate increased $31.7 million or 6.2% sequentially. Real estate construction loan segment decreased $26.0 million or 11.5% from the third quarter of 2007, due to continuing payoff activity, conversions to permanent status and slowing new production.
Deposits and Borrowings
Average deposits for the fourth quarter were $1.17 billion, down $126.1 million or 9.8% from the fourth quarter of 2006, and down sequentially $34.3 million from the third quarter of 2007. Period end deposits were also down $30.9 million or 2.6% sequentially, with approximately $15 million of this decrease representing maturity of brokered certificates of deposit that were not renewed during the quarter. Decreases were noted in each category with the exception of NOW accounts. Average noninterest bearing deposits have decreased $34.9 million or 14.6% from the fourth quarter of 2006. Average certificates of deposits were down $15.8 million or 2.7% sequentially, with the average cost of such funding improving from 4.38% to 4.32% for the period. Average borrowings for the fourth quarter of 2007 amounted to $238.3 million, an increase of $82.4 million or 52.9% compared to the same period in 2006, with the average cost of such funding improving from 5.10% to 4.58% for the period. Average borrowings were up sequentially $34.7 million or 17.1% from the third quarter of 2007, while the average cost of such funding improving from 5.15% to 4.58% for the period.
Capital
At December 31, 2007 VFG had total assets of $1.59 billion, compared to $1.63 billion at December 31, 2006. Shareholder’s equity at December 31, 2007 was $162.8 million, an increase of $12.1 million or 8.0% compared to December 31, 2006. Capital levels have remained very strong, with shareholder’s equity representing 10.21% of total assets at December 31, 2007, while tangible equity capital represented 9.23% of tangible assets at December 31, 2007. Book value at December 31, 2007 was $15.08 per share, an increase of 7.9% compared to $13.97 at December 31, 2006.
Asset Quality
VFG’s ratio of non-performing assets as a percentage of total assets amounted to 0.44% as of December 31, 2007, compared to 0.19% at December 31, 2006 and 0.47% at September 30, 2007. Net charge-offs as a percentage of average loans receivable amounted to 0.10% for the quarter ended December 31, 2007, compared to 0.00% for the same period in 2006. At December 31, 2007, the allowance for loan losses was approximately two times the level of non-performing assets, while the allowance as a percentage of total loans amounted to 1.23%, compared to 1.21% at September 30, 2007 and 1.19% at December 31, 2006. VFG recorded a provision for loan losses of $1.67 million for the fourth quarter, compared to $140 thousand for the three months ended December 31, 2006. The increase in non-performing assets and provision for loan losses is a result of a previously disclosed $4.1 million commercial credit that was put on nonaccrual status during the third quarter, written down $1.2 million and subsequently foreclosed upon during the fourth quarter. In addition, the real estate market conditions in VFG’s primary markets continue to show weakness. The higher loss experience rate related to charge-offs for acquisition and development lending coupled with market conditions necessitated a larger allocation of allowance and provisioning for the quarter. For the twelve month period, the provision for loan losses amounted to $2.0 million, compared to net charge-offs of $1.5 million for the period.
Merger with FNB Corporation
VFG and FNB Corporation (FNB) have scheduled special shareholders meetings on February 12, 2008 for shareholders of VFG and FNB to vote on the merger. As previously announced, the merger has received approval from the Federal Reserve Board and Virginia State Corporation Commission. Additionally, merger and integration teams continue to make significant progress on specific initiatives related to the combination and integration of the two companies.
In connection with the proposed merger, VFG filed with the Securities and Exchange Commission (the “SEC”) a registration statement on Form S-4 on September 21, 2007 to register the shares of VFG common stock to be issued to the shareholders of FNB. This document was declared effective by the SEC on December 28, 2007. The registration statement included a joint proxy statement/prospectus, a final version of which has now been sent to the shareholders of VFG and FNB seeking their approval of the merger. In addition, each of VFG and FNB has filed and may continue to file other relevant documents concerning the proposed merger with the SEC.
