Attached files
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| 8-K - FORM 8-K - Xenith Bankshares, Inc. | f8khmpr103012.htm |
Exhibit 99.1
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October 30, 2012
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Contact:
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Stephen P. Theobald
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Executive Vice President, Chief Financial Officer
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(757) 217-1000
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Hampton Roads Bankshares Announces Third Quarter 2012 Financial Results
· Net loss of $5.9 million, a 78% improvement over third quarter 2011
· Provision for loan losses declined to $2.5 million
· Nonperforming assets declined for eighth consecutive quarter
· Net interest margin up 36 basis points year-over-year to 3.55%
· $45 million of additional capital raised in rights offering
Norfolk, Virginia (October 30, 2012): Hampton Roads Bankshares, Inc. (the “Company”) (Nasdaq: HMPR), the holding company of Bank of Hampton Roads and Shore Bank, today announced financial results for the third quarter of 2012. The Company reported a net loss of $5.9 million for the quarter, compared to losses of $5.7 million for the second quarter of 2012 and $26.7 million for the third quarter of 2011. Third quarter 2012 results benefitted from increased core deposits, improving loan demand, increased origination activity in the
Company’s mortgage business and lower provision for loan losses, due to continued improvements in credit quality. During the quarter, the Company completed its previously disclosed capital raise by raising $45 million in additional common equity through its backstopped rights offering to existing shareholders.
“Third quarter results reflect continued progress across a number of key areas, including increases in core deposits and mortgage originations, improvements in asset quality and capital ratios, and the eighth consecutive quarterly decline in nonperforming assets,” said Douglas J. Glenn, President and Chief Executive Officer. “We continue to take actions to strengthen our franchise, improve the efficiency of our operations, and position the Company for growth and profitability.”
Net interest income for the third quarter of 2012 was $15.8 million, down from $16.2 million in the second quarter of 2012 and compared to $17.6 million in the third quarter of 2011. Net interest margin during the quarter was 3.55%, compared to 3.66% in the previous quarter and significantly higher than the net interest margin of 3.19% in the third quarter of 2011. Margin improvements from the prior year are the result of lower funding costs and a reduction in the amount of lower earning overnight funds as a percentage of earning assets. The decline in margin from the second quarter is a result of lower loan yields as rates for new and renewed loans reflect the lower interest rate
environment.
Provision for loan losses for the third quarter of 2012 was $2.5 million compared to $4.3 million in the second quarter of 2012 and $17.7 million in the third quarter of 2011. In addition, the Company reported a decline of $14.3 million in nonperforming assets during the third quarter, marking the eighth straight quarterly decline in the aggregate level of nonperforming assets. Provision expense during the quarter was lower than previous quarters due to the continued slowdown in new problem loans and continued success in resolving existing nonperforming assets. Nonperforming asset balances are down nearly 33% from the year ago levels.
Noninterest income was $2.2 million during the third quarter of 2012 compared to $2.0 million during the second quarter of 2012 and a negative $0.2 million in the third quarter of 2011. The slight improvement over the second quarter was due to increased mortgage banking revenue, offset by increased losses on foreclosed assets. Losses on foreclosed assets were $6.4 million during the third quarter of 2012 compared to $4.9 million in the prior quarter and $8.8 million in the third quarter of 2011. Overall, foreclosed asset balances declined by $4.5 million from the previous quarter and $23.0 million year-over-year. Mortgage revenue continued to benefit from increased
origination volumes in the Company’s mortgage business due to the positive impact of the low rate environment on mortgage refinancing activity. Mortgage revenue increased to $5.2 million from $3.9 million in the prior quarter and $2.7 million in the third quarter of 2011. In addition, during the quarter the Company completed the sale of the deposits of its Wilmington branch and two branches, along with related deposits, in Raleigh, NC. The transactions resulted in a net gain of $0.5 million during the quarter.
Noninterest expenses were $20.4 million during the quarter, compared to $18.8 million in the second quarter of 2012 and $24.1 million in the third quarter of 2011. The increase from the second quarter is due to increased mortgage expenses, primarily salary and benefit costs, associated with the increase in mortgage origination activity and an increase in legal and foreclosed asset expenses during the quarter. The decline in operating expenses from the prior year quarter is a direct result of the Company’s success in reducing its expense base through the consolidation and/or sales of selected branches, efficiencies gained in its various business operations and improvements in credit
quality.
