×

Cordia Bancorp Inc. Reports Second Quarter Loss Driven by Asset Growth Costs

Cordia Bancorp

MIDLOTHIAN, Va., Aug. 6, 2014 (GLOBE NEWSWIRE) -- Cordia Bancorp Inc. ("Cordia") (Nasdaq:BVA), parent company of Bank of Virginia, reported a net loss of $270,000 or $(0.09) per share for the second quarter of 2014, compared to net income of $261,000 or $0.09 per share for the second quarter of 2013. For the first six months of 2014, the net loss was $544,000 or $(0.19) per share compared to net income of $482,000 or $0.20 per share for the same period of 2013.

Highlights for the first six months of 2014

  • $15.4 million capital raise completed in April 2014
  • 26% growth in total assets
  • 72% growth in investment securities
  • 17% growth in loans held for investments
  • 16% growth in deposits
  • 14% increase in employees
  • Nonperforming assets decreased to 1.4% of total assets
  • Conversion of Cordia's recently issued preferred stock into approximately 3,629,871 shares of voting and nonvoting common stock

Chief Executive Officer Jack Zoeller stated, "With the $15.4 million capital raise completed, we are turning our focus to building the infrastructure to solidly grow the company. We have added significantly to our securities and student loan portfolios and have experienced strong commercial loan growth volume over the past few months. In addition, we recruited three experienced officers who will give an added boost to our asset originations in future periods."

Mr. Zoeller continued, "To help fund our growth, we opened two new branch office locations in the Richmond metro market last month. Although our additional lenders and branches will slightly constrain profitability in the short term, they are an important part of our strategy to build sustained core profitability in 2015 and beyond."

Balance Sheet Activity

  • Asset Growth. Total assets were $295.5 million at June 30, 2014, compared to $235.1 million at December 31, 2013. During the first six months of 2014 organic loans increased a net $15.3 million while student loans, 98% guaranteed by the U.S. Department of Education, increased a net $15.2 million. In addition, investment securities increased $28.3 miillion.
  • Deposit Growth and Mix. Total deposits increased 16% to $245.2 million at June 30, 2014, compared to $210.8 million at December 31, 2013. Non-interest bearing deposits increased 9% while interest bearing deposits increased over 17% during the six month ended June 30, 2014.
  • Asset Quality. Asset quality continued to improve, with total non-performing assets decreasing to $4.1 million, or 1.4% of total assets, at June 30, 2014, from $5.5 million, or 2.3% of assets, at December 31, 2013. There were no delinquencies in the Company's accruing organic loan portfolio at June 30, 2014.
  • Tangible Book Value. Tangible book value per share was $4.12 at June 30, 2014.

Operating Results

Three months ended June 30, 2014 compared to the three months ended June 30, 2013

  • The net loss for the quarter ended June 30, 2014 was $270,000 compared to net income of $261,000 for the prior year second quarter.
  • Net interest income was $2.07 million for the second quarter of 2014, compared to $2.15 million for the second quarter of 2013.
  • Net interest margin was 3.05% and 3.49% for the second quarter of 2014 and 2013, respectively. Adjusting for the impact of purchase accounting, net interest margin increased to 2.95% from 2.84%, or 11 basis points, from the 2013 period.
  • The provision for loan losses was $209,000 in the second quarter of 2014 compared to $7,000 in the prior year quarter.
  • Noninterest expense increased to $2.2 million for the second quarter of 2014, compared to $1.9 million for the second quarter of 2013. The increase in noninterest expense was primarily due to an increase in salaries and benefits of $176,000 resulting from staff additions and $108,000 in loan expenses.

Six months ended June 30, 2014 compared to the six months ended June 30, 2013

  • The net loss for the first six months of 2014 was $544,000 compared to net income of $482,000 for the first six months of 2013.
  • Net interest income was $3.97 million for the 2014 period, compared to $4.38 million for the 2013 period.
  • Net interest margin for the 2014 period was 3.19% compared to 3.87% for the 2013 period. Adjusting for the impact of purchase accounting, net interest margin increased to 3.06% from 2.86%, or 20 basis points, from the 2013 period.
  • Noninterest income was $185,000 for the 2014 period, compared to $133,000 for the 2013 period. The increase was driven by a net gain on the sale of available for sale securities of $64,000 in the first quarter of 2014.
  • Noninterest expense increased to $4.5 million for the 2014 period, compared to $3.9 million for the 2014 period. The increase in noninterest expense was primarily due to a one-time accrual of incentive compensation recorded in 2014 and an increase in servicing fees due to the growth of the student loan portfolio.

