WashingtonFirst Bankshares Inc. Announces Earnings for the Third Quarter 2013

Business Wire

RESTON, Va.--(BUSINESS WIRE)--

WashingtonFirst Bankshares Inc. (WFBI) (the “Company”), the holding company for WashingtonFirst Bank (the “Bank”), today reports unaudited consolidated net income to common shareholders for the three months ended September 30, 2013 of $2.1 million ($0.27 per diluted common share) compared to $0.3 million ($0.11 per diluted common share) for the three months ended September 30, 2012. For the nine months ended September 30, 2013, the Company's net income to common shareholders was $5.0 million ($0.65 per diluted common share), compared to $1.4 million ($0.44 per diluted common share) for the nine months ended September 30, 2012. The Company's increase in net income in 2013 is primarily the result of the acquisition of Alliance Bankshares Corporation ("Alliance") in December 2012.

Shaza Andersen, President and CEO of the Company, said, "I am pleased to announce a strong third quarter for the Bank in earnings and performance ratios. As we continue to realize the benefits we anticipated from the 2012 acquisition of Alliance Bank, we have seen improvements in our performance ratios and in our earnings per share."

       
For the Three Months Ended For the Nine Months Ended
September 30,
2013
    September 30,
2012
September 30,
2013
    September 30,
2012

Performance Ratios:

Return on average assets (1) 0.80 % 0.27 % 0.65 % 0.37 %
Return on average shareholders' equity (1) 8.06 % 2.79 % 6.56 % 3.70 %
Return on average common equity (1) 9.49 % 3.67 % 7.70 % 5.01 %
Yield on average interest-earning assets (1) 4.30 % 4.93 % 4.40 % 4.89 %
Rate on average interest-earning liabilities (1) 0.81 % 1.20 % 0.86 % 1.26 %
Net interest spread (1) 3.49 % 3.73 % 3.54 % 3.63 %
Net interest margin (1) 3.73 % 4.05 % 3.80 % 3.99 %

Efficiency ratio

60.22 % 80.66 % 64.60 % 71.09 %

Per Share Data:

Basic earnings per common share (2) $ 0.27 $ 0.11 $ 0.66 $ 0.45
Fully diluted earnings per common share (2) $ 0.27 $ 0.11 $ 0.65 $ 0.44
Weighted average basic shares outstanding (2) 7,643,852 3,081,702 7,611,958 3,069,060
Weighted average diluted shares outstanding (2) 7,696,972 3,136,129 7,664,906 3,125,879
(1) Annualized.
(2) Retroactively adjusted to reflect the effect of all stock dividends.
 

Return on average assets for the nine months ended September 30, 2013 increased by 28 basis points to 0.65 percent, compared to 0.37 percent for the same period in 2012. Additionally, the company has realized improved returns on both average shareholders' equity and average common equity. The decrease in net interest spread and margin in the third quarter 2013 compared to the third quarter 2012 is primarily attributable to greater liquidity and accelerated amortization of purchase accounting marks related to certain loans that prepaid in the three months ended September 30, 2013. These loans were acquired in December 2012 and had pricing marks associated with them under purchase accounting guidance. Purchase accounting marks are recognized into income over the life of the loan. Early payoffs create more volatility and can distort the net interest margin, as any unamortized mark is fully amortized upon loan payoff.

Balance Sheet and Capital

As of September 30, 2013 and December 31, 2012, total assets were $1.1 billion. Total loans increased $60.3 million (8.1 percent) from December 31, 2012 to September 30, 2013. Total deposits decreased $14.3 million (1.5 percent) from December 31, 2012 to September 30, 2013. This decrease is primarily attributable to management's intention to reduce non-core deposits, including brokered deposits acquired in the acquisition of Alliance in December 2012. Tier 1 capital increased $6.8 million to $111.8 million as of September 30, 2013, compared to $105.0 million as of December 31, 2012.

       
  September 30, 2013   December 31, 2012

Capital Ratios:

Total risk-based capital ratio 13.80% 13.77%
Tier 1 risk-based capital ratio 12.67% 12.71%
Tier 1 leverage ratio 10.52% 9.97%
Tangible common equity to tangible assets 7.54% 6.97%

Per Share Capital Data:

Book value per common share (1) $ 11.58 $ 11.16
Tangible book value per common share (1) $ 11.06 $ 10.62
Common shares outstanding (1) 7,632,398 7,500,970
(1) Retroactively adjusted to reflect the effect of all stock dividends.
 

