Access National Increases Dividend, Reports Second Quarter Earnings

Tue Jul 23, 2013 9:00am EDT

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Access National Increases Dividend, Reports Second Quarter Earnings

Access National Corporation (NASDAQ: ANCX), parent company for Access National Bank (Bank), reported second quarter net income of $3.5 million, down from the record setting $3.9 million recorded in the second quarter of 2012. This represents the Corporation’s 52nd consecutive quarterly profit over its 54 quarter history. Net income per diluted common share was $0.34 in comparison to the $0.38 reported in the second quarter of 2012.

The Board of Directors declared a cash dividend of $0.11 per share for holders of record as of August 7, 2013 and payable on August 23, 2013. This dividend represents a steady migration towards the stated objective equal to a 40% payout ratio of core earnings. It also represents a 1 cent increase over the prior quarter and a 10 cent increase over the last 9 quarters.

The second quarter of 2013 reflects a 21% increase in banking segment pretax earnings in comparison to the second quarter of 2012. With the closing of the Denver Mortgage Production Branch in April 2013 as well as an increase in mortgage loan rates, the mortgage segment’s contribution has decreased from 56% of the Corporation’s pre-tax income in the second quarter of 2012 to a contribution of 34% in the second quarter of 2013. This decrease in the mortgage division’s pre-tax contribution aligns with management’s intent, being that 70 – 80% of the Corporation’s net income is generated from the core business of the Bank.

Net interest margin for the first six months of 2013 decreased to 3.81% from 3.95% for the same period in 2012, yet on a linked quarter basis, the margin increased for the three months ended June 30, 2013 to 3.89% from 3.73% reported in the prior quarter.

Annualized return on average assets remained at 1.66% for both the first and second quarters of 2013, down slightly from the 1.80% reported for the six months ended June 30, 2012. Annualized return on average equity was 14.88% for the quarter ended June 30, 2013 compared to 17.55% for the same period last year.

Total assets amounted to $841.7 million compared to $863.9 million at December 31, 2012, an overall decline of $22.2 million. The decrease in loans held for sale of $62.6 million was offset by a growth in investment securities and cash balances of $13.3 million and loans held for investment of $24.5 million.

Total deposits at June 30, 2013 decreased $11.6 million from December 31, 2012. Management has viewed CDARS as a cost effective method of funding the mortgage division’s warehouse on loans held for sale as well as its investment portfolio. The $46.8 million reduction in CDARS was a planned response to the $62.7 million decrease in mortgage loans held for sale. Management continues to focus on expanding business banking relationships as evidenced by the increase in noninterest-bearing deposits of $56.3 million or 34.30% from December 31, 2012, which comprised 33.42% of the deposit portfolio at June 30, 2013.

Non-performing assets (NPAs) decreased to $2.3 million or 0.27% of total assets at June 30, 2013, down from $2.7 million or 0.32% of assets at December 31, 2012. The Corporation did not have other real estate owned at June 30, 2013. The allowance for loan losses totaled $13.0 million or 2.01% of total loans held for investment as of June 30, 2013.

Book value per common share increased 6.4% at June 30, 2013 to $9.20, from $8.65 at June 30, 2012. The ratio of total equity to total assets for Access National Corporation and its subsidiary bank was 11.24% at June 30, 2013 and continued to exceed standards of being “Well Capitalized” as set forth under banking regulations.

To better understand the impact the closing the Denver Mortgage Production Branch had on net income, included at the end of this release is pro forma information presenting results of the Corporation as if the Denver Mortgage Production Branch, which closed on April 30, 2013, had not been in existence in the three and six month periods ended June 30, 2013 and 2012.

Access National Corporation is the parent company of Access National Bank, an independent, nationally chartered bank serving the business community of the greater Washington DC Metropolitan area. Additional information is available on our website at www.AccessNationalBank.com. Shares of Access National Corporation are traded on the NASDAQ Global Market under the symbol "ANCX".

