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| 8-K - VALLEY FINANCIAL CORP /VA/ | f8kvalley.htm |
EXHIBIT 99.1
Valley Financial Corporation▲
_______________________________________________________________
FOR RELEASE 4:00 p.m. March 12, 2010
VALLEY FINANCIAL CORPORATION
36 Church Avenue, S.W.
Roanoke, Virginia 24011
For Further Information Contact:
Ellis L. Gutshall, President and Chief Executive Officer
Kimberly B. Snyder, Executive Vice President and Chief Financial Officer
(540) 342-2265
VALLEY FINANCIAL CORPORATION REVISES 2009 FOURTH QUARTER LOAN LOSS PROVISION
ROANOKE, VIRGINIA (March 12, 2010) -- Valley Financial Corporation (NASDAQ Capital Market-VYFC) today announced that it revised its fourth quarter loan loss provision to $5.3 million from the previously announced $2.6 million. After the revision, the Company’s total allowance for loan losses stood at $14.6 million and 2.56% of total loans, as compared to $14.6 million and 2.54% of total loans previously announced. The Company increased its loan loss provision for general reserves by a total of $2.7 million; $1.2 million as a result of the impact from additional charge-offs totaling $2.7 million of previously recognized collateral impairments in its residential and commercial real estate categories and $1.5 million as the result of a new environmental factor to account for concentration risk for its large borrower relationships. These revisions are in response to the more conservative approach regulators are taking towards loan loss reserves in this difficult economic environment.
As a result of the revisions, the Company’s ratio of non-performing assets as a percentage of total assets decreased to 4.36% as compared to 5.10% previously reported. This compares to 1.48% reported at December 31, 2008. Net charge-offs as a percentage of average loans receivable for the year ended December 31, 2009 was 1.41% compared to 0.94% previously reported and 0.12% for last year. Net charge-offs for the year ended December 31, 2009 totaled $8.2 million as compared to $614,000 for 2008.
Ellis L. Gutshall, President and CEO commented, “The current economic environment has severely impacted businesses and financial institutions throughout the country. While today’s environment continues to require stringent measures, we are confident in our ability to navigate through the effects of this difficult economic environment. Pre-provision earnings remain strong, core deposits continue to experience double-digit annualized growth rates and our capital levels remain well above the levels deemed well-capitalized by the regulatory agencies.”
Capital Levels Remain Strong
Valley Financial Corporation’s capital levels remain well above the regulatory well-capitalized ratios. Tier 1 risk-based and total risk-based capital ratios were 11.74% and 13.01%, respectively, at December 31, 2009. Capital levels decreased compared to 13.11% and 14.36%, respectively, at December 31, 2008.
Impact on Earnings
Net loss for the fiscal year ended December 31, 2009 totaled $5.7 million compared to net income of $1.7 million a year earlier. After deducting the dividends and discount accretion on preferred stock, net loss available to common shareholders for the year ending December 31, 2009 amounted to $6.6 million or $1.42 per share compared to net income available to common shareholders of $1.6 million and $0.35 per share for the twelve months ended December 31, 2008. Return on average total assets was (0.81%) for the year and return on average shareholder’s equity was (10.03%), compared with 0.27% and 3.87% respectively for the same period last year.
Net loss for the three-month period ending December 31, 2009 was $2.7 million compared to a net loss of $0.5 million for the same period last year. After deducting the dividends and discount accretion on preferred stock, the net loss available to common shareholders for the three-month period ending December 31, 2009 amounted to $3.0 million or $0.63 per share compared to $0.5 million or $0.11 per share for the three-month period ending December 31, 2008.
Balance Sheet
At December 31, 2009, Valley Financial’s total assets were $713.7 million compared to $674.5 million at December 31, 2008. Net loan receivables were $556.4 million compared to $545.5 million at December 31, 2008, an increase of $10.9 million or 2%. Total deposits were $552.9 million compared to $466.3 million at December 31, 2008, an increase of $86.6 million or 19%. Total shareholders’ equity was $51.5 million compared to $58.5 million at December 31, 2008, a decrease of $7.0 million or 12%.
