- Third quarter net income available to common shareholders totaled $2.8 million
- Year-to-date earnings totaled $3.5 million, a $23.0 million increase over the comparable period in 2012
- Average core deposits grew $21.2 million during the third quarter
- Non-performing assets declined to 4.39% of total assets from 7.68% over past 12 months
VIRGINIA BEACH, Va., Nov. 7, 2013 (GLOBE NEWSWIRE) -- 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 third quarter of 2013. Net income available to common shareholders was $2.8 million for the three months ended September 30, 2013, compared to $0.1 million for the second quarter of 2013 and a net loss available to common shareholders of $5.9 million for the third quarter of 2012. On a year-to-date basis, net income available to common shareholders totaled $3.5 million in 2013, compared to a net loss available to common shareholders of $19.5 million for the comparable period in 2012.
"I am pleased with the Company's performance in the third quarter," said Douglas Glenn, President and Chief Executive Officer. "We are focused on ensuring that our business model meets the needs of our customers in an evolving banking environment and on continuing to position our Company for future growth through the implementation of our One Bank Strategy. This quarter represents yet another building block in our long-term foundation."
Net Interest Income
Net interest income for the three and nine months ended September 30, 2013 was $15.8 million and $47.8 million, respectively, a decrease of $37 thousand and $910 thousand, respectively, for the same periods ended September 30, 2012. The decrease in net interest income for the nine months ended September 30, 2013 was due to decreases in average interest-earning assets and the yields received on these assets, partially offset by an increase in net interest margin which benefited from a lower cost of funding due to re-pricing of deposits and a change in the composition of interest bearing liabilities. Net interest margin, as calculated using our new method that now includes the impact of nonaccrual loans, increased to 3.42% and 3.44% for the three and nine months ended September 30, 2013, respectively from 3.35% and 3.38% for the three and nine months ended September 30, 2012.
The Company's ratio of non-performing assets to total assets decreased to 4.39% at September 30, 2013 from 4.81% at June 30, 2013. On a year over year basis, the ratio of non-performing assets to total assets declined by 43%. Total past due loans which continue to accrue interest decreased to $4.8 million, or 0.35% of total loans outstanding, at September 30, 2013 from $6.2 million, or 0.44% of total loans outstanding, at June 30, 2013.
As a result of the Company's quarterly analysis of the adequacy of the allowance for loan losses, the Company did not record a provision for loan losses in the third quarter of 2013, compared to a provision of $2.5 million for the comparable period in 2012 and $1.0 million for the second quarter of 2013. Provision for loan losses totaled $1.0 million for the nine months ended September 30, 2013 compared to $14.1 million for the comparable period in 2012. During the third quarter of 2013, the Company recovered $1.9 million from loans that had previously been charged-off, which increased the allowance for loan losses at September 30, 2013.
Noninterest income for the three and nine months ended September 30, 2013 was $7.9 million and $20.9 million, respectively, a 259% and 186% increase over the comparative periods in 2012. This was largely due to a decline in losses on other real estate owned and repossessed assets. Mortgage revenue decreased during the third quarter of 2013 compared to the same period in 2012 due to declines in both origination volume and margin. For the nine months ended September 30, 2013 mortgage revenue remained comparable to the corresponding period in 2012.
Income from bank-owned life insurance increased $1.8 million to $2.2 million and $3.0 million for the three and nine month periods ended September 30, 2013, respectively, compared to $399 thousand and $1.3 million for the comparative periods in 2012, largely due to a $1.8 million life insurance benefit recognized during the third quarter of 2013.
Noninterest expense was $20.8 million and $62.4 million for the three and nine months ended September 30, 2013, respectively, which was an increase of $396 thousand and $3.3 million over the comparable periods in 2012. The 2013 year to date increase is primarily due to higher expenses related to salary and employee benefits and occupancy, partially offset by a decrease in problem loan and repossessed asset costs.
Occupancy expense increased $844 thousand and $1.6 million for the three and nine months ended September 30, 2013, respectively, compared to the same periods in 2012 due to accelerated amortization of leasehold improvements at a closed branch and the accrual needed as a result of our decision to cease using a portion of the leased space in Dominion Tower after moving the Company's headquarters to Virginia Beach, Virginia.
Balance Sheet Trends
Total assets were $2.0 billion at September 30, 2013. Total assets decreased by $68.7 million or 3% from $2.1 billion at December 31, 2012. The decrease in assets was primarily associated with a $54.4 million or 65% decrease in loans held for sale, which can vary each month based on the timing of loan closings and subsequent loan sales to third party investors.
