Exhibit 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE | Contact: Bernard H. Clineburg, |
Tysons Corner, Virginia | Chairman, Chief Executive Officer |
October 20, 2010 | or |
| Mark A. Wendel, |
| EVP, Chief Financial Officer |
| 703-584-3400 |
CARDINAL ANNOUNCES THIRD QUARTER EARNINGS,
ASSET QUALITY REMAINS STRONG, NET INTEREST MARGIN IMPROVES, LOANS GROW 7%
Cardinal Financial Corporation (NASDAQ: CFNL) (the “Company”) today announced earnings of $5.90 million, or $0.20 per diluted share, for the quarter ended September 30, 2010. This is a 127% increase over earnings of $2.60 million, or $0.09 per diluted share, for the third quarter of last year. On a year-to-date basis, earnings were $14.41 million, or $0.49 per diluted share, versus $6.92 million, or $0.26 per diluted share, in 2009. At quarter end, the Company’s assets were $2.13 billion.
Selected Highlights
· Asset quality continues to be strong. Nonperforming loans remained low at 0.44% of total assets, and annualized net loan charge offs were 0.49% of loans outstanding. Real estate owned decreased to $2.62 million from $2.92 million at the previous quarter ended June 30, 2010, and the Company currently has $266,000 loans receivable past due 90 days or more.
· The Company’s tax equivalent net interest margin increased to 3.82% for the current quarter, up from 3.74% in the previous quarter and up from 2.97% in the year ago quarter.
· Total assets at period-end were $2.13 billion versus $1.89 billion one year earlier, an increase of 12.4%.
· Loans held for investment grew to $1.35 billion, an increase of $88.4 million, or 7.0%, compared to September 30, 2009.
· Total deposits grew to $1.40 billion, an increase of 9.5% compared to September 30, 2009. Non-interest bearing deposits grew 37.3% from $154.28 million at September 30, 2009 to $211.76 million at current quarter end.
· All capital ratios substantially exceed the requirements of banking regulators to be considered well-capitalized. Tangible common equity capital (TCE) as a percentage of total assets was 9.51%.
Income Statement Review
For the third quarter of 2010, net income was $5.90 million, or $0.20 per diluted share. Compared to the year ago quarter, net interest income increased 39% to $18.18 million from $13.09 million. For this same period, the tax equivalent net interest margin improved to 3.82% from 2.97%. The margin also improved from 3.74% for the second quarter of 2010. The growth in net interest income continues to be the result of the Bank’s success in growing its balance sheet and increasing average earning asset yields while lowering deposit rates. Compared to the year ago quarter, average earning assets grew $148 million, the average yield on earning assets increased 0.23% and the average cost of interest bearing liabilities decreased 0.70%. Further, the average balance of the Company’s loan portfolio increased $118 million while the yield increased 0.16%, and the average balance of interest-bearing deposits increased $63 million while the costs decreased 0.82%.
Noninterest income increased to $9.31 million for the current quarter compared to $5.70 million for the year ago quarter. For the nine month comparable periods ended September 30, noninterest income increased to $21.87 million from $17.71 million. The increase in income is primarily attributable to revenues from mortgage banking activities including management fee income, which improved by $3.4 million and $3.2 million for the three and nine month periods ended September 30, 2010 and 2009, respectively.
Noninterest expense increased $2.4 million to $15.37 million for the current quarter from $12.98 million for the year ago quarter. For the nine month comparable periods ended September 30, noninterest expense increased to $42.55 million from $38.72 million. The increase in expenses primarily resulted from higher mortgage banking commissions and other incentive compensation. Since the beginning of the year, the Company has added 24 business development officers in the mortgage, commercial and wealth business lines. In addition, an increase of $801,000 in benefit costs was incurred during the current quarter due to the anticipated vesting of retirement benefits for the Company’s CEO. This was offset by a $1.1 million reduction in expenses related to accruals for potential mortgage repurchases. On a year to date basis, data processing and telecommunications expenses increased by approximately $1.0 million as the Company completed a core systems conversion. Overall, the efficiency ratio improved to 55.9% compared to 69.1% during the same quarter of 2009. This is also an improvement from 59.0% last quarter.
Review of Balance Sheet and Credit Quality
At September 30, 2010, total assets of the Company were $2.13 billion, an increase of 12.4% from total assets of $1.89 billion at September 30, 2009. Loans held for investment grew 7.0% to $1.35 billion at September 30, 2010, from $1.26 billion at September 30, 2009. During this period, the Bank’s investment portfolio decreased $54.5 million, or 14.5%, while loans held for sale increased $189.6 million, or 124.9%.
