Virginia Financial Group, Inc. Announces Growth in Second Quarter
Earnings and Dividend CULPEPER, Va., July 21 /PRNewswire-FirstCall/
-- Virginia Financial Group, Inc. (NASDAQ:VFGI) today reported
second quarter 2004 earnings of $3.7 million, an increase of 2.7%
compared to earnings of $3.6 million for the second quarter of
2003. Net income per diluted share was $.51, up 2.0% compared to
$.50 for the same period in 2003. VFG'S earnings for the second
quarter of 2004 produced an annualized return on average assets
(ROA) of 1.05% and an annualized return on average equity (ROE) of
12.20%, compared to prior year ratios of 1.28% and 12.41%,
respectively. For the first six months of 2004, net income was $7.1
million, up 3.7% from $6.9 million for the same period in 2003. Net
income per diluted share was $.99, up 3.1% from $.96 for the first
six months of 2003. ROA and ROE for the six month period was 1.02%
and 11.86%, respectively. Analysis of Financial Performance
Revenues for the second quarter of 2004 were $16.5 million, an
increase of $2.2 million or 15.4% over $14.3 million in 2003. The
largest component, net interest income, amounted to $12.6 million
for the second quarter, up $2.2 million or 20.3% compared with
$10.4 million for the same quarter in 2003. For the six months
ended June 30, 2004, net interest income was $25.1 million, an
increase of $4.3 million or 20.9% from $20.7 million for the same
period in 2003. Significant growth in average earning assets from
loan production offices in Charlottesville and Lynchburg, and nine
new branches opened or purchased in 2003, were primarily
contributors to this growth. The net interest margin for the second
quarter of 2004 was 4.05%, down four basis points compared to 4.09%
for the first quarter of 2004, and down sixteen basis points when
compared to 4.21% for the second quarter of 2003. The decline is
largely due to lower yields associated with significant loan growth
over the past twelve month period. The net interest margin for the
six month period ended June 30, 2004 was 4.07%, compared to 4.24%
for the same period in 2003. Average loans for the second quarter
were $976.6 million, up $252.0 million or 34.8% from the second
quarter of 2003, and average assets were $1.41 billion, up 279.0
million or 24.7% from the second quarter of 2003. Loan growth for
the first six months of 2004 was $72.4 million or 7.8%. This 2004
growth was funded predominately from maturities and pay downs in
the securities portfolio and short term borrowings. Average
interest bearing deposits for the quarter were $991.7 million, up
23.8% from the second quarter of 2003. VFG's provision for loan
losses for the second quarter were $636 thousand, up $314 thousand
or almost 100% from the same period in 2003. For the six month
period, the provision for loan losses was $1.3 million, up $672
thousand or over 100% from the same period in 2003. The increases
are directly attributed to the aforementioned higher rates of loan
growth for each period. Nonperforming assets and net charge-offs
were at improved levels, with non- performing assets as a
percentage of total assets of .31% at June 30, 2004, compared to
.63% at June 30, 2003. Net charge-offs for the second quarter were
$120 thousand, compared to net-charges of $345 thousand for the
same period in 2003. Net charge-offs as a percentage of average
loans were .01% for the second quarter and .03% for the six month
period, compared to .05% and .07 % for the same periods in 2003. At
June 30, 2004, the allowance for loan losses as a percentage of
non-performing assets was 248.8%, while the allowance as a
percentage of total loans amounted to 1.08%. Total noninterest
income was $4.0 million for the second quarter of 2004, an increase
of $100 thousand or 2.0% compared to $3.9 million for the second
quarter of 2003. Growth in retail banking fees offset the decline
in mortgage revenue for the quarter, with revenue of $2.1 million,
up $610 thousand or 42.4% from the same period in 2003. Fees and
net gains from mortgages sold were $836 thousand for the second
quarter of 2004, a decrease of $423 thousand or 33.6% from the
second quarter of 2003. Originations were $50.4 million for the
second quarter of 2004, down 20.9% compared to $63.7 million for
the same period in 2003. Refinance loans represented $27.8 million
or 55.2% of total originations for the second quarter of 2004.