WE URGE INVESTORS AND SECURITY HOLDERS TO READ THE REGISTRATION STATEMENT ON FORM S-4 AND THE DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED MERGER, BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT VFG, FNB AND THE PROPOSED TRANSACTION. Investors and security holders may obtain free copies of these documents through the website maintained by the SEC athttp://www.sec.gov. Free copies of the joint proxy statement/prospectus also may be obtained by directing a request by telephone or mail to Virginia Financial Group, Inc., 590 Peter Jefferson Pkwy, Suite 250 Charlottesville, Virginia 22911, Attention: Investor Relations (telephone: (434) 964-2211) or by accessing VFG’s website athttp://www.vfgi.net under “SEC Filings and Other Documents”. The information on VFG’s website is not, and shall not be deemed to be, a part of this release or incorporated into other filings either company makes with the SEC.
VFG and FNB and their directors and certain of their executive officers are participants in the solicitation of proxies from the shareholders of VFG and/or FNB in connection with the merger. Information about the directors and executive officers of VFG is set forth in the proxy statement for VFG’s 2007 annual meeting of shareholders filed with the SEC on March 28, 2007. Information about the directors and executive officers of FNB is set forth in the proxy statement for FNB’s 2007 annual meeting of shareholders filed with the SEC on March 30, 2007. Additional information regarding these participants in the proxy solicitation and their direct and indirect interests, by security holdings or otherwise, will be contained in the joint proxy.
About VFG
VFG is the holding company for Planters Bank & Trust Company of Virginia – in Staunton; Second Bank & Trust – 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-five branches and two loan production offices serving Northern, 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 gains or losses on securities, fixed assets and foreclosed assets. This is a non-GAAP financial measure that we believe provides investors with important information regarding our operational efficiency. Comparison of our efficiency ratio with those of other companies may not be possible, because other companies may calculate the efficiency ratio differently. 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.”
Caution Regarding 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 | |||||||||||
12/31/2007 | 12/31/2006 | (Decrease) | |||||||||
INCOME STATEMENT | |||||||||||
Interest income - taxable equivalent | $ | 24,973 | $ | 25,754 | -3.03 | % | |||||
Interest expense | 10,335 | 10,370 | -0.34 | % | |||||||
Net interest income - taxable equivalent | 14,638 | 15,384 | -4.85 | % | |||||||
Less: taxable equivalent adjustment | 542 | 515 | 5.24 | % | |||||||
Net interest income | 14,096 | 14,869 | -5.20 | % | |||||||
Provision for loan and lease losses | 1,674 | 140 | >100.00 | % | |||||||
Net interest income after provision for loan and lease losses | 12,422 | 14,729 | -15.66 | % | |||||||
Noninterest income | 4,969 | 3,982 | 24.79 | % | |||||||
Noninterest expense | 11,733 | 12,057 | -2.69 | % | |||||||
Provision for income taxes | 1,537 | 1,929 | -20.32 | % | |||||||
Net income | $ | 4,121 | $ | 4,725 | -12.78 | % | |||||
PER SHARE DATA | |||||||||||
Basic earnings | $ | 0.38 | $ | 0.44 | -13.64 | % | |||||