Asset Quality

Non-performing assets totaled $21.0 million as of September 30, 2013, compared to $22.1 million as of December 31, 2012. Net charge-offs were $0.2 million or 0.12 percent of average loans for the three months ended September 30, 2013, compared to $0.1 million or 0.08 percent of average loans for the three months ended September 30, 2012. For the nine months ended September 30, 2013 net charge-offs were $2.6 million or 0.45 percent of average loans, compared to $1.4 million or 0.42 percent for the same period in 2012.

       
September 30, 2013 December 31, 2012
(dollars in thousands)
Non-accrual loans $ 14,823 $ 15,615
Trouble debt restructurings still accruing 3,881 3,036
Asset-backed debt securities 56 106
Other real estate owned 2,221   3,294
Total non-performing assets $ 20,981   $ 22,051
 
Allowance for loan losses to total loans 0.92% 0.83%
Non-GAAP adjusted allowance for loan losses to total loans 1.89% 2.09%
Allowance for loan losses to non-accrual loans 50.65% 40.09%
Allowance for loan losses to non-performing assets 35.78% 28.39%
Non-performing assets to total assets 1.87% 1.92%
 

The Company’s allowance for loan losses was 0.92 percent of total gross loans as of September 30, 2013, compared to 0.83 percent as of December 31, 2012. In connection with the acquisition of Alliance in December 2012, the company recorded the acquired loans at fair market value which consists of pricing and credit marks. The credit marks are negative purchase marks which are similar to an allowance for loan losses. Therefore, the Non-GAAP adjusted allowance for loan losses to total loans which considers these marks similar to allowance for loan for losses was 1.89 percent as of September 30, 2013 compared to 2.09 percent as of December 31, 2012.

About The Company

The Company is the parent company of the Bank, a $1.1 billion bank headquartered in Reston, VA. With 15 offices in the greater Washington, DC metropolitan area, WashingtonFirst is a community oriented bank that provides competitive financial services to local businesses and consumers.

Cautionary Statements About Forward-Looking Information

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements of the goals, intentions, and expectations of the Company as to future trends, plans, events, results of operations and policies and regarding general economic conditions. These forward-looking statements include, but are not limited to, statements about the Company’s goals, intentions, earnings and other expectations; estimates of risks and of future costs and benefits; assessments of probable loan and lease losses; assessments of market risk; and statements of the ability to achieve financial and other goals. Additional forward-looking statements are included regarding the merger between the Company and Alliance. In some cases, forward-looking statements can be identified by use of words such as “may,” “will,” “anticipates,” “believes,” “expects,” “plans,” “estimates,” “potential,” “continue,” “should,” and similar words or phrases. These statements are based upon the beliefs of the management of the Company as to the expected outcome of future events, current and anticipated economic conditions, nationally and in the Company’s market, and their impact on the operations, assets and earnings of the Company, interest rates and interest rate policy, competitive factors, judgments about the ability of the Company to successfully integrate its operations with Alliance, the ability to avoid customer dislocation during the period leading up to and following the merger, and other conditions which by their nature, are not susceptible to accurate forecast and are subject to significant uncertainty. Because of these uncertainties and the assumptions on which this discussion and the forward-looking statements are based, actual future operations and results in the future may differ materially from those indicated herein. Readers are cautioned against placing undue reliance on such forward-looking statements. Past results are not necessarily indicative of future performance. The Company assumes no obligation to revise, update, or clarify forward-looking statements to reflect events or conditions after the date of this release.

Additional documents are available free of charge at the SEC’s web site, www.sec.gov and on the Company’s website at www.wfbi.com under the tab “About the Bank” and then under the heading “Investor Relations” or by contacting the Company’s Investor Relations Department at 11921 Freedom Drive, Suite 250, Reston, VA 20190. You may also read and copy any reports, statements and other information filed with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington DC. Information about the operation of the SEC Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330.

Information about the directors and executive officers of the Company is set forth in the Company’s proxy statement dated April 30, 2013 available on the SEC’s website at www.sec.gov.

