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Cardinal Bankshares Corporation Reports Results for the Quarter ended March 31, 2014

FLOYD, Va., April 22, 2014 /PRNewswire/ -- Cardinal Bankshares Corporation (OTC: CDBK), parent company of Bank of Floyd, announced today its consolidated financial results for the first quarter of 2014 and reported net income of $87 thousand, or $0.06 per share versus $130 thousand, or $0.08 per share for the same quarter in 2013. The Company's net income for the three-month period produced an annualized return on average assets of 0.13% and an annualized return on average equity of 1.93% as compared to 0.19% and 1.74% for these measures in the same period last year.

Michael Larrowe, President and Chief Executive Officer added, "The Bank experienced increased net interest income, driven by additional loan income and a decrease in interest expense on deposit accounts relative to the same period in 2013. As a result, net interest margin for the quarter improved to 3.08% from 2.85% for the year in 2013. We believe these improved operating metrics coupled with our new product and service offerings will continue to bring improved value to our customers and shareholders.  Due to substantial investment in both technology and personnel, the Bank's ability to be competitive has dramatically improved, while retaining capital levels well above required amounts."

Financial Highlights:

  • Total assets increased by $2.9 million from $268.8 million at December 31, 2013 to $271.7 million at March 31, 2014.
  • Total loans at March 31, 2014 were $146.2 million, which is an increase of $200 thousand compared to December 31, 2013.
  • A decrease in higher cost interest-bearing deposits of $2.9 million in the three-month period helped to improve the net interest margin.
  • The first quarter 2014 provision for loan losses of $22 thousand was an improvement of $278 thousand versus the same period in 2013 as losses from legacy loans continue to decrease.

Capital Levels

Both the Bank's and the Company's capital levels remain above the regulatory well-capitalized ratios.  The Company's consolidated Tier 1 risk-based and total risk-based capital ratios were 12.25% and 13.50%, respectively, at March 31, 2014, down from the 12.63% and 13.89% reported at December 31, 2013.

Nonperforming Assets

The Company's ratio of nonperforming assets as a percentage of total assets decreased 169 basis points to 3.10% as compared to 4.79% one year earlier.  Nonperforming assets decreased $5.1 million from $13.5 million at March 31, 2013 to $8.4 million at March 31, 2014.  Nonperforming assets at March 31, 2014 consisted of nonaccrual loans of $6.2 million, foreclosed assets of $2.2 million, and loans that were past due greater than 90 days and still accruing interest of zero.  Nonperforming assets at March 31, 2013 consisted of nonaccrual loans of $9.3 million, foreclosed assets of $2.7 million, and loans totaling $1.5 million that were past due greater than 90 days and still accruing interest. 

The Company recorded a provision for loan losses for the first quarter of 2014 of $22 thousand, as compared to a provision of $300 thousand for the same period last year.  Net charge-offs annualized as a percentage of average loans outstanding was (.043%) for the first quarter of 2014, compared to (.04%) for the same quarter in the prior year.  Net charge-offs (recoveries) for the quarter ended March 31, 2014 were $(156) thousand, in comparison to $(11) thousand for the same quarter one year ago.

The allowance for loan losses as a percentage of total loans increased from 1.30% at March 31, 2013 to 2.08% at March 31, 2014.  At March 31, 2014, the Company's total reserves were $3.0 million, which was comprised of $2.3 million in general reserves to cover estimated losses in the portfolio and $780 thousand that are allocated to specific credits.

Financial Position

At March 31, 2014, the Company's total assets were $271.7 million, total deposits were $237.0 million, total loans were $143.2 million and total stockholders' equity was $18.5 million. Compared with December 31, 2013, the Company's total assets increased $2.9 million or 1.1%.

Total deposits decreased by $4.7 million or 2.0%, while new advances of $7.0 million were drawn on the Federal Home Loan Bank of Atlanta during the first three months of 2014.  This shift allowed the Bank to reduce its cost of funds as rates paid on these borrowings are lower than rates paid on most of our deposits.

Stockholders' equity increased $1.1 million to $18.4 million at March 31, 2014 compared to $17.3 at December 31, 2013. Reduction of unrealized portfolio losses resulted in an increase to total equity of $1.0 million as compared to December 31, 2013.  Net income of $87 thousand accounts for the remaining increase to equity.

Net Interest Income

The Company's net interest income was $1.9 million for the three months ended March 31, 2014, an increase of $225 thousand or 13.1% compared to same period last year.  The increase is a result interest income from new loan originations combined with lower-costs on deposits and debt.

Noninterest Income

Noninterest income decreased $247 thousand for the three-month period ended March 31, 2014, compared to the same period last year, due to recognition of net realized gains on sales of securities of $296 thousand for the three-month period ended March 31, 2013. However, excluding gains taken on the sales of securities, noninterest income increased $50 thousand or 32.5%.

Noninterest Expense

Noninterest expense for the first quarter of 2014 totaled $2.0 million, up $226 thousand or 12.5% as compared to the quarter ended March 31, 2013.  The increase in noninterest expense is due to salaries and employee benefits as a result of experienced personnel additions, occupancy and equipment expense as building improvements are ongoing, data processing services as technology services offered continue to expand and other operating expenses related to increased data transmission speeds.