Diluted earnings | $ | 0.38 | $ | 0.44 | -13.64 | % | |||||
Shares outstanding | 10,795,943 | 10,784,303 | |||||||||
Weighted average shares - | |||||||||||
Basic | 10,795,877 | 10,776,308 | |||||||||
Diluted | 10,817,458 | 10,852,495 | |||||||||
Dividends paid on common shares | $ | 0.16 | $ | 0.16 | |||||||
PERFORMANCE RATIOS | |||||||||||
Return on average assets | 1.04 | % | 1.16 | % | -10.34 | % | |||||
Return on average equity | 10.17 | % | 12.57 | % | -19.09 | % | |||||
Return on average realized equity (A) | 10.20 | % | 12.49 | % | -18.33 | % | |||||
Return on average tangible equity (D) | 11.39 | % | 14.27 | % | -20.18 | % | |||||
Net interest margin (taxable equivalent) | 3.98 | % | 4.08 | % | -2.57 | % | |||||
Efficiency (taxable equivalent) (B) | 63.18 | % | 62.16 | % | 1.64 | % | |||||
ASSET QUALITY | |||||||||||
Allowance for loan losses | |||||||||||
Beginning of period | $ | 14,617 | $ | 14,312 | |||||||
Provision for loan losses | 1,674 | 140 | |||||||||
Charge-offs | (1,329 | ) | (86 | ) | |||||||
Recoveries | 120 | 134 | |||||||||
Net (charge-offs) recoveries | (1,209 | ) | 48 | ||||||||
End of period | $ | 15,082 | $ | 14,500 | |||||||
Non-performing assets: | |||||||||||
Non-accrual loans | $ | 3,937 | $ | 2,999 | |||||||
Loans 90+ days past due and still accruing | — | — | |||||||||
Foreclosed assets | 3,027 | 38 | |||||||||
Troubled debt restructurings | — | — | |||||||||
Total non-performing assets | $ | 6,964 | $ | 3,037 | |||||||
to total assets: | 0.44 | % | 0.19 | % | |||||||
to total loans plus foreclosed assets: | 0.57 | % | 0.25 | % | |||||||
Allowance for loan losses to total loans | 1.23 | % | 1.19 | % | |||||||
Net charge-offs (recoveries) | $ | 1,209 | $ | (48 | ) | ||||||
Net charge-offs (recoveries) to average loans outstanding | 0.10 | % | 0.00 | % |
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 gains or losses on securities, fixed assets and foreclosed assets. |
(C) | Individual amounts shown above are calculated from actual, not rounded amounts in the thousands, which appear above. |
(D) | Excludes the amount of average stockholders’ equity related to average intangible asset balances which consist of core deposit intangibles net of amortization and goodwill at carrying value. |
QUARTERLY PERFORMANCE SUMMARY
Virginia Financial Group, Inc. (NASDAQ: VFGI)
(Dollars in thousands, except per share data)
For the Twelve Months Ended | Percent | ||||||||||
Increase | |||||||||||
12/31/2007 | 12/31/2006 | (Decrease) | |||||||||
INCOME STATEMENT | |||||||||||
Interest income - taxable equivalent | $ | 101,322 | $ | 97,620 | 3.79 | % | |||||
Interest expense | 41,390 | 35,482 | 16.65 | % | |||||||
Net interest income - taxable equivalent | 59,932 | 62,138 | -3.55 | % | |||||||
Less: taxable equivalent adjustment | 2,163 | 1,993 | 8.53 | % | |||||||
Net interest income | 57,769 | 60,145 | -3.95 | % | |||||||
Provision for loan and lease losses | 2,040 | 750 | >100.00 | % | |||||||
Net interest income after provision for loan and lease losses | 55,729 | 59,395 | -6.17 | % | |||||||
Noninterest income | 16,967 | 15,485 | 9.57 | % | |||||||
Noninterest expense | 48,841 | 46,918 | 4.10 | % | |||||||
Provision for income taxes | 6,853 | 8,465 | -19.04 | % | |||||||
Net income | $ | 17,002 | $ | 19,497 | -12.80 | % | |||||
PER SHARE DATA | |||||||||||
Basic earnings | $ | 1.58 | $ | 1.81 | -12.71 | % | |||||
Diluted earnings | $ | 1.57 | $ | 1.80 | -12.78 | % | |||||
