STRASBURG, Va., April 30, 2012 /PRNewswire/ -- First National Corporation (the "Company") (OTCBB: FXNC), the parent company of First Bank (the "Bank"), reported net income of $475 thousand and net income to common shareholders of $251 thousand, or $0.08 per basic and diluted share for the quarter ending March 31, 2012. For the same quarter of 2011, net income was $1.0 million and net income to common shareholders was $780 thousand, or $0.26 per basic and diluted share.
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Operating Highlights for the First Quarter
- Net interest margin increased to 4.14%
- Nonperforming assets decreased 12% from year-end to $15.9 million
- The Bank disposed of $2.3 million of foreclosed properties
- Allowance for loan losses was 3.49% of loans, or $13.6 million
- The Bank realized $1.1 million of gains on sale of securities
- The Company and Bank continued to be well-capitalized by regulatory requirements
Scott C. Harvard, President and CEO of the Company and the Bank commented, "I am pleased to report a profit for the first quarter of 2012 after three very difficult quarters at our banking company. We saw improvement in net interest margin, asset quality, and revenues, all of which are drivers of income and value. Our goal is to build sustainable profits by delivering the kind of personal service that is best provided by a local independent community bank committed to its core markets."
Net interest income increased 3% to $5.1 million for the first quarter of 2012, compared to the same period a year ago. The net interest margin increased to 4.14% from 3.89% compared to the quarter ended March 31, 2011. The interest margin benefitted from a lower cost of funds during the period and from the return to accrual status of one large loan relationship. The net interest margin of 4.14% was also an increase over the 4.07% for the prior quarter ended December 31, 2011.
Noninterest income, excluding gains on sale of securities, increased 4% to $1.4 million compared to the same period a year ago. The increase in noninterest income resulted from higher revenue from fees for other customer services, including loan fees. Revenues from trust and investment advisory services, where total assets at quarter end exceeded $230 million, increased slightly while other noninterest income categories, such as service charges on deposit accounts, ATM and check card income, remained stable when comparing the periods.
Noninterest expense increased to $4.6 million compared to $4.4 million for the same period in 2011, excluding the provision for other real estate owned and net gains on sale of other real estate owned. The Bank continued to bear additional expense related to non-performing assets. Some of the expenses in the category include legal, management, maintenance, acquisition, taxes and insurance. In addition, noninterest expenses include the cost of diverting resources to collecting and improving the assets in the non-performing portfolio. Management continues to focus on reducing non-performing assets with the goal of reducing the additional expense burden associated with problem loans.
The provision for loan losses was $2.0 million, which resulted in a total allowance for loan losses of $13.6 million or 3.49% of total loans at March 31, 2012. This compared to a provision for loan losses of $270 thousand and an allowance for loan losses of $13.2 million, or 3.09% of total loans, at the end of the same quarter in 2011. Net charge-offs for the period declined from $3.1 million in the first quarter of 2011 to $1.3 million in the first quarter of 2012. Non-performing assets decreased $2.3 million or 12% during the first quarter to 2.99% of total assets at March 31, 2012, compared to 3.38% at December 31, 2011. The Bank sold 37 foreclosed properties with carrying values of $2.3 million, which generated $90 thousand in net gains on disposition. In addition, the Bank charged down carrying values of foreclosed properties owned at March 31, 2012 by $401 thousand.
During the first quarter, the Company announced that Dennis Dysart was named Senior Executive Vice President and Chief Credit Officer. Dysart has over 19 years of banking experience in the market and helped build the retail and operations side of the Bank. Upon the departure of the prior chief executive officer in January 2011, Dysart took a leadership role in evaluating and managing the troubled loan portfolio. During that time he demonstrated a keen understanding of the credit function and a tireless commitment to troubled debt resolution. In his new role, Dysart has enhanced risk management practices, aggressively managed non-performing assets, and realized success marketing and selling repossessed real estate. Also during the first quarter, the Bank named Greg Sasser, a 27 year veteran lender in the market, to manage special assets for the bank.