About Valley Financial Corporation
Valley Financial Corporation is the holding company for Valley Bank, which opened in 1995 and engages in a general commercial and retail banking business in the Roanoke Valley, emphasizing the needs of small businesses, professional concerns and individuals. Valley Bank currently operates from eight full-service offices at 36 Church Avenue, 110 McClanahan Street, 1518 Hershberger Road, 3850 Keagy Road (near Lewis-Gale Hospital), and 1327 Grandin Road in Roanoke City, 4467 Starkey Road in Roanoke County, 8 East Main Street in the City of Salem, and 1003 Hardy Road in the Town of Vinton. Additionally, the Bank operates its wealth management subsidiary, Valley Wealth Management Services, Inc. at 36 Church Avenue in Roanoke City. The Bank’s Internet site at www.myvalleybank.com is available for online banking and extensive investor information.
The Common Stock of Valley Financial Corporation is traded on the NASDAQ Capital Market under the symbol VYFC.
Non-GAAP Financial Measures
This report refers to the overhead efficiency ratio, which is computed by dividing non-interest expense by the sum of net interest income on a tax equivalent basis and non-interest income excluding gains or losses on securities, fixed assets and foreclosed assets. This is a non-GAAP financial measure that we believe provides investors with important information regarding our
operational efficiency. Comparison of our efficiency ratio with those of other companies may not be possible, because other companies may calculate the efficiency ratio differently. Such information is not in accordance with generally accepted accounting principles in the United States (GAAP) and should not be construed as such. Management believes such financial information is meaningful to the reader in understanding operating performance, but cautions that such information not be viewed as a substitute for GAAP. Valley Financial Corporation, in referring to its net income, is referring to income under GAAP.
The reconciliation of tax-equivalent net interest income, which is not a measurement under GAAP, to net interest income, is reflected in the table below.
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Year Ended 12/31/09
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||
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Net interest income, non tax-equivalent
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$
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19,824
|
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Less: tax-exempt interest income
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(511)
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|
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Add: tax-equivalent of tax-exempt interest income
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774
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|
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Net interest income, tax-equivalent
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$
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20,087
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Forward Looking Statements
Information in this press release contains “forward-looking statements.” These statements involve risks and uncertainties that could cause actual results to differ materially, including without limitation, the effects of future economic conditions, governmental fiscal and monetary policies, legislative and regulatory changes, the risks of changes in interest rates and the effects of competition. Additional factors that could cause actual results to differ materially are discussed in Valley Financial Corporation’s recent filings with the Securities and Exchange Commission, included but not limited to its Annual Report on Form 10-K and its other periodic reports.
VALLEY FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
Unaudited
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12/31/09
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12/31/08
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|||||||
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Assets
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||||||||
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Cash and due from banks
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$ | 8,179 | $ | 7,270 | ||||
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Interest-bearing deposits in banks
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23,699 | 26 | ||||||
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Investment securities:
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||||||||
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Securities available-for-sale
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70,485 | 77,243 | ||||||
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Securities held-to-maturity
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11,991 | 10,001 | ||||||
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Restricted equity securities
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6,172 | 5,607 | ||||||
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Total investment securities
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88,648 | 92,851 | ||||||
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Loans
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571,021 | 553,046 | ||||||
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Less: allowance for loan losses
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(14,630 | ) | (7,592 | ) | ||||
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Net loans
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556,391 | 545,454 | ||||||
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Foreclosed assets, net
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2,513 | 424 | ||||||
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Premises and equipment, net
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7,742 | 8,121 | ||||||
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Bank owned life insurance
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12,930 | 12,390 | ||||||
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Accrued interest receivable
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2,498 | 2,634 | ||||||
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Other assets
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11,125 | 5,309 | ||||||
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Total assets
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$ | 713,725 | $ | 674,479 | ||||
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Liabilities and Shareholders’ Equity
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||||||||
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Liabilities:
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||||||||
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Noninterest-bearing deposits
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$ | 17,629 | $ | 14,550 | ||||
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Interest-bearing deposits
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535,299 | 451,785 | ||||||
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Total deposits
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552,928 | 466,335 | ||||||
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Federal Funds purchased
