First National Corporation Announces Earnings Increase
STRASBURG, Va., Aug. 1, 2012 /PRNewswire/ -- First National Corporation (the "Company") (OTCBB: FXNC), the parent company of First Bank (the "Bank"), announced today that it earned a profit for the second quarter of 2012 compared to a loss in the second quarter of 2011. In addition, the Company announced its second consecutive quarterly profit compared to the most recent quarter. Net income totaled $694 thousand and net income available to common shareholders totaled $467 thousand or $0.16 per basic and diluted share for the quarter ending June 30, 2012. This was a significant improvement over the net loss of $945 thousand and net loss available to common shareholders of $1.2 million, or $0.40 per basic and diluted share for the same quarter one year ago. Return on average assets was 0.53% and return on average equity was 7.21% for the second quarter of 2012 compared to -0.69% and -7.68%, respectively, for the second quarter of 2011.
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Operating Highlights for the Second Quarter
- Second consecutive profitable quarter in 2012
- Nonperforming assets decreased 17% from the same quarter one year ago
- Provision for loan losses decreased to $650 thousand compared to $2.0 million from the most recent quarter and $3.6 million from the same quarter one year ago
- Loan charge-offs decreased to $358 thousand compared to $1.4 million from the most recent quarter and $3.0 million from the same quarter in 2011
- The Company raised $7.8 million in gross proceeds from a rights offering of common stock and from standby investors, which improved its capital position
- The Company and Bank continued to be considered well-capitalized
Scott C. Harvard, President and CEO of the Company and the Bank commented, "We are pleased with performance for the second quarter. In addition to a successful capital raise of $7.8 million, the Bank saw a reduction in non-performing assets, lower loan loss provisions and lower loan charge-offs in the period. The earnings improvement over the same quarter of 2011 is dramatic, and achieving two consecutive quarters of positive earnings reinforces our belief that the hard work is paying off. We are fortunate to have a strong core banking team that is focused on improving asset quality, customer service and building our communities."
Quarterly Performance
Net interest income totaled $4.8 million for the second quarter of 2012 compared to $5.1 million for the same period one year ago. The net interest margin was 3.88% for the second quarter of 2012 compared to 4.00% for the same period one year ago, as a result of a change in the earning asset mix. During the quarter, the Bank's commercial real estate loan balances decreased and its residential real estate loan balances increased.
The provision for loan losses was $650 thousand, which resulted in a total allowance for loan losses of $14.0 million or 3.64% of total loans at June 30, 2012. This compared to a provision for loan losses of $3.6 million and an allowance for loan losses of $13.8 million, or 3.32% of total loans, at the end of the same quarter in 2011. Net charge-offs for the period declined to $287 thousand from $2.9 million in the second quarter of 2011. Non-performing assets decreased 17% to $16.1 million at June 30, 2012 compared to June 30, 2011.
Noninterest income increased slightly to $1.5 million compared to the same period one year ago. Increases in revenues from fees for other customer services and gains on sales of loans were partially offset by decreases in ATM and check card income, trust and investment advisory fees and service charges on deposit accounts when comparing the periods.
Noninterest expense decreased slightly to $4.4 million when compared to the same period in 2011, excluding the provision for other real estate owned and net gains on sale of other real estate owned. Net gains on sale of other real estate owned totaled $160 thousand for the second quarter, compared to net losses of $8 thousand for the same period in 2011. The provision for other real estate owned totaled $168 thousand for the second quarter compared to $46 thousand for the same period in 2011.
Year-to-Date Performance
For the six months ended June 30, 2012, net income totaled $1.2 million compared to $58 thousand for the same period in 2011. After the effective dividend on preferred stock, net income available to common shareholders was $718 thousand, or $0.24 per basic and diluted share, compared to net loss available to common shareholders of $388 thousand, or $0.13 per basic and diluted share, for the same period in 2011.
Net interest income was $9.9 million for the six months ended June 30, 2012 compared to $10.0 million for same period in 2011. The net interest margin was 7 basis points higher and average interest-earning assets were $19.5 million lower when comparing the two periods. The net interest margin was 4.01% for the six months ended June 30, 2012, compared to 3.94% for the same period in 2011. The provision for loan losses totaled $2.7 million for the six months ended June 30, 2012 compared to $3.8 million for the same period in 2011.