As of September 30, 2012, total assets were $2.07 billion, down slightly from $2.17 billion at December 31, 2011 and flat to the previous quarter. During 2012, loans outstanding declined from $1.50 billion to $1.42 billion as a result of continued resolutions of problem loans and charge-offs, with new lending activity largely offsetting normal portfolio attrition. Total deposits declined during the first half of the year to $1.63 billion from $1.80 billion at December 31, 2011
primarily from continued declines in brokered deposits and retail time deposits, and the sale of deposits in Wilmington and Raleigh. Non-interest bearing deposits increased by $11.4 million from the prior quarter.
Nonperforming assets declined to $159.2 million at September 30, 2012 from $173.5 million and $196.9 million at June 30, 2012 and December 31, 2011, respectively. Nonperforming assets represented 7.68% of total assets at September 30, 2012 compared to 9.08% at December 31, 2011.
At September 30, 2012, the Company exceeded all of the regulatory capital minimums and Bank of Hampton Roads and Shore Bank were both considered “well capitalized” under the risk-based capital standards.
Caution About Forward-Looking Statements.
Certain statements made herein and in the attached earnings 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, such as statements about the continuation of credit quality, origination and efficiency trends. 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 the Company will be able to exit its problem assets or return to profitability or that actual results, performance or achievements of the Company will not differ materially from any future results, performance or achievements 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, 2011, its Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 and other filings made with the
SEC.
About Hampton Roads Bankshares
Hampton Roads Bankshares, Inc. is a bank holding company that was formed in 2001 and is headquartered in Norfolk, Virginia. The Company’s primary subsidiaries are Bank of Hampton Roads, which opened for business in 1987, and Shore Bank, which opened in 1961 (the “Banks”). The Banks engage in general community and commercial banking business, targeting the needs of individuals and small to medium-sized businesses. Currently, Bank of Hampton Roads operates 33 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 Maryland and Virginia through seven banking
offices and recently opened loan production offices in West Ocean City, Maryland and Rehobeth, 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.
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.
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Hampton Roads Bankshares, Inc.
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Financial Highlights
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Unaudited
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(in thousands, except per share data)
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Nine months ended
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Operating Results
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September 30, 2012
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September 30, 2011
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Interest income
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$ | 62,208 | $ | 77,915 | ||||
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Interest expense
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13,473 | 23,904 | ||||||
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Net interest income
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48,735 | 54,011 | ||||||
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Provision for loan losses
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14,124 | 53,733 | ||||||
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Noninterest income
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7,301 | 5,337 | ||||||
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Noninterest expense
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59,072 | 80,281 | ||||||
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Income tax expense
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- | 2,154 | ||||||
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Net loss
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(17,160 | ) | (76,820 | ) | ||||
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Noncontrolling interest
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2,333 | 382 | ||||||
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Net loss attributable to Hampton Roads Bankshares, Inc.
