Xenith Bankshares, Inc. (Nasdaq:XBKS), parent company of Xenith
Bank, formerly known as Hampton Roads Bankshares, Inc. (HMPR) and
Bank of Hampton Roads, respectively, today announced financial
results for the three and nine months ended September 30, 2016.
The company reported net income of $47.9 million, or $0.23 per
common share, for the third quarter of 2016 compared to $303
thousand, or less than $0.01 per common share, in the third quarter
of 2015. Net income in the 2016 period included the effect of
merger-related costs of $12.9 million in connection with the
previously announced merger of legacy Xenith with and into HMPR and
an income tax benefit that included $60.0 million resulting from
the reversal of substantially all of the company’s remaining
deferred tax asset valuation allowance.
The company reported net income of $51.9 million, or $0.28 per
common share, for the nine months ended September 30, 2016 compared
to net income of $4.4 million, or $0.03 per common share, in the
nine months ended September 30, 2015. Net income in the 2016 period
included merger-related costs of $15.6 million and an income tax
benefit resulting from the reversal of substantially all of the
company’s remaining deferred tax asset valuation allowance of $60.0
million.
Information contained herein as of the period ended September
30, 2016 includes the balances of legacy Xenith; information
contained herein as of periods prior to September 30, 2016 does not
include the balances of legacy Xenith. Information for the
three and nine month periods ended September 30, 2016 includes the
operations of legacy Xenith only for the period immediately
following the effective date of the merger (July 29, 2016) through
September 30, 2016.
On September 16, 2016, the company announced its plans to cease
operations of its mortgage banking business conducted through its
wholly-owned subsidiary, Gateway Bank Mortgage, Inc. (“GBMI”), and
had entered into a definitive asset purchase agreement to sell
certain assets of GBMI to an unrelated party (the "GBMI Sale"). The
decision to exit the mortgage origination business was based on a
number of factors, including the substantial costs of regulatory
compliance in the post-Dodd Frank world and the absolute scale
required to be competitive in today’s mortgage banking market. For
purposes of the third quarter and year-to-date results, the
operations of GBMI have been reported as discontinued operations.
The completion of the GBMI Sale occurred on October 17,
2016.
T. Gaylon Layfield, III, the company’s Chief Executive Officer,
commented:
“We are off to a good start combining the strengths of Hampton
Roads Bankshares and legacy Xenith into the new Xenith
Bankshares. First and foremost, our management team and Board
have quickly coalesced around what we believe are our key
priorities. These include revenue growth and careful
management of our net interest margin and expense levels in line
with high performing banks of comparable asset size. In
addition to emphasizing organic growth, we will continue to examine
strategic opportunities that we believe can help build franchise
value.
I am also pleased to report on a number of other
accomplishments, including the roll out across the company of our
shared Mission, Vision and Values. At its core, banking is a people
business, and I am excited about our talented and motivated team.
Loan and deposit growth are off to a strong start as we are already
beginning to see the benefits of our increased scale. We have
seen solid loan growth in our commercial and Industrial and
commercial real estate loan portfolios as well as our Marine
division, Shore Premium Finance.
In mid-November, we expect to convert legacy Xenith customers to
the company’s combined core operating system. Finally, as we
begin to look toward 2017, we are sharply focused on managing
operating expenses by aligning people, processes and technology to
drive growth, always in the context of first-rate enterprise risk
management
practices.”
Third Quarter and Year-to-Date 2016
Highlights
- Income before income tax from continuing operations in the
three months ended September 30, 2016 was a loss of $17.3 million
compared to a loss of $376 thousand in the same period of 2015,
while income before income tax from continuing operations for the
nine months ended September 30, 2016 was a loss of $12.4 million
compared to income of $2.5 million in the same period of
2015.
- Net interest income in the three months ended September 30,
2016 was $23.0 million compared to $15.4 million in the same period
of 2015, while net interest income in the nine month ended
September 30, 2016 was $52.7 million compared to $45.5 million for
the same period in 2015. Accretion of acquired loan discounts in
the 2016 periods was $1.5 million compared to no amounts in the
same periods of 2015.
- Provision for loan losses was $10.7 million for the three
months ended September 30, 2016 compared to a benefit of $15
thousand in the same period of 2015. In the nine months ended
September 30, 2016 and 2015, provision expense was $10.7 million
and $622 thousand, respectively.
- Net loans were $2.4 billion at September 30, 2016 compared to
$1.5 billion at December 31, 2015 and $1.5 billion at September 30,
2015.
- Average interest-earning assets in the three and nine months
ended September 30, 2016 were $2.6 billion and $2.1 billion,
respectively. Average interest-earning assets in the same periods
of 2015 were $1.8 billion and $1.9 billion, respectively.
- Total assets at September 30, 2016 were $3.3 billion compared
to $2.1 billion at December 31, 2015.
- Total deposits at September 30, 2016 were $2.6 billion compared
to $1.7 billion at December 31, 2015.
- At September 30, 2016, the ratio of nonperforming assets to
total assets was 1.50% compared to 2.32% as of December 31, 2015,
the ratio of nonperforming loans to gross loans was 1.76% compared
to 2.31% as of December 31, 2015, and the ratio of the company’s
allowance for loan losses (ALL) to nonaccrual loans was 77.7%.