Cautionary Statements
The Company notes to investors that past results of operations do not necessarily indicate future results. Certain factors that affect the Company's operations and business environment are subject to uncertainties that could in turn affect future results. These factors are identified in the Annual Report on Form 10-K for the year ended December 31, 2011, which can be accessed from the Company's website at www.therespowerinone.com, as filed with the Securities and Exchange Commission.
About the Company
First National Corporation, headquartered in Strasburg, Virginia, is the financial holding company of First Bank. First Bank offers loan, deposit, trust and investment products and services from 10 branch offices in the northern Shenandoah Valley region of Virginia, including Shenandoah County, Warren County, Frederick County and the City of Winchester. First Bank also owns First Bank Financial Services, Inc., which invests in entities that provide investment services and title insurance.
FIRST NATIONAL CORPORATION Quarterly Performance Summary
(in thousands, except share and per share data) |
|
|
| (unaudited) For the Three Months Ended |
Income Statement |
|
|
|
| March 31, 2012 |
| March 31, 2011 |
Interest and dividend income |
|
|
|
|
|
|
|
Interest and fees on loans |
|
|
|
| $ 5,547 |
| $ 5,833 |
Interest on federal funds sold |
|
|
|
| 3 |
| 7 |
Interest on deposits in banks |
|
|
|
| 3 |
| 7 |
Interest and dividends on securities available for sale: |
|
|
|
|
|
|
|
Taxable interest |
|
|
|
| 535 |
| 451 |
Tax-exempt interest |
|
|
|
| 102 |
| 123 |
Dividends |
|
|
|
| 18 |
| 17 |
Total interest and dividend income |
|
|
|
| $ 6,209 |
| $ 6,438 |
|
|
|
|
|
|
|
|
Interest expense |
|
|
|
|
|
|
|
Interest on deposits |
|
|
|
| $ 986 |
| $ 1,303 |
Interest on trust preferred capital notes |
|
|
|
| 62 |
| 109 |
Interest on other borrowings |
|
|
|
| 80 |
| 91 |
Total interest expense |
|
|
|
| $ 1,129 |
| $ 1,503 |
|
|
|
|
|
|
|
|
Net interest income |
|
|
|
| $ 5,080 |
| $ 4,935 |
Provision for loan losses |
|
|
|
| 2,000 |
| 270 |
Net interest income after provision for loan losses |
|
|
|
| $ 3,080 |
| $ 4,665 |
|
|
|
|
|
|
|
|
Noninterest income |
|
|
|
|
|
|
|
Service charges on deposit accounts |
|
|
|
| $ 502 |
| $ 501 |
ATM and check card fees |
|
|
|
| 372 |
| 371 |
Trust and investment advisory fees |
|
|
|
| 346 |
| 342 |
Fees for other customer services |
|
|
|
| 98 |
| 73 |
Gains on sale of loans |
|
|
|
| 43 |
| 47 |
Gains on sale of securities available for sale |
|
|
|
| 1,117 |
| - |
Other operating income |
|
|
|
| 35 |
| 6 |
Total noninterest income |
|
|
|
| $ 2,514 |
| $ 1,340 |
|
|
|
|
|
|
|
|
Noninterest expense |
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
|
| $ 2,369 |
| $ 2,288 |
Occupancy |
|
|
|
| 326 |
| 341 |
Equipment |
|
|
|
| 306 |
| 325 |
Marketing |
|
|
|
| 78 |
| 105 |
Stationery and supplies |
|
|
|
| 81 |
| 79 |
Legal and professional fees |
|
|
|
| 250 |
| 201 |
ATM and check card fees |
|
|
|
| 156 |
| 171 |
FDIC assessment |
|
|
|
| 178 |
| 190 |
Gains on sale of other real estate owned, net |
|
|
|
| (90) |
| - |