Noninterest income, excluding gains on sale of securities, totaled $2.9 million for the six months ended June 30, 2012, which was a 3% increase compared to $2.8 million for the same period in 2011. Revenues from fees for other customer services and gains on sales of loans increased while ATM and check card income, trust and investment advisory fees and service charges on deposit accounts decreased slightly when comparing the periods.
Noninterest expense was 1% higher for the six months ended June 30, 2012, compared to the same period in 2011, when excluding net gains and losses on sale of other real estate owned and the provision for other real estate owned. Net gains on sale of other real estate owned totaled $250 thousand for the six months ended June 30, 2012, compared to net losses of $8 thousand for the same period in 2011. The provision for other real estate owned totaled $569 thousand for the six months ended June 30, 2012 compared to $176 thousand for the same period in 2011.
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.fbvirginia.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.
| Contact: |
|
| Scott C. Harvard |
M. Shane Bell |
| President and CEO |
Executive Vice President and CFO |
| (540) 465-9121 |
(540) 465-9121 |
FIRST NATIONAL CORPORATION Quarterly Performance Summary (in thousands, except share and per share data)
|
||||||||||||||
| (unaudited) For the Three Months Ended |
(unaudited) For the Six Months Ended |
|||||||||||||
| Income Statement |
June 30, 2012 |
June 30, 2011 |
June 30, 2012 |
June 30, 2011 |
||||||||||
| Interest and dividend income |
||||||||||||||
| Interest and fees on loans |
$ 5,265 |
$ 5,818 |
$ 10,812 |
$ 11,651 |
||||||||||
| Interest on federal funds sold |
6 |
4 |
9 |
11 |
||||||||||
| Interest on deposits in banks |
5 |
5 |
8 |
12 |
||||||||||
| Interest and dividends on securities available for sale: |
||||||||||||||
| Taxable interest |
514 |
572 |
1,048 |
1,023 |
||||||||||
| Tax-exempt interest |
71 |
121 |
173 |
244 |
||||||||||
| Dividends |
19 |
17 |
38 |
34 |
||||||||||
| Total interest and dividend income |
$ 5,880 |
$ 6,537 |
$ 12,088 |
$ 12,975 |
||||||||||
| Interest expense |
||||||||||||||
| Interest on deposits |
$ 959 |
$ 1,303 |
$ 1,945 |
$ 2,606 |
||||||||||
| Interest on trust preferred capital notes |
60 |
109 |
122 |
218 |
||||||||||
| Interest on other borrowings |
66 |
42 |
146 |
133 |
||||||||||
| Total interest expense |
$ 1,085 |
$ 1,454 |
$ 2,213 |
$ 2,957 |
||||||||||
| Net interest income |
$ 4,795 |
$ 5,083 |
$ 9,875 |
$ 10,018 |
||||||||||
| Provision for loan losses |
650 |
3,550 |
2,650 |
3,820 |
||||||||||
| Net interest income after provision for loan losses |
$ 4,145 |
$ 1,533 |
$ 7,225 |
$ 6,198 |
||||||||||
| Noninterest income |
||||||||||||||
| Service charges on deposit accounts |
$ 523 |
$ 535 |
$ 1,025 |
$ 1,036 |
||||||||||
| ATM and check card fees |
387 |
410 |
760 |
781 |
||||||||||
| Trust and investment advisory fees |
368 |
384 |
714 |
726 |
||||||||||
| Fees for other customer services |
107 |
74 |
205 |
147 |
||||||||||
| Gains on sale of loans |
49 |
22 |
92 |
69 |
||||||||||
| Gains on sale of securities available for sale |
1 |
41 |
1,118 |
41 |
||||||||||
| Other operating income |
27 |
