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8-K - NEW PEOPLES BANKSHARES INCnwpp8k030416.htm

Exhibit 99.1

 

 

NEWS RELEASE

 

FOR IMMEDIATE RELEASE:   FOR MORE INFORMATION, CONTACT:
March 4, 2016   C. Todd Asbury
    (276) 873-7000

 

NEW PEOPLES BANKSHARES, INC. REPORTS 2015 RESULTS

 

Honaker, Virginia -- New Peoples Bankshares (the “Company”) (OTCPINK: NWPP) and its wholly-owned subsidiary New Peoples Bank (the “Bank”) today announced consolidated net income of $2.7 million, or $0.12 earnings per share, for the year ended December 31, 2015. This compares to consolidated net income of $240,000, or $0.01 earnings per share, for the year ended December 31, 2014 which is an improvement of $2.4 million, or $0.11 earnings per share.

 

Highlights from the year ended December 31, 2015 include:

A negative provision for loan losses of $2.2 million;
A cumulative writedown of other real estate owned properties of $3.2 million, an increase of $2.1 million, or 195.36% when compared to 2014;
A reduction of $1.0 million, or 24.70%, in interest expenses when compared to 2014;
Salaries and employee benefits decreased from $12.7 million in 2014 to $11.8 million in 2015, a decrease of $902,000, or 7.09%;
Received regulatory approval to make all required interest payments on trust preferred securities;
A decrease of $7.1 million, or 32.08% in nonaccrual loans during 2015;
Net charge offs of $229,000 for 2015, which is an improvement of $2.9 million, or 92.75%,versus net charge offs of $3.2 million in 2014;
A decrease of $7.8 million, or 28.41%, in substandard loans during 2015;
A decrease of $2.6 million, or 17.62%, in other real estate owned during 2015;
A decrease of $43.0 million, or 14.33%, in higher-costing time deposits during 2015;
A strong net interest margin of 3.93% for 2015, which is an increase of 22 basis points over the 3.71% net interest margin for 2014;
An improvement in all regulatory capital ratios which exceeds “well capitalized” as defined by regulatory guidelines; and,
Tangible book value per share of $1.97 as of December 31, 2015.

 

“On February 2nd of 2016, we announced the termination of the formal written agreement the Company and Bank were under for over 5 years” stated Todd Asbury, President and Chief Executive Officer. He added “The tremendous progress made during 2015 in our financial results, capital position and credit quality that led to the termination of the formal written agreement was the result of the foundation laid in previous years. This foundation, which includes enhanced board and management oversight and risk-management practices, as well as stricter credit underwriting, will be the springboard for future balance sheet growth as we intend to prudently and conservatively increase loans and deposits. We believe we are well-positioned to achieve our growth goals and are extremely excited about the next phase of our Company.”

 

 

2015 Year-to-Date Results

The Company‘s consolidated net income for the year ended December 31, 2015 was $2.7 million, or earnings per share of $0.12, compared to consolidated net income of $240,000, or earnings per share of $0.01, for the year ended December 31, 2014. This is an improvement of $2.4 million, or $0.11 earnings per share. The improvement was mainly driven by maintaining a strong net interest margin of 3.93%, cost savings strategies initiated in prior periods but realized in the current period, and a negative provision for loan losses of $2.2 million. The annualized return on average assets for the fiscal year 2015 was 0.41% as compared to 0.04% for the same period in 2014. The annualized return on average equity was 5.95% for the fiscal year 2015 and 0.59% for the same period in 2014.

 

The Company’s primary source of income, net interest income, slightly increased by $13,000, or 0.06%, from 2014 to 2015. The increase in net interest income is due primarily to the $1.0 million savings in interest expense during 2015 mainly driven by the $43.0 million reduction in time deposits. The savings in interest expense offset the $989,000 decrease in interest income, which was due to a reduction in average loans during 2015 and decreased interest income from new and renewed loans recorded at lower interest rates, and an elevated level of nonaccrual loans. Loan interest income decreased $1.2 million, or 4.84%, from $24.9 million in 2014 to $23.7 million in 2015.