- Net charge-offs as a percentage of average loans were
insignificant for the three and nine month periods ended September
30, 2016. ALL as a percentage of gross loans was 1.37%, at
September 30, 2016, and this ratio including fair value adjustments
(Credit Mark Adjusted ALL/Gross Loans) was 1.77%1.
- Other real estate owned and repossessed asset balance was $6.3
million at September 30, 2016 compared to $12.4 million at December
31, 2015.
- The company’s capital ratios remained well above regulatory
standards for "well-capitalized" banks, with a Common Equity Tier 1
Capital Ratio of 12.14%, a Tier 1 Leverage Ratio of 12.50%, a Tier
1 Risk-Based Capital Ratio of 12.14%, and a Total Risk-Based
Capital Ratio of 13.62% at September 30, 2016. Xenith Bank had a
Common Equity Tier 1 Capital Ratio of 11.20%, a Tier 1 Leverage
Ratio of 11.55%, a Tier 1 Risk-Based Capital Ratio of 11.20%, and a
Total Risk-Based Capital Ratio of 12.39%. These capital ratios
exclude the disallowed portion of the company’s net operating
losses of approximately $65 million.
- Total shareholders' equity was $465.0 million at September 30,
2016 compared to $290.6 million at December 31, 2015. Tangible book
value at September 30, 2016 was $1.881 per share of common stock
compared to $1.701 at December 31, 2015. Return on average assets
was 6.67% and return on average common equity was 51.42% for the
three months ended September 30, 2016.
Operating Results
Third Quarter 2016 compared to Third Quarter 2015
Total interest income for the three months ended September 30,
2016 was $27.4 million compared to $18.6 million for the three
months ended September 30, 2015. For the three-month period of
2016, total interest income reflected average interest-earning
assets of $2.6 billion compared to $1.8 billion in interest-earning
assets in the same period of 2015. Asset yields in the 2016 period
were 4.26% compared to yields of 4.03 % in the 2015 period. Asset
yields in the 2016 period included accretion of $1.5 million. There
was no accretion in the third quarter of 2015.
Total interest expense for the three months ended September 30,
2016 was $4.4 million compared to $3.2 million for the three months
ended September 30, 2015. Average interest-bearing liabilities in
the three-month period of 2016 increased to $2.0 billion from $1.4
billion in the same period of 2015. The cost of total
interest-bearing liabilities was 0.85% and 0.88% for the
three-month periods ended September 30, 2016 and 2015,
respectively.
Net interest margin in the third quarter 2016 was 3.59% compared
to 3.35% in the third quarter 2015. Net interest margin excluding
accretion was 3.36% in the third quarter of 2016.
Net interest income after provision for loan losses was $12.3
million for the three months ended September 30, 2016 compared to
$15.4 million in the same period of 2015. Net interest income after
provision for loan losses in the 2016 period reflected $10.7
million in loan loss provision expense compared to $15 thousand of
provision benefit in the 2015 period. Higher provision expense in
the 2016 period was primarily due to specific reserves related to
two relationships. In each case, the additional reserve is
primarily attributable to impairments against the remaining
collateral securing the specific loan.
Total noninterest income was $2.9 million in the third quarter
of 2016 compared to $2.7 million in the third quarter of 2015.
Noninterest expense in the third quarter of 2016 was $32.5
million compared to $18.5 million in the third quarter of 2015.
Noninterest expense in the third quarter of 2016 included $12.9
million of merger-related costs, while noninterest expense in the
2015 period included one-time separation costs of $2.2 million.
First Nine Months of 2016 compared to First Nine Months of
2015
Total interest income for the nine months ended September 30,
2016 and 2015 was $63.4 million and $55.2 million, respectively.
For the nine months ended September 30, 2016, total interest income
reflected average interest-earning assets of $2.1 billion compared
to $1.9 billion in interest-earning assets in the same period of
2015. Asset yields were 4.12% and 3.96% in the nine months ended
September 30, 2016 and 2015, respectively. Asset yields in the 2016
period included accretion of $1.5 million. There was no accretion
in the 2015 period.
Total interest expense for the nine months ended September 30,
2016 and 2015 was $10.7 million and $9.8 million, respectively.
Average interest-bearing liabilities in the nine-month period of
2016 were $1.6 billion and $1.5 billion in the 2015 period. The
cost of total interest-bearing liabilities was 0.87% in both
periods.
Net interest margin for the nine months ended September 30, 2016
was 3.43% compared to 3.27% for the same period of 2015. Net
interest margin excluding accretion was 3.33% in the nine months
ended September 30, 2016.
Net interest income after provision for loan losses was $42.0
million for the nine months ended September 30, 2016 compared to
$44.9 million in the same period of 2015. Net interest income after
provision for loan losses in the 2016 period reflects the $10.7
million in loan loss provision expense, as previously discussed,
compared to $622 thousand of loan loss provision expense in the
2015 period.
Total noninterest income was $8.0 million in the nine months
ended September 30, 2016 compared to $7.4 million in the nine
months ended September 30, 2015.
Noninterest expense in the nine months ended September 30, 2016
was $62.4 million compared to $49.9 million in the same period of
2015. Noninterest expense in the 2016 period included $15.6 million
of merger-related costs. Excluding merger-related costs,
noninterest expense declined $3.0 million, or 6%, when comparing
the 2016 period to the 2015 period.