The Bank’s asset growth was primarily funded by a 9.5% increase in deposits, which grew $121.8 million and totaled $1.40 billion at September 30, 2010 versus $1.28 billion a year earlier. Demand deposit account balances increased by 37.3% year over year, reflecting the Bank’s continued focus on generating lower funding costs.
Although the quality of the Bank’s loan portfolio has remained strong, the provision for loan losses increased to $3.5 million for the current quarter versus $2.1 million for the third quarter of last year. The total allowance for loan losses increased to 1.66% of loans outstanding from a comparable ratio of 1.38% at September 30, 2009, reflecting the continuing uncertain economic environment and increase in annualized net charge-offs. The Company’s nonperforming loans stood at 0.44% of total assets at September 30, 2010 compared to 0.22% at June 30, 2010 and 0.50% at September 30, 2009. Net loan charge-offs totaled $2.1 million for the current quarter, compared to $929,000 for the last quarter. There were $266,000 loans past due 90 days or more at September 30, 2010, while early stage loan delinquencies at 30-89 days past due were $800,000.
MANAGEMENT COMMENTS
Bernard H. Clineburg, Chairman and Chief Executive Officer of the Company, said:
“I am pleased to announce another solid quarter for Cardinal as we continued to improve upon our profitability. Year over year, our pre-tax, pre-provision earnings increased 104% to $29.9 million. During the quarter, the Company’s net interest margin increased, commercial lending activity and deposit growth was steady, and mortgage lending activity continued to be very strong. Our balance sheet grew to $2.13 billion in assets at quarter end. We also maintained our prudent underwriting standards as reflected by our credit quality metrics which are among the best in the banking industry.
Although we have sustained our focus on profitability and growth, operating as a safe and sound financial institution remains our priority. We also remain committed to our shareholders to build upon the core banking strengths of our Company, and we continue to believe that we are well positioned to maximize the strength and value of the Cardinal franchise.”
CAUTION ABOUT FORWARD-LOOKING STATEMENTS
This press release contains “forward-looking statements” within the meaning of the federal securities laws. These forward-looking statements contain information related to matters such as the Company’s intent, belief or expectation with regard to such matters as financial and operational performance, credit quality and branch expansion. Such statements are necessarily based on management’s assumptions and estimates and are inherently subject to a variety of risks and uncertainties concerning the Company’s operations and business environment, which are difficult to predict and beyond the control of the Company. Such risks and uncertainties could cause actual results of the Company to differ materially from those matters expressed or implied in such forward-looking statements. For an explanation of the risks and uncertainties associated with forward-looking statements, please refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009 and other reports filed with and furnished to the Securities and Exchange Commission.
About Cardinal Financial Corporation: Cardinal Financial Corporation, a financial holding company headquartered in Tysons Corner, Virginia with assets of $2.13 billion at September 30, 2010, serves the Washington Metropolitan region through its wholly-owned subsidiary, Cardinal Bank, with 26 conveniently located banking offices. Cardinal also operates several other subsidiaries: George Mason Mortgage, LLC, and Cardinal First Mortgage, LLC, residential mortgage lending companies based in Fairfax, with six offices throughout the Washington Metropolitan region; Cardinal Trust and Investment Services, a trust division; Cardinal Wealth Services, Inc., a full-service brokerage company; and Wilson/Bennett Capital Management, Inc., an asset management company. The Company’s stock is traded on NASDAQ (CFNL). For additional information please visit our Web site at www.cardinalbank.com or call (703) 584-3400.