 

For 2015, noninterest income increased to $6.4 million from $6.2 million for the same period in 2014. This is an increase of $162,000, or 2.60%. This increase was primarily due to the $217,000 in life insurance earnings we received in August 2015 as the result of the death benefits we received on a bank-owned life insurance policy.

 

Noninterest expenses decreased $71,000, or 0.25%, to $28.5 million in 2015 from $28.6 million in 2014. Salaries and employee benefits decreased from $12.7 million in 2014 to $11.8 million in 2015, a decrease of $902,000, or 7.09%. This decrease was mainly due to management’s decision to close four lower-performing branches in October 2014 which resulted in staff reductions and salary and employee benefit savings in 2015. Occupancy and equipment expenses remained constant at $3.9 million in 2015 and 2014. Advertising expense decreased $56,000 from 2014 to 2015. Data processing and telecommunication expenses decreased $95,000 from 2014 to 2015. In 2015, FDIC assessment expense decreased $585,000, or 41.0%, from $1.4 million in 2014 to $842,000 in 2015. Expenses related to other real estate owned and repossessed assets increased $1.8 million, or 78.8%, from $2.3 million in 2014 to $4.1 million in 2015. During 2015 we recorded writedowns on other real estate owned properties in the amount of $3.2 million compared to $1.2 million in 2014. OREO decreased in 2015 to $12.4 million at December 31, 2015 from $15.0 million at December 31, 2014.

 

Balance Sheet

At December 31, 2015, total assets were $625.9 million, total loans were $441.2 million, and total deposits were $558.0 million. Total assets decreased $25.2 million in 2015, or 3.87%, from $651.1 million at December 31, 2014. During the 2014 and early 2015, we strategically decreased total assets and total loans to improve our capital position. However, going forward, we anticipate total assets increasing due to our plan to conservatively and prudently grow the loan portfolio, namely commercial loans. In August 2015, we hired an experienced commercial loan officer as our First Senior Vice President and Senior Commercial Banking Officer of the Bank. Subsequently, we have hired two additional commercial loan officers and a business development officer to assist in growing the loan portfolio.

 

On the liability side of the balance sheet, during 2015, as funding needs declined, total deposits declined $27.2 million, or 4.64% to $558.0 million. However, lower-costing non-time deposits increased $15.8 million, or 5.55%, while time deposits declined $43.0 million, or 14.33%. FHLB advances declined $1.2 million to $2.96 million while trust preferred securities remained unchanged at $16.5 million.

 

Total equity was $46.1 million at December 31, 2015. The Bank improved its capital position and maintained a well-capitalized status during both 2015 and 2014. The Bank’s capital ratios at December 31, 2015 as compared to December 31, 2014, respectively were as follows: Tier 1 leverage ratio of 9.67% versus 8.19%; Tier 1 risk based capital ratio of 16.29% versus 14.46%; and total risk based capital ratio of 17.55% versus 15.73%. The Company and Bank are considered well-capitalized under regulatory guidelines.

 

 

Asset Quality and Allowance for Loan Losses

Asset quality continued its trend of improvement during 2015. We have experienced a decrease in loan delinquencies and nonaccrual loans in 2015. Total past due loans were $13.4 million as of December 31, 2015, a decrease of $6.1 million, or 31.20%, from the $19.5 million as of December 31, 2014. At December 31, 2015, there were 161 loans in non-accrual status totaling $14.8 million, or 3.37% of total loans. At December 31, 2014, there were 165 loans in non-accrual status totaling $21.9 million, or 4.78% of total loans. There were no loans past due 90 days or greater and still accruing interest at December 31, 2015 or 2014.

 

Nonperforming assets, which include nonaccrual loans, loans past due 90 days or greater still accruing interest, and other real estate owned, decreased $9.7 million, or 26.18%, from $36.9 million to $27.2 million during 2015. Total nonperforming assets represented 4.35% and 5.67% of total assets at December 31, 2015 and December 31, 2014, respectively. Nonaccrual loans have declined $7.1 million, or 32.08%, to $14.8 million and other real estate owned declined $2.6 million or 17.62%, to $12.4 million during 2015.