Noninterest expense for the second quarter of 2004 amounted to
$10.6 million, up $1.4 million or 15.7% from the same period in
2003, and up 1.9% from the first quarter of 2004. For the six month
period ended June 30, 2004, noninterest expense amounted to $21.1
million, an increase of $2.8 million or 14.9% over the same period
in 2003. The increases are largely attributable to the Company's
expansion efforts, and the incremental operating costs and
intangible amortization associated with the eight purchased
branches, loan production offices in Charlottesville and Lynchburg
and a de novo branch in Fishersville, Virginia. At June 30, 2004
VFG had assets of $1.41 billion, compared to $1.15 billion at June
30, 2003. Equity capital represented 8.59% of total assets at June
30, 2004. Book value at June 30, 2004 was $16.87 per share.
Dividend Increase The Board of Directors has declared an increase
in the quarterly cash dividend on its common stock to $0.20 per
common share, up 5.3% from the current quarterly dividend of $0.19
per common share. The dividend is payable August 23, 2004, to
shareholders of record on August 2, 2004. The new annual dividend
rate will be $.80 per share, representing a 2.5% annualized yield
on the most recent closing price. About VFG VFG is the holding
company for Planters Bank & Trust Company of Virginia -- in
Staunton; Second Bank & Trust -- in Culpeper; Virginia
Heartland Bank -- in Fredericksburg and Virginia Commonwealth Trust
Company -- in Culpeper. The Company is a traditional community
banking provider, offering a full range of business and consumer
banking services including trust and asset management service via
its trust company affiliate. The organization maintains a network
of thirty-seven branches serving Central and Southwest Virginia. It
also maintains five trust and investment service offices in its
markets, and loan production offices located in Charlottesville and
Lynchburg. This press release contains forward-looking statements
as defined by federal securities laws. These statements may address
certain results that are expected or anticipated to occur or
otherwise state the company's predictions for the future. These
particular forward-looking statements and all other statements that
are not historical facts are subject to a number of risks and
uncertainties, and actual results may differ materially. Such
factors include but are not limited to: general economic
conditions, significant fluctuations in interest rates that could
reduce net interest margin; difficulties in executing integration
plans: reduction of fee income from existing products due to market
conditions; and the amount of growth in the company's general and
administrative expenses. Consequently, these cautionary statements
qualify all forward-looking statements made herein. Please refer to
VFG's filings with the Securities and Exchange Commission for
additional information, which may be accessed at
http://www.vfgi.net/. QUARTERLY PERFORMANCE SUMMARY Virginia
Financial Group, Inc. (NASDAQ:VFGI) (Dollars in thousands, except
per share data) Percent For the Three Months Ended Increase
06/30/2004 06/30/2003 Decrease) INCOME STATEMENT Interest income -
taxable equivalent $17,703 $15,789 12.12% Interest expense 4,693
4,764 -1.49% Net interest income - taxable equivalent 13,010 11,025
18.00% Less: taxable equivalent adjustment 448 586 -23.55% Net
interest income 12,562 10,439 20.34% Provision for loan and lease
losses 636 322 97.52% Net interest income after provision for loan
and lease losses 11,926 10,117 17.88% Noninterest income 3,949
3,870 2.04% Noninterest expense 10,635 9,195 15.66% Provision for
income taxes 1,555 1,203 29.26% Net income $3,685 $3,589 2.67% PER
SHARE DATA Basic earnings $0.51 $0.50 2.00% Diluted earnings $0.51
$0.50 2.00% Shares outstanding 7,160,417 7,149,659 Weighted average