Cardinal Financial Corporation and Subsidiaries
Summary Statements of Condition
September 30, 2010, December 31, 2009 and September 30, 2009
(Dollars in thousands)
| | (Unaudited) | | | | (Unaudited) | | % Change | |
| | September 30, 2010 | | December 31, 2009 | | September 30, 2009 | | Current Year | | Year Over Year | |
Cash and due from banks | | $ | 10,061 | | $ | 19,804 | | $ | 12,251 | | -49.2 | % | -17.9 | % |
Federal funds sold | | 9,833 | | 5,037 | | 7,727 | | 95.2 | % | 27.3 | % |
| | | | | | | | | | | |
Investment securities available-for-sale | | 296,608 | | 343,569 | | 334,670 | | -13.7 | % | -11.4 | % |
Investment securities held-to-maturity | | 23,434 | | 35,184 | | 37,526 | | -33.4 | % | -37.6 | % |
Investment securities — trading | | 1,843 | | 3,724 | | 4,225 | | -50.5 | % | -56.4 | % |
Total investment securities | | 321,885 | | 382,477 | | 376,421 | | -15.8 | % | -14.5 | % |
| | | | | | | | | | | |
Other investments | | 16,467 | | 16,467 | | 16,467 | | 0.0 | % | 0.0 | % |
Loans held for sale | | 341,413 | | 179,469 | | 151,806 | | 90.2 | % | 124.9 | % |
| | | | | | | | | | | |
Loans receivable, net of fees | | 1,351,703 | | 1,293,432 | | 1,263,291 | | 4.5 | % | 7.0 | % |
Allowance for loan losses | | (22,444 | ) | (18,636 | ) | (17,473 | ) | 20.4 | % | 28.4 | % |
Loans receivable, net | | 1,329,259 | | 1,274,796 | | 1,245,818 | | 4.3 | % | 6.7 | % |
| | | | | | | | | | | |
Premises and equipment, net | | 17,040 | | 15,743 | | 15,578 | | 8.2 | % | 9.4 | % |
Goodwill and intangibles, net | | 13,305 | | 13,935 | | 13,995 | | -4.5 | % | -4.9 | % |
Bank-owned life insurance | | 34,211 | | 33,712 | | 33,576 | | 1.5 | % | 1.9 | % |
Prepaid FDIC insurance premiums | | 4,717 | | 6,683 | | — | | -29.4 | % | 100.0 | % |
Other real estate owned | | 2,615 | | 4,991 | | 185 | | -47.6 | % | 1313.5 | % |
Other assets | | 26,505 | | 23,071 | | 19,579 | | 14.9 | % | 35.4 | % |
| | | | | | | | | | | |
TOTAL ASSETS | | $ | 2,127,311 | | $ | 1,976,185 | | $ | 1,893,403 | | 7.6 | % | 12.4 | % |
| | | | | | | | | | | |
Non-interest bearing deposits | | $ | 211,762 | | $ | 166,019 | | $ | 154,276 | | 27.6 | % | 37.3 | % |
Interest bearing deposits | | 1,185,914 | | 1,130,986 | | 1,121,600 | | 4.9 | % | 5.7 | % |
Total deposits | | 1,397,676 | | 1,297,005 | | 1,275,876 | | 7.8 | % | 9.5 | % |
| | | | | | | | | | | |
Other borrowed funds | | 441,287 | | 427,579 | | 378,645 | | 3.2 | % | 16.5 | % |
Mortgage funding checks | | 33,058 | | 13,918 | | 13,167 | | 137.5 | % | 151.1 | % |
Escrow liabilities | | 5,278 | | 2,079 | | 2,329 | | 153.9 | % | 126.6 | % |
Other liabilities | | 25,910 | | 31,097 | | 20,036 | | -16.7 | % | 29.3 | % |
| | | | | | | | | | | |
Shareholders’ equity | | 224,102 | | 204,507 | | 203,350 | | 9.6 | % | 10.2 | % |
| | | | | | | | | | | |
TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY | | $ | 2,127,311 | | $ | 1,976,185 | | $ | 1,893,403 | | 7.6 | % | 12.4 | % |
Cardinal Financial Corporation and Subsidiaries
Summary Income Statements
Three and Nine Months Ended September 30, 2010 and 2009
(Dollars in thousands, except share and per share data)
(Unaudited)
| | For the Three Months Ended | | | | For the Nine Months Ended | | | |
| | September 30, | | | | September 30, | | | |
| | 2010 | | 2009 | | % Change | | 2010 | | 2009 | | % Change | |
Net interest income | | $ | 18,182 | | $ | 13,092 | | 38.9 | % | $ | 50,579 | | $ | 35,674 | | 41.8 | % |
Provision for loan losses | | (3,500 | ) | (2,050 | ) | 70.7 | % | (8,625 | ) | (4,750 | ) | 81.6 | % |
