Virginia Heritage Bank Exceeds $300 Million in Total Assets While Positive Earnings Trend Continues

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posted: 30 DAYS 9 HOURS AGO

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Virginia Heritage Bank (OTCBB:VGBK), reported net income of $323 thousand for the third quarter of 2009, compared to a $(422) thousand net loss for the same period in 2008. On a per share basis, the third quarter income was $0.09 per share (basic and diluted), compared to a loss of $(0.11) per share (basic and diluted) for the third quarter of 2008.

The net income for the nine months ended September 30, 2009 was $805 thousand, compared to a net loss of $(1.5) million for the nine months ended September 30, 2008. The income per share was $0.21 per share (basic and diluted) for the nine months ended September 30, 2009, compared to a loss of $(0.40) per share (basic and diluted) for the nine months ended September 30, 2008.

The Bank had significant balance sheet growth with total assets of $318.8 million at September 30, 2009, representing an increase of $103.2 million compared to total assets at September 30, 2008. Total gross loans were $282.6 million, excluding loans held for sale, at September 30, 2009, representing an increase of $103.0 million over total gross loans at September 30, 2008. Total deposits were $243.2 million at September 30, 2009 compared to $153.8 million at September 30, 2008.

Nonperforming assets, including other real estate owned, as a percentage of total assets, increased to 0.68% at September 30, 2009, compared to 0.09% at September 30, 2008. Annualized net charge-offs were 0.30% of average loans for 2009, up from 0.02% in 2008.

The allowance for loan losses was $3.3 million as of September 30, 2009, or 1.17% of gross loans outstanding, excluding loans held for sale. Asset quality remains strong with one loan past due 90 days or more but still accruing interest, total non-accrual loans of $1.4 million and other real estate owned of $813 thousand. The Bank’s capital ratios, as set forth in the attached Financial Highlights schedule, are in excess of regulatory requirements.

David P. Summers, Chairman and Chief Executive Officer of the Company said:

“In spite of the severe recession we have experienced over the past 18 months, Virginia Heritage Bank has had three consecutive quarters of improving earnings. The current year net interest margin has expanded by 12 basis points over 2008 while our operating efficiency has improved to 78%. Asset quality continues to exceed that of our national and local peer groups and we do not anticipate significant additional credit deterioration in our loan portfolio over the next several quarters. Balance sheet growth has met expectations in what has been the most difficult economic period in recent memory.

Our mortgage division production continues to build as home sales increase from the historically low levels experienced the past two years. Our emphasis on first time home buyers has contributed to our higher volume of closed loans with mortgage division earnings becoming a more significant component of bank performance.

The Board of Directors and management are continuing to execute on our revised operating strategy adopted in mid 2007. We see continuing opportunities for the community banking sector as the larger regional banks appear to be distracted with the challenges they are experiencing with deteriorating credit quality in their loan portfolios. We intend to continue the expansion of the VHB franchise in an effort to take advantage of this unique set of circumstances. In view of this, we are excited to announce that our Tysons Corner branch will be opening in the coming weeks.”

Virginia Heritage Bank is headquartered in Fairfax City, Virginia. The Bank has three full service offices in Fairfax City, Chantilly and Gainesville, Virginia and a new branch in Tysons Corner coming soon. The Bank also has a mortgage division located in Chantilly, Virginia.

This release contains forward-looking statements, including our expectations with respect to future events that are subject to various risks and uncertainties. Factors that could cause actual results to differ materially from management’s projections, forecasts, estimates and expectations include: fluctuation in market rates of interest and loan and deposit pricing, adverse changes in the overall national economy as well as adverse economic conditions in our specific market areas, maintenance and development of well-established and valued client relationships and referral source relationships, and acquisition or loss of key production personnel. Other risks that can affect the Bank are detailed from time to time in our quarterly and annual reports filed with the Board of Governors of the Federal Reserve System. We caution readers that the list of factors above is not exclusive. The forward-looking statements are made as of the date of this release, and we may not undertake steps to update the forward-looking statements to reflect the impact of any circumstances or events that arise after the date the forward-looking statements are made. In addition, our past results of operations are not necessarily indicative of future performance.


VIRGINIA HERITAGE BANK
FINANCIAL HIGHLIGHTS ( Unaudited)
($ in thousands except per share data)

	At or For the Quarter Ended						At or For the Nine Months Ended
	September 30,						September 30,
	2009		2008		% Change		2009		2008		% Change
Statement of Operations Data:
Interest income	$4,075		$2,909		40.08	%	$11,180		$7,298		53.19	%
Interest expense	1,330		1,224		8.66	%	3,810		3,032		25.66	%
Net interest income	2,745		1,685		62.91	%	7,370		4,266		72.76	%
Provision for loan losses	762		598		27.42	%	1,595		1,348		18.32	%
Total noninterest income	1,088		746		45.84	%	3,496		1,657		110.98	%
Total noninterest expense	2,748		2,255		21.86	%	8,466		6,098		38.83	%
Net income (loss)	323		(422	)	N/M		805		(1,523	)	N/M

Per Share Data and Shares Outstanding:
Net income (loss) (basic and diluted)	$0.09		($0.11	)	N/M		$0.21		($0.40	)	N/M
Book value at period end	8.04		7.83		2.68	%	8.04		7.83		2.68	%
Weighted average shares (basic and diluted)	3,791,633		3,791,633				3,791,633		3,791,633

Selected Balance Sheet Data:
Assets	$318,808		$215,584		47.88	%
Total gross loans ⁽³⁾	282,572		179,591		57.34	%
Loans held for sale	5,711		5,140		11.11	%
Securities available for sale, at fair value	17,088		17,068		0.12	%
Deposits	243,152		153,780		58.12	%
Federal funds purchased	20,400		9,190		121.98	%
Repurchase agreements	5,636		3,980		41.61	%
FHLB advances	18,000		18,000		0.00	%
Stockholders' equity	30,472		29,706		2.58	%

Asset Quality:
Non-performing assets ⁽¹⁾
to total assets	0.68	%	0.09	%
Non-performing loans and past due loans ⁽²⁾
to total assets	0.44	%	0.09	%
to total loans	0.48	%	0.10	%
Allowance for loan losses to total loans ⁽³⁾	1.17	%	1.19	%
Net charge-offs to average loans outstanding	0.28	%	0.02	%			0.30	%	0.02	%

Performance Ratios:
Return (loss) on average assets	0.43	%	(0.85	)%			0.39	%	(1.22	)%
Return (loss) on average stockholders' equity	4.25	%	(5.66	)%			3.55	%	(6.65	)%
Net interest rate spread	3.22	%	2.58	%			3.08	%	2.36	%
Net interest margin	3.71	%	3.49	%			3.62	%	3.50	%
Efficiency ratio	71.69	%	92.76	%			77.91	%	102.95	%

Regulatory Capital Ratios:	Actual		Minimum To Be Well Capitalized
Total risk-based capital ratio	11.86	%	10.00	%
Tier 1 risk-based capital ratio	10.70	%	6.00	%
Tier 1 capital to average assets	10.16	%	5.00	%

(1) Includes non-accrual loans and other real estate owned.
(2) Includes non-accrual loans and loans past due 90 days or more and still accruing interest.
(3) Excludes loans held for sale.
N/M - Not meaningful