Asset and Credit Quality
At September 30, 2016, the ratio of nonperforming assets to
total assets was 1.50%, the ratio of nonperforming loans to gross
loans was 1.76%, and the ratio of the company’s allowance for loan
losses (ALL) to nonaccrual loans was 77.7%. Net charge-offs as a
percentage of average loans were insignificant for the nine months
ended September 30, 2016, as recoveries nearly offset charge-offs
during the period. ALL as a percentage of gross loans was 1.37%, at
September 30, 2016, and this ratio including fair value adjustments
(Credit Mark Adjusted ALL/Gross Loans) was 1.77%1.
Capital and Shareholder Value Measures
The company’s combined capital ratios remained well above
regulatory standards for "well-capitalized" banks, with a Common
Equity Tier 1 Capital Ratio of 12.14%, a Tier 1 Leverage Ratio of
12.50%, a Tier 1 Risk-Based Capital Ratio of 12.14%, and a Total
Risk-Based Capital Ratio of 13.62% at September 30, 2016. Capital
ratios for Xenith Bank were also strong, with a Common Equity Tier
1 Capital Ratio of 11.20%, a Tier 1 Leverage Ratio of 11.55%, a
Tier 1 Risk-Based Capital Ratio of 11.20%, and a Total Risk-Based
Capital Ratio of 12.39% at September 30, 2016. These ratios
exclude approximately $65 million in disallowed net operating
losses as required by Basel III rules.
Total shareholders' equity was $465.0 million at September 30,
2016 compared to $290.6 million at December 31, 2015. The increase
in equity was primarily the result of the issuance of common stock
in connection with the merger and the reversal of most of the
remaining valuation allowance on the deferred tax asset. Tangible
book value at September 30, 2016 was $1.881 per share of common
stock compared to $1.701 at December 31, 2015. Return on average
assets was 6.67% and return on average common equity was 51.42%,
both explained by the deferred tax asset valuation allowance
reversal.
Outlook
Layfield concluded: “As CEO of legacy Xenith, I frequently
talked about the challenges banks face in the marketplace today:
low rates, increased regulatory burdens, uncertain economies, the
need for scale and the pressure for consolidation, just to name a
few. As CEO of the new Xenith, I can tell you that all those
challenges still exist. However, our company is in a
different league now. We have the combination of strong teams and
talented bankers across attractive markets to drive both core
deposit growth and organic loan growth. We are focused on
three business lines: Middle Market Commercial Banking, including
commercial real estate, Business Banking, primarily serving
companies with annual sales of less than $10 million, and Retail
Banking. In all three businesses, we believe we now have the people
and capital to compete effectively in our markets and are in a
position to attract and retain top-notch talent. As we
continue our early progress following the merger, we remain well
aware of the metrics for top performing banks in our size range and
while we won’t get there overnight, we are working every day to
meet those
metrics”
About Xenith Bankshares, Inc.
Xenith Bankshares, Inc. (“XBKS”) is the holding company for
Xenith Bank, a full-service commercial bank headquartered in
Richmond, Virginia. XBKS is the fifth largest community bank
by deposits headquartered in the Commonwealth of Virginia.
Xenith Bank specifically targets the banking needs of middle market
and small businesses, local real estate developers and investors,
and retail banking clients. XBKS also offers marine finance
floorplan and end-user products through its Shore Premium Finance
division of Xenith Bank. Xenith Bank’s regional area of
operations spans from Baltimore, Maryland and Rehoboth Beach,
Delaware, to Raleigh and eastern North Carolina, complementing its
significant presence in Greater Washington, D.C., Greater Richmond,
Virginia, Greater Hampton Roads, Virginia and on the Eastern Shore
of Maryland and Virginia. Xenith Bank has 42 full-service
branches and five loan production offices located across these
areas with its headquarters centrally-located in Richmond. XBKS’s
common stock trades on The NASDAQ Stock Market under the symbol
“XBKS.”
Additional information about XBKS and its subsidiaries can be
found at www.xenithbank.com.
Caution About Forward-Looking
Statements
All statements other than statements of historical facts
contained in this press release are forward-looking
statements. Forward-looking statements made in this press
release reflect beliefs, assumptions and expectations of future
events or results, taking into account the information currently
available to XBKS. These beliefs, assumptions and
expectations may change as a result of many possible events,
circumstances or factors, not all of which are currently known to
XBKS. If a change occurs, XBKS’s business, financial
condition, liquidity, results of operations and prospects may vary
materially from those expressed in, or implied by, the
forward-looking statements. Accordingly, you should not place
undue reliance on these forward-looking statements. Factors
related to the Gateway Bank Mortgage, Inc. (“GBMI”) transaction
that may cause actual results to differ materially from those
contemplated by these forward-looking statements include among
others a higher than expected number of GBMI employees leaving GBMI
prior to the closing, funding and sale of loans currently in
process. Additional factors include among others:
difficulties and delays in integrating the combination of the
Hampton Roads Bankshares, Inc. and legacy Xenith Bankshares, Inc.
businesses or fully-realizing cost savings and other benefits;
business disruptions following the merger; changes in asset quality
and credit risk; the inability to sustain revenue and earnings
growth; changes in interest rates and capital markets; inflation;
customer borrowing, repayment, investment and deposit practices;
customer disintermediation; the introduction, withdrawal, success
and timing of business initiatives; competitive conditions; the
inability to realize cost savings or revenues or to implement
integration plans and other consequences associated with mergers,
acquisitions and divestitures; economic conditions; the inability
to realize deferred tax assets within expected time frames or at
all; and the impact, extent and timing of technological changes,
capital management activities and other actions of the Federal
Reserve Board and legislative and regulatory actions and reforms;
and the risks discussed in XBKS’s public filings with the
Securities and Exchange Commission, including those outlined under
“Risk Factors” in XBKS’s registration statement on Form S-4
(Registration Statement No: 333-210643). Except as required
by applicable law or regulations, XBKS does not undertake, and
specifically disclaims any obligation, to update or revise any
forward-looking statement.