This press release contains “forward-looking statements” within the meaning of the federal securities laws. These statements may be identified as “may”, “could”, “expect”, “believe”, anticipate”, “intend”, “plan” or variations thereof. These forward-looking statements may contain information related to those matters such as the Company’s intent, belief, or expectation with respect to matters such as financial performance. Such statements are necessarily based on assumptions and estimates and are inherently subject to a variety of risks and uncertainties concerning the Company’s operations and business environment, which are difficult to predict and beyond control of the company. Such risks and uncertainties could cause the actual results of the Company to differ materially from those matters expressed or implied in such forward-looking statements. For an explanation of certain risks and uncertainties associated with forward-looking statements, please refer to the Company’s Annual Report on Form 10-K and other SEC filings.

     
Access National Corporation
Consolidated Balance Sheet
             
June 30, December 31, June 30,
2013 2012 2012
(In Thousands)   (Unaudited)       (Unaudited)
 
ASSETS
 
Cash and due from banks $ 11,499 $ 15,735 $ 11,322
 
Interest-bearing balances and federal funds sold 35,123 22,206 22,335
 
Investment securities:
Available-for-sale, at fair value 69,427 35,759 32,477
Held-to-maturity, at amortized cost (fair value of $15,530, $45,308 and $70,363)   15,861     44,952   69,936
Total investment securities 85,288 80,711 102,413
 
Restricted Stock, at amortized cost 4,284 4,237 5,788
 
Loans held for sale - at fair value 48,887 111,542 100,310
 

Loans held for investment net of allowance for loan losses of $13,007, 12,500, and $12,031, respectively

628,457 604,478 570,569
 
Premises, equipment and land, net 8,434 8,517 8,517
 
Other assets 19,711 16,488 20,455
     
Total assets $ 841,683   $ 863,914 $ 841,709
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
LIABILITIES
Noninterest-bearing deposits $ 220,474 $ 164,161 $ 157,305
 
Savings and interest-bearing deposits 190,179 187,997 173,423
 
Time deposits   249,205     319,338   350,203
 
Total deposits 659,858 671,496 680,931
 
Short-term borrowings 70,161 83,091 48,161
 
Long-term borrowings - - 2,964
 
Subordinated debentures 6,186 6,186 6,186
 
Other liabilities and accrued expenses 10,898 11,874 14,419
     
Total Liabilities   747,103     772,647   752,661
 
SHAREHOLDERS' EQUITY

Common stock $0.835 par value; 60,000,000 authorized; issued and outstanding,10,285,212, 10,317,767 and 10,250,802 shares, respectively

8,588 8,615 8,559
 
Additional paid in capital 16,719 17,155 16,753
 
Retained earnings 70,653 65,404 63,673
 
Accumulated other comprehensive income (loss), net (1,380 ) 93 63
     
Total shareholders' equity   94,580     91,267   89,048
     
Total liabilities and shareholders' equity $ 841,683   $ 863,914 $ 841,709
 
 
Access National Corporation
Consolidated Statement of Operations
             
  Three Months Ended   Six Months Ended
June 30, 2013 June 30, 2013   June 30, 2012
(In Thousands Except for Share and Per Share Data)   (unaudited)   (unaudited)
 
INTEREST INCOME
Interest and fees on loans $ 8,611 $ 17,206 $ 17,040
 
Interest on federal funds sold and bank balances 28 54 50
 
Interest on securities   447   982   1,263  
Total interest income 9,086 18,242 18,353
 
INTEREST EXPENSE
Interest on deposits 966 1,967 2,423
 
Interest on other borrowings   68   134   330  
Total interest expense   1,034   2,101   2,753  
Net interest income 8,052 16,141 15,600
 
Provision for loan losses   -   225   1,190  
Net interest income after provision for loan losses 8,052 15,916 14,410
 
NONINTEREST INCOME
Service charges and fees 138 307 337
 
Gain on sale of loans 7,120 15,001 25,682
 
Other Income   765   3,559   (186 )
Total noninterest income 8,023 18,867 25,833
 
NONINTEREST EXPENSE
Salaries and benefits 6,799 14,868 15,809
 
Occupancy and equipment 616 1,320 1,230
 
Other operating expense   3,118   7,000   11,136  
Total noninterest expense   10,533   23,188   28,175  
Income before income tax 5,542 11,595 12,068
 
