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Colonial Virginia Bank Announces 2013 Earnings

GLOUCESTER, Va., Feb. 12, 2014 (GLOBE NEWSWIRE) -- Colonial Virginia Bank (OTCBB:CNVB) ("the Bank"), today reported results of operations for the fiscal year ended December 31, 2013, which reflected record earnings with net income after taxes of $623,319, compared to net after tax earnings of $255,007 in 2012. Pre-tax earnings were $862,279 for 2013, compared to pre-tax earnings of $285,731 in 2012. On a per share basis, 2013 reflected earnings on a fully diluted basis of $1.02 per share, compared to $0.42 per share in 2012.

There were several elements that contributed to the marked growth in profits relative to the prior year and resulted in the record earnings in 2013. First, and most significant, was a vast reduction in losses associated with non-performing assets. Losses on the sale of assets totaled $72,544 in 2013 compared to losses of $673,498 in 2012. The 2012 total included write-downs precipitated by the closure of the Bank's New Kent office totaling $248,620. Other expenses associated with non-performing assets totaled $212,847 in 2013 compared to $98,881 in the previous year. Also contributing to the overall earnings increase was a considerable reduction in loan loss provision expense. Loan loss provisions totaled $155,000 in 2013 compared to $303,325 in 2012. During 2013, several large problem loans paid off and although past due and non-accrual loans fluctuate quarter to quarter, the risk of loss diminished and led to a decrease in the provision for loan loss expense.

Another positive factor was an appreciable decline in occupancy, utilities, and furniture, fixtures and equipment expenses resulting primarily from the New Kent office closing. The total expense in 2013 for these items was $296,595 which compares to $369,963 in 2012. The discontinuation of operations in New Kent, as well as a sizable reduction of pension costs, yielded a noticeable decrease in personnel expenses. Total salary and employee benefits costs were $1.8 million in 2013 compared to $2.1 million in the year prior. Net interest income declined year over year, but this was the product of balance sheet retrenchment rather than margin contraction; average earning assets decreased to $102.3 million in 2013 from $109.7 million in 2012. The average yield on earning assets declined to 4.88% in 2013 from 5.01% in 2012, but this was offset by a reduction in funding costs; the average rate on interest-bearing liabilities decreased to 0.63% for 2013 compared to 0.81% for 2012.

Non-interest income totaled $439,460 in 2013 compared to $487,287 in 2012, a 9.8% decrease. Non-interest expenses totaled $3.8 million for the year which compares to $4.6 million in 2012, a 16.8% reduction. The reduction was due primarily to the decrease in losses on the sale of assets as mentioned above. Loan loss provisions totaled $155,000 in 2013 compared to $303,325 in 2012. The loan loss reserve as a percentage of gross loans as of December 31, 2013 was 2.19% which compares to 2.62% as of the previous year-end. The ratio of non-performing assets to total assets decreased to 3.49% from 3.91% a year ago. Provisions for federal income taxes were $238,960 in 2013 which compares to $30,724 in 2012.

Total assets as of December 31, 2013 were $114.9 million, exhibiting a decrease of 2.5% over the previous year-end. Total securities increased 24.1% during 2013 to $18.9 million. Gross loans totaled $73.0 million at year-end, representing a decline of 7.8% from year-end 2012. Deposits totaled $99.5 million at December 31, 2013, representing a year over year decrease of 3.1%. Federal Home Loan Bank borrowings remained level throughout the twelve month period at $1.5 million. Total capital appreciated 3.2% to $12.2 million as of December 31, 2013.

Bob Bailey, CEO & President, commented on his second full year as the company's lead executive. "We are excited to report record earnings for 2013. Having just celebrated our 10 year anniversary, it is gratifying that we are showing continued momentum in our net income and credit metrics, despite a lethargic economy. Many people deserve our sincere thanks for their contribution to the year over year improvement we have delivered. There is still work to be done but for now, we are enjoying this historic accomplishment with our teammates, customers, shareholders and the community. Several large problem loans were paid off or improved in 2013 which will allow us to direct more resources towards meeting the challenges this economy, new regulations and intense competition present."

The Bank operates two full service retail bank offices in Gloucester County, Virginia, as well as a loan production office in York County, Virginia. The Bank is engaged in a referral relationship with Lions Bridge Financial to accommodate Bank investment clients. The Lions Bridge relationship involves no ownership by the Bank.