For Further Information Contact:

Michael D. Larrowe, President and Chief Executive Officer
Alan Dickerson, Chief Financial Officer
(540) 745-4191

 


Consolidated Balance Sheets

(in thousands, except share data)






March 31,


December 31,


2014


2013

Assets




Cash and due from banks                                           

$               3,537


$               3,339

Interest-bearing deposits in banks                                

8,240


6,757

Investment securities, available for sale                       

97,452


96,932

Investment securities, held to maturity                        

-


-

Restricted equity securities                                      

1,314


999





Total loans                                                           

146,206


146,031

Allowance for loan losses                                      

(3,040)


(2,862)

    Net loans                                                         

143,166


143,169





Bank premises and equipment, net                         

4,951


4,971

Accrued interest receivable                                     

795


910

Foreclosed assets                                                 

2,209


2,196

Bank owned life insurance                                      

6,611


6,571

Deferred tax asset                                                  

6,351


6,891

Reserve deferred tax asset                                      

(5,139)


(5,139)

Prepaid assets                                                     

947


800

Other assets                                                        

1,299


451

        Total assets                                                    

$           271,733


$           268,847





Liabilities and Stockholders' Equity








Liabilities




Noninterest-bearing deposits                                     

$             39,020


$             40,882

Interest-bearing deposits                                          

197,976


200,861

        Total deposits                                                 

236,996


241,743

FHLB advances                                                       

15,000


8,000

Accrued interest payable                                           

67


65

Bank owned life insurance SERP                              

830


828

Other liabilities                                                      

383


891

        Total liabilities                                              

253,276


251,527





Stockholders' Equity




Common stock, $10 par value; 5,000,000




Shares authorized; 1,535,733 shares issued




Issued and outstanding                                      

15,357


15,357

Additional paid-in capital                                           

2,925


2,925

Retained earnings                                                   

2,527


2,440

Accumulated other comprehensive income              

(2,352)


(3,402)

        Total stockholders' equity                              

18,457


17,320

        Total liabilities and stockholders' equity         

$           271,733


$           268,847

 

 

Consolidated Statements of Operations

(in thousands, except share data)






Three Months Ended March 31,


2014


2013

Interest and dividend income




    Loans and fees on loans        

$                     1,858


$                     1,723

    Federal funds sold                 

-


-

    Investment securities             




      Taxable                

485


402

       Exempt from federal income tax     

81


191

    Dividend income                  

5


5

    Deposits with banks       

3


6

            Total interest income    

2,432


2,327





Interest expense




    Deposits                        

489


611

    Borrowings                    

4


2

            Total interest expense         

493


613

            Net interest income       

1,939


1,714





Provision for loan losses         

22


300

        Net interest income after provision




            for loan losses          

1,917


1,414





Noninterest income




    Service charges on deposit accounts         

38


42

    Other service charges and fees            

27


26

    Net realized gains on sales of securities   

(1)


296

    Income on bank owned life insurance      

40


43

    Other income                                 

99


43

        Total noninterest income          

203


450





Noninterest expense




    Salaries and employee benefits      

1,138


1,065

    Occupancy and equipment            

287


202

    Legal and professional                  

68


120

    Bank franchise tax                       

42


36

    Data processing services               

124


71

    FDIC insurance premiums              

91


91

    Foreclosed assets, net                  

19


34

    Other operating expense                       

265


189

        Total noninterest expense                

2,034


1,808

        Income (loss) before income taxes    

86


56

        Income tax expense (benefit)        

(1)


(74)

Net income (loss)                                  

$                           87


$                         130

Basic earnings (loss) per share             

$                        0.06


$                        0.08

 


Cardinal Bankshares Corporation

Financial Highlights (Unaudited)

(in thousands)





Three Months Ended


March 31,
2014


March 31,
2013





Per Share




Earnings per share, basic and diluted

$          0.06


$           0.08

Book value

$        12.02


$         18.41





Financial Ratios




Annualized Return on Average Assets

0.13%


0.19%

Annualized Return on Average Equity

1.93%


1.74%

Annualized Net Interest Margin for the quarter ended1

3.08%


3.25%

Efficiency Ratio2

94.03%


97.39%





Capital Ratios




Tier 1 risk-based capital - Bank only

11.15%


12.19%

Total risk-based capital - Bank only

12.40%


13.22%





Tier 1 risk-based capital - consolidated

12.25%


15.33%

Total risk-based capital - consolidated

13.50%


16.42%





Allowance for Loan Losses at Beginning of Period

$        2,862


$         1,514

Loans Charged-off, net of Recoveries

156


11

Provision for Loan Losses

22


300

Allowance for Loan Losses at End of Period

$        3,040


$         1,825





Credit Quality Ratios




Nonperforming Assets as a % of Total Assets

3.10%


4.79%

Total Allowance for Loan Losses as a % of Total Loans

2.08%


1.30%

Total Allowance for Loan Losses as a % of Nonperforming Loans

48.97%


16.87%

Annualized Net Charge-offs as a % of Average Loans

-0.43%


-0.04%





Nonperforming Assets




Nonaccrual Loans

$        6,192


$         9,271

Loans Past Due 90 Days+, still accruing

16


1,547





Total Nonperforming Loans

6,208


10,818

Other Real Estate Owned

2,209


2,671

Total Nonperforming Assets

$        8,417


$       13,489





1 Net interest margin equals net interest income divided by interest-earning average assets.

2 Efficiency ratio equals noninterest expense (excluding OREO valuations and OREO operating expenses) divided by net interest income plus noninterest income (excluding net realized gains on sales of securities).

 

SOURCE Cardinal Bankshares Corporation

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