Income tax expense   2,018   4,387   4,741  
NET INCOME   3,524   7,208   7,327  
 
Earnings per common share:
Basic $ 0.34 $ 0.70 $ 0.72  
Diluted $ 0.34 $ 0.69 $ 0.71  
 
Average outstanding shares:
Basic 10,306,561 10,314,592 10,219,085
Diluted 10,379,870 10,408,735 10,331,529
 
 
Performance and Capital Ratios
                 
  Three Months   Six Months   Six Months   Twelve Months
Ended Ended Ended Ended
June 30, June 30, June 30, December 31,
(Dollars In Thousands)   2013   2013   2012   2012
 
Return on average assets (annualized) 1.66 % 1.66 % 1.80 % 2.15 %
Return on average equity (annualized) 14.88 % 15.41 % 16.80 % 19.68 %
Net interest margin 3.89 % 3.81 % 3.95 % 3.94 %
Efficiency ratio - Bank only 51.30 % 52.26 % 52.40 % 51.71 %
Total average equity to earning assets 11.44 % 11.04 % 11.03 % 11.24 %
 
Averages
Assets $ 850,200 $ 869,285 $ 812,855 $ 826,233
Loans held for investment 645,654 636,129 573,946 583,724
Loans held for sale 49,814 62,222 68,648 78,543
Interest-bearing deposits & federal funds sold 38,310 48,567 39,043 33,272
Investment securities 94,058 100,317 109,022 105,520
Earning assets 828,136 847,411 790,519 800,917
Interest-bearing deposits 508,740 542,078 534,514 526,346
Total deposits 699,749 722,123 658,909 672,693
Repurchase agreements & federal funds purchased 23,265 26,807 26,601 26,744
Commercial paper & other short term borrowings 17,011 11,066 16,522 14,748
Long-term borrowings 6,186 6,186 10,189 9,201
Equity $ 94,735 $ 93,541 $ 87,225 $ 90,047
 
Banking segment - income before taxes $ 4,227 $ 8,025 $ 6,742 $ 14,730
Mortgage segment - income before taxes $ 1,887 $ 4,695 $ 6,547 $ 15,656
Other segments - income before taxes $ (572 ) $ (1,125 ) $ (1,221 ) $ (1,955 )
Mortgage loan originations and brokered loans $ 171,427 $ 389,107 $ 524,145 $ 1,130,089
Allowance for losses on mortgage loans sold $ 4,645 $ 4,645 $ 4,216 $ 4,376
 
Book value per common share $ 9.20 $ 9.20 $ 8.65 $ 8.85
 
 
Composition of Loan Portfolio
                     
    June 30, 2013   December 31, 2012
    Percentage of     Percentage of
(Dollars In Thousands)   Amount   Total   Amount   Total
 
Commercial real estate-owner occupied $ 189,648 29.56 % $ 182,655 29.60 %
Commercial real estate-non owner occupied 98,694 15.39 107,213 17.38
Residential real estate 157,253 24.51 144,521 23.43
Commercial 156,563 24.41 149,389 24.21
Real estate construction 35,396 5.52 30,038 4.87
Consumer   3,910   0.61     3,162

 

0.51  
Total loans $ 641,464 100.00 % $ 616,978 100.00 %
Less allowance for loan losses   13,007   12,500
$ 628,457 $ 604,478
 
 
Composition of Deposits
                 
    June 30, 2013   December 31, 2012
    Percentage of     Percentage of
(Dollars In Thousands)   Amount   Total   Amount   Total
 
Demand deposits $ 220,474 33.42 % $ 164,161 24.44 %
Interest-bearing demand deposits 70,430 10.67 71,015 10.58
Savings and money market 119,554 18.12 116,554 17.36
CDARS-reciprocal time deposits 124,076 18.80 170,835 25.44
Brokered deposits 16,687 2.53 29,277 4.36
Time deposits   108,637   16.46       119,654   17.82  
Total Deposits $ 659,858   100.00 %   $ 671,496   100.00 %
 