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$ | (19,493 | ) | $ | (77,202 | ) | ||
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Per Share Data
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Loss per share:
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Basic
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$ | (0.32 | ) | $ | (2.28 | ) | ||
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Diluted
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(0.32 | ) | (2.28 | ) | ||||
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Common dividends declared
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- | - | ||||||
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Book value per common share
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1.10 | 3.93 | ||||||
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Book value per common share - tangible
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1.09 | 3.81 | ||||||
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Daily Averages
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Total assets
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$ | 2,100,016 | $ | 2,654,697 | ||||
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Gross loans
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1,450,474 | 1,783,739 | ||||||
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Total investment securities
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318,853 | 347,613 | ||||||
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Intangible assets
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3,234 | 9,546 | ||||||
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Total deposits
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1,722,433 | 2,212,171 | ||||||
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Total borrowings
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236,371 | 253,419 | ||||||
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Shareholders' equity
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122,699 | 166,017 | ||||||
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Shareholders' equity - tangible
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119,465 | 156,471 | ||||||
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Common shareholders' equity
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122,699 | 166,017 | ||||||
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Common shareholders' equity - tangible
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119,465 | 156,471 | ||||||
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Interest-earning assets
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1,801,328 | 2,302,404 | ||||||
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Interest-bearing liabilities
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1,724,613 | 2,235,116 | ||||||
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Nine months ended
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Financial Ratios
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September 30, 2012
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September 30, 2011
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Return on average assets
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-1.24 | % | -3.89 | % | ||||
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Return on average common equity
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-21.22 | % | -62.17 | % | ||||
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Return on average common equity - tangible
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-21.80 | % | -65.97 | % | ||||
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Net interest margin
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3.61 | % | 3.14 | % | ||||
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Efficiency ratio
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106.33 | % | 141.63 | % | ||||
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Tangible common equity to tangible assets
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8.95 | % | 5.40 | % | ||||
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Allowance for Loan Losses
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Beginning balance
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$ | 74,947 | $ | 157,253 | ||||
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Provision for losses
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14,124 | 53,733 | ||||||
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Charge-offs
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(40,933 | ) | (131,900 | ) | ||||
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Recoveries
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6,306 | 3,950 | ||||||
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Ending balance
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$ | 54,444 | $ | 83,036 | ||||
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Asset Quality Ratios
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Annualized net (chargeoffs) recoveries to average loans
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-3.19 | % | -9.59 | % | ||||
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Nonperforming loans to total loans
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8.12 | % | 10.45 | % | ||||
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Nonperforming assets to total assets
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7.68 | % | 9.72 | % | ||||
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Allowance for loan losses to total loans
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3.84 | % | 5.11 | % | ||||
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Hampton Roads Bankshares, Inc.
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Financial Highlights
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Unaudited
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(in thousands, except per share data)
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Operating Results
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Q3 2012 | Q2 2012 | Q3 2011 | |||||||||
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Interest income
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$ | 19,933 | $ | 20,669 | $ | 24,449 | ||||||
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Interest expense
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4,096 | 4,472 | 6,897 | |||||||||
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Net interest income
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15,837 | 16,197 | 17,552 | |||||||||
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Provision for loan losses
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2,476 | 4,346 | 17,679 | |||||||||
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Noninterest income
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2,200 | 1,993 | (171 | ) | ||||||||
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Noninterest expense
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20,394 | 18,767 | 24,086 | |||||||||
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Income tax expense
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- | - | 2,110 | |||||||||
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Net loss
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(4,833 | ) | (4,923 | ) | (26,494 | ) | ||||||
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Noncontrolling Interest
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1,088 | 744 | 247 | |||||||||
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Net loss attributable to Hampton Roads Bankshares, Inc.
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$ | (5,921 | ) | $ | (5,667 | ) | $ | (26,741 | ) | |||
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Per Share Data
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Loss per share:
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Basic
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$ | (0.05 | ) | $ | (0.15 | ) | $ | (0.77 | ) | |||
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Diluted
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(0.05 | ) | (0.15 | ) | (0.77 | ) | ||||||
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Common dividends declared
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- | - | - | |||||||||
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Book value per common share
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1.10 | 1.41 | 3.93 | |||||||||
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Book value per common share - tangible
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1.09 | 1.38 | 3.81 | |||||||||
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Balance Sheet at Period-End
