- Year-to-date earnings totaled $3.9 million, a $3.3
million increase over the comparable period in 2013
- Non-performing asset ratio improves by more than 30%
year-over-year
- Average core deposits grow by more than $24 million
year-over-year
Hampton Roads Bankshares, Inc. (the "Company") (Nasdaq:HMPR), the
holding company for the Bank of Hampton Roads and Shore Bank, today
announced financial results for the first quarter of 2014. Net
income attributable to Hampton Roads Bankshares, Inc. was $3.9
million for the three months ended March 31, 2014, compared to $0.6
million for the comparable period in 2013.
"Our financial results in the first quarter reflect the
continued discipline in the execution of our One Bank strategic
plan which we implemented in early 2013," said Douglas Glenn,
President and Chief Executive Officer. "We are committed to
achieving sustained profitability in a difficult banking
environment without taking undue risk. Our success has allowed for
additional investment in people, products and services which
provide our customers consistency, convenience and choice in
helping them achieve their financial dreams. "
Net Interest Income
Net interest income for the three months ended March 31, 2014
and March 31, 2013 was $15.0 million and $15.9 million,
respectively. The decrease in year-over-year net interest income
was primarily the result of decreases in average interest-earning
assets and a slight decline in net interest margin.
Credit Quality
The Company's non-performing assets ratio improved to 5.16% at
March 31, 2014 from 5.29% at December 31, 2013 and from 7.51% at
the comparable quarter end in 2013.
The allowance for loan losses decreased $3.8 million (net of
charge-offs and recoveries) during the three months ended March 31,
2014 as a result of net charge-offs exceeding additional provisions
for loan losses. Net charge-offs were $3.9 million during the three
months ended March 31, 2014 compared with $4.7 million during the
same period in 2013. Our provision for loan losses was $100
thousand during the three months ended March 31, 2014 compared to
no provision for loan losses being recorded during the same period
in 2013.
Noninterest Income
Noninterest income for the three months ended March 31, 2014 was
$7.3 million, an increase of $1.9 million as compared to $5.4
million for the same period in 2013. Declines in losses on premises
and equipment, other real estate owned and repossessed assets, and
an increase in income from bank-owned life insurance, offset by a
decline in mortgage banking revenue, produced a year-over -year
increase.
Income from bank-owned life insurance increased $2.8 million to
$3.2 million for the three months ended March 31, 2014 compared to
$373 thousand for the comparative period in 2013, largely because
of life insurance benefits recognized in excess of cash surrender
value from the deaths of one current employee and one former
employee during the first quarter of 2014.
Noninterest Expense
Noninterest expense was $18.5 million and $19.4 million for the
three months ended March 31, 2014 and March 31, 2013, respectively,
a decrease of $915 thousand. Year-over-year reductions in headcount
and lower volume in our mortgage company were largely responsible
for a $1.4 million decline in salaries and employee benefits.
Increased data processing costs and elevated professional and
consultant fees partially offset the drop in salaries and employee
benefits. Data processing increased $350 thousand mainly due to
implementation costs and operating expenses associated with the
Company's additional products and services.
Professional and consultant fees remain elevated due to a number
of factors related to the launch of new products and services, the
resolution of problem assets, and ongoing costs related to legal
matters.
Balance Sheet Trends
Total assets were $1.9 billion at March 31, 2014, a decrease of
$4.7 million from December 31, 2013. The decrease in assets
was primarily associated with a $4.5 million decrease in loans held
for sale, a $34.8 million decrease in gross loans, a $9.0 million
decrease in other real estate owned and repossessed assets, a $7.1
million decrease in investment securities available for sale,
partially offset by a $47.0 million increase in overnight funds
sold and due from FRB and a $4.2 million increase in other
assets.
Gross loans decreased by $34.8 million during the three months
ended March 31, 2014, primarily due to normal loan pay down and
charge-off activity exceeding new loan origination volume. Impaired
loans increased by $3.3 million during the three months ended March
31, 2014 to $70.9 million, up from $67.6 million at December 31,
2013, primarily as a result of three credit relationships that
became impaired.
Allowance for loan losses at March 31, 2014 decreased 10.8% to
$31.3 million from $35.0 million at December 31, 2013 as net
charge-offs exceeded additional provisions for loan losses.
Deposits at March 31, 2014 decreased $5.4 million from December
31, 2013 as a result of decreases of $4.5 million in time deposits
over $100 thousand, decreases of $3.7 million in
noninterest-bearing demand deposits, decreases of $3.4 million in
savings deposits, partially offset by increases of $5.4 million in
interest-bearing demand deposits. The decline in time deposits is
primarily the result of the attrition of certain national market
time deposits and reflects the Company's continuing efforts to
improve its mix of funds.