1 Please see the discussion of non-GAAP financial measures at
the end of the financial tables.
-Selected Financial Tables Follow-
|
Xenith Bankshares, Inc. |
Consolidated Balance Sheets |
For the Periods Ended September 30, 2016 and December
31, 2015 |
|
|
|
|
(unaudited) |
|
|
|
(in thousands, except
share data) |
September 30, 2016 |
|
December 31, 2015 |
Assets |
|
|
|
Cash and
due from banks |
$ |
42,712 |
|
|
$ |
17,031 |
|
Interest-bearing deposits in other banks |
|
4,791 |
|
|
|
691 |
|
Overnight
funds sold and due from Federal Reserve Bank |
|
62,406 |
|
|
|
46,024 |
|
Investment securities available for sale, at fair value |
|
328,145 |
|
|
|
198,174 |
|
Restricted equity securities, at cost |
|
24,475 |
|
|
|
9,830 |
|
Loans |
|
2,471,032 |
|
|
|
1,538,952 |
|
Allowance
for loan losses |
|
(33,730 |
) |
|
|
(23,157 |
) |
Net
loans |
|
2,437,302 |
|
|
|
1,515,795 |
|
Premises
and equipment, net |
|
57,182 |
|
|
|
52,135 |
|
Interest
receivable |
|
9,205 |
|
|
|
4,116 |
|
Other
real estate owned and repossessed assets, |
|
|
|
net of
valuation allowance |
|
6,293 |
|
|
|
12,409 |
|
Goodwill |
|
26,225 |
|
|
|
— |
|
Other
intangible assets, net |
|
3,918 |
|
|
|
— |
|
Net
deferred tax assets, net of valuation allowance |
|
158,343 |
|
|
|
92,142 |
|
Bank-owned life insurance |
|
71,658 |
|
|
|
50,695 |
|
Other
assets |
|
17,879 |
|
|
|
6,474 |
|
Assets of
discontinued operations |
|
74,933 |
|
|
|
60,424 |
|
Totals assets |
$ |
3,325,467 |
|
|
$ |
2,065,940 |
|
Liabilities and
Shareholders' Equity |
|
|
|
Deposits: |
|
|
|
Noninterest-bearing demand |
$ |
507,300 |
|
|
$ |
298,351 |
|
Interest-bearing: |
|
|
|
Demand |
|
1,103,486 |
|
|
|
693,413 |
|
Savings |
|
83,438 |
|
|
|
61,023 |
|
Time
deposits: |
|
|
|
Less than
$250 |
|
807,553 |
|
|
|
592,089 |
|
$250 or
more |
|
84,831 |
|
|
|
60,269 |
|
Total
deposits |
|
2,586,608 |
|
|
|
1,705,145 |
|
Federal
Home Loan Bank borrowings |
|
197,500 |
|
|
|
25,000 |
|
Other
borrowings |
|
38,468 |
|
|
|
29,689 |
|
Interest
payable |
|
645 |
|
|
|
463 |
|
Other
liabilities |
|
22,921 |
|
|
|
13,974 |
|
Liabilities of discontinued operations |
|
14,369 |
|
|
|
1,048 |
|
Total liabilities |
|
2,860,511 |
|
|
|
1,775,319 |
|
Commitments and contingencies |
|
|
|
Shareholders' equity: |
|
|
|
Preferred
stock, 1,000,000 shares authorized; none issued and
outstanding |
|
— |
|
|
|
— |
|
Common
stock, $0.01 par value; 1,000,000,000 shares |
|
|
|
authorized; 230,795,174 and 171,128,266 shares issued |
|
|
|
and
outstanding on September 30, 2016 and December 31, 2015,
respectively |
|
2,308 |
|
|
|
1,711 |
|
Capital
surplus |
|
708,827 |
|
|
|
590,417 |
|
Accumulated deficit |
|
(250,711 |
) |
|
|
(302,580 |
) |
Accumulated other comprehensive income, net of tax |
|
3,388 |
|
|
|
560 |
|
Total
shareholders' equity before non-controlling interest |
|
463,812 |
|
|
|
290,108 |
|
Non-controlling interest of the discontinued operations |
|
1,144 |
|
|
|
513 |
|
Total shareholders' equity |
|
464,956 |
|
|
|
290,621 |
|
Total liabilities and shareholders' equity |
$ |
3,325,467 |
|
|
$ |
2,065,940 |
|
Xenith Bankshares, Inc. |
Consolidated Statements of Operations |
For the Three and Nine Months Ended September 30, 2016
and 2015 |
|
|
|
|
|
|
|
|
(unaudited) |
Three Months Ended |
|
Nine Months Ended |
(in thousands, except
share and per share data) |
September 30, 2016 |
|
September 30, 2015 |
|
September 30, 2016 |
|
September 30, 2015 |
Interest
Income |
|
|
|
|
|
|
|
Loans,
including fees |
$ |
25,513 |
|
|
$ |
17,106 |
|
|
$ |
58,797 |
|
|
$ |
50,382 |
|
Investment securities |
|
1,763 |
|
|
|
1,436 |
|
|
|
4,476 |
|
|
|
4,733 |
|
Overnight
funds sold and deposits in other banks |
|
96 |
|
|
|
