Exhibit 99.1
CENTRAL VIRGINIA BANKSHARES: REPORTS LOWER 1st QUARTER EARNINGS
POWHATAN, VA., April 30, 2007 / PR Newswire / - Central Virginia Bankshares, Inc. (NASDAQ: CVBK) reported first quarter 2007 earnings of $849,509 a decline of $446,882 or 34.5 percent when compared to $1,296,391 in the first quarter of 2006. On a per share basis, basic earnings were $0.35 per share a decline of 35.2 percent versus $0.54 per share in the first quarter of the prior year. On a fully diluted basis, net income per share was $0.35 a decline of 34.0 percent compared to $0.53 in the comparable period of the prior year. For the first quarter, the return on average assets was 0.76 percent versus the prior year’s 1.30 percent. The return on average shareholders equity was 9.05 percent compared to 15.42 percent in last year’s first quarter. At quarter end, total shareholders equity stood at a record $38.2 million, versus $33.3 million in the first quarter of 2006. Accordingly, the book value of a share of common stock rose to $15.72 compared to $13.86 in 2006.
The fully tax equivalent net interest income in the first quarter was $3.73 million, a decline of 5.0 percent compared to $3.92 million in the first quarter of 2006. The tax equivalent net interest margin was 3.59 percent for the quarter versus 4.22 percent in first quarter 2006. This margin compression is a result of continued strong deposit growth with very little loan growth coupled with a flat yield curve. Non-interest income declined as well, ending the quarter at $801,741 a decrease of 17.5 percent from the prior year’s first quarter total of $972,215. This change is attributable to the lower volume and revenue generated by the secondary market mortgage loan sales; lower deposit fees and charges due to the introduction of no service charge checking in the fourth quarter 2006 and lower overdraft volumes; the absence of significant net securities gains as a result of normal investment portfolio management and a general decline in other miscellaneous income. Non-performing assets at the end of the first quarter 2007 totaled $1,648,282, an increase of $647,842 from the December 31, 2006 balance of $1,000,440, and an increase of $684,376 from the balance at the end of the first quarter 2006 of $963,906.There was no loan loss provision expense in the first quarter of 2007 despite the increase in non-performing loans, as management believes the reserve is sufficient to absorb any potential future losses. This decision was based upon the low growth in balances of loans outstanding, the reserve representing 1.35 percent of loans, and no significant net charge-offs for the quarter. The reserve for loan losses now represents 174 percent of quarter-end non-performing assets.
Average earning assets in the first quarter were $415.2 million, an increase of $43.3 million or 11.7 percent compared to $371.8 million in the corresponding quarter last year. Average loan balances grew by $9.0 million to $209.7 million, an increase of 4.5 percent from the prior year’s first quarter average balances of $200.7 million. The bank's investment securities portfolio averaged $180.8 million, an increase of $10.5 million from $170.3 million in first quarter 2006, while overnight funds sold averaged $24.0 million, a significant increase from the $79,567 average in the first quarter of 2006. Deposits continue their growth, averaging $364.8 million for the quarter an increase of $43.0 million or 13.4 percent increase versus last year’s first quarter average of $321.8 million, with the majority of the growth concentrated in higher rate certificates of deposit. Total borrowings, which consist of overnight advances and term borrowings from the Federal home loan bank, overnight fed funds purchased, retail repurchase agreements, and long-term capital trust preferred, averaged $40.2 million, a decline of $2.7 million from the prior year’s first quarter average of $43.0 million. Total assets averaged $444.9 million, having grown by $44.5 million or 11.1 percent from $ 400.4 million in the prior year.
Non-interest expense for the first quarter 2007 increased by 9.1 percent to $3.3 million as compared to $3.0 million last year. Salaries and benefits totaled $1,875,700 for the first quarter and increased by $113,870, representing the largest single component of the overall increase in non-interest expenses and resulted largely from additions to staff for business development and lending, as well as cost increases resulting from filling previously open positions. Equipment repairs and maintenance was up 44 percent to $110,231; while advertising and public relations expense was up 131.8 percent to $172,817 largely due to our new ongoing marketing program; and other operating expenses were up 12.8 percent to $465,466 a function of the bank’s overall growth. The company will focus its efforts on controlling future expense growth, with a goal of improving its efficiency ratio, which has risen to 73.3 percent for the quarter compared to 62.1 percent in the first quarter of the prior year.
Ralph Larry Lyons, President and CEO of Central Virginia Bankshares, Inc., commented: “First quarter earnings and profitability were indeed a disappointment. However, we continue to exceed our expectations for deposit growth, and with our increased emphasis on marketing and business development, we anticipate increasing loan growth in the future quarters, which should greatly help to improve our profitability. Our bank is financially sound, and profitable, just not as profitable as we should be.” He added “...we fully anticipated that in addition to the net interest margin compression, expenses in 2007 would be up as well, due to increases in staff, our marketing campaign, and the impact of Sarbanes-Oxley compliance. Despite the first quarter’s decline in profitability, we still believe we are well positioned to continue our record of outstanding performance, in addition, we continue with our plans to expand our franchise through the addition of new branch locations in the future.”