Average core deposits, which exclude brokered deposits and
certificates of deposit greater than $100 thousand, increased by
$24.4 million over the comparable quarterly average in 2013 as a
result of successful marketing campaigns of the Company's deposit
products.
Capitalization
At March 31, 2014, the Company exceeded all of the regulatory
capital minimums and Bank of Hampton Roads and Shore Bank were both
considered "well capitalized" under all applicable regulatory
capital standards. The Company's total risk-based capital,
Tier 1 and Tier 1 leverage ratios as of March 31, 2014, were
15.98%, 14.72% and 11.18%, respectively.
Caution About Forward-Looking Statements
Certain statements made in this press release may constitute
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of
1995. Forward-looking statements are statements that
include projections, predictions, expectations, or beliefs about
events or results or otherwise are not statements of historical
facts, including statements about future trends and
strategies. Although the Company believes that its
expectations with respect to such forward-looking statements are
based upon reasonable assumptions within the bounds of its existing
knowledge of its business and operations, there can be no assurance
that actual results, performance or achievements of the Company
will not differ materially from those expressed or implied by such
forward-looking statements. Factors that could cause
actual events or results to differ significantly from those
described in the forward-looking statements include, but are not
limited to those described in the cautionary language included
under the headings "Risk Factors" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2013, and other filings made with the SEC.
About Hampton Roads Bankshares, Inc.
Hampton Roads Bankshares, Inc. is a bank holding company
headquartered in Virginia Beach, Virginia. The Company's
primary subsidiaries are The Bank of Hampton Roads, which opened
for business in 1987, and Shore Bank, which opened in 1961
(collectively, the "Banks"). The Banks engage in general
community and commercial banking business, targeting the needs of
individuals and small to medium-sized businesses. The
Bank of Hampton Roads operates banking offices in Virginia and
North Carolina doing business as Bank of Hampton Roads and Gateway
Bank & Trust Co. Shore Bank serves the Eastern Shore of
Virginia, eastern Maryland and southern Delaware through six
banking offices, ATMs and loan production offices in West Ocean
City, Maryland and Rehoboth Beach, Delaware. Through various
affiliates, the Banks also offer mortgage banking services and
investment products. Shares of the Company's common stock are
traded on the NASDAQ Global Select Market under the symbol
"HMPR." Additional information about the Company and its
subsidiaries can be found at www.hamptonroadsbanksharesinc.com.
Hampton Roads Bankshares,
Inc. |
Financial
Highlights |
(in thousands) |
(unaudited) |
March 31,
2014 |
December 31,
2013 |
March 31,
2013 |
Assets: |
|
|
|
Cash and due from banks |
$ 17,568 |
$ 18,806 |
$ 14,767 |
Interest-bearing deposits in
other banks |
698 |
654 |
818 |
Overnight funds sold and due
from Federal Reserve Bank |
89,866 |
42,841 |
108,637 |
Investment securities available
for sale, at fair value |
318,374 |
325,484 |
292,669 |
Restricted equity securities,
at cost |
16,419 |
17,356 |
17,323 |
|
|
|
|
Loans held for sale |
20,544 |
25,087 |
51,846 |
|
|
|
|
Loans |
1,349,743 |
1,384,531 |
1,412,650 |
Allowance for loan losses |
(31,260) |
(35,031) |
(43,709) |
Net loans |
1,318,483 |
1,349,500 |
1,368,941 |
Premises and equipment,
net |
66,565 |
67,146 |
71,457 |
Interest receivable |
4,567 |
4,811 |
5,371 |
Other real estate owned and
repossessed assets, net of valuation allowance |
27,619 |
36,665 |
33,834 |
Intangible assets, net |
