New Peoples Bankshares (NWPP) 8-K New Peoples Bankshares Announces SECONDQUARTER2016 Results

Exhibit 99.1

 

NEWS RELEASE

FOR IMMEDIATE RELEASE:	FOR MORE INFORMATION, CONTACT:
August 11, 2016	C. Todd Asbury
	(276) 873-7000

NEW PEOPLES BANKSHARES ANNOUNCES SECONDQUARTER2016 RESULTS

Honaker, Virginia--New Peoples Bankshares (the “Company”) (OTCBB: NWPP) and its wholly-owned subsidiary New Peoples Bank (the “Bank”) today announced second quarter net income of $882,000, or $0.04 per share, for the quarter ended June 30, 2016. This compares to net income of $462,000, or $0.02 per share, for the same period ended June 30, 2015, which is an improvement of $420,000, or 90.9%. For the six months ended June 30, 2016, the Company reported net income of $1.58 million, or $0.07 per share. This compares to net income of $1.08 million, or $0.05 per share, for the same period ended June 30, 2015, which is an improvement of $496,000, or 45.8%.

Operationally, during the first half of 2016, the Bank successfully installed state-of-the-art Interactive Teller Machines (“ITMs”) in all branch locations, allowing the Bank to provide its customers with teller services from 7am to 7pm Monday through Saturday. Additionally, in July 2016 the Bank and its wholly-owned subsidiary NPB Insurance Services, Inc. announced it is teaming up with The Hilb Group of Virginia dba CSE Insurance Services, a division of the Hilb Group, LLC (“CSE”), located in Abingdon, Virginia, to provide insurance services for its current and future customers. Effective July 1, 2016, current NPB Insurance Services, Inc. customers will be serviced by CSE and the Bank will refer future insurance needs of its bank customers to CSE.

Earnings Highlights

· For the quarter ended June 30, 2016:

· Strong net interest margin of 3.94% for the quarter;

· Net interest income declined slightly by $199,000, or 3.6%, when compared to the quarter ended June 30, 2015;

· A negative provision for loans losses of $500,000 was recorded in the 2^nd quarter of 2016;

· Gains on the sales of investment securities were $135,000 for the quarter as compared to no gains for the same period in 2015;

· Noninterest income increased by $212,000, or 13.8%, when compared to the quarter ended June 30, 2015;

· Salaries and employee benefits expense rose 15.9%, or $457,000, when compared to the same quarter of 2015. This increase was mainly due to adding several commercial lending officers as well as staff to operate the ITMs;

· Occupancy and equipment expense increased by $148,000, or 16.1%, when compared to the same period of 2015. This increase was mainly due to the installation of the ITMs; and

· Expenses associated with other real estate owned declined $618,000, or 87.4% when compared to the quarter ended June 30, 2015.

· Year-to-date June 30, 2016:

· The net interest margin was 3.95%;

· Net interest income declined slightly by $158,000, or 1.4%, when compared to the first six months of 2015;

· A negative provision for loans losses of $500,000 was recorded in the first half of 2016;

· Gains on the sales of investment securities were $240,000 for the first half of 2016;

· Salaries and employee benefits expense rose 12.5%, or $725,000, when compared to the same period of 2015. This increase was mainly due to adding several commercial lending officers as well as staff to operate the ITMs;

· Data processing and telecommunications expense rose $155,000, or 15.5% when compared to the same period in 2015;

· FDIC insurance premiums expense fell $169,000, or 38.5%, from $439,000 during the first half of 2015, to $270,000 for the same period in 2016;

· Expenses associated with other real estate owned declined $814,000, or 76.4%, when compared to the six-months ended June 30, 2015; and

· Total noninterest expenses climbed $204,000, or 1.6%, to $13.1 million for the first half of 2016 from the $12.9 million recorded in the same period in 2015.

Balance Sheet:

· Total loans increased $9.3 million during the quarter, to $459.6 million at June 30, 2016. Year to date, loans have increased $18.4 million, or 4.2%;

· Securities available for sale decreased $8.1 million during the quarter from $84.7 million at March 31, 2016 to $76.6 million at June 30, 2016. Year to date, securities available for sale decreased $25.0 million, or 24.6%;

· Bank premise and equipment has increased $3.1 million, or 10.9%, year to date primarily due to the installation of the ITMs;

· Time deposits declined $5.4 million, or 2.1%, during the first six months of 2016;

· Total deposits showed a slight decline of $132,000 during the quarter, totaling $555.1 million at June 30, 2016. Year to date, total deposits declined $2.9 million or 0.5%;

· Federal Home Loan Bank advances declined $3.3 million during the second quarter to $9.4 million. Year to date, Federal Home Loan Bank advances have increased $6.4 million;

· Total capital at June 30, 2016 was $48.5 million;

· Book value per share of $2.08 as of June 30, 2016; and

· The Bank was ‘well capitalized’ as defined by regulatory guidance.