The Bank's stock is listed for trading on the OTC Markets marketplace under the symbol CNVB (http://www.otcmarkets.com/stock/CNVB/quote). Additional information regarding the Bank's products and services is available on the Bank's website at http://www.colonialvabank.com.

Use of Certain Non-GAAP Financial Measures. In addition to results presented in accordance with United States generally accepted accounting principles (GAAP), this earnings release includes certain non-GAAP financial measures, which are reconciled to their equivalent GAAP financial measures below. Management believes these non-GAAP financial measures provide information useful to investors in understanding the corporation's performance trends and facilitate comparisons with its peers. Specifically, management believes the exclusion of a significant recovery of income recognized in a single accounting period permits a comparison of results for ongoing business operations, and it is on this basis that management internally assesses the corporation's performance and establishes goals for future periods.

Although the corporation's management believes the non-GAAP financial measures presented in this earnings release enhance investors' understanding of it performance, these non-GAAP financial measures should not be considered an alternative to GAAP-based financial statements.

Forward-Looking Statements. The statements contained in this press release that are not historical facts may constitute "forward-looking statements" as defined by the federal securities laws. These statements may address issues that involve estimates and assumptions made by management; risks and uncertainties, and actual results could differ materially from historical results or those anticipated by such statements. Factors that could have a material adverse effect on the operations and future prospects of the corporation include, but are not limited to, changes in: (1) interest rates, (2) general economic conditions, (3) demand for loan products, (4) the legislative/regulatory climate, (5) monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board, (6) the quality or composition of the loan or investment portfolios, (7) deposit flows, (8) competition, (9) demand for financial services in the Bank's market area, (10) technology, (11) reliance on third parties for key services, and (12) accounting principles, policies and guidelines. These risks and uncertainties should be considered in evaluating the forward-looking statements contained herein, and readers are cautioned not to place undue reliance on such statements, which speak only as of their dates.

Balance Sheet ($) Y-Y
2013 YTD 2012 YTD Ch (%)
Loans Held for Investment, before Reserves 72,985,833 79,116,328 (7.75)
Loan Loss Reserve 1,604,150 2,079,051 (22.84)
Net Loans Receivable 71,381,683 77,037,277 (7.34)
Total Assets 114,880,032 117,864,706 (2.53)
Deposits 99,474,979 102,680,780 (3.12)
Common Equity 12,209,090 11,836,517 3.15
Total Shareholders' Equity 12,209,090 11,836,517 3.15
Shares Outstanding (actual) 610,175 610,175 0.00
Income Statement ($) Y-Y
2013 YTD 2012 YTD Ch (%)
Net Interest Income 4,390,632 4,683,683 (6.26)
Provision for Loan Losses 155,000 303,325 (48.90)
Noninterest Income 439,460 487,227 (9.80)
Noninterest Expense 3,812,813 4,581,854 (16.78)
Net Income Before Taxes 862,279 285,731 201.78
Provision for Taxes 238,960 30,724 677.76
Net Income 623,319 255,007 144.43
Per Share Items ($) Y-Y
2013 YTD 2012 YTD Ch (%)
Book Value Per Share 20.01 19.40 3.15
Diluted EPS 1.02 0.42 142.86
Dividends Declared 0.00 0.00 --
Performance Ratios (%) Y-Y
2013 YTD 2012 YTD Ch (bp)
ROAA 0.56 0.23 33
ROAE 5.45 2.38 307
Net Interest Margin 4.33 4.29 4
Loans / Deposits 73.37 77.05 (368)
Efficiency Ratio 73.62 84.39 (1,077)
Balance Sheet Ratios (%) Y-Y
2013 YTD 2012 YTD Ch (bp)
Equity / Assets 10.63 10.04 59
Asset Quality Ratios (%) Y-Y
2013 YTD 2012 YTD Ch (bp)
Nonperforming Assets / Assets 3.49 3.91 (42)
Loan Loss Reserves / Gross Loans 2.19 2.62 (43)
Loan Loss Reserves / Nonperforming Loans 53.54 89.51 (3,597)
Net Charge-offs / Avg Loans 0.83 0.49 34
Regulatory Capital Ratios (%) Y-Y
2013 YTD 2012 YTD Ch (bp)
Tier 1 Capital Ratio 15.50 13.75 175
*Performance Ratios are calculated on a fully taxable equivalent basis assuming a federal tax rate of 34%.

CONTACT: Kenneth E. Smith Executive Vice President & CFO of Colonial Virginia Bank 1-804-695-9300Source:Colonial Virginia Bank