19 |
62 |
25 |
||||||||||
| Total noninterest income |
$ 1,462 |
$ 1,485 |
$ 3,976 |
$ 2,825 |
||||||||||
| Noninterest expense |
||||||||||||||
| Salaries and employee benefits |
$ 2,388 |
$ 2,280 |
$ 4,757 |
$ 4,568 |
||||||||||
| Occupancy |
337 |
331 |
663 |
672 |
||||||||||
| Equipment |
307 |
323 |
613 |
648 |
||||||||||
| Marketing |
95 |
100 |
173 |
205 |
||||||||||
| Stationery and supplies |
86 |
87 |
167 |
166 |
||||||||||
| Legal and professional fees |
198 |
269 |
448 |
470 |
||||||||||
| ATM and check card fees |
163 |
159 |
319 |
330 |
||||||||||
| FDIC assessment |
179 |
217 |
357 |
407 |
||||||||||
| (Gains) losses on sale of other real estate owned, net |
(160) |
8 |
(250) |
8 |
||||||||||
| Provision for other real estate owned |
168 |
46 |
569 |
176 |
||||||||||
| Other real estate owned expense |
98 |
66 |
351 |
192 |
||||||||||
| Other operating expense |
575 |
630 |
1,171 |
1,229 |
||||||||||
| Total noninterest expense |
$ 4,434 |
$ 4,516 |
$ 9,338 |
$ 9,071 |
||||||||||
| Income (loss) before income taxes |
$ 1,173 |
$ (1,498) |
$ 1,863 |
$ (48) |
||||||||||
| Income tax provision (benefit) |
479 |
(553) |
694 |
(106) |
||||||||||
| Net income (loss) |
$ 694 |
$ (945) |
$ 1,169 |
$ 58 |
||||||||||
| Effective dividend and accretion on preferred stock |
227 |
223 |
451 |
446 |
||||||||||
| Net income (loss) available to common shareholders |
$ 467 |
$ (1,168) |
$ 718 |
$ (388) |
||||||||||
| Common Share and Per Common Share Data |
||||||||||||||
| Net income (loss), basic and diluted |
$ 0.16 |
$ (0.40) |
$ 0.24 |
$ (0.13) |
||||||||||
| Shares outstanding at period end |
4,901,464 |
2,955,649 |
4,901,464 |
2,955,649 |
||||||||||
| Weighted average shares, basic and diluted |
2,998,414 |
2,952,818 |
2,977,032 |
2,951,002 |
||||||||||
| Book value at period end |
$ 6.19 |
$ 11.64 |
$ 6.19 |
$ 11.64 |
||||||||||
| Cash dividends |
$ - |
$ 0.10 |
$ - |
$ 0.20 |
||||||||||
FIRST NATIONAL CORPORATION Quarterly Performance Summary (in thousands, except share and per share data) |
||||||||||||||
| (unaudited) For the Three Months Ended |
(unaudited) For the Six Months Ended |
||||||||||||||
| June 30, 2012 |
June 30, 2011 |
June 30, 2012 |
June 30, 2011 |
||||||||||||
| Key Performance Ratios |
|||||||||||||||
| Return on average assets |
0.53% |
(0.69%) |
0.44% |
0.02% |
|||||||||||
| Return on average equity |
7.21% |
(7.68%) |
6.17% |
0.24% |
|||||||||||
| Net interest margin |
3.88% |
4.00% |
4.01% |
3.94% |
|||||||||||
| Efficiency ratio (1) |
70.16% |
67.58% |
70.22% |
68.60% |
|||||||||||
| Asset Quality |
|||||||||||||||
| Loan charge-offs |
$ 358 |
$ 3,008 |
$ 1,784 |
$ 6,233 |
|||||||||||
| Loan recoveries |
71 |
69 |
196 |
156 |
|||||||||||
| Net charge-offs |
287 |
2,939 |
1,588 |
6,077 |
|||||||||||
| Non-accrual loans |
10,639 |
13,642 |
10,639 |
13,642 |
|||||||||||
| Other real estate owned, net |
5,420 |
5,696 |
5,420 |
5,696 |
|||||||||||
| Nonperforming assets |
16,059 |
19,338 |
16,059 |
19,338 |
|||||||||||
| Average Balances |
|||||||||||||||
| Average assets |
$ 529,222 |
$ 549,326 |
$ 528,998 |
$ 551,130 |
|||||||||||
| Average earning assets |
501,558 |
517,609 |
500,617 |
520,100 |
|||||||||||
| Average shareholders' equity |
38,700 |
49,366 |
38,083 |