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Total assets
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$ | 2,071,433 | $ | 2,070,945 | $ | 2,438,691 | ||||||
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Gross loans
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1,416,933 | 1,437,644 | 1,625,107 | |||||||||
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Allowance for loan losses
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54,444 | 62,907 | 83,036 | |||||||||
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Total investment securities
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311,104 | 326,760 | 300,271 | |||||||||
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Intangible assets
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2,745 | 3,080 | 4,130 | |||||||||
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Total deposits
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1,630,943 | 1,668,025 | 2,044,395 | |||||||||
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Total borrowings
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236,183 | 236,306 | 236,529 | |||||||||
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Shareholders' equity
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187,960 | 149,347 | 135,670 | |||||||||
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Shareholders' equity - tangible
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185,215 | 146,267 | 131,540 | |||||||||
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Common shareholders' equity
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187,960 | 149,347 | 135,670 | |||||||||
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Common shareholders' equity - tangible
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185,215 | 146,267 | 131,540 | |||||||||
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Daily Averages
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Q3 2012 | Q2 2012 | Q3 2011 | |||||||||
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Total assets
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$ | 2,054,380 | $ | 2,086,935 | $ | 2,531,650 | ||||||
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Gross loans
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1,422,909 | 1,444,003 | 1,670,465 | |||||||||
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Total investment securities
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322,306 | 328,361 | 311,067 | |||||||||
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Intangible assets
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2,907 | 3,227 | 7,884 | |||||||||
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Total deposits
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1,651,972 | 1,724,808 | 2,108,225 | |||||||||
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Total borrowings
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236,238 | 236,352 | 242,241 | |||||||||
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Shareholders' equity
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149,019 | 106,559 | 157,844 | |||||||||
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Shareholders' equity - tangible
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146,112 | 103,332 | 149,960 | |||||||||
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Common shareholders' equity
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149,019 | 106,559 | 157,844 | |||||||||
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Common shareholders' equity - tangible
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146,112 | 103,332 | 149,960 | |||||||||
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Interest-earning assets
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1,770,564 | 1,781,285 | 2,184,958 | |||||||||
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Interest-bearing liabilities
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1,639,320 | 1,730,717 | 2,112,414 | |||||||||
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Financial Ratios
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Return on average assets
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-1.15 | % | -1.09 | % | -4.19 | % | ||||||
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Return on average common equity
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-15.81 | % | -21.39 | % | -67.21 | % | ||||||
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Return on average common equity - tangible
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-16.12 | % | -22.06 | % | -70.75 | % | ||||||
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Net interest margin
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3.55 | % | 3.66 | % | 3.19 | % | ||||||
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Efficiency ratio
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114.45 | % | 104.75 | % | 161.56 | % | ||||||
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Tangible common equity to tangible assets
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8.95 | % | 7.07 | % | 5.40 | % | ||||||
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Allowance for Loan Losses
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Beginning balance
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$ | 62,907 | $ | 68,917 | $ | 94,595 | ||||||
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Provision for losses
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2,476 | 4,346 | 17,679 | |||||||||
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Charge-offs
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(13,281 | ) | (12,367 | ) | (31,053 | ) | ||||||
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Recoveries
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2,342 | 2,011 | 1,815 | |||||||||
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Ending balance
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$ | 54,444 | $ | 62,907 | $ | 83,036 | ||||||
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Nonperforming Assets at Period-End
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Nonaccrual loans including nonaccrual impaired loans
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$ | 115,093 | $ | 124,915 | $ | 163,816 | ||||||
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Loans 90 days past due and still accruing interest
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- | - | 6,000 | |||||||||
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Repossessed assets
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44,061 | 48,578 | 67,107 | |||||||||
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Total nonperforming assets
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$ | 159,154 | $ | 173,493 | $ | 236,923 | ||||||
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Asset Quality Ratios
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Annualized net (chargeoffs) recoveries to average loans
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-3.06 | % | -2.88 | % | -6.94 | % | ||||||
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Nonperforming loans to total loans
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8.12 | % | 8.69 | % | 10.45 | % | ||||||
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Nonperforming assets to total assets
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7.68 | % | 8.38 | % | 9.72 | % | ||||||
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Allowance for loan losses to total loans
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3.84 | % | 4.38 | % | 5.11 | % | ||||||
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Composition of Loan Portfolio at Period-End
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Commercial
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$ | 247,125 | $ | 236,009 | $ | 258,759 | ||||||
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Construction
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233,194 | 257,772 | 318,805 | |||||||||
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Real-estate commercial
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532,884 | 532,569 | 585,825 | |||||||||
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Real-estate residential
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379,558 | 387,687 | 434,117 | |||||||||
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Installment
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24,302 | 23,632 | 27,781 | |||||||||
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Deferred loan fees and related costs
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(130 | ) | (25 | ) | (180 | ) | ||||||
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Total loans
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$ | 1,416,933 | $ | 1,437,644 | $ | 1,625,107 |