About Cordia Bancorp

Cordia Bancorp Inc. is a public bank holding company founded in 2009 seeking to invest in undervalued community banks and pursue organic and strategic growth in the Mid-Atlantic banking market. Substantially all of the assets of Cordia consist of its investment in Bank of Virginia. Bank of Virginia provides retail banking services to individuals and commercial customers through four full-service and two ATM-only banking locations in the greater Richmond market, including Chesterfield and Henrico Counties and Colonial Heights, Virginia.

For more information about Cordia Bancorp and Bank of Virginia, visit our websites: www.cordiabancorp.com and www.bankofva.com.

DISCLAIMER

This news release may include forward-looking statements. These forward-looking statements are based on current expectations that involve risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may differ materially. These risks include: changes in business or other market conditions; the timely development, production and acceptance of new products and services; the challenge of managing asset/liability levels; the management of credit risk and interest rate risk; the difficulty of keeping expense growth at modest levels while increasing revenues; and other risks detailed from time to time in the Company's periodic filings with the Securities Exchange Commission. Pursuant to the Private Securities Litigation Reform Act of 1995, the Company does not undertake to update forward-looking statements contained within this news release.

Cordia Bancorp
Consolidated Balance Sheets (unaudited)
June 30, March 31, Dec. 31, Sept. 30, June 30,
(Dollars in thousands, except per share data) 2014 2014 2013 2013 2013
Assets
Cash and due from banks $ 5,332 $ 10,499 $ 5,290 $ 6,893 $ 3,756
Fed funds sold and Interest-bearing deposits 9,843 16,839 8,694 15,889 27,766
Total cash and cash equivalents 15,175 27,338 13,984 22,782 31,522
Securities available for sale, at fair value 45,835 24,464 24,567 29,807 22,105
Securities held to maturity 21,839 14,500 14,753 -- --
Restricted securities 1,525 1,529 1,074 1,071 1,134
Loans held for investment:
Commercial real estate 90,909 85,084 82,602 85,962 80,289
Commercial and industrial 24,605 22,118 21,208 20,388 21,273
Guaranteed student loans 70,624 80,966 55,427 51,293 52,957
Consumer and other 18,147 16,914 14,770 15,146 13,960
Total loans held for investment 204,285 205,082 174,007 172,789 168,479
Less: Allowance for loan losses (1,407) (1,504) (1,489) (1,517) (1,562)
Net loans held for investment 202,878 203,578 172,518 171,272 166,917
Loans held for sale -- -- -- -- --
Premises and equipment, net 4,510 4,430 4,464 4,512 4,287
Accrued interest receivable 1,830 2,177 1,655 1,335 1,132
Other real estate owned, net of valuation allowance 1,543 1,543 1,545 1,545 1,768
Other assets 390 697 588 648 655
Total assets $ 295,525 $ 280,256 $ 235,148 $ 232,972 $ 229,520
Liabilities and stockholders' equity
Non-interest bearing deposits 24,883 21,642 22,845 21,719 21,338
Savings and interest bearing demand deposits 76,044 74,825 60,685 59,546 49,493
Time deposits, $100,000 and greater 93,565 87,559 76,231 75,023 79,795