28 |
|
|
|
179 |
|
|
|
126 |
|
Total interest income |
|
27,372 |
|
|
|
18,570 |
|
|
|
63,452 |
|
|
|
55,241 |
|
Interest
Expense |
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
Demand |
|
1,391 |
|
|
|
667 |
|
|
|
3,075 |
|
|
|
2,023 |
|
Savings |
|
40 |
|
|
|
15 |
|
|
|
81 |
|
|
|
39 |
|
Time
deposits |
|
2,169 |
|
|
|
1,959 |
|
|
|
5,746 |
|
|
|
5,753 |
|
Interest
on deposits |
|
3,600 |
|
|
|
2,641 |
|
|
|
8,902 |
|
|
|
7,815 |
|
Federal
Home Loan Bank borrowings |
|
109 |
|
|
|
95 |
|
|
|
109 |
|
|
|
668 |
|
Other
borrowings |
|
652 |
|
|
|
439 |
|
|
|
1,706 |
|
|
|
1,281 |
|
Total interest expense |
|
4,361 |
|
|
|
3,175 |
|
|
|
10,717 |
|
|
|
9,764 |
|
Net interest income |
|
23,011 |
|
|
|
15,395 |
|
|
|
52,735 |
|
|
|
45,477 |
|
Provision
for loan losses |
|
10,685 |
|
|
|
(15 |
) |
|
|
10,704 |
|
|
|
622 |
|
Net interest
income after provision for loan losses |
|
12,326 |
|
|
|
15,410 |
|
|
|
42,031 |
|
|
|
44,855 |
|
Noninterest
Income |
|
|
|
|
|
|
|
Service
charges on deposit accounts |
|
1,191 |
|
|
|
1,273 |
|
|
|
3,447 |
|
|
|
3,713 |
|
Earnings
from bank-owned life insurance |
|
395 |
|
|
|
302 |
|
|
|
1,046 |
|
|
|
956 |
|
Gain on
sale of investment securities available for sale |
|
— |
|
|
|
— |
|
|
|
15 |
|
|
|
238 |
|
Visa
check card income |
|
709 |
|
|
|
677 |
|
|
|
2,056 |
|
|
|
1,994 |
|
Other |
|
575 |
|
|
|
441 |
|
|
|
1,430 |
|
|
|
547 |
|
Total noninterest income |
|
2,870 |
|
|
|
2,693 |
|
|
|
7,994 |
|
|
|
7,448 |
|
Noninterest
Expense |
|
|
|
|
|
|
|
Salaries
and employee benefits |
|
9,880 |
|
|
|
10,100 |
|
|
|
24,990 |
|
|
|
26,091 |
|
Professional and consultant fees |
|
978 |
|
|
|
1,459 |
|
|
|
2,101 |
|
|
|
3,584 |
|
Occupancy |
|
1,594 |
|
|
|
1,556 |
|
|
|
4,428 |
|
|
|
4,654 |
|
FDIC
insurance |
|
679 |
|
|
|
339 |
|
|
|
1,524 |
|
|
|
1,361 |
|
Data
processing |
|
1,446 |
|
|
|
1,466 |
|
|
|
3,985 |
|
|
|
4,285 |
|
Problem
loan and repossessed asset costs |
|
219 |
|
|
|
538 |
|
|
|
420 |
|
|
|
1,150 |
|
Impairments and gains and losses on sales of other real estate
owned and repossessed assets, net |
|
685 |
|
|
|
225 |
|
|
|
112 |
|
|
|
1,471 |
|
Impairments and gains and losses on sale of premises and equipment,
net |
|
42 |
|
|
|
— |
|
|
|
41 |
|
|
|
14 |
|
Equipment |
|
309 |
|
|
|
300 |
|
|
|
812 |
|
|
|
942 |
|
Board
fees |
|
493 |
|
|
|
433 |
|
|
|
1,133 |
|
|
|
1,028 |
|
Advertising and marketing |
|
398 |
|
|
|
115 |
|
|
|
503 |
|
|
|
389 |
|
Merger-related |
|
12,910 |
|
|
|
— |
|
|
|
15,555 |
|
|
|
— |
|
Other |
|
2,902 |
|
|
|
1,948 |
|
|
|
6,813 |
|
|
|
4,883 |
|
Total noninterest expense |
|
32,535 |
|
|
|
18,479 |
|
|
|
62,417 |
|
|
|
49,852 |
|
(Loss) income from
continuing operations before (benefit) provision for income
taxes |
|
(17,339 |
) |
|
|
(376 |
) |
|
|
(12,392 |
) |
|
|
2,451 |
|
(Benefit) provision for
income taxes |
|
(64,840 |
) |
|
|
28 |
|
|
|
(62,794 |
) |
|
|
44 |
|
Net income
(loss) from continuing operations |
|
47,501 |
|
|
|
(404 |
) |
|
|
50,402 |
|
|
|
2,407 |
|
Income from
discontinued operations before provision for income taxes |
|
2,011 |
|
|
|
1,231 |
|
|
|
3,900 |
|
|
|
3,602 |
|
Provision for income
taxes |
|
842 |
|
|
|
23 |
|
|
|
877 |
|
|
|
82 |
|
Income from
discontinued operations attributable to non-controlling
interest |
|
806 |
|
|
|
501 |
|
|
|
1,556 |
|
|
|
1,563 |
|
Net income from
discontinued operations |
|
363 |
|
|
|
707 |
|
|
|
1,467 |
|
|
|
1,957 |
|
Net income
attributable to Xenith Bankshares, Inc. |
$ |
47,864 |
|
|
$ |
303 |
|
|
$ |
51,869 |
|
|
$ |
4,364 |
|
Basic and diluted
income per share |
$ |
0.23 |
|
|
$ |
— |
|
|
$ |
0.28 |
|
|
$ |
0.03 |
|
CONSOLIDATED
FINANCIAL HIGHLIGHTS (Unaudited) |
|
|
|
|
|
|