Net interest income after provision for loan losses | | 14,682 | | 11,042 | | 33.0 | % | 41,954 | | 30,924 | | 35.7 | % |
| | | | | | | | | | | | | |
Service charges on deposit accounts | | 463 | | 514 | | -9.9 | % | 1,434 | | 1,482 | | -3.2 | % |
Loan fees | | 678 | | 503 | | 34.8 | % | 1,490 | | 2,161 | | -31.1 | % |
Investment fee income | | 1,048 | | 975 | | 7.5 | % | 3,072 | | 2,665 | | 15.3 | % |
Realized and unrealized gains on mortgage banking activities | | 5,325 | | 2,833 | | 88.0 | % | 11,855 | | 9,579 | | 23.8 | % |
Management fee income | | 1,255 | | 553 | | 126.9 | % | 2,676 | | 1,267 | | 111.2 | % |
Income from bank owned life insurance | | 173 | | 167 | | 3.6 | % | 499 | | 400 | | 24.8 | % |
Net realized gains on investment securities | | 193 | | 73 | | 164.4 | % | 726 | | 625 | | 16.2 | % |
Litigation recovery on previously impaired investment | | 71 | | — | | 100.0 | % | 87 | | — | | 100.0 | % |
Other non-interest income (loss) | | 100 | | 86 | | 16.3 | % | 26 | | (467 | ) | -105.6 | % |
Total non-interest income | | 9,306 | | 5,704 | | 63.1 | % | 21,865 | | 17,712 | | 23.4 | % |
| | | | | | | | | | | | | |
Net interest income and non-interest income | | 23,988 | | 16,746 | | 43.2 | % | 63,819 | | 48,636 | | 31.2 | % |
| | | | | | | | | | | | | |
Salaries and benefits | | 8,923 | | 5,897 | | 51.3 | % | 21,782 | | 17,546 | | 24.1 | % |
Occupancy | | 1,376 | | 1,321 | | 4.2 | % | 4,301 | | 4,055 | | 6.1 | % |
Depreciation | | 462 | | 464 | | -0.4 | % | 1,469 | | 1,515 | | -3.0 | % |
Data processing | | 854 | | 469 | | 82.1 | % | 2,245 | | 1,438 | | 56.1 | % |
Telecommunications | | 392 | | 328 | | 19.5 | % | 1,141 | | 939 | | 21.5 | % |
Professional fees | | 571 | | 562 | | 1.6 | % | 1,576 | | 1,566 | | 0.6 | % |
FDIC insurance assessment | | 524 | | 463 | | 13.2 | % | 1,592 | | 2,202 | | -27.7 | % |
Impairment of goodwill | | — | | — | | 0.0 | % | 451 | | — | | 100.0 | % |
Mortgage loan repurchases and settlements | | (1,084 | ) | 517 | | -309.7 | % | (686 | ) | 1,692 | | -140.5 | % |
Other operating expense | | 3,351 | | 2,957 | | 13.3 | % | 8,679 | | 7,768 | | 11.7 | % |
Total non-interest expense | | 15,369 | | 12,978 | | 18.4 | % | 42,550 | | 38,721 | | 9.9 | % |
Net income before income taxes | | 8,619 | | 3,768 | | 128.7 | % | 21,269 | | 9,915 | | 114.5 | % |
Provision for income taxes | | 2,716 | | 1,164 | | 133.3 | % | 6,857 | | 3,000 | | 128.6 | % |
NET INCOME | | $ | 5,903 | | $ | 2,604 | | 126.7 | % | $ | 14,412 | | $ | 6,915 | | 108.4 | % |
| | | | | | | | | | | | | |
Earnings per common share - basic | | $ | 0.20 | | $ | 0.09 | | 125.6 | % | $ | 0.50 | | $ | 0.26 | | 90.2 | % |
Earnings per common share - diluted | | $ | 0.20 | | $ | 0.09 | | 125.8 | % | $ | 0.49 | | $ | 0.26 | | 90.6 | % |
Weighted-average common shares outstanding - basic | | 29,140,193 | | 28,999,230 | | 0.5 | % | 29,110,038 | | 26,559,683 | | 9.6 | % |
Weighted-average common shares outstanding - diluted | | 29,639,114 | | 29,524,878 | | 0.4 | % | 29,582,342 | | 27,047,915 | | 9.4 | % |
| | | | | | | | | | | | | |
Reconciliation of Non-GAAP measures: | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
GAAP net income reported above | | $ | 5,903 | | $ | 2,604 | | | | $ | 14,412 | | $ | 6,915 | | | |
Add: Provision for loan losses | | 3,500 | | 2,050 | | | | 8,625 | | 4,750 | | | |
Add: Provision for income taxes | | 2,716 | | 1,164 | | | | 6,857 | | 3,000 | | | |
| | | | | | | | | | | | | |
Operating earnings, excluding provision items | | $ | 12,119 | | $ | 5,818 | | 108.3 | % | $ | 29,894 | | $ | 14,665 | | 103.8 | % |