Other time deposits 50,701 51,002 51,053 52,620 54,732
Total deposits 245,193 235,028 210,814 208,908 205,358
Accrued expenses and other liabilities 3,419 12,202 1,047 897 998
FHLB borrowings 20,000 20,000 10,000 10,000 10,000
Total Liabilities 268,612 267,230 221,861 219,805 216,356
Preferred stock -- -- -- -- --
Common stock - voting 50 28 28 28 28
Common stock - nonvoting 14 -- -- -- --
Additional paid-in-capital 32,848 18,672 18,648 18,606 18,579
Retained deficit (5,559) (5,289) (5,005) (5,011) (5,219)
Accumulated other comprehensive income (440) (385) (384) (456) (224)
Total stockholders' equity 26,913 13,026 13,287 13,167 13,164
Total liabilities and stockholders' equity $ 295,525 $ 280,256 $ 235,148 $ 232,972 $ 229,520
Cordia Bancorp
Consolidated Statemtents of Income (unaudited)
Three Months Ended Six Months Ended
June 30, March 31, Dec. 31, Sept. 30, June 30, June 30, June 30,
(Dollars in thousands, except per share data) 2014 2014 2013 2013 2013 2014 2013
Interest Income
Interest and fees on loans $ 2,252 $ 2,149 $ 2,089 $ 2,182 $ 2,516 $ 4,401 $ 5,095
Investment securities 311 207 161 123 72 518 142
Interest on federal funds sold and deposits with banks 9 6 10 19 29 15 44
Total interest income 2,572 2,362 2,260 2,324 2,617 4,934 5,281
Interest Expense
Interest on deposits 441 426 412 415 426 867 818
Interest on FHLB Borrowings 56 41 40 42 41 97 81
Total interest expense 497 467 452 457 467 964 899
Net interest income 2,075 1,895 1,808 1,867 2,150 3,970 4,382
Provision for (benefit from) loan losses 209 20 (92) (23) 7 229 134
Net interest income after provision for loan losses 1,866 1,875 1,900 1,890 2,143 3,741 4,248
Non-interest income
Service charges on deposit accounts 19 26 40 31 29 45 62
Net gain on sale of available for sale securities -- 64 -- -- -- 64 --
Other fee income 43 33 46 51 36 76 71
Total non-interest income 62 123 86 82 65 185 133
Non-interest expense
Salaries and employee benefits 1,150 1,406 1,066 991 974 2,556 2,159
Professional services 125 106 161 67 211 231 273
Occupancy 120 151 138 137 145 271 290
Data processing and communictions 151 142 139 140 144 293 269
FDIC assessment and bank fees 93 94 97 102 114 187 234
Bank franchise taxes 27 29 14 14 20 56 46
Loan expenses 210 126 76 81 102 336 117
Other real estate expenses 17 5 16 5 12 22 28
Gain on sale of OREO 65 75 75 30 64 140 133
Supplies and equipment 44 41 40 42 42 85 84
Insurance 24 16 32 34 38 40 72
Marketing and business development 9 6 32 19 15 15 37
Other 163 85 95 102 66 248 157
Total non-interest expense 2,198 2,282 1,981 1,764 1,947 4,480 3,899
Consolidated net income (loss) before non-controlling interest (270) (284) 5 208 261 (554) 482
Net income (loss) (270) (284) 5 208 261 (554) 482
Earnings per share, basic and diluted $ (0.09) $ (0.10) $ -- $ 0.07 $ 0.09 $ (0.19) $ 0.20
Weighted average shares outstanding, basic 3,017,772 2,776,992 2,773,320 2,768,484 2,764,090 2,898,047 2,431,019
Weighted average shares outstanding, diluted 3,017,772 2,776,992 2,788,302 2,777,840 2,775,802 2,898,047 2,444,923
Cordia Bancorp
Consolidated Financial Highlights (unaudited)
As of and for the Three Months Ended Six Months Ended
June 30, March 31, Dec. 31, Sept. 30, June 30, June 30, June 30,