         
Asset Quality Trend Profile
                     
Six Months Three Months Twelve Months Nine Months Six Months
Ended Ended Ended Ended Ended
(Dollars In Thousands)   June 30, 2013   March 31, 2013   December 31, 2012   September 30, 2012   June 30, 2012
 
Total assets $ 841,683 $ 876,361 $ 863,914 $ 849,348 $ 841,709
Total loans held for investment $ 641,464 $ 639,696 $ 616,978 $ 590,619 $ 582,600
 
Allowance for loan losses - beginning balance $ 12,500 $ 12,500 $ 11,738 $ 11,738 $ 11,738
Charge offs - - (2,165 ) (1,829 ) (1,425 )
Recoveries   282       135       1,412       799       528  
Net charge offs 282 135 (753 ) (1,030 ) (897 )
Provision for loan losses   225       225       1,515       1,340       1,190  
Allowance for loan losses - ending balance $ 13,007     $ 12,860     $ 12,500     $ 12,048     $ 12,031  
 
Allowance for loan losses/loans held for investment 2.01 % 2.01 % 2.03 % 2.04 % 2.06 %
 
Delinquent 30 - 90 days $ 1,070 $ 671 $ - $ - $ 614
Percentage of loans delinquent 0.17 % 0.10 % 0.00 % 0.00 % 0.11 %
 
Non-accrual loans $

2,299

$ 1,738 $ 2,743 $ 3,626 $ 5,209
OREO $ - $ - $ - $ - $ -
Total NPA $

2,299

$ 1,738 $ 2,743 $ 3,626 $ 5,209
NPA to total assets

0.27

% 0.20 % 0.32 % 0.43 % 0.62 %
Allowance for loan losses/NPA

565.77

% 739.93 % 455.71 % 332.27 % 230.97 %
 
OREO Expense $ 40 $ 39 $ 6 $ 1 $ 1
Gain on Sale of OREO $ -     $ -     $ -     $ -     $ -  
OREO expense net $ 40     $ 39     $ 6     $ 1     $ 1  
 
Allowance for losses on mortgage loans sold $ 4,645 $ 4,475 $ 4,376 $ 4,802 $ 4,216
Provision for losses on mortgage loans sold $ 388 $ 218 $ 2,510 $ 2,186 $ 1,600
 
  Yield on Average Earning Assets and Rates on Average Interest-Bearing Liabilities
Three Months Ended
         
June 30, 2013 June 30, 2012
Average Income / Yield / Average Income / Yield /
Balance   Expense   Rate Balance   Expense   Rate
(Dollars In Thousands)
Assets:
Interest earning assets:
Securities $ 94,358 $ 447 1.90 % $ 111,277 $ 614 2.21 %
Loans held for sale 49,814 430 3.45 % 57,721 511 3.54 %
Loans(1) 645,654 8,181 5.07 % 579,541 7,858 5.42 %
Interest-bearing balances and federal funds sold   38,310       28   0.29 %   27,613       19   0.28 %
Total interest earning assets 828,136 9,086 4.39 % 776,152 9,002 4.64 %
Noninterest earning assets:
Cash and due from banks 11,922 9,381
Premises, land and equipment 8,501 8,561
Other assets 14,576 16,123
Less: allowance for loan losses   (12,936 )   (11,945 )
Total noninterest earning assets   22,063     22,120  
Total Assets $ 850,200   $ 798,272  
 
