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8-K - COMMUNITY FINANCIAL CORP /VA/cffc-8kearnings093012.htm

NEWS RELEASE

CONTACT: R. Jerry Giles, Chief Financial Officer
TELEPHONE #:  540-886-0796
DATE:  November 13, 2012

FOR IMMEDIATE RELEASE
COMMUNITY FINANCIAL ANNOUNCES SECOND QUARTER EARNINGS
STAUNTON, VIRGINIA
 
Community Financial Corporation (NASDAQ: CFFC), a holding company whose sole subsidiary is Community Bank, Staunton, Virginia, today reported earnings for the second quarter of its fiscal year ending March 31, 2013.  For the quarter ended September 30, 2012, Community Financial reported earnings of $341,000 compared to $709,000 for the same period last year.  After payment of preferred dividends, net income available to common stockholders totaled $153,000 or $0.03 per diluted common share for the current quarter compared to $521,000 or $0.12 per diluted common share for the same quarter last year.  The decrease in net income for the current quarter compared to the September 30, 2011 quarter was due primarily to an increase in the provision for loan losses and a decrease in net interest income, which was partially offset by a decrease in non-interest expenses.

Total interest income decreased $722,000 during the September 30, 2012 quarter compared to the September 30, 2011 quarter due to a decrease in average loan volume. Total interest expense decreased by $250,000 for the 2012 period compared to the same period in 2011 primarily due to a decrease in the interest rates paid on interest-bearing liabilities. Our interest rate spread decreased by 21 basis points to 4.56% for the quarter ended September 30, 2012 compared to 4.77% for the same period in 2011.

Non-interest income decreased $113,000 to $918,000 for the quarter ended September 30, 2012 from $1,031,000 for the September 30, 2011 quarter. The decrease in non-interest income for the current quarter compared to the September 30, 2011 period was due to both a decrease in transaction account charges and loan fees. Non-interest expenses decreased $668,000 for the September 30, 2012 quarter compared to the September 30, 2011 quarter. The decrease in non-interest expenses was due primarily to a $684,000 decrease in real estate owned and collection expenses and a $199,000 decrease in compensation expenses for the September 30, 2012 quarter, partially offset by a $171,000 increase in professional fees.

The Company's total assets decreased $17.8 million, or 3.5%, to $486.1 million at September, 2012 from $503.9 million at March 31, 2012 due to a decrease in loans receivable. The $2.1 million, or 0.6%, increase in total deposits to $374.5 million at September, 2012, is due primarily to an increase in time deposits and transaction accounts. The increase in deposits is due to management’s strategy to increase deposits relative to loans receivable. Stockholders’ equity increased $1.2 million, or 2.4%, to $51.6 million at September 30, 2012, from $50.4 million at March 31, 2012, due to net income less dividends paid on preferred stock issued to the U.S. Treasury.

Community’s net income for the six months ended September 30, 2012 was $1.6 million or $.27 per diluted common share, compared to $1.3 million or $0.20 per diluted common share for the six months ended September 30, 2011. The increase in net income for the six months ended September 30, 2012 compared to the same period ended September 30, 2011 can be attributed to a decrease in noninterest expense.

Non-interest income decreased $179,000 to $1.8 million for the six months ended September 30, 2012 from $2.0 million for the September 30, 2011 period. The decrease in non-interest income for the current period compared to the September 30, 2011 period was due to both a decrease in transaction account charges and loan fees. Non-interest expenses decreased $1.8 million for the six months ended September 30, 2012 compared to the September 30, 2011 period. The decrease in non-interest expenses was due primarily to a $1.8 million decrease in real estate owned and collection expenses as real estate owned was reduced from $11.0 million at September 30, 2011 to $5.1 million at September 30, 2012 and a $376,000 decrease in compensation and benefits.

At September 30, 2012, non-performing assets totaled approximately $25.7 million or 5.28% of assets compared to $21.6 million or 4.29% of assets at March 31, 2012. Our allowance for loan losses to non-performing loans was 49.6% and to total loans was 2.33% at September 30, 2012 compared to 73.0% and 2.0%.  The increase in non-performing assets consisted of an increase of $8.4 million in nonaccrual loans. The Bank’s regulatory risk-based capital increased from 13.08% at March 31, 2012 to 14.05% at September 30, 2012.
 
 
 
 
 
 
 
 

 
At September 30, 2012, Community Bank exceeded all regulatory capital requirements and continued to be classified as a "well capitalized" institution.  Community Bank, the wholly owned subsidiary of Community Financial, is headquartered in Staunton, Virginia and has offices in Waynesboro, Stuarts Draft, Raphine, Verona, Lexington, Buena Vista and Virginia Beach.  Community Financial Corporation is traded on the Nasdaq Global Market, under the symbol CFFC.