(Dollars in thousands, except per share data) 2014 2014 2013 2013 2013 2014 2013
Results of Operations
Interest income $ 2,572 $ 2,362 $ 2,260 $ 2,324 $ 2,617 $ 4,934 $ 5,281
Interest expense 497 467 452 457 467 964 899
Net interest income 2,075 1,895 1,808 1,867 2,150 3,970 4,382
Provision (benefit) for loan losses 209 20 (92) (23) 7 229 134
Net interest income after provision for loan losses 1,866 1,875 1,900 1,890 2,143 3,741 4,248
Non-interest income 62 123 86 82 65 185 133
Non-interest expense 2,198 2,282 1,981 1,764 1,947 4,480 3,899
Net income $ (270) $ (284) $ 5 $ 208 $ 261 $ (554) $ 482
Earnings per share, basics and diluted $ (0.09) $ (0.10) $ -- $ 0.07 $ 0.09 $ (0.19) $ 0.20
Weighted average shares outstanding, basic 3,017,772 2,776,992 2,773,320 2,768,484 2,764,090 2,898,047 2,431,019
Weighted average shares outstanding, diluted 3,017,772 2,776,992 2,788,302 2,777,840 2,775,802 2,898,047 2,444,923
Performance Ratios
Return on average assets -0.38% -0.47% 0.01% 0.35% 0.41% -0.42% 0.41%
Return on average equity -4.20% -8.52% 0.15% 6.39% 7.88% -5.66% 7.63%
Return on average tangible equity -4.22% -8.61% 0.15% 6.46% 7.97% -5.70% 7.73%
Efficiency ratio 102.85% 113.08% 104.59% 90.51% 87.90% 107.82% 86.36%
Yields and Rates
Yield on loans 4.39% 4.88% 4.82% 5.11% 5.55% 4.60% 6.03%
Yield on securities 2.27% 2.08% 2.14% 1.79% 1.70% 2.19% 1.63%
Yield on interest earning assets 3.77% 4.16% 4.13% 4.09% 4.23% 3.94% 4.63%
Cost of interest bearing deposits 0.82% 0.88% 0.89% 0.88% 0.82% 0.85% 0.86%
Cost of total deposits 0.74% 0.79% 0.80% 0.79% 0.75% 0.76% 0.78%
Cost of borrowings 1.12% 1.62% 1.60% 1.68% 1.64% 1.29% 1.62%
Cost of interest bearing liabilities 0.84% 0.92% 0.93% 0.92% 0.86% 0.88% 0.90%
Interest rate spread 2.93% 3.25% 3.21% 3.17% 3.38% 3.06% 3.73%
Net interest margin 3.05% 3.34% 3.30% 3.29% 3.49% 3.19% 3.87%
Capital
Total equity to total assets 9.11% 4.65% 5.65% 5.65% 5.74% 9.11% 5.74%
Tangible equity to total assets 9.07% 4.60% 5.59% 5.59% 5.67% 9.07% 5.67%
Book value per share 4.14 4.67 4.77 4.74 4.76 4.14 4.76
Tangible book value per share 4.12 4.63 4.72 4.69 4.71 4.12 4.71
Common shares outstanding 6,505,781 2,788,302 2,788,302 2,775,802 2,764,090 6,505,781 2,764,090
Average Balances
Loans 205,104 176,161 173,536 170,969 181,373 191,451 168,928
Securities 54,904 39,747 30,156 27,509 16,922 47,367 17,410
Earning assets 272,733 226,968 218,707 227,110 247,283 250,715 228,170
Total assets 286,525 241,660 231,435 235,067 254,765 264,216 235,273
Interest bearing deposits 215,856 193,946 184,920 188,526 208,433 204,959 189,713
Total deposits 238,416 215,721 206,981 210,395 228,571 227,130 209,049
FHLB borrowings 20,000 10,111 10,000 10,000 10,000 15,083 10,000
Interest bearing liabilities 235,856 204,057 194,920 198,526 218,433 220,042 199,713
Total equity 25,727 13,332 13,266 13,027 13,254 19,564 12,639
Tangible equity 25,601 13,196 13,123 12,875 13,093 19,434 12,473
Asset Quality
Net charge-offs 306 5 (65) 22 28 311 689
Net charge-off rate 0.60% 0.01% -0.15% 0.05% 0.06% 0.16% 0.41%
Non-performing loans 2,572 3,225 3,934 4,054 3,980 2,572 3,980
Non-performing assets 4,115 4,768 5,479 5,599 5,748 4,115 5,748