Liabilities and Shareholders' Equity:
Interest-bearing deposits:
Interest-bearing demand deposits $ 62,215 $ 25 0.16 % $ 64,481 $ 40 0.25 %
Money market deposit accounts 122,468 73 0.24 % 118,984 124 0.42 %
Savings accounts 2,499 1 0.18 % 2,678 1 0.15 %
Time deposits   321,558       867   1.08 %   324,856       985   1.21 %
Total interest-bearing deposits 508,740 966 0.76 % 510,999 1,150 0.90 %
Borrowings:
FHLB Advances 17,011 11 0.26 % 17,335 24 0.55 %
Securities sold under agreements to repurchase and federal funds purchased 23,265 4 0.08 % 24,777 9 0.15 %
Other short-term borrowings - - 0.00 % - - 0.00 %
FHLB Long-term borrowings - - 0.00 % 3,256 31 3.81 %
FDIC Term Note - - 0.00 % - - 0.00 %
Subordinated Debentures   6,186       53   3.43 %   6,186       56   3.62 %
Total borrowings   46,462       68   0.59 %   51,554       120   0.93 %
Total interest-bearing deposits and borrowings 555,202 1,034 0.74 % 562,553 1,270 0.90 %
Noninterest-bearing liabilities:
Demand deposits 191,009 136,492
Other liabilities   9,254     10,579  
Total liabilities 755,465 709,624
Shareholders' Equity   94,735     88,648  
Total Liabilities and Shareholders' Equity: $ 850,200   $ 798,272  
 
Interest Spread(2) 3.64 % 3.74 %
 
Net Interest Margin(3) $ 8,052   3.89 % $ 7,732   3.98 %
 

(1)

 

Loans placed on nonaccrual status are included in loan balances

(2)

Interest spread is the average yield earned on earning assets, less the average rate incurred on interest-bearing liabilities.

(3)

Net interest margin is net interest income, expressed as a percentage of average earning assets.

 
  Yield on Average Earning Assets and Rates on Average Interest-Bearing Liabilities
Six Months Ended
         
June 30, 2013 June 30, 2012
Average Income / Yield / Average Income / Yield /
Balance   Expense   Rate Balance   Expense   Rate
(Dollars In Thousands)
Assets:
Interest earning assets:
Securities $ 100,493 $ 982 1.95 % $ 108,882 $ 1,263 2.32 %
Loans held for sale 62,222 1,044 3.36 % 68,648 1,361 3.97 %
Loans(1) 636,129 16,162 5.08 % 573,946 15,679 5.46 %
Interest-bearing balances and federal funds sold   48,567       54   0.22 %   39,043       50   0.26 %
Total interest earning assets 847,411 18,242 4.31 % 790,519 18,353 4.64 %
Noninterest earning assets:
Cash and due from banks 11,659 9,173
Premises, land and equipment 8,521 8,601
Other assets 14,466 16,438
Less: allowance for loan losses   (12,773 )   (11,876 )
Total noninterest earning assets   21,873     22,336  
Total Assets $ 869,285   $ 812,855  
 
Liabilities and Shareholders' Equity:
Interest-bearing deposits:
Interest-bearing demand deposits $ 73,571 $ 67 0.18 % $ 63,362 $ 91 0.29 %
Money market deposit accounts 120,707 162 0.27 % 124,673 270 0.43 %
Savings accounts 2,472 2 0.16 % 2,618 2 0.15 %
Time deposits   345,328       1,736   1.01 %   343,861       2,060   1.20 %
Total interest-bearing deposits 542,078 1,967 0.73 % 534,514 2,423 0.91 %
Borrowings:
FHLB Advances 11,066 15 0.27 % 9,269 28 0.60 %
Securities sold under agreements to repurchase and federal funds purchased 26,807 13 0.10 % 26,601 19 0.14 %
Other short-term borrowings - - 0.00 % - - 0.00 %
FHLB Long-term borrowings - - 0.00 % 4,003 72 3.60 %
FDIC Term Note - - 0.00 % 7,253 98 2.70 %
Subordinated Debentures   6,186       106   3.43 %   6,186       113   3.65 %
Total borrowings   44,059       134   0.61 %   53,312       330   1.24 %
Total interest-bearing deposits and borrowings 586,137 2,101 0.72 % 587,826 2,753 0.94 %
Noninterest-bearing liabilities:
Demand deposits 180,045 124,395
Other liabilities   9,562     13,409  
Total liabilities 775,744 725,630
Shareholders' Equity   93,541     87,225  
Total Liabilities and Shareholders' Equity: $ 869,285   $ 812,855  
 
Interest Spread(2) 3.59 % 3.71 %
 
Net Interest Margin(3) $ 16,141   3.81 % $ 15,600   3.95 %
 

(1)

 

Loans placed on nonaccrual status are included in loan balances

(2)

Interest spread is the average yield earned on earning assets, less the average rate incurred on interest-bearing liabilities.