Provision for other real estate owned |
|
|
|
| 401 |
| 130 |
Other real estate owned expense |
|
|
|
| 253 |
| 126 |
Other operating expense |
|
|
|
| 596 |
| 599 |
Total noninterest expense |
|
|
|
| $ 4,904 |
| $ 4,555 |
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
|
| $ 690 |
| $ 1,450 |
Income tax provision |
|
|
|
| 215 |
| 447 |
Net income |
|
|
|
| $ 475 |
| $ 1,003 |
Effective dividend and accretion on preferred stock |
|
|
|
| 224 |
| 223 |
Net income available to common shareholders |
|
|
|
| $ 251 |
| $ 780 |
|
|
|
|
|
|
|
|
Common Share and Per Common Share Data |
|
|
|
|
|
|
|
Net income, basic and diluted |
|
|
|
| $ 0.08 |
| $ 0.26 |
Shares outstanding at period end |
|
|
|
| 2,955,649 |
| 2,952,303 |
Weighted average shares, basic and diluted |
|
|
|
| 2,955,649 |
| 2,949,166 |
Book value at period end |
|
|
|
| $ 7.39 |
| $ 11.86 |
Cash dividends |
|
|
|
| $ - |
| $ 0.10 |
|
|
|
|
|
|
|
|
|
|
|
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FIRST NATIONAL CORPORATION Quarterly Performance Summary (in thousands, except share and per share data) |
|
|
|
|
|
|
|
| (unaudited) For the Three Months Ended |
|
|
|
|
|
| March 31, 2012 |
| March 31, 2011 |
|
Key Performance Ratios |
|
|
|
|
|
|
|
|
Return on average assets |
|
|
|
| 0.36% |
| 0.74% |
|
Return on average equity |
|
|
|
| 5.17% |
| 8.31% |
|
Net interest margin |
|
|
|
| 4.14% |
| 3.89% |
|
Efficiency ratio (1) |
|
|
|
| 70.27% |
| 69.67% |
|
|
|
|
|
|
|
|
|
|
Asset Quality |
|
|
|
|
|
|
|
|
Loan charge-offs |
|
|
|
| $ 1,426 |
| $ 3,225 |
|
Loan recoveries |
|
|
|
| 125 |
| 88 |
|
Net charge-offs |
|
|
|
| 1,301 |
| 3,137 |
|
Non-accrual loans |
|
|
|
| 10,370 |
| 11,016 |
|
Other real estate owned, net |
|
|
|
| 5,562 |
| 5,428 |
|
Nonperforming assets |
|
|
|
| 15,932 |
| 16,444 |
|
|
|
|
|
|
|
|
|
|
Average Balances |
|
|
|
|
|
|
|
|
Average assets |
|
|
|
| $ 529,469 |
| $ 552,939 |
|
Average earning assets |
|
|
|
| 499,681 |
| 522,432 |
|
Average shareholders' equity |
|
|
|
| 36,981 |
| 48,931 |
|
|
|
|
|
|
|
|
|
|
|
| (unaudited) |
|
|
|
|
| March 31, 2012 |
| March 31, 2011 |
Capital Ratios |
|
|
|
|
|
|
|
Tier 1 capital |
|
|
|
| $ 45,522 |
| $ 58,027 |
Total capital |
|
|
|
| 50,595 |
| 63,641 |
Total capital to risk-weighted assets |
|
|
|
| 12.74% |
| 14.41% |
Tier 1 capital to risk-weighted assets |
|
|
|
| 11.46% |
| 13.14% |
Leverage ratio |
|
|
|
| 8.60% |
| 10.50% |
|
|
|
|
|
|
|
|
Balance Sheet |
|
|
|
|
|
|
|
Cash and due from banks |
|
|
|
| $ 9,477 |
| $ 7,329 |
Interest-bearing deposits in banks |
|
|
|
| 19,553 |
| 14,912 |
Federal funds sold |
|
|
|
| - |
| 15,000 |
Securities available for sale, at fair value |
|
|
|
| 84,627 |
| 66,660 |
Restricted securities, at cost |
|
|
|
| 2,775 |
| 3,153 |
Loans held for sale |
|
|
|
| 329 |
| 150 |
Loans, net of allowance for loan losses |
|
|
|
| 376,758 |
| 413,148 |
Premises and equipment, net |
|
|
|
| 19,446 |
| 20,020 |
Interest receivable |
|
|
|
| 1,523 |
| 1,632 |
Other assets |
|
|
|
| 13,755 |
| 18,231 |
Total assets |
|
|
|
| $ 528,243 |
| $ 560,235 |
|
|
|
|
|
|
|
|
Noninterest-bearing demand deposits |
|
|
|
| $ 85,043 |