| | | | | | | | | | | | | |
GAAP earnings per share - diluted reported above | | $ | 0.20 | | $ | 0.09 | | | | $ | 0.49 | | $ | 0.26 | | | |
Add: Provision for loan losses | | 0.12 | | 0.07 | | | | 0.29 | | 0.18 | | | |
Add: Provision for income taxes | | 0.09 | | 0.04 | | | | 0.23 | | 0.11 | | | |
| | | | | | | | | | | | | |
Operating earnings per common share - diluted (excluding provision items) | | $ | 0.41 | | $ | 0.20 | | 107.5 | % | $ | 1.01 | | $ | 0.54 | | 86.4 | % |
Cardinal Financial Corporation and Subsidiaries
Selected Financial Information
(Dollars in thousands, except per share data and ratios)
(Unaudited)
| | For the Three Months Ended | | For the Nine Months Ended | |
| | September 30, | | September 30, | |
| | 2010 | | 2009 | | 2010 | | 2009 | |
Income Statements: | | | | | | | | | |
Interest income | | $ | 24,771 | | $ | 21,923 | | $ | 71,639 | | $ | 63,571 | |
Interest expense | | 6,589 | | 8,831 | | 21,060 | | 27,897 | |
Net interest income | | 18,182 | | 13,092 | | 50,579 | | 35,674 | |
Provision for loan losses | | 3,500 | | 2,050 | | 8,625 | | 4,750 | |
Net interest income after provision for loan losses | | 14,682 | | 11,042 | | 41,954 | | 30,924 | |
Non-interest income | | 9,306 | | 5,704 | | 21,865 | | 17,712 | |
Non-interest expense | | 15,369 | | 12,978 | | 42,550 | | 38,721 | |
Net income before income taxes | | 8,619 | | 3,768 | | 21,269 | | 9,915 | |
Provision for income taxes | | 2,716 | | 1,164 | | 6,857 | | 3,000 | |
Net income | | $ | 5,903 | | $ | 2,604 | | $ | 14,412 | | $ | 6,915 | |
| | | | | | September 30, 2010 | | September 30, 2009 | |
Balance Sheet Data: | | | | | | | | | |
Total assets | | | | | | $ | 2,127,311 | | $ | 1,893,403 | |
Loans receivable, net of fees | | | | | | 1,351,703 | | 1,263,291 | |
Allowance for loan losses | | | | | | (22,444 | ) | (17,473 | ) |
Loans held for sale | | | | | | 341,413 | | 151,806 | |
Total investment securities | | | | | | 321,885 | | 376,421 | |
Total deposits | | | | | | 1,397,676 | | 1,275,876 | |
Other borrowed funds | | | | | | 441,287 | | 378,645 | |
Total shareholders’ equity | | | | | | 224,102 | | 203,350 | |
| | | | | | | | | |
Common shares outstanding | | | | | | 28,762 | | 28,690 | |
| | | | | | | | | | | |
| | For the Three Months Ended September 30, | | For the Nine Months Ended September 30, | |
| | 2010 | | 2009 | | 2010 | | 2009 | |
Selected Average Balances: | | | | | | | | | |
Total assets | | $ | 2,032,287 | | $ | 1,851,895 | | $ | 1,969,550 | | $ | 1,783,380 | |
Loans receivable, net of fees | | 1,330,585 | | 1,212,910 | | 1,312,915 | | 1,183,271 | |
Allowance for loan losses | | (22,181 | ) | (16,692 | ) | (20,289 | ) | (15,725 | ) |
Loans held for sale | | 243,064 | | 131,417 | | 167,947 | | 168,428 | |
Total investment securities | | 316,398 | | 326,182 | | 347,595 | | 283,652 | |
Interest earning assets | | 1,925,585 | | 1,778,013 | | 1,866,489 | | 1,708,611 | |
Total deposits | | 1,393,022 | | 1,271,837 | | 1,355,767 | | 1,220,137 | |
Other borrowed funds | | 389,969 | | 362,391 | | 376,443 | | 363,422 | |
Total shareholders’ equity | | 223,598 | | 200,387 | | 214,610 | | 180,041 | |
Weighted Average: | | | | | | | | | |
Common shares outstanding - basic | | 29,140 | | 28,999 | | 29,110 | | 26,560 | |
Common shares outstanding - diluted | | 29,639 | | 29,525 | | 29,582 | | 27,048 | |
| | | | | | | | | |
Per Common Share Data: | | | | | | | | | |
Basic net income | | $ | 0.20 | | $ | 0.09 | | $ | 0.50 | | $ | 0.26 | |