Shares outstanding | 10,795,943 | 10,784,303 | |||||||||
Weighted average shares - | |||||||||||
Basic | 10,793,177 | 10,770,969 | |||||||||
Diluted | 10,817,127 | 10,843,356 | |||||||||
Dividends paid on common shares | $ | 0.64 | $ | 0.61 | |||||||
PERFORMANCE RATIOS | |||||||||||
Return on average assets | 1.07 | % | 1.24 | % | -13.71 | % | |||||
Return on average equity | 10.92 | % | 13.57 | % | -19.53 | % | |||||
Return on average realized equity (A) | 10.88 | % | 13.42 | % | -18.93 | % | |||||
Return on average tangible equity (D) | 12.30 | % | 15.52 | % | -20.75 | % | |||||
Net interest margin (taxable equivalent) | 4.08 | % | 4.25 | % | -4.00 | % | |||||
Efficiency (taxable equivalent) (B) | 64.39 | % | 60.54 | % | 6.36 | % | |||||
ASSET QUALITY | |||||||||||
Allowance for loan losses | |||||||||||
Beginning of period | $ | 14,500 | $ | 13,581 | |||||||
Provision for loan losses | 2,040 | 750 | |||||||||
Charge-offs | (1,762 | ) | (402 | ) | |||||||
Recoveries | 304 | 571 | |||||||||
Net (charge-offs) recoveries | (1,458 | ) | 169 | ||||||||
End of period | $ | 15,082 | $ | 14,500 | |||||||
Allowance for loan losses to total loans | 1.23 | % | 1.19 | % | |||||||
Net charge-offs | $ | 1,458 | $ | (169 | ) | ||||||
Net charge-offs (recoveries) to average loans outstanding | 0.12 | % | (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. |
(D) | Excludes the amount of average stockholders’ equity related to average intangible asset balances which consist of core deposit intangibles net of amortization and goodwill at carrying value. |
QUARTERLY PERFORMANCE SUMMARY
Virginia Financial Group, Inc. (NASDAQ: VFGI)
(Dollars in thousands, except per share data)
Percent | |||||||||||
Increase | |||||||||||
12/31/2007 | 12/31/2006 | (Decrease) | |||||||||
SELECTED BALANCE SHEET DATA | |||||||||||
(Dollars in thousands) | |||||||||||
End of period balances | |||||||||||
Cash and cash equivalents | $ | 41,793 | $ | 57,635 | -27.49 | % | |||||
Securities available for sale | 240,217 | 268,922 | -10.67 | % | |||||||
Securities held to maturity | 2,657 | 3,328 | -20.16 | % | |||||||
Total securities | 242,874 | 272,250 | -10.79 | % | |||||||
Real estate - construction | 199,281 | 198,400 | 0.44 | % | |||||||
Real estate - 1-4 family residential | 331,029 | 276,488 | 19.73 | % | |||||||
Real estate - commercial and multifamily | 538,776 | 597,423 | -9.82 | % | |||||||
Commercial, financial and agricultural | 125,410 | 104,709 | 19.77 | % | |||||||
Consumer loans | 26,169 | 32,528 | -19.55 | % | |||||||
All other loans | 5,924 | 7,270 | -18.51 | % | |||||||
Total loans | 1,226,589 | 1,216,818 | 0.80 | % | |||||||
Deferred loan costs | 1,088 | 814 | 33.66 | % | |||||||
Allowance for loan losses | (15,082 | ) | (14,500 | ) | 4.01 | % | |||||
Net loans | 1,212,595 | 1,203,132 | 0.79 | % | |||||||
Bank owned life insurance | 10,725 | 10,231 | 4.83 | % | |||||||
Other assets | 86,831 | 92,972 | -6.61 | % | |||||||
Total assets | 1,594,818 | 1,625,989 | -1.92 | % | |||||||
Noninterest bearing deposits | 204,774 | 239,672 | -14.56 | % | |||||||
Money market & interest checking | 306,983 | 367,132 | -16.38 | % | |||||||
Savings | 78,626 | 96,682 | -18.68 | % | |||||||
CD’s and other time deposits | 552,164 | 614,795 | -10.19 | % | |||||||
Total deposits | 1,142,547 | 1,318,281 | -13.33 | % | |||||||
Federal funds purchased and securities sold under agreements to repurchase | 20,000 | — | N/A | ||||||||