1,288 |
1,437 |
2,075 |
Bank-owned life insurance |
49,773 |
50,802 |
53,572 |
Other assets |
13,848 |
9,683 |
11,032 |
Totals
assets |
$ 1,945,612 |
$ 1,950,272 |
$ 2,032,342 |
Liabilities and Shareholders'
Equity: |
|
|
|
Deposits: |
|
|
|
Noninterest-bearing demand |
$ 241,748 |
$ 245,409 |
$ 239,813 |
Interest-bearing: |
|
|
|
Demand |
605,697 |
600,315 |
570,544 |
Savings |
58,873 |
62,283 |
61,949 |
Time
deposits: |
|
|
|
Less than $100 |
325,357 |
324,635 |
362,446 |
$100 or more |
286,236 |
290,686 |
360,412 |
Total deposits |
1,517,911 |
1,523,328 |
1,595,164 |
Federal Home Loan Bank
borrowings |
188,958 |
194,178 |
194,839 |
Other borrowings |
29,086 |
28,983 |
41,103 |
Interest payable |
6,341 |
6,025 |
5,181 |
Other liabilities |
13,524 |
13,912 |
10,693 |
Total
liabilities |
1,755,820 |
1,766,426 |
1,846,980 |
Shareholders' equity: |
|
|
|
Common stock |
1,703 |
1,703 |
1,703 |
Capital surplus |
587,786 |
587,424 |
586,508 |
Retained deficit |
(401,005) |
(404,864) |
(410,754) |
Accumulated other comprehensive
income, net of tax |
1,130 |
(865) |
6,598 |
Total shareholders' equity
before non-controlling interest |
189,614 |
183,398 |
184,055 |
Non-controlling interest |
178 |
448 |
1,307 |
Total
shareholders' equity |
189,792 |
183,846 |
185,362 |
Total liabilities and shareholders' equity |
$ 1,945,612 |
$ 1,950,272 |
$ 2,032,342 |
|
|
|
|
|
|
|
|
Non-performing Assets at
Period-End: |
|
|
|
Nonaccrual loans including nonaccrual
impaired loans |
$ 44,242 |
$ 39,854 |
$ 78,633 |
Loans 90 days past due and still accruing
interest |
298 |
-- |
-- |
Other real estate owned and repossessed
assets |
27,619 |
36,665 |
33,834 |
Total non-performing assets |
$ 72,159 |
$ 76,519 |
$ 112,467 |
|
|
|
|
Composition of Loan Portfolio at
Period-End: |
|
|
|
Commercial |
$ 206,130 |
$ 225,492 |
$ 239,563 |
Construction |
149,067 |
158,473 |
199,782 |
Real-estate commercial |
588,480 |
590,475 |
553,350 |
Real-estate residential |
355,074 |
354,035 |
364,743 |
Installment |
52,439 |
57,623 |
56,296 |
Deferred loan fees and related costs |
(1,447) |
(1,567) |
(1,084) |
Total loans |
$ 1,349,743 |
$ 1,384,531 |
$ 1,412,650 |
|
|
Hampton Roads Bankshares,
Inc. |
Financial
Highlights |
(in thousands, except share and per share
data) |
Three
Months Ended |
(unaudited) |
March 31,
2014 |
December 31,
2013 |
March 31,
2013 |
Interest Income: |
|
|
|
Loans, including fees |
$ 15,692 |
$ 16,471 |
$ 17,673 |
Investment securities |
2,234 |
2,225 |
1,815 |
Overnight funds sold and due
from FRB |
32 |
64 |
42 |
Interest-bearing deposits in
other banks |
-- |
-- |
-- |
Total interest
income |
17,958 |
18,760 |
19,530 |
Interest Expense: |
|
|
|
Deposits: |
|
|
|
Demand |
623 |
566 |
509 |
Savings |
8 |
8 |
10 |
Time deposits: |
|
|
|
Less than
$100 |
772 |
819 |
1,000 |
$100 or more |
737 |
783 |
1,008 |
Interest on deposits |
2,140 |
2,176 |
2,527 |
Federal Home Loan Bank
borrowings |
422 |
468 |
486 |
Other borrowings |
441 |
440 |
587 |
Total interest
expense |
3,003 |
3,084 |
3,600 |
Net interest income |
14,955 |
15,676 |
15,930 |
Provision for loan losses |
100 |
-- |
-- |
Net interest
income after provision for loan losses |
14,855 |
15,676 |
15,930 |
Noninterest Income: |
|
|
|
Mortgage banking revenue |
1,811 |
2,478 |
5,964 |
Service charges on deposit
accounts |
1,159 |
1,233 |
1,217 |
Income from bank-owned life
insurance |
3,216 |
296 |
373 |
Gain (loss) on sale of premises
and equipment |
(13) |
457 |
(127) |
Impairment of premises and
equipment |
-- |
-- |
(2,825) |
Gain (loss) on other real
estate owned and repossessed assets |
221 |
(13) |
(234) |
Other than temporary impairment
of other real estate owned and repossessed assets |
(336) |
(1,489) |
(670) |
Gain on sale of investment
securities available for sale |
67 |
18 |
-- |
Visa check card income |
593 |
649 |
596 |
Rental Income |