Asset Quality:

· Nonperforming assets, which includes nonaccrual loans and other real estate owned, declined $590,000, or 2.2% during the first half of 2016. Nonperforming assets declined $5.7 million, or 17.6%, when compared to June 30, 2015;

· Nonperforming assets as a percentage of total assets was 4.2% at quarter end;

· Loans past due 30 days or more totaled $15.6 million, or 3.4% of total loans outstanding;

· Annualized net charge offs as a percentage of average loans and average assets for the first half of 2016 was 0.15% and 0.11%, respectively; and

· The allowance for loan losses as a percentage to total loans was 1.45% at June 30, 2016.

About New Peoples Bankshares, Inc.

New Peoples Bankshares, Inc. is a one-bank holding company headquartered in Honaker, Virginia. Its wholly-owned subsidiary provides banking products and services through its 19 locations throughout southwest Virginia, Eastern Tennessee, and southern West Virginia. The Company’s common stock is traded over the counter under the trading symbol “NWPP”. Additional investor information can be found on the Company’s website at www.npbankshares.com.

This news release may include forward-looking statements. These forward-looking statements are based on current expectations that involve risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may differ materially. These risks include: changes in business or other market conditions; the timely development, production and acceptance of new products and services; the challenge of managing asset/liability levels; the management of credit risk and interest rate risk; the difficulty of keeping expense growth at modest levels while increasing revenues; and other risks detailed from time to time in the Company's Securities and Exchange Commission reports including, but not limited to, the Annual Report on Form 10-K for the most recent fiscal year end. Pursuant to the Private Securities Litigation Reform Act of 1995, the Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.

NEW PEOPLES BANKSHARES, INC.

CONSOLIDATED BALANCE SHEETS

JUNE 30, 2016 AND DECEMBER 31, 2015

(IN THOUSANDS EXCEPT SHARE DATA)

ASSETS	June 30, 2016			December 31, 2015
	UNAUDITED			AUDITED
Cash and due from banks	$	18,412		$	15,087
Interest-bearing deposits with banks		13,821			11,251
Total Cash and Cash Equivalents		32,233			26,338
Investment securities available-for-sale		76,626			101,642
Loans receivable		459,613			441,169
Allowance for loan losses		(6,649	)		(7,493	)
Net Loans		452,964			433,676
Bank premises and equipment, net		31,228			28,148
Equity securities (restricted)		2,613			2,441
Other real estate owned		14,134			12,398
Accrued interest receivable		1,886			1,816
Life insurance investments		12,168			12,105
Deferred taxes, net		4,770			5,121
Other assets		3,689			2,213
Total Assets	$	632,311		$	625,898
LIABILITIES
Deposits
Demand deposits
Noninterest bearing	$	148,729		$	149,714
Interest-bearing		42,720			30,251
Savings deposits		112,037			121,076
Time deposits		251,598			256,978
Total Deposits		555,084			558,019
FHLB advances		9,358			2,958
Accrued interest payable		292			288
Accrued expenses and other liabilities		2,596			2,050
Trust preferred securities		16,496			16,496
Total Liabilities		583,826			579,811

STOCKHOLDERS’ EQUITY
Common stock - $2.00 par value; 50,000,000 shares authorized;
23,354,082 shares issued and outstanding at
June 30, 2016 and December 31, 2015		46,708			46,708
Common stock warrants		764			764
Additional paid-in capital		13,965			13,965
Retained deficit		(13,443	)		(15,023	)
Accumulated other comprehensive income (loss)		491			(327	)
Total Stockholders’ Equity		48,485			46,087
Total Liabilities and Stockholders’ Equity	$	632,311		$	625,898

NEW PEOPLES BANKSHARES, INC.

CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE MONTHS ENDED JUNE 30, 2016 AND 2015

(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)

(UNAUDITED)

INTEREST AND DIVIDEND INCOME	2016		2015
Loans including fees	$	5,613	$	5,925
Federal funds sold		—		1
Interest-earning deposits with banks		23		29
Investments		363		423
Dividends on equity securities (restricted)		32		34
Total Interest and Dividend Income		6,031		6,412
INTEREST EXPENSE
Deposits
Demand		13		9
Savings		37		44
Time deposits below $100,000		270		360
Time deposits above $100,000		158		251
FHLB Advances		28		38
Federal funds purchased		—		—
Trust Preferred Securities		123		109
Total Interest Expense		629		811
NET INTEREST INCOME		5,402		5,601
PROVISION FOR LOAN LOSSES		(500)		—
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES		5,902		5,601
NONINTEREST INCOME
Service charges		584		552
Fees, commissions and other income		858		823
Insurance and investment fees		143		132
Net realized gains on sale of investment securities		135		—
Life insurance investment income		33		34
Total Noninterest Income		1,753		1,541
NONINTEREST EXPENSES
Salaries and employee benefits		3,339		2,882
Occupancy and equipment expense		1,068		920
Advertising and public relations		129		72
Data processing and telecommunications		576		503
FDIC insurance premiums		136		221
Other real estate owned and repossessed vehicles, net		89		707
Other operating expenses		1,439		1,375
Total Noninterest Expenses		6,776		6,680

INCOME BEFORE INCOME TAXES		879		462
INCOME TAX EXPENSE (BENEFIT)		(3)		—
NET INCOME	$	882	$	462
Income Per Share
Basic	$	0.04	$	0.02
Fully Diluted	$	0.04	$	0.02
Weighted Average Shares of Common Stock
Basic		23,354,082		22,878,654
Fully Diluted		23,354,082		22,878,654

NEW PEOPLES BANKSHARES, INC.

