FOR IMMEDIATE RELEASE

INVESTOR RELATIONS CONTACT:

Tara Y. Harrison (434) 817-8587

•

Gross loans outstanding at December 31, 2019 totaled $539.5 million, an increase of $2.3 million, or 0.4%, over the 2018 year-end balance.  

•

The period-end allowance for loan losses as a percentage of total loans decreased to 0.78% at the end of December 2019, compared to 0.91% at the end of December 2018.

•

The balance of loans in non-accrual status decreased from $615 thousand at year-end 2018 to $299 thousand as of December 31, 2019, due largely to the receipt of an anticipated payout of $320 thousand from the liquidator for the surety company that formerly insured the student loans.

•

Loans 90 days or more past due and still accruing interest amounted to $771 thousand as of December 31, 2019, compared to $199 thousand as of September 30, 2019 and $895 thousand as of December 31, 2018.  The December balances included a government guaranteed loan of approximately $548 thousand.  

•

A provision for loan losses of $1.4 million was recognized during 2019, compared to $1.9 million recognized in 2018, a 26.6% decline.

•

Return on average assets (ROAA) for 2019 was 1.02% compared to 1.33% realized in the prior year.

•

The efficiency ratio on a fully tax equivalent basis (FTE) was 64.9% for 2019, compared to 56.2% in the prior year.  

¹ 

Common share data for all periods presented has been adjusted to reflect the 5% stock dividend paid in the third quarter of 2019.

•

2019 net interest income decreased $972 thousand, or 4.3%, over the amount recognized in 2018.

•

Net interest margin (FTE) declined 23 basis points to 3.57% compared to 3.80% for 2018.

•

The loan-to-deposit ratio was 86.9% at December 31, 2019, compared to 93.8% at December 31, 2018.

•

Tangible book value per share as of December 31, 2019, which reflects the 5% stock dividend effective July 2019, was $27.98.  This compares to $27.48 as of December 31, 2018, which was prior to, and therefore not adjusted for, the 2019 5% stock dividend.  

•

The cost of funds of 74 basis points incurred in 2019 increased 25 basis points from 49 basis points for 2018, due to increased rates on deposit accounts.  Low-cost deposits, which include noninterest checking accounts and interest-bearing checking, savings, and money market accounts, remained in excess of 81% of total deposits at the end of 2019 and 2018.

•

Noninterest income for 2019 increased $21 thousand, or 0.4%, compared to 2018, primarily due to the increase in bank-owned life insurance earnings as a result of a death benefit received following the death of a former employee, offset by a decline in royalty income in the first quarter, due predominantly to the condition of the stock market as of 2018 calendar year-end.  

•

Noninterest expense for 2019 increased $1.9 million, or 11.7%, compared to 2018. Salaries and employee benefits increased $1.2 million, or 15.1%, as a result of the addition of experienced personnel in the Richmond and Roanoke markets and to the cyber security and network team, as well as increased stock grant expense for executive management. Settlement of claims amounted to $460 thousand in 2019 in connection with the final settlement of pending and threatened legal proceedings.  Data processing expense increased $230 thousand, or 21.1%, over the prior year, due to the implementation of software to enhance our lending operations and to assist in the adoption of the current expected credit losses model.  

•

Whereas pre-tax income declined 22.0%, or $2.3 million, from 2018 to 2019, the provision for income taxes decreased 26.2%, or $542 thousand, due primarily to increased bank-owned life insurance earnings, as noted above, which was not subject to tax.

•

Capital ratios continue to be well in excess of regulatory requirements for well-capitalized banks.  

•

A provision for loan losses of $875 thousand was recognized in the fourth quarter of 2019, compared to $983 thousand recognized in the fourth quarter of 2018.

•

Net interest income for the fourth quarter of 2019 decreased $296 thousand, or 5.2%, compared to the same period in 2018.  

•

The cost of funds of 76 basis points for the fourth quarter of 2019 increased 18 basis points from 58 basis points for the fourth quarter of 2018, due to increased rates on deposit accounts.

•

Noninterest income for the fourth quarter increased $226 thousand, or 18.2%, compared to the fourth quarter of 2018, primarily due to higher wealth management performance fees in the current year.  