Fully diluted net income | | 0.20 | | 0.09 | | 0.49 | | 0.26 | |
Book value | | 7.79 | | 7.09 | | 7.79 | | 7.09 | |
Tangible book value (1) | | 7.00 | | 6.41 | | 7.00 | | 6.41 | |
| | | | | | | | | |
Performance Ratios: | | | | | | | | | |
Return on average assets | | 1.16 | % | 0.56 | % | 0.98 | % | 0.52 | % |
Return on average equity | | 10.56 | % | 5.20 | % | 8.95 | % | 5.12 | % |
Net interest margin (2) | | 3.82 | % | 2.97 | % | 3.65 | % | 2.81 | % |
Efficiency ratio (3) | | 55.91 | % | 69.05 | % | 58.74 | % | 72.53 | % |
Non-interest income to average assets | | 1.83 | % | 1.23 | % | 1.48 | % | 1.32 | % |
Non-interest expense to average assets | | 3.02 | % | 2.80 | % | 2.88 | % | 2.89 | % |
| | | | | | | | | |
Asset Quality Data: | | | | | | | | | |
Annualized net charge-offs to average loans receivable, net of fees | | | | | | 0.49 | % | 0.20 | % |
Total nonaccrual loans | | | | | | $ | 9,315 | | $ | 9,454 | |
Real estate owned | | | | | | $ | 2,615 | | $ | 185 | |
Nonperforming loans to loans receivable, net of fees | | | | | | 0.69 | % | 0.75 | % |
Nonperforming loans to total assets | | | | | | 0.44 | % | 0.50 | % |
Total loans receivable past due 30 to 89 days | | | | | | $ | 800 | | $ | 15 | |
Total loans receivable past due 90 days or more | | | | | | $ | 266 | | $ | 25 | |
Allowance for loan losses to loans receivable, net of fees | | | | | | 1.66 | % | 1.38 | % |
Allowance for loan losses to nonperforming loans | | | | | | 234.26 | % | 184.33 | % |
| | | | | | | | | |
Capital Ratios: | | | | | | | | | |
Tier 1 risk-based capital | | | | | | 12.28 | % | 13.16 | % |
Total risk-based capital | | | | | | 13.57 | % | 14.31 | % |
Leverage capital ratio | | | | | | 10.76 | % | 11.09 | % |
(1) Tangible book value is calculated as total shareholders’ equity, adjusted for changes in other comprehensive income, less goodwill and other intangible assets, divided by common shares outstanding.
(2) Net interest margin is calculated as net interest income divided by total average earning assets and reported on a tax equivalent basis at a rate of 32%.
(3) Efficiency ratio is calculated as total non-interest expense divided by the total of net interest income and non-interest income.
Cardinal Financial Corporation and Subsidiaries
Average Statements of Condition and Yields on Earning Assets and Interest-Bearing Liabilities
Three and Nine Months Ended September 30, 2010 and 2009
(Dollars in thousands)
(Unaudited)
| | For the Three Months Ended | | For the Nine Months Ended | |
| | September 30, 2010 | | September 30, 2009 | | September 30, 2010 | | September 30, 2009 | |
| | Average
Balance | | Average
Yield | | Average
Balance | | Average
Yield | | Average
Balance | | Average
Yield | | Average
Balance | | Average
Yield | |
Interest-earning assets: | | | | | | | | | | | | | | | | | |
Loans receivable, net of fees (1) | | | | | | | | | | | | | | | | | |
Commercial and industrial | | $ | 162,810 | | 4.67 | % | $ | 148,446 | | 4.80 | % | $ | 160,116 | | 4.65 | % | $ | 158,966 | | 4.80 | % |
Real estate - commercial | | 609,800 | | 6.40 | % | 567,150 | | 6.27 | % | 606,537 | | 6.21 | % | 531,923 | | 6.26 | % |
Real estate - construction | | 203,948 | | 5.80 | % | 178,585 | | 5.04 | % | 197,108 | | 5.62 | % | 177,728 | | 4.57 | % |
Real estate - residential | | 230,707 | | 5.09 | % | 201,500 | | 5.15 | % | 227,272 | | 5.17 | % | 202,133 | | 5.34 | % |
Home equity lines | | 120,709 | | 3.50 | % | 114,414 | | 3.58 | % | 119,248 | | 3.62 | % | 109,935 | | 3.65 | % |