($ in thousands, except
per share data) |
|
|
|
|
|
|
PERFORMANCE
MEASURES |
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
Year Ended |
|
|
September 30, |
June 30, |
March 31, |
December 31, |
September 30, |
|
|
|
|
|
2016 |
|
|
2016 |
|
|
2016 |
|
|
2015 |
|
|
2015 |
|
|
|
2015 |
|
Net interest margin
(1) |
|
3.59 |
% |
|
3.29 |
% |
|
3.30 |
% |
|
3.35 |
% |
|
3.35 |
% |
|
|
3.29 |
% |
|
Return on average
assets (2) |
|
6.67 |
% |
|
0.51 |
% |
|
0.27 |
% |
|
17.79 |
% |
|
0.06 |
% |
|
|
4.64 |
% |
|
Return on average
common equity (3) |
|
51.42 |
% |
|
3.56 |
% |
|
1.89 |
% |
|
170.30 |
% |
|
0.59 |
% |
|
|
45.55 |
% |
|
Efficiency ratio
(4) |
|
126 |
% |
|
82 |
% |
|
90 |
% |
|
123 |
% |
|
102 |
% |
|
|
102 |
% |
|
Efficiency ratio,
excluding merger-related costs (5) |
|
76 |
% |
|
76 |
% |
|
81 |
% |
|
123 |
% |
|
102 |
% |
|
|
102 |
% |
|
Net income |
$ |
47,864 |
|
|
2,623 |
|
|
1,382 |
|
|
88,591 |
|
|
303 |
|
|
|
92,955 |
|
|
Earnings per common
share (basic and diluted) |
$ |
0.23 |
|
|
0.02 |
|
|
0.01 |
|
|
0.52 |
|
|
0.00 |
|
|
|
0.54 |
|
|
______________________________ |
|
|
|
|
|
|
|
|
(1) Net interest margin is net interest income divided by
average interest-earning assets. |
|
(2) Return on average assets is net income for the respective
period (annualized for quarter periods) divided by average assets
for the respective period. |
|
(3) Return on average common equity is net income for the
respective period (annualized for quarter periods) divided by
average common equity (excluding non-controlling interest) for the
respective period. |
|
(4) Efficiency ratio is noninterest expense divided by the sum
of net interest income and noninterest income from continuing
operations. |
|
(5) Non-GAAP financial measure. See discussion of
non-GAAP financial measures below. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSET QUALITY
MEASURES |
Quarter Ended |
|
|
|
|
September 30, |
June 30, |
March 31, |
December 31, |
September 30, |
|
|
|
|
|
2016 |
|
|
2016 |
|
|
2016 |
|
|
2015 |
|
|
2015 |
|
|
|
|
Net charge-offs as a
percentage of average loans (year to date) |
|
0.01 |
% |
|
-0.43 |
% |
|
0.50 |
% |
|
-0.08 |
% |
|
1.26 |
% |
|
|
|
Allowance for loan
losses (ALL) as a percentage of loans (1) |
|
1.37 |
% |
|
1.47 |
% |
|
1.40 |
% |
|
1.51 |
% |
|
1.49 |
% |
|
|
|
ALL plus remaining
discounts on acquired loans (credit mark adjusted ALL) as a
percentage of gross loans (2) |
|
1.77 |
% |
|
1.47 |
% |
|
1.40 |
% |
|
1.51 |
% |
|
1.49 |
% |
|
|
|
ALL to nonaccrual loans
(1) |
|
77.65 |
% |
|
76.53 |
% |
|
61.97 |
% |
|
65.28 |
% |
|
66.54 |
% |
|
|
|
Nonperforming loans as
a percentage of gross loans |
|
1.76 |
% |
|
1.92 |
% |
|
2.26 |
% |
|
2.31 |
% |
|
2.24 |
% |
|
|
|
Nonperforming assets as
a percentage of total assets |
|
1.50 |
% |
|
1.66 |
% |
|
2.10 |
% |
|
2.32 |
% |
|
2.37 |
% |
|
|
|
Troubled debt
restructurings |
$ |
28,981 |
|
|
29,812 |
|
|
30,479 |
|
|
30,753 |
|
|
29,055 |
|
|
|
|
______________________________ |
|
|
|
|
|
|
|
|
(1) ALL excludes discounts (fair value adjustments) on acquired
loans. |
|
|
|
|
|
|
(2) Ratio is a non-GAAP financial measure calculated as the
sum of ALL and discounts (fair value adjustments) on acquired loans
divided by the sum of gross loans and discounts on loans. See
discussion of non-GAAP financial measures below. |
|
|
|
|
|
|
|
|
|
|
CAPITAL
MEASURES |
Quarter Ended |
|
|
|
|
September 30, |
June 30, |
March 31, |
December 31, |
September 30, |
|
|
|
|
|
2016 |
|
|
2016 |
|
|
2016 |
|
|
2015 |
|
|
2015 |
|
|
|
|
Common Equity Tier 1
capital ratio - Consolidated |
|
12.14 |
% |
|
14.52 |
% |
|
14.65 |
% |
|
14.73 |
% |
|
11.58 |
% |
|
|
|
Common Equity Tier 1
capital ratio - Bank only |