Federal Home Loan Bank advances | 169,000 | 65,000 | >100.00 | % | |||||||
Subordinated debt | 20,619 | 20,619 | 0.00 | % | |||||||
Commercial paper | 68,745 | 58,632 | 17.25 | % | |||||||
Other borrowed funds | 892 | 561 | 59.00 | % | |||||||
Other liabilities | 10,247 | 12,244 | -16.31 | % | |||||||
Total liabilities | 1,432,050 | 1,475,337 | -2.93 | % | |||||||
Total stockholders’ equity | $ | 162,768 | $ | 150,652 | 8.04 | % | |||||
Accumulated comprehensive gain (loss) | $ | 475 | $ | (1,026 | ) | >(100.00 | )% | ||||
Average balances | |||||||||||
For the Three Months Ended | Percent Increase | ||||||||||
12/31/2007 | 12/31/2006 | (Decrease) | |||||||||
Total assets | $ | 1,576,586 | $ | 1,609,823 | -2.06 | % | |||||
Total stockholders’ equity | $ | 160,745 | $ | 149,171 | 7.76 | % | |||||
For the Twelve Months Ended | |||||||||||
12/31/2007 | 12/31/2006 | ||||||||||
Total assets | $ | 1,583,182 | $ | 1,570,778 | 0.79 | % | |||||
Total stockholders’ equity | $ | 155,668 | $ | 143,722 | 8.31 | % | |||||
OTHER DATA | |||||||||||
End of period full time employees | 496 | 580 | -14.48 | % |
QUARTERLY PERFORMANCE SUMMARY
Virginia Financial Group, Inc. (NASDAQ: VFGI)
(Dollars in thousands)
For the Three Months Ended | Percent Increase (Decrease) | ||||||||||
12/31/2007 | 12/31/2006 | ||||||||||
Interest Income | |||||||||||
Loans, including fees | $ | 21,747 | $ | 22,118 | -1.68 | % | |||||
Deposits in other banks | 4 | 4 | 0.00 | % | |||||||
Investment securities: | |||||||||||
Taxable | 1,567 | 1,975 | -20.66 | % | |||||||
Tax-exempt | 934 | 873 | 6.99 | % | |||||||
Dividends | 171 | 129 | 32.56 | % | |||||||
Federal funds sold | 8 | 140 | -94.29 | % | |||||||
Total interest income | 24,431 | 25,239 | -3.20 | % | |||||||
Interest Expense | |||||||||||
Deposits | 7,544 | 8,339 | -9.53 | % | |||||||
Federal funds purchased and securities sold under agreements to repurchase | 216 | 45 | >100.00 | % | |||||||
Federal Home Loan Bank advances | 1,393 | 770 | 80.91 | % | |||||||
Subordinated debt | 419 | 427 | -1.87 | % | |||||||
Commercial paper | 752 | 783 | -3.96 | % | |||||||
Other borrowings | 11 | 6 | 83.33 | % | |||||||
Total interest expense | 10,335 | 10,370 | -0.34 | % | |||||||
Net interest income | 14,096 | 14,869 | -5.20 | % | |||||||
Provision for loan losses | 1,674 | 140 | >100.00 | % | |||||||
Net interest income after provision for loan losses | 12,422 | 14,729 | -15.66 | % | |||||||
Noninterest Income | |||||||||||
Retail banking fees | 2,052 | 1,816 | 13.00 | % | |||||||
Commissions and fees from fiduciary activities | 834 | 788 | 5.84 | % | |||||||
Brokerage fee income | 175 | 191 | -8.38 | % | |||||||
Other operating income | 281 | 466 | -39.70 | % | |||||||
Gains (losses) on sale of premises and equipment | 1,035 | (18 | ) | >100.00 | % | ||||||
(Losses) gains on securities available for sale | (1 | ) | 3 | >100.00 | % | ||||||
Gains on sale of other real estate owned | — | 39 | -100.00 | % | |||||||
Mortgage banking-related fees | 593 | 697 | -14.92 | % | |||||||
Total noninterest income | 4,969 | 3,982 | 24.79 | % | |||||||
Noninterest Expense | |||||||||||
Compensation and employee benefits | 6,132 | 6,615 | -7.30 | % | |||||||
Net occupancy | 918 | 890 | 3.15 | % | |||||||
Supplies and equipment | 1,103 | 1,085 | 1.66 | % | |||||||
Amortization-intangible assets | 161 | 160 | 0.63 | % | |||||||
Marketing | 419 | 448 | -6.47 | % | |||||||