Except for the historical information in this press release, the matters discussed may be deemed to be forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties, including, but not limited to, the credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs that may be impacted by deterioration in the housing and commercial real estate markets and changes in economic conditions in the Company’s market areas, changes in the financial condition or business prospects of the Company’s borrowers, changes in policies by regulatory agencies, the impact of competitive loan products, loan demand risks, fluctuations in interest rates and the relationship between long and short term rates, operating results and other risks detailed from time to time in the Company’s filings with the Securities and Exchange Commission.  Actual strategies and results in future periods may differ materially from those currently expected.  These forward-looking statements represent the Company’s judgment as of the date of this release.  The Company disclaims, however, any intent or obligation to update these forward-looking statements.

Community Financial Corporation (NASDAQ: CFFC)
 
                   
Selected Financial Condition Data
                 
(Dollars in thousands)
             
Percent
 
               
Increase
 
   
September 30, 2012
   
March 31, 2011
   
(Decrease)
 
                   
Total assets
  $ 486,143     $ 530,080       (3.5 ) %
Loans receivable, net
    428,518       445,098       (3.7 )
Investment securities
    20,610       11,383       81.1  
Real estate owned and repossessed assets
    5,048       9,259       (45.5 )
Deposits
    374,510       372,418       0.6  
Borrowings
    57,000       78,000       (26.9 )
Stockholders’ equity
    51,646       50,403       2.5  
                         

Selected Operations Data
                 
(Dollars in thousands)
                 
   
Three Months Ended
September 30,
   
Percent
Increase
 
   
2012
   
2011
   
(Decrease)
 
                   
Interest income
  $ 5,900     $ 6,622       (10.9 ) %
Interest expense
    650       900       (27.8 ) )
Net interest income
    5,250       5,722       (8.2 ) )
Provision for loan losses
    1,803       1,123       60.6 )
Net interest income after provision for loan losses
    3,447       4,599       (25.0 )
Noninterest income
    918       1,031       (11.0 )
Noninterest expense
    3,852       4,520       (14.8 )
Income tax expense (benefit)
    171       400       (57.3 )
Net income (loss)
    341       709       (51.9 )
Effective dividend on preferred stock
    188       188       ---  
Net income (loss) available to common stockholders
    153       521       (70.6 )

Selected Ratios and Other Information
                 
   
At or for the
       
   
Three Months Ended
   
Percent
 
   
September 30,
   
Increase
 
   
2012
   
2011
   
(Decrease)
 
                   
Return on average equity
    2.64 %     5.63 %     (53.1 ) %
Return on average assets
    .28       .55       (49.1 )
Interest rate spread
    4.56       4.77       (4.4 )
Diluted earnings (loss) per common share
  $ 0.03       0.12       (75.0 )
Dividends paid on common shares
    ---       ---       ---  
Non-performing assets to total assets
    5.28 %     4.51 %     17.1  
Allowance for loan losses to total loans
    2.33 %     1.62 %     43.8  
Allowance for loan losses to nonperforming loans
    49.6 %     62.0 %     (20.0  


 
 
 
 


Selected Operations Data
                 
   
Six Months Ended
   
Percent
 
   
September 30,
   
Increase
 
(In thousands)
 
2012
   
2011
   
(Decrease)
 
                   
Interest income
  $ 12,003     $ 13,532       (11.3 ) %
Interest expense
    1,330       1,900       (30.0 ) )
Net interest income
    10,673       11,632       (8.2 )
Provision for loan losses
    1,988       1,829       8.7  
Net interest income after provision for loan losses
    8,685       9,803       (11.4 )
Noninterest income
    1,825       2,005       (9.0 )
Noninterest expense
    7,998       9,847       (18.8 )
Income tax expense
    954       704       35.5  
Net income
    1,559       1,257       24.0  
Effective dividend on preferred stock
    376       376       ---  
Net income available to common stockholders
    1,183       881       34.3  

Other Selected Data
           
   
At or For the
       
   
Six Months Ended
   
Percent
 
   
September 30,
   
Increase
 
   
2012
   
2011
   
(Decrease)
 
                   
Return on average equity
    6.01 %     4.94 %     21.7 %
Return on average assets
    .63       .48       31.3  
Interest rate spread
    4.61       4.80       (4.0 )
Non-performing assets to total assets
    5.28       4.51       17.1  
Allowance for loan losses to total loans
    2.33       1.62       43.8  
Allowance for loan losses to nonperforming assets
    49.6 %     62.0 %     (20.0 ) %
 
                         
Per Share Data
                       
   
At or For the
         
   
Six Months Ended
   
Percent
 
   
September 30,
   
Increase
 
      2012       2011    
(Decrease)
 
                         
Diluted earnings per common share
  $ .27     $ .20       35.0 %
Book value per common share
    8.94       8.73       24.1  
Dividends paid on common shares
    ---       ---       ---  
Shares outstanding
    4,361,658       4,361,658       ---