| $ 82,226 |
Savings and interest-bearing demand deposits |
|
|
|
| 204,682 |
| 185,076 |
Time deposits |
|
|
|
| 174,870 |
| 210,421 |
Total deposits |
|
|
|
| $ 464,595 |
| $ 477,723 |
Other borrowings |
|
|
|
| 14,094 |
| 20,117 |
Trust preferred capital notes |
|
|
|
| 9,279 |
| 9,279 |
Other liabilities |
|
|
|
| 4,131 |
| 3,937 |
Total liabilities |
|
|
|
| $ 492,099 |
| $ 511,056 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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FIRST NATIONAL CORPORATION
Quarterly Performance Summary
(in thousands, except share and per share data) |
|
|
|
| (unaudited) |
|
| March 31, 2012 |
| March 31, 2011 |
|
Balance Sheet (continued) |
|
|
|
|
Preferred stock | $ 14,299 |
| $ 14,160 |
|
Common stock | 3,695 |
| 3,690 |
|
Surplus | 1,644 |
| 1,613 |
|
Retained earnings | 16,753 |
| 29,455 |
|
Accumulated other comprehensive income (loss), net | (247) |
| 261 |
|
Total shareholders' equity | $ 36,144 |
| $ 49,179 |
|
|
|
|
|
|
Total liabilities and shareholders' equity | $ 528,243 |
| $ 560,235 |
|
|
|
|
|
|
Loan Data |
|
|
|
|
Mortgage loans on real estate: |
|
|
|
|
Construction and land development | $ 49,893 |
| $ 50,655 |
|
Secured by farm land | 6,148 |
| 6,018 |
|
Secured by 1-4 family residential | 125,628 |
| 120,863 |
|
Other real estate loans | 169,590 |
| 196,190 |
|
Loans to farmers (except those secured by real estate) | 2,378 |
| 2,341 |
|
Commercial and industrial loans (except those secured by real estate) | 27,071 |
| 37,318 |
|
Consumer installment loans | 8,565 |
| 11,881 |
|
Deposit overdrafts | 100 |
| 128 |
|
All other loans | 1,021 |
| 922 |
|
Total loans | $ 390,394 |
| $ 426,316 |
|
Allowance for loan losses | 13,636 |
| 13,168 |
|
Loans, net | $ 376,758 |
| $ 413,148 |
|
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|
(1) The efficiency ratio is computed by dividing noninterest expense excluding the provision for other real estate owned and gains and losses on other real estate owned by the sum of net interest income on a tax equivalent basis and noninterest income excluding gains and losses on sales of securities and premises and equipment. Tax equivalent net interest income is calculated by adding the tax benefit realized from interest income that is nontaxable to total interest income then subtracting total interest expense. The tax rate utilized in calculating the tax benefit for 2012 and 2011 was 34%. Net interest income on a tax equivalent basis was $5,139 and $5,011 for the three months ended March 31, 2012 and 2011, respectively. Noninterest income excluding gains and losses on sales of securities and premises and equipment was $1,397 and $1,340 for the three months ended March 31, 2012 and 2011, respectively. The efficiency ratio is a non-GAAP financial measure that management believes provides investors with important information regarding operational efficiency. 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 operational performance, but cautions that such information not be viewed as a substitute for GAAP. |
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SOURCE First National Corporation