State franchise taxes | 298 | 257 | 15.95 | % | |||||||
Data processing | 446 | 365 | 22.19 | % | |||||||
Telecommunications | 236 | 231 | 2.16 | % | |||||||
Professional fees | 298 | 187 | 59.36 | % | |||||||
Other operating expenses | 1,722 | 1,819 | -5.33 | % | |||||||
Total noninterest expense | 11,733 | 12,057 | -2.69 | % | |||||||
Income before income taxes | 5,658 | 6,654 | -14.97 | % | |||||||
Income tax expense | 1,537 | 1,929 | -20.32 | % | |||||||
Net income | $ | 4,121 | $ | 4,725 | -12.78 | % |
QUARTERLY PERFORMANCE SUMMARY
Virginia Financial Group, Inc. (NASDAQ: VFGI)
(Dollars in thousands)
For the Twelve Months Ended | Percent Increase (Decrease) | ||||||||||
12/31/2007 | 12/31/2006 | ||||||||||
Interest Income | |||||||||||
Loans, including fees | $ | 87,902 | $ | 84,003 | 4.64 | % | |||||
Deposits in other banks | 18 | 74 | -75.68 | % | |||||||
Investment securities: | |||||||||||
Taxable | 6,853 | 6,724 | 1.92 | % | |||||||
Tax-exempt | 3,726 | 3,410 | 9.27 | % | |||||||
Dividends | 582 | 486 | 19.75 | % | |||||||
Federal funds sold | 78 | 930 | -91.61 | % | |||||||
Total interest income | 99,159 | 95,627 | 3.69 | % | |||||||
Interest Expense | |||||||||||
Deposits | 31,551 | 28,496 | 10.72 | % | |||||||
Federal funds purchased and securities sold under agreements to repurchase | 630 | 219 | >100.00 | % | |||||||
Federal Home Loan Bank advances | 4,345 | 2,834 | 53.32 | % | |||||||
Subordinated debt | 1,684 | 1,636 | 2.93 | % | |||||||
Commercial paper | 3,141 | 2,275 | 38.07 | % | |||||||
Other borrowings | 39 | 22 | >100.00 | % | |||||||
Total interest expense | 41,390 | 35,482 | 16.65 | % | |||||||
Net interest income | 57,769 | 60,145 | -3.95 | % | |||||||
Provision for loan losses | 2,040 | 750 | >100.00 | % | |||||||
Net interest income after provision for loan losses | 55,729 | 59,395 | -6.17 | % | |||||||
Noninterest Income | |||||||||||
Retail banking fees | 7,724 | 6,982 | 10.63 | % | |||||||
Commissions and fees from fiduciary activities | 3,375 | 3,108 | 8.59 | % | |||||||
Brokerage fee income | 909 | 756 | 20.24 | % | |||||||
Other operating income | 1,473 | 1,652 | -10.84 | % | |||||||
Gains on sale of premises and equipment | 1,013 | 274 | >100.00 | % | |||||||
Gains (losses) on securities available for sale | 35 | (196 | ) | >100.00 | % | ||||||
(Losses) gains on sale of foreclosed assets | (1 | ) | 40 | >100.00 | % | ||||||
Mortgage banking-related fees | 2,439 | 2,869 | -14.99 | % | |||||||
Total noninterest income | 16,967 | 15,485 | 9.57 | % | |||||||
Noninterest Expense | |||||||||||
Compensation and employee benefits | 26,422 | 26,607 | -0.70 | % | |||||||
Net occupancy | 3,570 | 3,147 | 13.44 | % | |||||||
Supplies and equipment | 4,383 | 4,141 | 5.84 | % | |||||||
Amortization-intangible assets | 646 | 578 | 11.76 | % | |||||||
Marketing | 1,533 | 1,214 | 26.28 | % | |||||||
State franchise taxes | 1,138 | 973 | 16.96 | % | |||||||
Data processing | 1,794 | 1,389 | 29.16 | % | |||||||
Telecommunications | 976 | 1,006 | -2.98 | % | |||||||
Professional fees | 1,005 | 823 | 22.11 | % | |||||||
Other operating expenses | 7,374 | 7,040 | 4.74 | % | |||||||
Total noninterest expense | 48,841 | 46,918 | 4.10 | % | |||||||
Income before income taxes | 23,855 | 27,962 | -14.69 | % | |||||||
Income tax expense | 6,853 | 8,465 | -19.04 | % | |||||||
Net income | $ | 17,002 | $ | 19,497 | -12.80 | % |
VIRGINIA FINANCIAL GROUP INC.