Consumer | | 2,611 | | 5.93 | % | 2,815 | | 5.92 | % | 2,634 | | 5.79 | % | 2,586 | | 6.05 | % |
Total loans | | 1,330,585 | | 5.63 | % | 1,212,910 | | 5.47 | % | 1,312,915 | | 5.53 | % | 1,183,271 | | 5.41 | % |
| | | | | | | | | | | | | | | | | |
Loans held for sale | | 243,064 | | 4.62 | % | 131,417 | | 4.96 | % | 167,947 | | 4.82 | % | 168,428 | | 4.47 | % |
Investment securities - available-for-sale (1) | | 290,903 | | 4.41 | % | 286,835 | | 4.72 | % | 317,195 | | 4.54 | % | 239,301 | | 4.96 | % |
Investment securities - held-to-maturity | | 25,495 | | 3.23 | % | 39,347 | | 3.60 | % | 30,400 | | 3.33 | % | 44,351 | | 3.78 | % |
Other investments | | 15,728 | | 0.44 | % | 15,728 | | 0.84 | % | 15,728 | | 0.32 | % | 15,697 | | 0.11 | % |
Federal funds sold | | 19,810 | | 0.22 | % | 91,776 | | 0.25 | % | 22,304 | | 0.23 | % | 57,563 | | 0.24 | % |
Total interest-earning assets | | 1,925,585 | | 5.19 | % | 1,778,013 | | 4.96 | % | 1,866,489 | | 5.16 | % | 1,708,611 | | 4.99 | % |
| | | | | | | | | | | | | | | | | |
Non-interest earning assets: | | | | | | | | | | | | | | | | | |
Cash and due from banks | | 12,348 | | | | 1,213 | | | | 12,719 | | | | 1,026 | | | |
Premises and equipment, net | | 17,079 | | | | 15,723 | | | | 16,256 | | | | 15,977 | | | |
Goodwill and intangibles, net | | 13,343 | | | | 14,025 | | | | 13,699 | | | | 14,090 | | | |
Accrued interest and other assets | | 86,113 | | | | 59,613 | | | | 80,676 | | | | 59,401 | | | |
Allowance for loan losses | | (22,181 | ) | | | (16,692 | ) | | | (20,289 | ) | | | (15,725 | ) | | |
| | | | | | | | | | | | | | | | | |
TOTAL ASSETS | | $ | 2,032,287 | | | | $ | 1,851,895 | | | | $ | 1,969,550 | | | | $ | 1,783,380 | | | |
| | | | | | | | | | | | | | | | | |
Interest-bearing liabilities: | | | | | | | | | | | | | | | | | |
Interest checking | | $ | 131,355 | | 0.26 | % | $ | 120,990 | | 0.92 | % | $ | 133,166 | | 0.40 | % | $ | 121,062 | | 1.06 | % |
Money markets | | 113,375 | | 0.51 | % | 54,539 | | 0.82 | % | 98,749 | | 0.60 | % | 49,504 | | 1.07 | % |
Statement savings | | 268,665 | | 0.41 | % | 314,226 | | 1.22 | % | 277,845 | | 0.57 | % | 286,180 | | 1.52 | % |
Certificates of deposit | | 671,236 | | 1.81 | % | 631,746 | | 2.73 | % | 656,142 | | 2.03 | % | 619,158 | | 3.00 | % |
Total interest-bearing deposits | | 1,184,631 | | 1.20 | % | 1,121,501 | | 2.02 | % | 1,165,902 | | 1.38 | % | 1,075,904 | | 2.30 | % |
| | | | | | | | | | | | | | | | | |
Other borrowed funds | | 389,969 | | 3.07 | % | 362,391 | | 3.42 | % | 376,443 | | 3.21 | % | 363,422 | | 3.45 | % |
Total interest-bearing liabilities | | 1,574,600 | | 1.66 | % | 1,483,892 | | 2.36 | % | 1,542,345 | | 1.83 | % | 1,439,326 | | 2.59 | % |
| | | | | | | | | | | | | | | | | |
Noninterest-bearing liabilities: | | | | | | | | | | | | | | | | | |
Noninterest-bearing deposits | | 208,391 | | | | 150,336 | | | | 189,865 | | | | 144,233 | | | |
Other liabilities | | 25,698 | | | | 17,280 | | | | 22,730 | | | | 19,780 | | | |
| | | | | | | | | | | | | | | | | |
Shareholders’ equity | | 223,598 | | | | 200,387 | | | | 214,610 | | | | 180,041 | | | |
| | | | | | | | | | | | | | | | | |
TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY | | $ | 2,032,287 | | | | $ | 1,851,895 | | | | $ | 1,969,550 | | | | $ | 1,783,380 | | | |
| | | | | | | | | | | | | | | | | |
NET INTEREST MARGIN (1) | | | | 3.82 | % | | | 2.97 | % | | | 3.65 | % | | | 2.81 | % |
(1) The average yields for loans receivable and investment securities available-for-sale are reported on a fully taxable-equivalent basis at a rate of 32%.