 

The allowance for loan losses decreased to $7.5 million at December 31, 2015 as compared to $9.9 million at December 31, 2014. The allowance for loan losses at the end of 2015 was approximately 1.70% of total loans as compared to 2.17% at the end of 2014. No provision for loan losses was recorded during 2014, while negative provisions of $2.2 million were recorded in 2015. Net loans charged off decreased in 2015 as they were $229,000, or 0.05% of average loans, compared to $3.2 million, or 0.67% of average loans, in 2014.

 

About New Peoples Bankshares, Inc.

New Peoples Bankshares, Inc. is a one-bank holding company headquartered in Honaker, Virginia. Its wholly-owned subsidiary provides banking products and services through its 19 locations throughout southwest Virginia, Eastern Tennessee, and southern West Virginia. The Company’s common stock is traded over the counter under the trading symbol “NWPP”. Additional investor information can be found on the Company’s website at www.npbankshares.com.

 

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 Securities and Exchange Commission reports including, but not limited to, the Annual Report on Form 10-K for the most recent fiscal year end. Pursuant to the Private Securities Litigation Reform Act of 1995, the Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.

 

 

NEW PEOPLES BANKSHARES, INC.

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2015 AND 2014

(IN THOUSANDS EXCEPT SHARE DATA)

ASSETS  2015  2014
           
Cash and due from banks  $15,087   $14,622 
Interest-bearing deposits with banks   11,251    20,933 
Federal funds sold   —      5 
Total Cash and Cash Equivalents   26,338    35,560 
           
Investment securities available-for-sale   101,642    100,069 
           
Loans receivable   441,169    457,549 
Allowance for loan losses   (7,493)   (9,922)
Net Loans   433,676    447,627 
           
Bank premises and equipment, net   28,148    28,766 
Equity securities (restricted)   2,441    2,369 
Other real estate owned   12,398    15,049 
Accrued interest receivable   1,816    1,975 
Life insurance investments   12,105    12,268 
Deferred taxes, net   5,121    4,988 
Other assets   2,213    2,413 
Total Assets  $625,898   $651,084 
           
LIABILITIES          
           
Deposits          
Demand deposits          
Noninterest bearing  $149,714   $143,950 
Interest-bearing   30,251    29,567 
Savings deposits   121,076    111,701 
Time deposits   256,978    299,974 
Total Deposits   558,019    585,192 
           
FHLB advances   2,958    4,158 
Accrued interest payable   288    266 
Accrued expenses and other liabilities   2,050    2,121 
Trust preferred securities   16,496    16,496 
Total Liabilities   579,811    608,233 
           
STOCKHOLDERS’ EQUITY          
Common stock - $2.00 par value; 50,000,000 shares authorized; 23,354,082 and 22,878,654 shares issued and outstanding at December 31, 2015 and 2014, respectively   46,708    45,757 
Common stock warrants   764    1,176 
Additional paid-in capital   13,965    13,672 
Retained deficit   (15,023)   (17,685)
Accumulated other comprehensive loss   (327)   (69)
Total Stockholders’ Equity   46,087    42,851 
Total Liabilities and Stockholders’ Equity  $625,898   $651,084 
 
 

NEW PEOPLES BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
 
INTEREST AND DIVIDEND INCOME  2015  2014
Loans including fees  $23,671   $24,875 
Federal funds sold   2    3 
Interest-earning deposits with banks   91    155 
Investments   1,759    1,482 
Dividends on equity securities (restricted)   132    129 
Total Interest and Dividend Income   25,655    26,644 
           
INTEREST EXPENSE          
Deposits          
Demand   37    37 
Savings   173    180 
Time deposits below $100,000   1,343    1,829 
Time deposits above $100,000   916    1,270 
FHLB advances   145    195 
Trust Preferred Securities   440    545 
Total Interest Expense   3,054    4,056 
           