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES
THREE MONTHS ENDED DECEMBER 31, 2007 AND 2006
(Dollars in thousands)
Three months ended December 31, (unaudited) | ||||||||||||||||||
2007 | 2006 | |||||||||||||||||
Dollars in thousands | Average Balance | Interest Inc/Exp | Average Rates | Average Balance | Interest Inc/Exp | Average Rates | ||||||||||||
Assets | ||||||||||||||||||
Loans receivable, net | $ | 1,214,274 | $ | 21,786 | 7.12 | % | $ | 1,213,929 | $ | 22,162 | 7.24 | % | ||||||
Investment securities | ||||||||||||||||||
Taxable | 151,455 | 1,738 | 4.49 | % | 181,710 | 2,104 | 4.53 | % | ||||||||||
Tax exempt | 94,146 | 1,437 | 5.97 | % | 90,711 | 1,344 | 5.80 | % | ||||||||||
Total investments | 245,601 | 3,175 | 5.06 | % | 272,421 | 3,448 | 4.95 | % | ||||||||||
Interest bearing deposits | 376 | 4 | 4.16 | % | 431 | 4 | 3.63 | % | ||||||||||
Federal funds sold | 657 | 8 | 4.76 | % | 10,791 | 140 | 5.08 | % | ||||||||||
246,634 | 3,187 | 5.06 | % | 283,643 | 3,592 | 4.95 | % | |||||||||||
Total earning assets | 1,460,908 | 24,973 | 6.78 | % | 1,497,572 | 25,754 | 6.82 | % | ||||||||||
Total nonearning assets | 115,678 | 112,251 | ||||||||||||||||
Total assets | $ | 1,576,586 | $ | 1,609,823 | ||||||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||||
Interest-bearing deposits | ||||||||||||||||||
Interest checking | $ | 185,150 | $ | 512 | 1.10 | % | $ | 160,517 | $ | 81 | 0.20 | % | ||||||
Money market | 122,022 | 706 | 2.30 | % | 189,015 | 1,335 | 2.80 | % | ||||||||||
Savings | 84,809 | 137 | 0.64 | % | 100,276 | 305 | 1.21 | % | ||||||||||
Time deposits: | ||||||||||||||||||
Less than $100,000 | 374,927 | 3,861 | 4.09 | % | 404,378 | 4,265 | 4.18 | % | ||||||||||
$100,000 and more | 193,877 | 2,328 | 4.76 | % | 203,022 | 2,353 | 4.60 | % | ||||||||||
Total interest-bearing deposits | 960,785 | 7,544 | 3.12 | % | 1,057,208 | 8,339 | 3.13 | % | ||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 17,149 | 216 | 4.93 | % | 3,348 | 45 | 5.33 | % | ||||||||||
Federal Home Loan Bank advances | 123,441 | 1,393 | 4.42 | % | 65,000 | 770 | 4.70 | % | ||||||||||
Subordinated debt | 20,619 | 419 | 7.95 | % | 20,619 | 427 | 8.22 | % | ||||||||||
Commercial paper | 76,181 | 752 | 3.86 | % | 66,518 | 783 | 4.67 | % | ||||||||||
Other borrowings | 863 | 11 | 4.99 | % | 355 | 6 | 6.71 | % | ||||||||||
238,253 | 2,791 | 4.58 | % | 155,840 | 2,031 | 5.10 | % | |||||||||||
Total interest-bearing liabilities | 1,199,038 | 10,335 | 3.41 | % | 1,213,048 | 10,370 | 3.38 | % | ||||||||||
Total noninterest-bearing liabilities | 216,803 | 247,604 | ||||||||||||||||
Total liabilities | 1,415,841 | 1,460,652 | ||||||||||||||||
Stockholders’ equity | 160,745 | 149,171 | ||||||||||||||||
Total liabilities and stockholders’ equity | $ | 1,576,586 | $ | 1,609,823 | ||||||||||||||
Net interest income (tax equivalent) | $ | 14,638 | $ | 15,384 | ||||||||||||||
Average interest rate spread | 3.37 | % | 3.44 | % | ||||||||||||||
Interest expense as percentage of average earning assets | 2.81 | % | 2.75 | % | ||||||||||||||
Net interest margin | 3.98 | % | 4.08 | % |
VIRGINIA FINANCIAL GROUP INC.