Cardinal Financial Corporation and Subsidiaries
Segment Reporting at and for the Three and Nine Months Ended September 30, 2010 and 2009
(Dollars in thousands)
(Unaudited)
At and for the Three Months Ended September 30, 2010:
| | Commercial | | Mortgage | | Wealth Management & | | | | Intersegment | | | |
| | Banking | | Banking | | Trust Services | | Other | | Elimination | | Consolidated | |
Net interest income | | $ | 17,745 | | $ | 647 | | $ | — | | $ | (210 | ) | $ | — | | $ | 18,182 | |
Provision for loan losses | | 3,500 | | — | | — | | — | | — | | 3,500 | |
Non-interest income | | 1,025 | | 7,147 | | 1,052 | | 120 | | (38 | ) | 9,306 | |
Non-interest expense | | 10,074 | | 2,342 | | 913 | | 2,078 | | (38 | ) | 15,369 | |
Provision for income taxes | | 1,507 | | 1,894 | | 47 | | (732 | ) | — | | 2,716 | |
Net income (loss) | | $ | 3,689 | | $ | 3,558 | | $ | 92 | | $ | (1,436 | ) | $ | — | | $ | 5,903 | |
| | | | | | | | | | | | | |
Average Assets | | $ | 2,018,523 | | $ | 254,864 | | $ | 2,992 | | $ | 230,292 | | $ | (474,384 | ) | $ | 2,032,287 | |
At and for the Three Months Ended September 30, 2009:
| | Commercial | | Mortgage | | Wealth Management & | | | | Intersegment | | | |
| | Banking | | Banking | | Trust Services | | Other | | Elimination | | Consolidated | |
Net interest income | | $ | 12,649 | | $ | 655 | | $ | — | | $ | (212 | ) | $ | — | | $ | 13,092 | |
Provision for loan losses | | 2,050 | | — | | — | | — | | — | | 2,050 | |
Non-interest income | | 917 | | 3,724 | | 980 | | 103 | | (20 | ) | 5,704 | |
Non-interest expense | | 8,334 | | 3,192 | | 785 | | 687 | | (20 | ) | 12,978 | |
Provision for income taxes | | 961 | | 408 | | 66 | | (271 | ) | — | | 1,164 | |
Net income (loss) | | $ | 2,221 | | $ | 779 | | $ | 129 | | $ | (525 | ) | $ | — | | $ | 2,604 | |
| | | | | | | | | | | | | |
Average Assets | | $ | 1,851,296 | | $ | 137,303 | | $ | 3,430 | | $ | 223,422 | | $ | (363,556 | ) | $ | 1,851,895 | |
At and for the Nine Months Ended September 30, 2010:
| | Commercial | | Mortgage | | Wealth Management & | | | | Intersegment | | | |
| | Banking | | Banking | | Trust Services | | Other | | Elimination | | Consolidated | |
Net interest income | | $ | 49,467 | | $ | 1,727 | | $ | — | | $ | (615 | ) | $ | — | | $ | 50,579 | |
Provision for loan losses | | 8,625 | | — | | — | | — | | — | | 8,625 | |
Non-interest income | | 3,157 | | 15,605 | | 3,086 | | 97 | | (80 | ) | 21,865 | |
Non-interest expense | | 28,056 | | 8,113 | | 3,090 | | 3,371 | | (80 | ) | 42,550 | |
Provision for income taxes | | 4,982 | | 3,202 | | — | | (1,327 | ) | — | | 6,857 | |
Net income (loss) | | $ | 10,961 | | $ | 6,017 | | $ | (4 | ) | $ | (2,562 | ) | $ | — | | $ | 14,412 | |
| | | | | | | | | | | | | |
Average Assets | | $ | 1,958,395 | | $ | 177,033 | | $ | 3,254 | | $ | 230,843 | | $ | (399,975 | ) | $ | 1,969,550 | |
At and for the Nine Months Ended September 30, 2009:
| | Commercial | | Mortgage | | Wealth Management & | | | | Intersegment | | | |
| | Banking | | Banking | | Trust Services | | Other | | Elimination | | Consolidated | |
Net interest income | | $ | 34,191 | | $ | 2,165 | | $ | — | | $ | (682 | ) | $ | — | | $ | 35,674 | |
Provision for loan losses | | 4,656 | | 94 | | — | | — | | — | | 4,750 | |
Non-interest income | | 3,077 | | 12,419 | | 2,686 | | (406 | ) | (64 | ) | 17,712 | |
Non-interest expense | | 25,504 | | 9,154 | | 2,376 | | 1,751 | | (64 | ) | 38,721 | |
Provision for income taxes | | 2,025 | | 1,835 | | 105 | | (965 | ) | — | | 3,000 | |
Net income (loss) | | $ | 5,083 | | $ | 3,501 | | $ | 205 | | $ | (1,874 | ) | $ | — | | $ | 6,915 | |
| | | | | | | | | | | | | |
Average Assets | | $ | 1,777,923 | | $ | 170,349 | | $ | 3,447 | | $ | 201,099 | | $ | (369,438 | ) | $ | 1,783,380 | |