153 |
309 |
152 |
Other |
431 |
659 |
982 |
Total noninterest
income |
7,302 |
4,597 |
5,428 |
Noninterest Expense: |
|
|
|
Salaries and employee
benefits |
9,567 |
9,370 |
10,956 |
Occupancy |
1,719 |
2,001 |
1,802 |
FDIC insurance |
901 |
1,939 |
1,018 |
Professional and consultant
fees |
1,232 |
1,561 |
893 |
Data processing |
1,147 |
1,176 |
797 |
Problem loan and repossessed
asset costs |
433 |
696 |
480 |
Equipment |
373 |
389 |
464 |
Directors' and regional board
fees |
387 |
421 |
241 |
Advertising and marketing |
254 |
434 |
260 |
Other |
2,504 |
1,947 |
2,521 |
Total noninterest
expense |
18,517 |
19,934 |
19,432 |
Income before provision for income taxes |
3,640 |
339 |
1,926 |
Provision for income taxes |
7 |
(248) |
-- |
Net income |
3,633 |
587 |
1,926 |
Net income attributable to non-controlling
interest |
(226) |
(36) |
1,294 |
Net income attributable to Hampton Roads
Bankshares, Inc. |
$ 3,859 |
$ 551 |
$ 632 |
|
|
|
|
Per Share: |
|
|
|
Cash dividends declared |
$ -- |
$ -- |
$ -- |
Basic Income |
$ 0.02 |
$ -- |
$ -- |
Diluted Income |
$ 0.02 |
$ -- |
$ -- |
Basic weighted average shares
outstanding |
170,477,548 |
170,370,406 |
170,390,149 |
Effect of dilutive shares and warrant |
751,215 |
729,051 |
391,254 |
Diluted weighted average shares
outstanding |
171,228,763 |
171,099,457 |
170,781,403 |
|
|
|
|
|
Hampton Roads Bankshares,
Inc. |
Financial
Highlights |
(in thousands, except share and per share
data) |
Three
Months Ended |
(unaudited) |
March 31,
2014 |
December 31,
2013 |
March 31,
2013 |
|
|
|
|
Daily Averages: |
|
|
|
Total assets |
$ 1,936,027 |
$ 1,973,557 |
$ 2,031,259 |
Gross loans (excludes loans held for
sale) |
1,357,676 |
1,361,073 |
1,427,245 |
Investment and restricted equity
securities |
333,797 |
330,664 |
303,948 |
Intangible assets |
1,375 |
1,509 |
2,235 |
Total deposits |
1,509,574 |
1,547,534 |
1,594,868 |
Total borrowings |
218,783 |
223,213 |
233,557 |
Shareholders' equity * |
187,208 |
185,864 |
185,361 |
Shareholders' equity - tangible * |
185,833 |
184,355 |
183,126 |
Interest-earning assets |
1,785,041 |
1,818,693 |
1,874,746 |
Interest-bearing liabilities |
1,486,452 |
1,503,824 |
1,592,562 |
|
|
|
|
Financial Ratios: |
|
|
|
Return on average assets |
0.80% |
0.02% |
0.12% |
Return on average equity * |
8.31% |
1.19% |
1.36% |
Return on average equity - tangible * |
8.37% |
1.20% |
1.37% |
Net interest margin |
3.40% |
3.42% |
3.45% |
Efficiency ratio |
83.45% |
98.42% |
80.35% |
Tangible equity to tangible assets * |
9.69% |
9.34% |
8.96% |
|
|
|
|
Allowance for Loan
Losses: |
|
|
|
Beginning balance |
$ 35,031 |
$ 37,701 |
$ 48,382 |
Provision for losses |
100 |
-- |
-- |
Charge-offs |
(5,167) |
(4,620) |
(6,023) |
Recoveries |
1,296 |
1,950 |
1,350 |
Ending balance |
$ 31,260 |
$ 35,031 |
$ 43,709 |
|
|
|
|
Asset Quality Ratios: |
|
|
|
Annualized net chargeoffs to average
loans |
-1.37% |
-0.80% |
-1.43% |
Non-performing loans to total loans |
3.30% |
2.88% |
5.57% |
Non-performing assets ratio |
5.16% |
5.29% |
7.51% |
Allowance for loan losses to total loans |
2.32% |
2.53% |
3.09% |
|
|
|
|
* Equity amounts exclude
non-controlling interest |
Use of Non-GAAP Financial Measures
This earnings press release contains GAAP financial measures and
non-GAAP financial measures where management believes it to be
helpful in understanding our results of operations or financial
position. Where non-GAAP financial measures are used, the
comparable GAAP financial measure, as well as the reconciliation to
the comparable GAAP financial measure, can be found in the Form 8-K
filed related to this release. The Form 8-K can be found on
the SEC's EDGAR website at www.sec.gov or our website at
www.hamptonroadsbanksharesinc.com.
CONTACT: Douglas J. Glenn
President and Chief Executive Officer
(757) 217-1000
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