May 8, 2014
Contact:Douglas J. Glenn
President and Chief Executive Officer
(757) 217-1000
Hampton Roads Bankshares Announces First Quarter Financial Results
| · | | Year-to-date earnings totaled $3.9 million, a $3.3 million increase over the comparable period in 2013 |
| · | | Non-performing asset ratio improves by more than 30% year-over-year |
| · | | Average core deposits grow by more than $24 million year-over-year |
VIRGINIA BEACH, Va., May 8, 2014 (GLOBE NEWSWIRE) -- Hampton Roads Bankshares, Inc. (the “Company”) (Nasdaq: HMPR), the holding company for the Bank of Hampton Roads and Shore Bank, today announced financial results for the first quarter of 2014. Net income attributable to Hampton Roads Bankshares, Inc. was $3.9 million for the three months ended March 31, 2014, compared to $0.6 million for the comparable period in 2013.
“Our financial results in the first quarter reflect the continued discipline in the execution of our One Bank strategic plan which we implemented in early 2013,” said Douglas Glenn, President and Chief Executive Officer. "We are committed to achieving sustained profitability in a difficult banking environment without taking undue risk. Our success has allowed for additional investment in people, products and services which provide our customers consistency, convenience and choice in helping them achieve their financial dreams. "
Net Interest Income
Net interest income for the three months ended March 31, 2014 and March 31, 2013 was $15.0 million and $15.9 million, respectively. The decrease in year-over-year net interest income was primarily the result of decreases in average interest-earning assets and a slight decline in net interest margin.
Credit Quality
The Company’s non-performing assets ratio improved to 5.16% at March 31, 2014 from 5.29% at December 31, 2013 and from 7.51% at the comparable quarter end in 2013.
The allowance for loan losses decreased $3.8 million (net of charge-offs and recoveries) during the three months ended March 31, 2014 as a result of net charge-offs exceeding additional provisions for loan losses. Net charge-offs were $3.9 million during the three months ended March 31, 2014 compared with $4.7 million during the same period in 2013. Our provision for loan losses was $100 thousand during the three months ended March 31, 2014 compared to no provision for loan losses being recorded during the same period in 2013.
Noninterest Income
Noninterest income for the three months ended March 31, 2014 was $7.3 million, an increase of $1.9 million as compared to $5.4 million for the same period in 2013. Declines in losses on premises and equipment, other real estate owned and repossessed assets, and an increase in income from bank-owned life insurance, offset by a decline in mortgage banking revenue, produced a year-over -year increase.
Income from bank-owned life insurance increased $2.8 million to $3.2 million for the three months ended March 31, 2014 compared to $373 thousand for the comparative period in 2013, largely because of life insurance benefits recognized in excess of cash surrender value from the deaths of one current employee and one former employee during the first quarter of 2014.
Noninterest Expense
Noninterest expense was $18.5 million and $19.4 million for the three months ended March 31, 2014 and March 31, 2013, respectively, a decrease of $915 thousand. Year-over-year reductions in headcount and lower volume in our mortgage company were largely responsible for a $1.4 million decline in salaries and employee benefits.
Increased data processing costs and elevated professional and consultant fees partially offset the drop in salaries and employee benefits. Data processing increased $350 thousand mainly due to implementation costs and operating expenses associated with the Company’s additional products and services.
Professional and consultant fees remain elevated due to a number of factors related to the launch of new products and services, the resolution of problem assets, and ongoing costs related to legal matters.
Balance Sheet Trends
Total assets were $1.9 billion at March 31, 2014, a decrease of $4.7 million from December 31, 2013. The decrease in assets was primarily associated with a $4.5 million decrease in loans held for sale, a $34.8 million decrease in gross loans, a $9.0 million decrease in other real estate owned and repossessed assets, a $7.1 million decrease in investment securities available for sale, partially offset by a $47.0 million increase in overnight funds sold and due from FRB and a $4.2 million increase in other assets.
Gross loans decreased by $34.8 million during the three months ended March 31, 2014, primarily due to normal loan pay down and charge-off activity exceeding new loan origination volume. Impaired loans increased by $3.3 million during the three months ended March 31, 2014 to $70.9 million, up from $67.6 million at December 31, 2013, primarily as a result of three credit relationships that became impaired.
Allowance for loan losses at March 31, 2014 decreased 10.8% to $31.3 million from $35.0 million at December 31, 2013 as net charge-offs exceeded additional provisions for loan losses.
Deposits at March 31, 2014 decreased $5.4 million from December 31, 2013 as a result of decreases of $4.5 million in time deposits over $100 thousand, decreases of $3.7 million in noninterest -bearing demand deposits, decreases of $3.4 million in savings deposits, partially offset by increases of $5.4 million in interest-bearing demand deposits. The decline in time deposits is primarily the result of the attrition of certain national market time deposits and reflects the Company’s continuing efforts to improve its mix of funds.
Average core deposits, which exclude brokered deposits and certificates of deposit greater than $100 thousand, increased by $24.4 million over the comparable quarterly average in 2013 as a result of successful marketing campaigns of the Company’s deposit products.
Capitalization
At March 31, 2014, the Company exceeded all of the regulatory capital minimums and Bank of Hampton Roads and Shore Bank were both considered “well capitalized” under all applicable regulatory capital standards. The Company’s total risk-based capital, Tier 1 and Tier 1 leverage ratios as of March 31, 2014, were 15.98%, 14.72% and 11.18%, respectively.
Caution About Forward-Looking Statements
Certain statements made in this press release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that include projections, predictions, expectations, or beliefs about events or results or otherwise are not statements of historical facts, including statements about future trends and strategies. Although the Company believes that its expectations with respect to such forward-looking statements are based upon reasonable assumptions within the bounds of its existing knowledge of its business and operations, there can be no assurance that actual results, performance or achievements of the Company will not differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual events or results to differ significantly from those described in the forward-looking statements include, but are not limited to those described in the cautionary language included under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2013, and other filings made with the SEC.
About Hampton Roads Bankshares, Inc.
Hampton Roads Bankshares, Inc. is a bank holding company headquartered in Virginia Beach, Virginia. The Company’s primary subsidiaries are The Bank of Hampton Roads, which opened for business in 1987, and Shore Bank, which opened in 1961 (collectively, the “Banks”). The Banks engage in general community and commercial banking business, targeting the needs of individuals and small to medium-sized businesses. The Bank of Hampton Roads operates banking offices in Virginia and North Carolina doing business as Bank of Hampton Roads and Gateway Bank & Trust Co. Shore Bank serves the Eastern Shore of Virginia, eastern Maryland and southern Delaware through six banking offices, ATMs and loan production offices in West Ocean City, Maryland and Rehoboth Beach, Delaware. Through various affiliates, the Banks also offer mortgage banking services and investment products. Shares of the Company’s common stock are traded on the NASDAQ Global Select Market under the symbol “HMPR.” Additional information about the Company and its subsidiaries can be found at www.hamptonroadsbanksharesinc.com.