NET INTEREST INCOME   22,601    22,588 
           
PROVISION FOR LOAN LOSSES   -2,200    —   
           
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES   24,801    22,588 
           
NONINTEREST INCOME          
Service charges   2,216    2,191 
Fees, commission and other income   3,247    3,572 
Insurance and investment fees   559    391 
Net realized gains on sale of investment securities   35    2 
Life insurance investment income   346    85 
Total Noninterest Income   6,403    6,241 
           
NONINTEREST EXPENSES          
Salaries and employee benefits   11,823    12,725 
Occupancy and equipment expenses   3,865    3,886 
Advertising and public relations   407    463 
Data processing and telecommunications   2,149    2,244 
FDIC insurance premiums   842    1,427 
Other real estate owned and repossessed assets, net   4,088    2,286 
Other operating expenses   5,349    5,563 
Total Noninterest Expenses   28,523    28,594 
           
INCOME BEFORE INCOME TAXES   2,681    235 
INCOME TAX EXPENSE (BENEFIT)   19    -5 
NET INCOME  $2,662   $240 
           
Income Per Share          
Basic and Fully Diluted  $0.12   $0.01 
Average Weighted Shares of Common Stock          
Basic and Fully Diluted   22,955,391    22,099,926 

 
 

NEW PEOPLES BANKSHARES, INC.
KEY PERFORMANCE AND CAPITAL RATIOS
 
   For the three-months ended,
   December 31, 2015    September 30, 2015     June 30, 2015    March 31, 2015  December 31, 2014
Key Performance Ratios                         
   Earning Asset Yield   4.70%   4.50%   4.42%   4.32%   4.39%
   Cost of interest bearing liabilities   0.60%   0.65%   0.71%   0.75%   0.84%
   Cost of Funds   0.45%   0.49%   0.53%   0.56%   0.64%
   Net Interest Margin   4.23%   3.99%   3.86%   3.74%   3.72%
                          
   Return on average stockholder’s equity   (6.02)%   20.52%   4.19%   5.82%   0.71%
   Return on average assets   (0.45)%   1.43%   0.28%   0.38%   0.05%
   Efficiency Ratio*   122.39%   84.95%   93.53%   90.88%   98.90%
   Loan to Deposit Ratio   79.06%   77.67%   76.96%   75.83%   78.19%
                          
Asset Quality                         
   Allowance for loan loss to total loans   1.70%   1.98%   1.97%   1.99%   2.17%
Net Charge Offs to average loans,   annualized   0.16%   (1.03)%   0.20%   0.85%   0.46%
   Nonaccrual loans to total loans   3.37%   4.08%   3.83%   4.61%   4.78%
   Nonperforming assets to total assets   4.35%   5.22%   5.03%   5.39%   5.67%
                          
Capital Ratios**                         
  Tier 1 leverage ratio                         
     The Company   9.74%   9.64%   8.84%   8.75%   8.07%
     The Bank   9.67%   9.66%   9.01%   8.88%   8.19%
  Tier 1 risk-based capital ratio                         
     The Company   16.40%   16.41%   15.23%   14.97%   14.26%
     The Bank   16.29%   16.44%   15.52%   15.17%   14.46%
  Total risk-based capital ratio                         
     The Company   17.80%   17.83%   16.84%   16.61%   15.98%
     The Bank   17.55%   17.71%   16.79%   16.44%   15.73%
  Total common equity tier 1 capital ratio                         
     The Company   12.27%   12.29%   11.38%   11.20%   n/a 
     The Bank   16.29%   16.44%   15.52%   15.17%   n/a 

 

*The efficiency ratio is computed as a percentage of non-interest expense divided by the sum of net interest income and non-interest income. This is a non-GAAP financial measure that management believes provides investors with important information regarding operational efficiency. Management believes such financial information is meaningful to the reader in understanding operating performance, but cautions that such information should not be viewed as a substitute for GAAP. Comparison of our efficiency ratio with those of other companies may not be possible because other companies may calculate them differently.

**The capital ratios as of December 31, 2015 and 2014 are audited.