Gross loans decreased by $61.5 million or 4% during the nine months ended September 30, 2013, primarily through reductions in non-performing loans (both payoffs and charge-offs). The majority of the recent loan demand within our markets has come from the real estate - commercial mortgage category. Due to relatively soft loan demand in several loan categories, the majority of cash received from normal principal amortization and loan payoffs was reinvested in overnight funds sold and due from the Federal Reserve Bank, which increased $25.6 million or 31% from December 31, 2012, and in investment securities available for sale, which increased $19.1 million or 7% from December 31, 2012.
Deposits decreased $58.4 million or 4% from December 31, 2012 as a result of decreases of $56.8 million in time deposits under $100 thousand and $72.2 million in time deposits over $100 thousand, partially offset by increases of $14.5 million in noninterest-bearing demand deposits, $49.8 million in interest-bearing demand deposits, and $6.4 million in interest-bearing savings deposits. Decline in time deposits is a result of the Company's efforts to improve both the average cost and mix of funds. Average core deposits, which exclude brokered deposits and certificates of deposit greater than $100,000, increased by $21.2 million during the third quarter of 2013 to $1.2 billion as a result of successful marketing campaigns.
At September 30, 2013, 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 September 30, 2013, were 14.80%, 13.54% and 10.56%, 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, 2012, Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, and other filings made with the SEC.
About Hampton Roads Bankshares
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. Currently, 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 seven 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.|
|(unaudited)||September 30, 2013||June 30, 2013||September 30, 2012|
|Cash and due from banks||$ 16,251||$ 16,783||$ 15,316|
|Interest-bearing deposits in other banks||662||648||694|
|Overnight funds sold and due from Federal Reserve Bank||109,396||107,339||119,242|
|Investment securities available for sale, at fair value||295,626||278,386||293,335|
|Restricted equity securities, at cost||17,234||17,351||17,769|
|Loans held for sale||29,633||51,369||60,360|
|Allowance for loan losses||(37,701)||(38,234)||(54,444)|
|Premises and equipment, net||69,634||69,925||78,975|
|Other real estate owned and repossessed assets, net of valuation allowance||39,196||32,906||44,061|
|Intangible assets, net||1,585||1,741||2,745|
|Bank-owned life insurance||56,216||54,006||52,840|
|Totals assets||$ 1,985,420||$ 2,008,938||$ 2,071,433|
|Liabilities and Shareholders' Equity:|
|Less than $100||336,753||341,193||402,457|
|$100 or more||309,010||324,466||388,569|
|Federal Home Loan Bank borrowings||194,399||194,619||195,280|
|Accumulated other comprehensive income, net of tax||1,109||1,028||8,301|
|Total shareholders' equity before non-controlling interest||184,485||181,257||189,306|
|Total shareholders' equity||184,995||181,681||190,406|
|Total liabilities and shareholders' equity||$ 1,985,420||$ 2,008,938||$ 2,071,433|
|Non-performing Assets at Period-End:|
|Nonaccrual loans including nonaccrual impaired loans||$ 47,604||$ 63,739||$ 115,093|
|Loans 90 days past due and still accruing interest||320||--||--|
|Other real estate owned and repossessed assets||39,196||32,906||44,061|
|Total non-performing assets||$ 87,120||$ 96,645||$ 159,154|
|Composition of Loan Portfolio at Period-End:|
|Commercial||$ 218,504||$ 239,293||$ 247,125|
|Deferred loan fees and related costs||(1,541)||(1,039)||(130)|
|Total loans||$ 1,370,728||$ 1,400,250||$ 1,416,933|
|Hampton Roads Bankshares, Inc.|
|(in thousands, except share and per share data)||Three Months Ended||Nine Months Ended|
|(unaudited)||September 30, 2013||June 30, 2013||September 30, 2012||September 30, 2013||September 30, 2012|
|Loans, including fees||$ 17,122||$ 17,687||$ 17,904||$ 52,482||$ 56,026|
|Overnight funds sold and due from FRB||70||63||43||175||189|
|Interest-bearing deposits in other banks||1||--||--||1||1|
|Total interest income||19,024||19,589||19,933||58,143||62,208|