Allowance for loan losses 1,407 1,504 1,489 1,517 1,562 1,407 1,562
Non-performing loans as a % of total loans held for investment 1.26% 1.57% 2.26% 2.35% 2.36% 1.26% 1.94%
Non-performing assets as a % of total assets 1.39% 1.70% 2.33% 2.40% 2.50% 1.39% 2.05%
Allowance for loan losses as a % of total loans held for investment 0.69% 0.73% 0.86% 0.88% 0.93% 0.69% 0.76%
Allowance for loan losses as a % of non-performing loans 54.70% 46.64% 37.85% 37.42% 39.25% 54.70% 39.25%
Cordia Bancorp
GAAP to Non-GAAP Reconciliations (unaudited)
The table below shows the computations of tangible equity and tangible assets and certain related ratios, all of which are considered to be non-GAAP financial measures. The tangible equity to tangible assets ratio has become a focus of some investors and management believes this ratio may assist in analyzing the Corporation's capital position, absent the effects of intangible assets. These non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation, or as substitute for analysis of results reported under GAAP. Because not all companies use identical calculations, the non-GAAP measures presented in the following table may not be comparable to those reported by other companies.
As of and for the Three Months Ended Six Months Ended
June 30, March 31, Dec. 31, Sept. 30, June 30, June 30,
(Dollars in thousands, except per share data) 2014 2014 2013 2013 2013 2014 2013
Tangible Equity and Tangible Assets (Period End)
Total shareholders' equity (GAAP) $ 26,913 $ 13,026 $ 13,287 $ 13,167 $ 13,164 $ 26,913 $ 13,164
Less: intangible assets 121 130 139 148 157 121 157
Tangible Equity (non-GAAP) $ 26,792 $ 12,896 $ 13,148 $ 13,019 $ 13,007 $ 26,792 $ 13,007
-- --
Total assets (GAAP) $ 295,525 $ 280,256 $ 235,148 $ 232,972 $ 229,520 $ 295,525 $ 229,520
Less: intangible assets 121 130 139 148 157 121 157
Tangible assets (non-GAAP) $ 295,404 $ 280,126 $ 235,009 $ 232,824 $ 229,363 $ 295,404 $ 229,363
-- --
Total equity to total assets (GAAP) 9.11% 4.65% 5.65% 5.65% 5.74% 9.11% 5.74%
Book value per share (GAAP) $ 4.14 $ 4.67 $ 4.77 $ 4.74 $ 4.76 $ 4.14 $ 4.76
Tangible equity to tangible assets (non-GAAP) 9.07% 4.60% 5.59% 5.59% 5.67% 9.07% 5.67%
Tangible book value per share (non-GAAP) $ 4.12 $ 4.63 $ 4.72 $ 4.69 $ 4.71 $ 4.12 $ 4.71
Tangible Equity and Tangible Assets (Average)
Total shareholders' equity (GAAP) 25,727 13,332 13,266 13,027 13,254 19,564 12,639
Less: intangible assets 126 136 144 153 162 130 166
Tangible Equity (non-GAAP) $ 25,601 $ 13,196 $ 13,123 $ 12,875 $ 13,093 $ 19,434 $ 12,473
Total assets (GAAP) 286,525 241,660 231,435 235,067 254,765 264,216 235,273
Less: intangible assets 126 136 144 153 162 130 166
Tangible assets (non-GAAP) $ 286,399 $ 241,524 $ 231,292 $ 234,915 $ 254,604 $ 264,086 $ 235,107
Total equity to total assets (GAAP) 8.98% 5.52% 5.73% 5.54% 5.20% 7.40% 5.37%
Book value per share (GAAP) $ 3.95 $ 4.78 $ 4.76 $ 4.69 $ 4.80 $ 3.01 $ 4.57
Tangible equity to tangible assets (non-GAAP) 8.94% 5.46% 5.67% 5.48% 5.14% 7.36% 5.31%
Tangible book value per share (non-GAAP) $ 3.94 $ 4.73 $ 4.71 $ 4.64 $ 4.74 $ 2.99 $ 4.51

CONTACT: Mark Severson, CFO, Cordia Bancorp Inc 804-763-1322

Source:Cordia Bancorp