|
11.20 |
% |
|
14.60 |
% |
|
14.72 |
% |
|
14.47 |
% |
|
12.42 |
% |
|
|
|
Tier 1 risk-based
capital ratio - Consolidated |
|
12.14 |
% |
|
14.93 |
% |
|
15.11 |
% |
|
14.73 |
% |
|
13.19 |
% |
|
|
|
Tier 1 risk-based
capital ratio - Bank only |
|
11.20 |
% |
|
14.60 |
% |
|
14.72 |
% |
|
14.47 |
% |
|
12.42 |
% |
|
|
|
Total risk-based
capital ratio - Consolidated |
|
13.62 |
% |
|
16.19 |
% |
|
16.35 |
% |
|
16.01 |
% |
|
14.44 |
% |
|
|
|
Total risk-based
capital ratio - Bank only |
|
12.39 |
% |
|
15.87 |
% |
|
15.96 |
% |
|
15.75 |
% |
|
13.67 |
% |
|
|
|
Tier 1 leverage ratio -
Consolidated |
|
12.50 |
% |
|
13.16 |
% |
|
13.05 |
% |
|
13.46 |
% |
|
11.56 |
% |
|
|
|
Tier 1 leverage ratio -
Bank only |
|
11.55 |
% |
|
12.76 |
% |
|
12.69 |
% |
|
13.20 |
% |
|
10.98 |
% |
|
|
|
Book value per common
share (1) |
$ |
2.01 |
|
|
1.74 |
|
|
1.71 |
|
|
1.70 |
|
|
1.20 |
|
|
|
|
Tangible book value per
common share (2) |
$ |
1.88 |
|
|
1.74 |
|
|
1.71 |
|
|
1.70 |
|
|
1.20 |
|
|
|
|
______________________________ |
|
|
|
|
|
|
|
|
(1) Book value per common share is total shareholders' equity
less preferred stock divided by common shares outstanding at the
end of the respective period. |
|
(2) Tangible book value per common share is a non-GAAP
financial measure calculated as total shareholders' equity less the
sum of goodwill and other intangible assets divided by common
shares outstanding at the end of the respective period. See
discussion of non-GAAP financial measures below. |
|
|
|
|
|
|
|
|
|
|
AVERAGE
BALANCES (1) |
Quarter Ended |
|
Year Ended |
|
|
September 30, |
June 30, |
March 31, |
December 31, |
September 30, |
|
|
|
|
|
2016 |
|
|
2016 |
|
|
2016 |
|
|
2015 |
|
|
2015 |
|
|
|
2015 |
|
Total assets |
$ |
2,854,920 |
|
|
2,053,285 |
|
|
2,034,948 |
|
|
1,975,873 |
|
|
1,976,181 |
|
|
|
2,005,235 |
|
|
Average
interest-earning assets |
$ |
2,573,181 |
|
|
1,849,152 |
|
|
1,820,574 |
|
|
1,845,801 |
|
|
1,848,266 |
|
|
|
1,873,699 |
|
|
Loans, net of allowance
for loan losses |
$ |
2,117,627 |
|
|
1,591,399 |
|
|
1,564,868 |
|
|
1,532,896 |
|
|
1,572,146 |
|
|
|
1,565,821 |
|
|
Total deposits |
$ |
2,298,600 |
|
|
1,670,289 |
|
|
1,681,744 |
|
|
1,715,456 |
|
|
1,681,327 |
|
|
|
1,675,206 |
|
|
Shareholders'
equity |
$ |
371,007 |
|
|
296,897 |
|
|
294,706 |
|
|
206,939 |
|
|
206,206 |
|
|
|
204,646 |
|
|
______________________________ |
|
|
|
|
|
|
|
|
(1) Average balances
are computed on a daily basis. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
END OF PERIOD
BALANCES |
Quarter Ended |
|
|
|
|
September 30, |
June 30, |
March 31, |
December 31, |
September 30, |
|
|
|
|
|
2016 |
|
|
2016 |
|
|
2016 |
|
|
2015 |
|
|
2015 |
|
|
|
|
Total assets |
$ |
3,325,467 |
|
|
2,092,448 |
|
|
2,040,373 |
|
|
2,065,940 |
|
|
1,977,612 |
|
|
|
|
Loans, net of allowance
for loan losses |
$ |
2,437,302 |
|
|
1,539,244 |
|
|
1,499,616 |
|
|
1,515,795 |
|
|
1,511,722 |
|
|
|
|
Total deposits |
$ |
2,586,608 |
|
|
1,643,759 |
|
|
1,684,258 |
|
|
1,705,145 |
|
|
1,686,808 |
|
|
|
|
Shareholders'
equity |
$ |
464,956 |
|
|
297,900 |
|
|
293,619 |
|
|
290,621 |
|
|
204,439 |
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
MEASURES |
|
|
|
|
|
|
|
|
Quarter Ended |
Nine Months Ended |
|
|
|
|
Efficiency
ratio, excluding merger-related costs (continuing
operations) |
September 30,
2016 |
June 30, 2016 |
March 31, 2016 |
September 30,
2016 |
|
|
|
|
Noninterest expense |
$ |
32,535 |
|
|
14,409 |
|
|
15,618 |
|
|
62,417 |
|
|
|
|
|
Deduct:
merger-related costs (1) |
$ |
12,910 |
|
|
1,077 |
|
|
1,568 |
|
|
15,555 |
|
|
|
|
|
Noninterest expense,
excluding merger-related costs |
$ |
19,625 |
|
|
13,332 |
|
|
14,050 |
|
|
46,862 |