49,144 |
|||||||||||
| (unaudited) |
|||||||
| June 30, 2012 |
June 30, 2011 |
||||||
| Capital Ratios |
|||||||
| Tier 1 capital |
$ 53,633 |
$ 55,844 |
|||||
| Total capital |
58,623 |
61,301 |
|||||
| Total capital to risk-weighted assets |
15.02% |
14.33% |
|||||
| Tier 1 capital to risk-weighted assets |
13.75% |
13.06% |
|||||
| Leverage ratio |
10.14% |
10.18% |
|||||
| Balance Sheet |
|||||||
| Cash and due from banks |
$ 7,684 |
$ 8,431 |
|||||
| Interest-bearing deposits in banks |
29,901 |
21,098 |
|||||
| Securities available for sale, at fair value |
87,267 |
82,780 |
|||||
| Restricted securities, at cost |
2,408 |
2,859 |
|||||
| Loans, net of allowance for loan losses |
370,136 |
401,724 |
|||||
| Premises and equipment, net |
19,312 |
19,804 |
|||||
| Interest receivable |
1,536 |
1,706 |
|||||
| Other assets |
12,986 |
16,847 |
|||||
| Total assets |
$ 531,230 |
$ 555,249 |
|||||
| Noninterest-bearing demand deposits |
$ 82,868 |
$ 82,727 |
|||||
| Savings and interest-bearing demand deposits |
208,004 |
189,270 |
|||||
| Time deposits |
167,822 |
204,497 |
|||||
| Total deposits |
$ 458,694 |
$ 476,494 |
|||||
| Other borrowings |
14,088 |
18,111 |
|||||
| Trust preferred capital notes |
9,279 |
9,279 |
|||||
| Other liabilities |
4,473 |
2,768 |
|||||
| Total liabilities |
$ 486,534 |
$ 506,652 |
|||||
FIRST NATIONAL CORPORATION Quarterly Performance Summary (in thousands, except share and per share data)
|
| (unaudited) |
||||||||
| June 30, 2012 |
June 30, 2011 |
|||||||
| Balance Sheet (continued) |
||||||||
| Preferred stock |
$ 14,335 |
$ 14,194 |
||||||
| Common stock |
6,127 |
3,695 |
||||||
| Surplus |
6,813 |
1,644 |
||||||
| Retained earnings |
17,221 |
27,991 |
||||||
| Accumulated other comprehensive income, net |
200 |
1,073 |
||||||
| Total shareholders' equity |
$ 44,696 |
$ 48,597 |
||||||
| Total liabilities and shareholders' equity |
$ 531,230 |
$ 555,249 |
||||||
| Loan Data |
||||||||
| Mortgage loans on real estate: |
||||||||
| Construction and land development |
$ 47,843 |
$ 50,741 |
||||||
| Secured by farm land |
6,105 |
6,016 |
||||||
| Secured by 1-4 family residential |
128,229 |
120,575 |
||||||
| Other real estate loans |
168,107 |
189,750 |
||||||
| Loans to farmers (except those secured by real estate) |
2,117 |
2,362 |
||||||
| Commercial and industrial loans (except those secured by real estate) |
22,820 |
33,151 |
||||||
| Consumer installment loans |
7,823 |
11,307 |
||||||
| Deposit overdrafts |
87 |
279 |
||||||
| All other loans |
1,004 |
1,321 |
||||||
| Total loans |
$ 384,135 |
$ 415,502 |
||||||
| Allowance for loan losses |
13,999 |
13,778 |
||||||
| Loans, net |
$ 370,136 |
$ 401,724 |
||||||
| (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 $4,839 and $5,160 for the three months ended June 30, 2012 and 2011, respectively, and $9,979 and $10,170 for the six months ended June 30, 2012 and 2011. Noninterest income excluding gains and losses on sales of securities and premises and equipment was $1,461 and $1,444 for the three months ended June 30, 2012 and 2011, respectively, and $2,858 and $2,784 for the six months ended June 30, 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
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