 
WashingtonFirst Bankshares, Inc.
Consolidated Balance Sheets

(unaudited)

       
September 30, 2013 December 31, 2012
(in thousands)
Assets:
Cash and cash equivalents:
Cash and due from bank balances $ 3,571 $ 4,521
Federal funds sold 140,981 208,476
Interest bearing balances 9,717   11,210  
Cash and cash equivalents 154,269 224,207
Investment securities, available-for-sale, at fair value 118,900 134,598
Other equity securities 2,925 3,623
Loans:
Loans held for investment, at amortized cost 814,916 753,355
Allowance for loan losses (7,508 ) (6,260 )
Total loans, net of allowance 807,408 747,095
Premises and equipment, net 3,754 3,519
Intangibles 3,964 4,029
Deferred tax asset, net 12,631 11,419
Accrued interest receivable 3,207 3,424
Other real estate owned 2,221 3,294
Bank-owned life insurance 10,196 5,010
Other assets 3,716   7,600  
Total Assets $ 1,123,191   $ 1,147,818  
 
Liabilities and Shareholders' Equity:
Liabilities:
Non-interest bearing deposits $ 259,640 $ 294,439
Interest bearing deposits 698,758   678,221  
Total deposits 958,398 972,660
Other borrowings 12,533 14,428
FHLB advances 30,100 40,813
Long-term borrowings 9,811 9,682
Accrued interest payable 520 2,012
Other liabilities 5,653   6,703  
Total Liabilities 1,017,015   1,046,298  
Shareholders' Equity:
Preferred stock:
Series D - 17,796 shares issued and outstanding, 1% dividend 89 89
Additional paid-in capital - preferred 17,707 17,707
Common stock:
Common Stock Voting, $0.01 par value, 50,000,000 shares authorized, 6,547,493 and 6,099,629 shares outstanding, respectively 66 61
Common Stock Non-Voting, $0.01 par value, 10,000,000 shares authorized, 1,096,359 and 1,044,152 shares outstanding, respectively 10 10
Additional paid-in capital - common 85,513 80,460
Accumulated earnings 4,760 3,226
Accumulated other comprehensive loss (1,969 ) (33 )
Total Shareholders’ Equity 106,176   101,520  
Total Liabilities and Shareholders' Equity $ 1,123,191   $ 1,147,818  
 
 
WashingtonFirst Bankshares, Inc.
Consolidated Statements of Operations

(unaudited)

       
For the Three Months Ended For the Nine Months Ended
September 30,
2013
    September 30,
2012
September 30,
2013
    September 30,
2012
(in thousands, except per share amounts)
Interest income:
Interest and fees on loans $ 10,669 $ 6,609 $ 32,281 $ 19,112
Interest and dividends on investments 646   340   1,843   1,109  
Total interest income 11,315 6,949 34,124 20,221
Interest expense:
Interest on deposits 1,165 995 3,611 3,018
Interest on borrowings 326   227   1,044   656  
Total interest expense 1,491   1,222   4,655   3,674  
Net interest income 9,824 5,727 29,469 16,547
Provision for loan losses 1,800   515   3,875   2,586  
Net interest income after provision for loan losses 8,024 5,212 25,594 13,961
Non-interest income:
Service charges on deposit accounts 141 111 391 358
Gain on sale of loans 821 821
Other operating income 572   135   1,445   611  
Total non-interest income 1,534 246 2,657 969
Non-interest expense:
Compensation and employee benefits 3,432 2,266 10,087 6,198
Premises and equipment 1,381 707 4,150 2,024
Data processing 775 351 2,438 1,083
Professional fees 415 107 1,078 344
Other operating expenses 836   1,387   2,999   2,803  
Total other expenses 6,839   4,818   20,752   12,452  
Income before provision income taxes 2,719 640 7,499 2,478
Provision for income taxes 579   257   2,356   962  
Net income 2,140 383 5,143 1,516
Preferred stock dividends and accretion (44 ) (44 ) (133 ) (133 )
Net income available to common shareholders $ 2,096   $ 339   $ 5,010   $ 1,383  
 
Earnings per common share:
Basic earnings per common share (1) $ 0.27 $ 0.11 $ 0.66 $ 0.45
Fully diluted earnings per common share (1) $ 0.27 $ 0.11 $ 0.65 $ 0.44
(1) Retroactively adjusted to reflect the effect of all stock dividends.
 

Contact:
WashingtonFirst Bankshares Inc.
Matthew R. Johnson, 703-840-2422
Executive Vice President & Chief Financial Officer
MJohnson@WFBI.com
www.WFBI.com

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