CONSOLIDATED STATEMENTS OF INCOME

FOR THE SIX MONTHS ENDED JUNE 30, 2016 AND 2015

(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)

(UNAUDITED)

INTEREST AND DIVIDEND INCOME	2016			2015
Loans including fees	$	11,178		$	11,706
Federal funds sold		—			2
Interest-earning deposits with banks		44			55
Investments		827			849
Dividends on equity securities (restricted)		64			66
Total Interest and Dividend Income		12,113			12,678
INTEREST EXPENSE
Deposits
Demand		24			18
Savings		78			85
Time deposits below $100,000		535			747
Time deposits above $100,000		312			522
FHLB advances		64			78
Federal funds purchased		2			—
Trust preferred securities		245			217
Total Interest Expense		1,260			1,667
NET INTEREST INCOME		10,853			11,011
PROVISION FOR LOAN LOSSES		(500	)		—
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES		11,353			11,011
NONINTEREST INCOME
Service charges		1,072			1,088
Fees, commissions and other income		1,663			1,537
Insurance and investment fees		301			256
Net realized gains on sale of investment securities		240			35
Life insurance investment income		63			69
Total Noninterest Income		3,339			2,985
NONINTEREST EXPENSES
Salaries and employee benefits		6,549			5,824
Occupancy and equipment expense		1,921			1,862
Advertising and public relations		233			129
Data processing and telecommunications		1,157			1,002
FDIC insurance premiums		270			439
Other real estate owned and repossessed vehicles, net		252			1,066
Other operating expenses		2,731			2,587
Total Noninterest Expenses		13,113			12,909

INCOME BEFORE INCOME TAXES		1,579			1,087
INCOME TAX EXPENSE (BENEFIT)		(1	)		3
NET INCOME	$	1,580		$	1,084
Income Per Share
Basic	$	0.07		$	0.05
Fully Diluted	$	0.07		$	0.05
Average Weighted Shares of Common Stock
Basic		23,354,082			22,878,654
Fully Diluted		23,354,082			22,878,654

NEW PEOPLES BANKSHARES, INC.

KEY PERFORMANCE AND CAPITAL RATIOS

(UNAUDITED)

	For the three-months ended,
		June 30, 2016		March 31, 2016		December 31, 2015		September 30, 2015		June 30, 2015
Key Performance Ratios
Earning Asset Yield		4.39	%	4.41	%	4.70	%	4.50	%	4.42	%
Cost of interest bearing liabilities		0.59	%	0.58	%	0.60	%	0.65	%	0.71	%
Cost of Funds		0.43	%	0.44	%	0.45	%	0.49	%	0.53	%
Net Interest Margin		3.94	%	3.95	%	4.23	%	3.99	%	3.86	%
Return on average stockholder’s equity		7.49	%	5.99	%	(6.02	)%	20.52	%	4.19	%
Return on average assets		0.56	%	0.45	%	(0.45	)%	1.43	%	0.28	%
Efficiency Ratio*		94.70	%	90.05	%	122.39	%	84.95	%	93.53	%
Loan to Deposit Ratio		82.80	%	81.10	%	79.06	%	77.67	%	76.96	%
Asset Quality
Allowance for loan loss to total loans		1.45	%	1.60	%	1.70	%	1.98	%	1.97	%
Net Charge Offs to average loans,   annualized		0.06	%	0.25	%	0.16	%	(1.03	)%	0.20	%
Nonaccrual loans to total loans		2.72	%	3.00	%	3.37	%	4.08	%	3.83	%
Nonperforming assets to total assets		4.22	%	4.20	%	4.35	%	5.22	%	5.03	%
Capital Ratios (Bank Only)**
Tier 1 leverage		9.98	%	9.83	%	9.67	%	9.66	%	9.01	%
Tier 1 risk-based capital		15.70	%	16.02	%	16.29	%	16.44	%	15.52	%
Total risk-based capital		16.95	%	17.28	%	17.55	%	17.71	%	16.79	%
Total common equity tier 1 capital		15.70	%	16.02	%	16.29	%	16.44	%	15.52	%

*The efficiency ratio is computed as a percentage of non-interest expense divided by the sum of net interest income and non-interest income. This is a non-GAAP financial measure that management believes provides investors with important information regarding operational efficiency. Management believes such financial information is meaningful to the reader in understanding operating performance, but cautions that such information should not be viewed as a substitute for GAAP. Comparison of our efficiency ratio with those of other companies may not be possible because other companies may calculate them differently.

**The Bank’s capital ratios as of December 31, 2015 and 2014 are audited.