•

Noninterest expense for the fourth quarter increased $346 thousand, or 8.9%, compared to the fourth quarter of 2018, primarily  as a result of the addition of experienced personnel in the Richmond and Roanoke markets and to the cyber security and network team, as well as increased stock grant expense for executive management.

•

The provision for income taxes recognized in the fourth quarter of 2019 decreased $57 thousand, or 13.9%, compared to the fourth quarter of 2018, due primarily to the decline in pre-tax net income, which decreased 14.7% over the same quarter in the prior year.

•

Cash dividends of $808 thousand were declared during the fourth quarter of 2019, while the remaining net income of $623 thousand, or 43.5%, was retained.  

December 31, 2019

December 31, 2018 *

(Unaudited)

ASSETS

Cash and due from banks

$

14,908

$

11,741

Federal funds sold

4,177

7,133

Securities:

Available for sale, at fair value

114,041

61,392

Restricted securities, at cost

1,684

1,683

Total securities

115,725

63,075

Loans

539,533

537,190

Allowance for loan losses

(4,209

)

(4,891

)

Loans, net

535,324

532,299

Premises and equipment, net

6,145

7,042

Bank owned life insurance

16,412

16,790

Goodwill

372

372

Other intangible assets, net

408

477

Accrued interest receivable and other assets

9,808

5,871

Total assets

$

703,279

$

644,800

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:

Demand deposits:

Noninterest-bearing

$

166,975

$

185,819

Interest-bearing

122,994

106,884

Money market and savings deposit accounts

221,964

171,299

Certificates of deposit and other time deposits

109,278

108,531

Total deposits

621,211

572,533

Accrued interest payable and other liabilities

5,961

1,525

Total liabilities

627,172

574,058

Commitments and contingent liabilities

Shareholders' equity:

Preferred stock, $2.50 par value, 2,000,000 shares authorized,

   no shares outstanding

-

-

Common stock, $2.50 par value, 10,000,000 shares authorized; 2,692,005

   (including 4,000 nonvested shares) and 2,543,452 issued and outstanding

   at December 31, 2019 and December 31, 2018, respectively

6,720

6,359

Capital surplus

32,195

27,013

Retained earnings

37,235

38,647

Accumulated other comprehensive loss

(43

)

(1,277

)

Total shareholders' equity

76,107

70,742

Total liabilities and shareholders' equity

$

703,279

$

644,800

*

Derived from audited consolidated financial statements

For the three months ended

For the twelve months ended

December 31, 2019

December 31, 2018

December 31, 2019

December 31, 2018

Interest and dividend income:

Loans, including fees

$

5,957

$

6,070

$

24,180

$

23,919

Federal funds sold

192

89

459

209

Investment securities:

Taxable

369

259

1,158

1,073

Tax exempt

69

83

290

340

Dividends

24

42

110

145

Total interest and dividend income

6,611

6,543

26,197

25,686

Interest expense:

Demand and savings deposits

663

361

2,038

1,134

Certificates and other time deposits

527

443

2,146

1,258

Repurchase agreements and other borrowings

-

22

89

398

Total interest expense

1,190

826

4,273

2,790

Net interest income

5,421

5,717

21,924

22,896

Provision for loan losses

875

983

1,375

1,873

Net interest income after provision for loan losses

4,546

4,734

20,549

21,023

Noninterest income:

Wealth management income

572

415

1,698

1,665

Advisory and brokerage income

154

139

605

565

Royalty income

4

16

17

585

Deposit account fees

201

216

766

909

Debit/credit card and ATM fees

186

180

723

747

Earnings/increase in value of bank owned  life insurance

111

113

798

446

Fees on mortgage sales

60

38

189

193

Gains on sales of securities

3

-

74

-

Losses on sales of other assets

-

-

-

(33

)

Other

174

122

681

453

Total noninterest income

1,465

1,239

5,551

5,530

Noninterest expense:

Salaries and employee benefits

2,449

2,014

9,249

8,036

Net occupancy

451

448

1,824

1,835

Equipment

114

126

430

500

Data processing

331

288

1,318

1,088

Settlement of claims

-

-

460

-

Other

882

1,005

4,603

4,555

Total noninterest expense

4,227

3,881

17,884

16,014

Income before income taxes

1,784

2,092

8,216

10,539

Provision for income taxes

353

410

1,527

2,069

Net income

$

1,431

$

1,682

$

6,689

$

8,470

Net income per common share, basic *

$

0.53

$

0.63

$

2.49

$

3.18

Net income per common share, diluted *

$

0.53

$

0.63

$

2.49

$

3.15

Weighted average common shares outstanding, basic *

2,692,005

2,670,625

2,686,866

2,666,902

Weighted average common shares outstanding, diluted *

2,693,437

2,682,270

2,689,977

2,685,879

*

Shares and per share data have been retroactively adjusted to reflect a 5% stock dividend effective July 5, 2019.