|Less than $100||851||921||1,168||2,772||4,145|
|$100 or more||837||935||1,187||2,780||4,210|
|Interest on deposits||2,220||2,423||2,923||7,170||9,915|
|Federal Home Loan Bank borrowings||477||479||562||1,442||1,728|
|Total interest expense||3,224||3,494||4,096||10,318||13,473|
|Net interest income||15,800||16,095||15,837||47,825||48,735|
|Provision for loan losses||--||1,000||2,476||1,000||14,124|
|Net interest income after provision for loan losses||15,800||15,095||13,361||46,825||34,611|
|Mortgage banking revenue||3,139||4,250||5,186||13,353||12,299|
|Service charges on deposit accounts||1,264||1,300||1,276||3,781||3,883|
|Income from bank-owned life insurance||2,210||434||399||3,017||1,261|
|Gain (loss) on sale of premises and equipment||243||7||--||123||(47)|
|Impairment of premises and equipment||--||--||--||(2,825)||--|
|Losses on other real estate owned and repossessed assets||(378)||(774)||(6,445)||(2,056)||(14,357)|
|Gain on sale of investment securities available for sale||--||763||218||763||479|
|Visa check card income||649||662||624||1,907||1,782|
|Total noninterest income||7,902||7,584||2,200||20,914||7,301|
|Salaries and employee benefits||9,946||10,951||10,117||31,853||28,973|
|Professional and consultant fees||1,693||1,639||1,514||4,225||4,852|
|Problem loan and repossessed asset costs||723||530||1,245||1,733||2,761|
|Total noninterest expense||20,790||22,193||20,394||62,415||59,072|
|Income (loss) before provision for income taxes||2,912||486||(4,833)||5,324||(17,160)|
|Provision for income taxes||22||135||--||157||--|
|Net income (loss)||2,890||351||(4,833)||5,167||(17,160)|
|Net income attributable to non-controlling interest||86||262||1,088||1,642||2,333|
|Net income (loss) attributable to Hampton Roads Bankshares, Inc.||$ 2,804||$ 89||$ (5,921)||$ 3,525||$ (19,493)|
|Cash dividends declared||$ --||$ --||$ --||$ --||$ --|
|Basic Income (loss)||$ 0.02||$ --||$ (0.05)||$ 0.02||$ (0.32)|
|Diluted Income (loss)||$ 0.02||$ --||$ (0.05)||$ 0.02||$ (0.32)|
|Basic weighted average shares outstanding||170,388,263||170,391,127||108,785,717||170,389,513||60,349,261|
|Effect of dilutive shares and warrant||2,067,958||1,247,524||--||2,025,830||--|
|Diluted weighted average shares outstanding||172,456,221||171,638,651||108,785,717||172,415,343||60,349,261|
|Total assets||$ 1,995,473||$ 2,027,560||$ 2,054,380||$ 2,017,966||$ 2,100,016|
|Gross loans (excludes loans held for sale)||1,375,985||1,415,524||1,416,959||1,406,063||1,450,475|
|Shareholders' equity *||180,994||187,406||150,882||185,030||124,715|
|Shareholders' equity - tangible *||179,335||185,503||147,975||183,100||121,481|
|Return on average assets||0.56%||0.02%||-1.15%||0.23%||-1.24%|
|Return on average equity *||6.15%||0.19%||-15.61%||2.55%||-20.88%|
|Return on average equity - tangible *||6.20%||0.19%||-15.92%||2.57%||-21.43%|
|Net interest margin||3.42%||3.44%||3.35%||3.44%||3.38%|
|Tangible equity to tangible assets *||9.22%||8.94%||9.02%||9.22%||9.02%|
|Allowance for Loan Losses:|
|Beginning balance||$ 38,234||$ 43,709||$ 62,907||$ 48,382||$ 74,947|
|Ending balance||$ 37,701||$ 38,234||$ 54,444||$ 37,701||$ 54,444|
|Asset Quality Ratios:|
|Annualized net chargeoffs to average loans||-0.15%||-1.83%||-3.06%||-1.11%||-3.19%|
|Nonperforming loans to total loans||3.50%||4.55%||8.12%||3.50%||8.12%|
|Nonperforming assets to total assets||4.39%||4.81%||7.68%||4.39%||7.68%|
|Allowance for loan losses to total loans||2.75%||2.73%||3.84%||2.75%||3.84%|
|* 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.
|September 30, 2013|
|As of||As of||As of|
|September 30, 2013||June 30, 2013||September 30, 2012|
|Total assets||$ 1,985,420||$ 2,008,938||$ 2,071,433|
|Less: intangible assets||1,585||1,741||2,745|
|Tangible assets||$ 1,983,835||$ 2,007,197||$ 2,068,688|
|Total shareholders' equity *||$ 184,485||$ 181,257||$ 189,306|
|Less: intangible assets||1,585||1,741||2,745|
|Common shareholders' equity - tangible *||$ 182,900||$ 179,516||$ 186,561|
|Tangible common equity to tangible assets *||9.22%||8.94%||9.02%|
|Total common shareholders' equity to total assets *||9.29%||9.02%||9.14%|
|* Equity amounts exclude non-controlling interest|
CONTACT: Douglas J. Glenn President and Chief Executive Officer (757) 217-1000Source:Hampton Roads Bankshares, Inc.