shares - Basic 7,159,654 7,154,236 Diluted 7,200,797 7,189,857
Shares repurchased - 12,100 Average price of shares repurchased $-
$30.40 Dividends paid on common shares $0.19 $0.19 PERFORMANCE
RATIOS Return on average assets 1.05% 1.28% -17.97% Return on
average equity 12.20% 12.41% -1.69% Return on average realized
equity(A) 12.51% 13.22% -5.37% Net yield on earning assets (taxable
equivalent) 4.05% 4.21% -3.80% Efficiency (taxable equivalent)(B)
62.69% 61.85% 1.36% ASSET QUALITY Allowance for loan losses
Beginning of period $10,283 $9,367 Provision for loan losses 636
323 Charge offs (178) (416) Recoveries 58 70 End of period $10,799
$9,344 NOTES: Applicable ratios are annualized (A) Excludes the
effect on average shareholders' equity of unrealized gains (losses)
that result from changes in market values of securities and other
comprehensive pension expense. (B) Excludes foreclosed property
expense and non-recurring items for all periods. QUARTERLY
PERFORMANCE SUMMARY Virginia Financial Group, Inc. (NASDAQ:VFGI)
(Dollars in thousands, except per share data) Percent For the Six
Months Ended Increase 06/30/2004 06/30/2003 (Decrease) INCOME
STATEMENT Interest income - taxable equivalent $35,545 $31,649
12.31% Interest expense 9,581 9,755 -1.78% Net interest income -
taxable equivalent 25,964 21,894 18.59% Less: taxable equivalent
adjustment 910 1,174 -22.49% Net interest income 25,054 20,720
20.92% Provision for loan and lease losses 1,317 645 104.19% Net
interest income after provision for loan and lease losses 23,737
20,075 18.24% Noninterest income 7,406 7,529 -1.63% Noninterest
expense 21,070 18,345 14.85% Provision for income taxes 2,933 2,376
23.44% Net income $7,140 $6,883 3.73% PER SHARE DATA Basic earnings
$1.00 $0.96 4.17% Diluted earnings $0.99 $0.96 3.13% Shares
outstanding 7,160,417 7,149,659 Weighted average shares - Basic
7,156,505 7,161,280 Diluted 7,199,256 7,196,207 Shares repurchased
- 28,507 Average price of shares repurchased $- $28.68 Dividends
paid on common shares $0.38 $0.37 PERFORMANCE RATIOS Return on
average assets 1.02% 1.24% -17.74% Return on average equity 11.86%
11.97% -0.92% Return on average realized equity(A) 12.24% 12.85%
-4.75% Net yield on earning assets (taxable equivalent) 4.07% 4.24%
-4.01% Efficiency (taxable equivalent)(B) 63.11% 62.36% 1.20% ASSET
QUALITY Allowance for loan losses Beginning of period $9,743 $9,180
Provision for loan losses 1,317 646 Charge offs (354) (591)
Recoveries 93 109 End of period $10,799 $9,344 Non-performing
assets: Non-accrual loans $2,325 $1,257 Loans 90+ days past due and
still accruing 13 512 Other real estate owned 5 1,052 Troubled debt
restructurings 1,998 4,707 Total non-performing assets $4,341
$7,528 NOTES: Applicable ratios are annualized (A) Excludes the
effect on average shareholders' equity of unrealized gains (losses)
that result from changes in market values of securities and other
comprehensive pension expense. (B) Excludes foreclosed property
expense for all periods. QUARTERLY PERFORMANCE SUMMARY Virginia
Financial Group, Inc. (NASDAQ:VFGI) (Dollars in thousands, except
per share data) Percent For the Six Months Ended Increase
06/30/2004 06/30/2003 (Decrease) SELECTED BALANCE SHEET DATA End of
period balances Securities available for sale $294,003 $319,332
-7.93% Securities held to maturity 5,843 7,056 -17.19% Total
securities 299,846 326,388 -8.13% Real estate - construction
102,907 64,635 59.21% Real estate - 1-4 family residential 311,626
234,621 32.82% Real estate - commercial and multifamily 451,480
311,779 44.81% Commercial, financial and agricultural 78,278 66,548
17.63% Consumer loans 46,459 48,275 -3.76% All other loans 4,685
17,812 -73.70% Total loans 995,435 743,670 33.85% Allowance for
loan losses (10,799) (9,344) 15.57% Other earning assets 749 9,210
-91.87% Total earning assets 1,296,030 1,079,268 20.08% Total