At or For the Three Months Ended

December 31,

2019

September 30,

2019

June 30,

2019

March 31,

2019

December 31,

2018

Common Share Data:

Net income per weighted average share, basic ¹

$

0.53

$

0.71

$

0.79

$

0.46

$

0.63

Net income per weighted average share, diluted ¹

$

0.53

$

0.71

$

0.79

$

0.46

$

0.63

Weighted average shares outstanding, basic ¹

2,692,005

2,689,092

2,688,005

2,678,184

2,670,625

Weighted average shares outstanding, diluted ¹

2,693,437

2,690,142

2,688,965

2,687,098

2,682,270

Actual shares outstanding

2,692,005

2,692,005

2,560,138

2,560,138

2,543,452

Tangible book value per share at period end

$

27.98

$

27.77

$

28.72

$

28.00

$

27.48

Key Ratios:

Return on average assets²

0.81

%

1.15

%

1.33

%

0.80

%

1.05

%

Return on average equity²

7.43

%

9.96

%

11.53

%

7.03

%

9.52

%

Net interest margin (FTE)³

3.31

%

3.54

%

3.67

%

3.78

%

3.78

%

Efficiency ratio (FTE)⁴

61.22

%

66.90

%

65.24

%

66.35

%

55.62

%

Loan-to-deposit ratio

86.85

%

90.10

%

94.26

%

94.82

%

93.83

%

Net Interest Income:

Net interest income

$

5,421

$

5,474

$

5,461

$

5,568

$

5,717

Net interest income (FTE)^3,4

$

5,440

$

5,491

$

5,481

$

5,589

$

5,739

Capital Ratios:

Tier 1 leverage ratio

10.81

%

11.42

%

11.51

%

11.37

%

11.03

%

Total risk-based capital ratio

15.08

%

15.55

%

15.68

%

15.12

%

14.38

%

Assets and Asset Quality:

Average Earning Assets

$

653,195

$

616,306

$

599,836

$

599,776

$

602,188

Average Gross Loans

$

526,249

$

516,637

$

524,424

$

533,358

$

523,157

Allowance for loan losses:

Beginning of period

$

3,983

$

4,817

$

4,905

$

4,891

$

4,678

Provision for (recovery of) loan losses

875

(120

)

(64

)

684

983

Charge-offs

(689

)

(747

)

(114

)

(709

)

(781

)

Recoveries

40

33

90

39

11

Net (charge-offs) recoveries

(649

)

(714

)

(24

)

(670

)

(770

)

End of period

$

4,209

$

3,983

$

4,817

$

4,905

$

4,891

Non-accrual loans

$

299

$

337

$

390

$

552

$

615

Loans 90 days or more past due and still accruing

771

199

617

629

895

OREO

-

-

-

-

-

Total nonperforming assets (NPA)

$

1,070

$

536

$

1,007

$

1,181

$

1,510

NPA as a % of total assets

0.15

%

0.08

%

0.16

%

0.19

%

0.23

%

NPA as a % of total loans plus OREO

0.20

%

0.10

%

0.19

%

0.22

%

0.28

%

Allowance for loan losses to total loans

0.78

%

0.76

%

0.92

%

0.93

%

0.91

%

Non-accruing loans to total loans

0.06

%

0.06

%

0.07

%

0.10

%

0.11

%

Net charge-offs to average loans²

-0.49

%

-0.55

%

-0.02

%

-0.50

%

-0.59

%

¹

Share and per share data have been retroactively  adjusted to reflect a 5% stock dividend effective July 5, 2019.

²

Ratio is computed on an annualized basis.

³

The net interest margin and net interest income are reported on a fully tax equivalent basis (FTE), using a Federal income tax rate of 21%.

⁴

The efficiency ratio is computed as a percentage of noninterest expense divided by the sum of fully tax equivalent (FTE) net interest income and noninterest 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.