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES
TWELVE MONTHS ENDED DECEMBER 31, 2007 AND 2006
(Dollars in thousands)
Twelve months ended December 31, (unaudited) | ||||||||||||||||||
2007 | 2006 | |||||||||||||||||
Dollars in thousands | Average Balance | Interest Inc/Exp | Average Rates | Average Balance | Interest Inc/Exp | Average Rates | ||||||||||||
Assets | ||||||||||||||||||
Loans receivable, net | $ | 1,210,638 | $ | 88,059 | 7.27 | % | $ | 1,188,388 | $ | 84,159 | 7.08 | % | ||||||
Investment securities | ||||||||||||||||||
Taxable | 163,847 | 7,435 | 4.48 | % | 165,083 | 7,210 | 4.37 | % | ||||||||||
Tax exempt | 94,034 | 5,732 | 6.01 | % | 85,020 | 5,247 | 6.17 | % | ||||||||||
Total investments | 257,881 | 13,167 | 5.04 | % | 250,103 | 12,457 | 4.98 | % | ||||||||||
Interest bearing deposits | 481 | 18 | 3.69 | % | 2,681 | 74 | 2.76 | % | ||||||||||
Federal funds sold | 1,445 | 78 | 5.32 | % | 18,805 | 930 | 4.95 | % | ||||||||||
259,807 | 13,263 | 5.04 | % | 271,589 | 13,461 | 4.97 | % | |||||||||||
Total earning assets | 1,470,445 | 101,322 | 6.89 | % | 1,459,977 | 97,620 | 6.69 | % | ||||||||||
Total nonearning assets | 112,737 | 110,801 | ||||||||||||||||
Total assets | $ | 1,583,182 | $ | 1,570,778 | ||||||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||||
Interest-bearing deposits | ||||||||||||||||||
Interest checking | $ | 170,475 | $ | 1,312 | 0.77 | % | $ | 170,204 | $ | 765 | 0.45 | % | ||||||
Money market | 147,295 | 3,649 | 2.48 | % | 170,892 | 3,734 | 2.19 | % | ||||||||||
Savings | 91,560 | 565 | 0.62 | % | 108,659 | 853 | 0.79 | % | ||||||||||
Time deposits: | ||||||||||||||||||
Less than $100,000 | 394,436 | 16,599 | 4.21 | % | 393,897 | 15,099 | 3.83 | % | ||||||||||
$100,000 and more | 201,432 | 9,426 | 4.68 | % | 189,353 | 8,045 | 4.25 | % | ||||||||||
Total interest-bearing deposits | 1,005,198 | 31,551 | 3.14 | % | 1,033,005 | 28,496 | 2.76 | % | ||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 11,852 | 630 | 5.24 | % | 4,738 | 219 | 4.62 | % | ||||||||||
Federal Home Loan Bank advances | 87,860 | 4,345 | 4.88 | % | 61,612 | 2,834 | 4.60 | % | ||||||||||
Subordinated debt | 20,619 | 1,684 | 8.06 | % | 20,619 | 1,636 | 7.93 | % | ||||||||||
Commercial paper | 71,545 | 3,141 | 4.33 | % | 50,530 | 2,275 | 4.50 | % | ||||||||||
Other borrowings | 772 | 39 | 4.98 | % | 363 | 22 | 6.06 | % | ||||||||||
192,648 | 9,839 | 5.04 | % | 137,862 | 6,986 | 5.07 | % | |||||||||||
Total interest-bearing liabilities | 1,197,846 | 41,390 | 3.45 | % | 1,170,867 | 35,482 | 3.03 | % | ||||||||||
Total noninterest-bearing liabilities | 229,668 | 256,189 | ||||||||||||||||
Total liabilities | 1,427,514 | 1,427,056 | ||||||||||||||||
Stockholders’ equity | 155,668 | 143,722 | ||||||||||||||||
Total liabilities and stockholders’ equity | $ | 1,583,182 | $ | 1,570,778 | ||||||||||||||
Net interest income (tax equivalent) | $ | 59,932 | $ | 62,138 | ||||||||||||||
Average interest rate spread | 3.44 | % | 3.66 | % | ||||||||||||||
Interest expense as percentage of average earning assets | 2.81 | % | 2.43 | % | ||||||||||||||
Net interest margin | 4.08 | % | 4.25 | % |