assets 1,406,422 1,145,670 22.76% Non-interest bearing deposits
225,416 186,024 21.18% Money market & interest checking 362,894
286,186 26.80% Savings 142,207 112,541 26.36% CD's and other time
deposits 488,398 403,682 20.99% Total deposits 1,218,915 988,433
23.32% Short-term borrowed funds 25,498 21,528 18.44% Trust
preferred capital notes 20,000 - 100.00% Federal Home Loan Bank
advances 14,100 9,180 53.59% Total interest-bearing liabilities
1,053,097 833,117 26.40% Total shareholders' equity $120,769
$119,501 1.06% Average balances Total assets $1,405,147 $1,120,681
25.38% Total shareholders' equity $121,089 $115,955 4.43% Percent
Average Balances For the Three Months Ended Increase 06/30/2004
06/30/2003 (Decrease) Total assets $1,406,614 $1,127,594 24.74%
Total shareholders' equity $121,446 $115,952 4.74% QUARTERLY
PERFORMANCE SUMMARY Virginia Financial Group, Inc. (NASDAQ:VFGI)
(Dollars in thousands) For the Three For the Six Months Ended
Months Ended 06/30/ 06/30/ 06/30/ 06/30/ 2004 2003 2004 2003
Interest Income Interest and fees on loans $14,239 $12,006 $28,294
$24,214 Interest on deposits in other banks 1 - 2 2 Interest on
investment securities: Taxable 92 114 187 228 Interest and
dividends on securities available for sale: Taxable 2,126 1,970
4,557 3,890 Nontaxable 713 940 1,462 1,834 Dividends 77 108 124 163
Interest income on federal funds sold 7 65 9 144 Total Interest
Income 17,255 15,203 34,635 30,475 Interest Expense Interest on
deposits 4,237 4,535 8,771 9,285 Interest on trust preferred 194 -
222 - Interest on Federal Home Loan Bank advances 183 178 338 370
Interest on federal funds repurchased and securities sold under
agreements to repurchase 35 49 106 97 Interest on other short-term
borrowings 44 2 144 3 Total Interest Expense 4,693 4,764 9,581
9,755 Net Interest Income 12,562 10,439 25,054 20,720 Provision for
loan losses 636 322 1,317 645 Net Interest Income after Provision
for Loan Losses 11,926 10,117 23,737 20,075 Other Income Retail
banking fees 2,050 1,440 3,599 2,688 Fees from fiduciary activities
684 710 1,460 1,489 Brokerage services 147 115 345 348 Other
operating income 232 300 521 612 Gains (losses) on securities
available for sale - 46 - 70 Gains (losses) on other real estate
owned - - - - Gains (losses) on sale of fixed assets - - - - Fees
on mortgage loans sold 836 1,259 1,481 2,322 Total Other Income
3,949 3,870 7,406 7,529 Other Expense Compensation and employee
benefits 5,948 5,326 11,808 10,584 Net occupancy expense 670 548
1,376 1,118 Supplies and equipment 1,095 999 2,139 1,947
Amortization-intangible assets 174 40 347 79 Computer services 442
291 741 632 Professional fees 290 144 491 356 Other operating
expenses 2,016 1,847 4,168 3,629 Total Other Expense 10,635 9,195
21,070 18,345 Income Before Income Tax Expense 5,240 4,792 10,073
9,259 Income tax expense 1,555 1,203 2,933 2,376 Net Income $3,685
$3,589 $7,140 $6,883 VIRGINIA FINANCIAL GROUP INC. CONSOLIDATED
AVERAGE BALANCES, YIELDS AND RATES THREE MONTHS ENDED JUNE 30, 2004
AND 2003 2004 Interest Average Income/ Average Dollars in thousands
Balance Expense Rates Assets Loans receivable, net $976,562,652
$14,297,176 5.89% Investment securities Taxable 244,109,495
2,299,787 3.79% Tax exempt 66,607,619 1,096,467 6.62% Total
Investments 310,717,114 3,396,254 4.40% FHLB int bearing 504,116
1,291 1.03% Federal funds sold 3,220,790 7,378 0.92% 314,442,020
3,404,923 4.36% Total Earning Assets $1,291,004,672 17,702,099
5.51% Liabilities and Stockholders' Equity Time and savings
deposits Interest-bearing transaction accounts $189,402,247
$184,872 0.39% Money market deposit accounts 170,697,590 375,130
0.88% Passbook savings accounts 141,020,480 235,474 0.67%
Certificates of deposit >$100k 119,938,527 993,335 3.33%
Certificates of deposit $100k 117,895,192 1,980,014 3.38%
Certificates of deposit
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