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- | 11,326 | ||||||
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Securities sold under agreements to repurchase
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21,304 | 35,693 | ||||||
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FHLB borrowings
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68,000 | 80,000 | ||||||
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Trust preferred subordinated debt
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16,496 | 16,496 | ||||||
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Accrued interest payable and other liabilities
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3,458 | 6,124 | ||||||
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Total liabilities
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662,186 | 615,974 | ||||||
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Commitments and contingencies
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- | - | ||||||
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Shareholders' equity:
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||||||||
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Preferred stock, no par value; 10,000,000 shares authorized; 16,019 and 16,019 shares issued and outstanding at December 31, 2009 and 2008, respectively
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15,336 | 15,188 | ||||||
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Common stock, no par value; 10,000,000 shares authorized; 4,680,251 and 4,678,851 shares issued and outstanding at December 31, 2009 and 2008, respectively
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23,369 | 23,232 | ||||||
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Retained earnings
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12,878 | 19,596 | ||||||
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Accumulated other comprehensive income
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(44 | ) | 489 | |||||
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Total shareholders’ equity
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51,539 | 58,505 | ||||||
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Total liabilities and shareholders’ equity
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$ | 713,725 | $ | 674,479 | ||||
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VALLEY FINANCIAL CORPORATION
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||||||||||||||||
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CONSOLIDATED STATEMENTS OF INCOME
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||||||||||||||||
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(In thousands, except for per share data)
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||||||||||||||||
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Unaudited
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||||||||||||||||
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3 Months Ended
Ene
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Year Ended
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|||||||||||||||
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12/31/09
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12/31/08
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12/31/09
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12/31/08
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|||||||||||||
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Interest Income:
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||||||||||||||||
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Interest and fees on loans
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$ | 7,711 | 7,719 | $ | 30,349 | $ | 31,511 | |||||||||
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Interest on securities
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883 | 1,152 | 3,862 | 4,541 | ||||||||||||
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Interest on deposits in banks
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18 | 6 | 28 | 65 | ||||||||||||
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Total interest income
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8,612 | 8,877 | 34,239 | 36,117 | ||||||||||||
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Interest Expense:
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||||||||||||||||
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Interest on deposits
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2,597 | 3,234 | 10,919 | 14,293 | ||||||||||||
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Interest on trust preferred subordinated debt
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93 | 204 | 475 | 850 | ||||||||||||
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Interest on borrowings
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742 | 879 | 3,021 | 3,775 | ||||||||||||
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Total interest expense
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3,432 | 4,317 | 14,415 | 18,918 | ||||||||||||
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Net interest income
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5,180 | 4,560 | 19,824 | 17,199 | ||||||||||||
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Provision for loan losses
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5,307 | 2,209 | 15,179 | 3,323 | ||||||||||||
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Net interest income after provision for loan losses
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(127 | ) | 2,351 | 4,645 | 13,876 | |||||||||||
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Noninterest Income:
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||||||||||||||||
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Service charges on deposit accounts
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314 | 298 | 1,189 | 1,137 | ||||||||||||
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Income earned on bank owned life insurance
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132 | 130 | 540 | 551 | ||||||||||||
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Realized gain/(loss) on sale of securities
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50 | - | 1,019 | (14 | ) | |||||||||||
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Realized gain/(loss) on sale of foreclosed assets
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(527 | ) | - | (692 | ) | 6 | ||||||||||
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Other income
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102 | 117 | 497 | 731 | ||||||||||||
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Total noninterest income
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71 | 545 | 2,553 | 2,411 | ||||||||||||
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Noninterest Expense:
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||||||||||||||||
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Compensation expense
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2,020 | 1,908 | 7,627 | 7,361 | ||||||||||||
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Occupancy and equipment
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373 | 477 | 1,603 | 1,626 | ||||||||||||
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Data processing expense