(3)

Net interest margin is net interest income, expressed as a percentage of average earning assets.

 
 
Access National Corporation
Condensed Consolidated Statement of Income
Three Months Ended June 30, 2013
(In Thousands, Except for Share Data)
 
  Adjustment for  
Mortgage Production
As Reported Branch Closure Pro Forma Totals
Interest and dividend income $ 9,086 $ (55 ) $ 9,031
 
Interest expense   1,034     -     1,034  
 
Net interest income 8,052 (55 ) 7,997
Provision for loan losses   -     -     -  
Net interest income after provision for loan losses 8,052 (55 ) 7,997
 
Noninterest income 8,023 (1,075 ) 6,948
 
Noninterest expense   10,533     (636 )   9,897  
 
Income before income taxes 5,542 (494 ) 5,048
 
Provision for income taxes   2,018     (193 )   1,825  
 
Net income $ 3,524   $ (302 ) $ 3,222  
 
Earnings per common share:
Basic $ 0.34   $ (0.03 ) $ 0.31  
Diluted $ 0.34   $ (0.03 ) $ 0.31  
 
Average outstanding shares:
Basic 10,306,561 - 10,306,561
Diluted 10,379,870 - 10,379,870
 
 
Average total assets (in thousands) $ 850,200 $ (302 ) $ 849,898
Average shareholders' equity (in thousands) $ 94,735 $ (100 ) $ 94,635
 
Return on average assets (annualized) 1.66 % (0.14 )% 1.52 %
Return on average shareholders' equity (annualized) 14.88 % (1.26 )% 13.62 %
 
Total loan volume (in thousands) $ 171,427 $ (35,407 ) $ 136,020
Purchase loan units as a percentage of business 44.82 % 7.55 % 52.37 %
 
 
Access National Corporation
Condensed Consolidated Statement of Income
Three Months Ended June 30, 2012
(In Thousands, Except for Share Data)
     

 

Adjustment for

 

Mortgage Production

As Reported

Branch Closure

Pro Forma Totals

Interest and dividend income $ 9,002 $ (197 ) $ 9,199
 
Interest expense   1,270     -     1,270  
 
Net interest income 7,732 (197 ) 7,929
Provision for loan losses   472     -     472  
Net interest income after provision for loan losses 7,260 - 7,457
 
Noninterest income 13,732 (5,519 ) 8,213
 
Noninterest expense   14,411     (3,601 )   10,810  
 
Income before income taxes 6,581 (1,918 ) 4,860
 
Provision for income taxes   2,691     (748 )   1,943  
 
Net income $ 3,890   $ (1,170 ) $ 2,917  
 
Earnings per common share:
Basic $ 0.38   $ (0.11 ) $ 0.27  
Diluted $ 0.38   $ (0.11 ) $ 0.27  
 
Average outstanding shares:
Basic 10,237,515 - 10,237,515
Diluted 10,349,704 - 10,349,704
 
 
Average total assets (in thousands) $ 798,272 $ (1,085 ) $ 797,187
Average shareholders' equity (in thousands) $ 88,648 $ (398 ) $ 88,250
 
Return on average assets (annualized) 1.95 % (0.49 )% 1.46 %
Return on average shareholders' equity (annualized) 17.55 % (4.33 )% 13.22 %
 
Total loan volume (in thousands) $ 266,850 $ (102,715 ) $ 164,135
Purchase loan units as a percentage of business 28.77 % $ 22.87 % 51.64 %
 

Access National Corporation
Michael Clarke, 703-871-2100