Readers are cautioned that this press release may contain forward-looking statements made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on management’s current knowledge and assumptions about future events, and may address issues that involve significant risks, uncertainties, and estimates, that may cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements.
Central Virginia Bankshares, Inc. is the parent of Central Virginia Bank, a 34 year old $460 million community bank with its headquarters and main office in Powhatan County, and six additional branch offices; two branches in the adjacent County of Cumberland, three branches in western Chesterfield County, and one branch in western Henrico County.
Selected Financial Data Follows for Central Virginia Bankshares, Inc.:
SOURCE: | Central Virginia Bankshares, Inc. |
CONTACT: Charles F. Catlett, III - Senior Vice President and Chief Financial Officer, (804) 403-2002
Central Virginia Bankshares, Inc. | First Quarter |
| (Unaudited) |
| March 31, 2007 | March 31, 2006 |
Net Income | 849,509 | 1,296,391 |
Interest & Fees on Loans | 4,397,089 | 3,960,385 |
Interest on Investments | 2,543,041 | 2,347,499 |
Interest on Funds Sold | 309,816 | 240 |
Interest on Deposits | 3,207,670 | 2,085,492 |
Interest on Borrowings | 487,464 | 487,406 |
Net Interest Income (FTE) | 3,729,732 | 3,924,137 |
Non Interest Income | 801,741 | 972,215 |
Loan Loss Provision | 0 | 0 |
Interest Expense | 3,695,134 | 2,572,898 |
Non Interest Expense | 3,319,573 | 3,042,136 |
Period End Balances: |
Investment Securities | 183,438,079 | 161,218,850 |
Fed Funds Sold | 25,310,000 | 5,246,000 |
Loans (net of Unearned Discount) | 212,670,919 | 206,162,995 |
Loan Loss Reserve | 2,874,295 | 2,907,975 |
Non Interest Bearing Deposits | 47,105,907 | 49,112,082 |
Total Deposits | 378,090,506 | 336,240,598 |
Borrowings | 40,212,000 | 35,826,500 |
Assets | 459,121,421 | 407,788,702 |
Period End Shareholders Equity | 38,169,551 | 33,298,894 |
Average Balances: |
Average Assets | 444,948,120 | 400,422,261 |
Average Earning Assets | 415,152,563 | 371,814,841 |
Investment Securities | 180,780,593 | 170,293,793 |
Federal Funds Sold | 23,978,611 | 79,567 |
Mortgage Loans Held for Sale | 663,544 | 709,471 |
Loans (net of Unearned Discount) | 209,729,814 | 200,732,011 |
Non Interest Bearing Deposits | 42,704,002 | 44,655,198 |
Total Deposits | 364,844,452 | 321,802,404 |
FHLB Overnight Advances | 0 | 4,533,333 |
FHLB Term Borrowings | 35,000,000 | 25,966,667 |
Fed Funds Purchased & REPO | 62,161 | 7,300,811 |
Average Shareholders Equity | 37,564,856 | 33,627,483 |
Average Shares Outstanding – Basic | 2,423,246 | 2,400,460 |
Average Shares Outstanding - Fully Diluted | 2,455,648 | 2,440,743 |
Asset Quality: |
Charged Off Loans | 31,660 | 26,302 |
Recoveries | 16,459 | 16,607 |
Period End: Non -Accrual Loans | 1,512,037 | 693,228 |
Loans Past Due 90 Days or More | 136,244 | 159,847 |
Other Non Performing Assets | 0 | 110,830 |
Other Real Estate | 0 | 0 |
Total Non Performing Assets | 1,648,282 | 963,906 |
Per Share Data & Ratios: |
Net Income Per Share - Basic | $0.35 | $0.54 |
Net Income Per Share - Diluted | $0.35 | $0.53 |
Period End Book Value Per Share | $15.72 | $13.86 |
Return on Average Assets | 0.76% | 1.30% |
Return on Average Equity | 9.05% | 15.42% |
Efficiency Ratio | 73.26% | 62.13% |
Average Loans to Average Deposits | 57.48% | 62.38% |
Reserve for Loan Losses / Loans EOP | 1.35% | 1.41% |
Net Interest Margin (FTE) | 3.59% | 4.22% |
SOURCE: | Central Virginia Bankshares, Inc. |
CONTACT: Charles F. Catlett, III - Senior Vice President and Chief Financial Officer, (804) 403-2002