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275 | 222 | 1,060 | 823 | ||||||||||||
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Insurance
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343 | 101 | 1,355 | 407 | ||||||||||||
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Legal
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123 | 20 | 586 | 186 | ||||||||||||
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Deposit expense
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154 | 95 | 505 | 284 | ||||||||||||
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Loan expense
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93 | 118 | 357 | 436 | ||||||||||||
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Other expense
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828 | 683 | 3,054 | 2,911 | ||||||||||||
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Total noninterest expense
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4,209 | 3,624 | 16,147 | 14,034 | ||||||||||||
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Income/(loss) before income taxes
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(4,265 | ) | (728 | ) | (8,949 | ) | 2,253 | |||||||||
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Income tax expense
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(1,544 | ) | (251 | ) | (3,263 | ) | 577 | |||||||||
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Net income/(loss)
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$ | (2,721 | ) | $ | (477 | ) | $ | (5,686 | ) | $ | 1,676 | |||||
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Preferred stock dividend and accretion of preferred stock discount
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231 | 53 | 947 | 53 | ||||||||||||
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Net income/(loss) available to common shareholders
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$ | (2,952 | ) | $ | (530 | ) | $ | (6,633 | ) | $ | 1,623 | |||||
VALLEY FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS
(Unaudited)
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3 Months Ended
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Year Ended
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|||||||||||||||
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12/31/09
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12/31/08
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12/31/09
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12/31/08
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PER COMMON SHARE
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||||||||||||||||
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Earnings per share – basic
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$ | (0.63 | ) | $ | (0.11 | ) | $ | (1.42 | ) | $ | 0.35 | |||||
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Earnings per share – diluted
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$ | (0.63 | ) | $ | (0.11 | ) | $ | (1.42 | ) | $ | 0.35 | |||||
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Book value
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$ | 7.74 | $ | 9.15 | ||||||||||||
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FINANCIAL RATIOS
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||||||||||||||||
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Return on average assets
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(1.49 | %) | (0.29 | %) | (0.81 | %) | 0.27 | % | ||||||||
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Return on average shareholders’ equity
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(19.54 | %) | (4.03 | %) | (10.03 | %) | 3.87 | % | ||||||||
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Net interest margin (FTE)
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3.00 | % | 2.93 | % | 2.99 | % | 2.90 | % | ||||||||
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Efficiency - Consolidated
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78.22 | % | 69.47 | % | 70.49 | % | 69.86 | % | ||||||||
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Efficiency – Bank only
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76.46 | % | 67.13 | % | 68.69 | % | 67.01 | % | ||||||||
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Total risk based capital – Consolidated
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13.01 | % | 14.36 | % | ||||||||||||
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Total risk based capital – Bank only
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11.88 | % | 10.25 | % | ||||||||||||
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Net charge-off to average loans
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0.69 | % | 0.00 | % | 1.41 | % | 0.12 | % | ||||||||
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ALLOWANCE FOR LOAN LOSSES
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||||||||||||||||
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Beginning balance
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7,592 | 4,883 | ||||||||||||||
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Provision for loan losses
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15,179 | 3,323 | ||||||||||||||
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Charge-offs
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(8,187 | ) | (672 | ) | ||||||||||||
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Recoveries
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46 | 58 | ||||||||||||||
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Ending balance
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14,630 | 7,592 | ||||||||||||||
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ASSET QUALITY RATIOS
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||||||||||||||||
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Nonperforming assets to total assets
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4.36 | % | 1.48 | % | ||||||||||||
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Allowance for loan losses to total loans
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2.56 | % | 1.37 | % | ||||||||||||
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Allowance for loan losses to nonaccrual loans
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51.2 | % | 79.6 | % | ||||||||||||
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COMPOSITION OF RISK ASSETS
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Nonperforming loans:
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||||||||||||||||
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90 days past due
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24 | 57 | ||||||||||||||
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Nonaccrual
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28,568 | 9,532 | ||||||||||||||
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OREO/Repos
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2,513 | 424 | ||||||||||||||
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Troubled Debt Restructurings
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- | - | ||||||||||||||
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Total nonperforming assets
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31,105 | 10,013 | ||||||||||||||