|
|
|
|
|
Net interest income |
$ |
23,011 |
|
|
14,970 |
|
|
14,769 |
|
|
52,735 |
|
|
|
|
|
Noninterest income |
$ |
2,870 |
|
|
2,611 |
|
|
2,513 |
|
|
7,994 |
|
|
|
|
|
Efficiency ratio,
excluding merger-related costs |
|
76 |
% |
|
76 |
% |
|
81 |
% |
|
77 |
% |
|
|
|
|
______________________________ |
|
|
|
|
|
|
|
|
(1)
Merger-related costs impacted the quarters ended September 30,
2016, June 30, 2016 and March 31, 2016 only. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
|
|
|
September 30, |
June 30, |
March 31, |
December 31, |
September 30, |
|
|
|
|
|
2016 |
|
|
2016 |
|
|
2016 |
|
|
2015 |
|
|
2015 |
|
|
|
|
Credit Mark
Adjusted ALL/ Gross Loans |
|
|
|
|
|
|
|
|
Allowance for loan
losses |
$ |
33,730 |
|
|
22,911 |
|
|
21,228 |
|
|
23,184 |
|
|
22,874 |
|
|
|
|
Add:
Discounts (fair value adjustments) on acquired loans |
$ |
10,075 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
|
Total credit mark
adjusted ALL/Gross loans |
$ |
43,805 |
|
|
22,911 |
|
|
21,228 |
|
|
23,184 |
|
|
22,874 |
|
|
|
|
Gross loans + discounts
(fair value adjustments) on acquired loans |
$ |
2,481,107 |
|
|
1,560,615 |
|
|
1,516,702 |
|
|
1,538,952 |
|
|
1,532,036 |
|
|
|
|
Credit mark adjusted
ALL/Gross loans |
|
1.77 |
% |
|
1.47 |
% |
|
1.40 |
% |
|
1.51 |
% |
|
1.49 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Tangible book
value per common share |
|
|
|
|
|
|
|
|
Total shareholders'
equity |
$ |
464,956 |
|
|
297,900 |
|
|
293,619 |
|
|
290,621 |
|
|
204,439 |
|
|
|
|
Deduct: Goodwill and other intangible assets, net |
$ |
30,143 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
|
Tangible shareholders'
equity |
$ |
434,813 |
|
|
297,900 |
|
|
293,619 |
|
|
290,621 |
|
|
204,439 |
|
|
|
|
Common shares
outstanding - in thousands |
|
230,795 |
|
|
171,531 |
|
|
171,331 |
|
|
171,128 |
|
|
170,954 |
|
|
|
|
Tangible book value per
common share |
$ |
1.88 |
|
$ |
1.74 |
|
$ |
1.71 |
|
$ |
1.70 |
|
$ |
1.20 |
|
|
|
|
______________________________ |
|
|
|
|
|
|
|
|
Efficiency ratio, excluding merger-related costs is a non-GAAP
financial measures and is not required by or presented in
accordance with GAAP. Management believes that this measure
excluding merger-related costs is meaningful as it presents the
performance of the company without the additive merger costs that
are non-recurring and would not be incurred if the company had not
merged with Hampton Roads Bankshares, Inc. Allowance for loan
losses (ALL) plus discounts on acquired loans as a percentage of
gross loans and tangible book value per share are supplemental
financial measures that are not required by, or presented in
accordance with, U.S. GAAP. Management believes that credit
mark adjusted ALL as a percentage of gross loans is meaningful
because it is a measure management uses to assess asset
quality. Management believes that tangible book value per
common share is meaningful because it is one of the measures
management uses to assess capital adequacy. Set forth above
are reconciliations of each of these non-GAAP financial measures
calculated and reported in accordance with GAAP. Book value
is the same as shareholders' equity presented on consolidated
balance sheets. Calculations of these non-GAAP financial
measures may not be comparable to the calculation of similarly
titled measures reported by other companies. |
|
Contact:
Thomas W. Osgood
Executive Vice President, Chief Financial Officer,
Chief Administrative Officer and Treasurer
(804) 433-2209
tosgood@xenithbank.com
Xenith Bankshares, Inc. NEW (NASDAQ:XBKS)
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Xenith Bankshares, Inc. NEW (NASDAQ:XBKS)
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