Access National Declares Dividend, Reports Third Quarter Earnings

Mon Oct 21, 2013 4:51pm EDT

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Access National Declares Dividend, Reports Third Quarter Earnings

Access National Corporation (NASDAQ: ANCX), parent company for Access National Bank (Bank), reported third quarter net income of $2.8 million, or $0.27 per share. This represents the Corporation’s 53rd consecutive quarterly profit over its 55 quarter history. Consistent with management’s stated objective of a 40% payout ratio against core earnings, the Board of Directors declared a cash dividend of $0.11 per share for holders of record as of November 6, 2013 and payable on November 25, 2013.

The third quarter of 2013 reflects a 17% increase in banking segment pretax earnings in comparison to the third quarter of 2012. The mortgage segment contribution declined 53% for the nine months ended September 30, 2013 in comparison with the same period in 2012 due to a reduction in volume and gain on sale margin. While the company has suffered volume reduction and margin compression consistent with the overall market, the mortgage segment has experienced further reductions in volume due to the strategic decision to close a significant out-of-market office in April 2013. The third quarter of 2013 represented a transition period for the mortgage segment as it reported near break-even performance while overhead staffing was reduced to align overhead with expected production. Through September 30, 2013, the mortgage division’s pre-tax contribution is 30%, which aligns with management’s intent, being that 70-80% of the Corporation’s net income is generated from the core business of the Bank. While mortgage banking remains an important component of both the client and shareholder value proposition, the extraordinary mortgage contributions of prior years are not expected to return. In order to blunt the adverse impact of a mortgage segment in transition, the commercial banking segment elected to sell $10.6 million of SBA Guaranteed loans that resulted in an after-tax gain of $602 thousand.

Net interest margin for the first nine months of 2013 decreased to 3.83% from 3.95% for the same period in 2012. On a linked quarter basis, the 3.88% margin was essentially flat for the three months ended September 30, 2013 compared to 3.89% reported in the prior quarter.

On a consolidated basis, management believes the Corporation’s results continue to compare favorably to similar banking companies as evidenced by the annualized return on average assets of 1.35% and 1.56% for the three and nine month periods ended September 30, 2013. Meanwhile, the annualized return on average equity was 11.87% and 14.22% for the three and nine month periods ended September 30, 2013, respectively.

Total assets amounted to $846.6 million compared to $863.9 million at December 31, 2012, an overall decline of $17.3 million. The decrease in loans held for sale of $95.2 million was offset by a growth in interest-bearing balances of $40.0 million and loans held for investment of $37.8 million. Following the sale of $10.6 million in SBA Guaranteed loans, loans held for investment increased at an annualized rate of 8.3% or $13.4 million on a linked quarter basis. Absent the loan sale, loans held for investment would have increased $24.0 million or at an annualized rate of 15.0% on a linked quarter basis, driven by growth in commercial loans.

Total deposits at September 30, 2013 increased $3.8 million from December 31, 2012. Management continues to focus on expanding business banking relationships as evidenced by the increase in demand deposits of $71.6 million or 30.44% from December 31, 2012, which comprised 45.44% of the deposit portfolio at September 30, 2013. Management has viewed brokered deposits and CDARS as cost effective methods of funding the mortgage division’s warehouse on loans held for sale as well as its investment portfolio. The $57.2 million reduction in brokered deposits and CDARS was a planned response to the decrease in mortgage loans held for sale.

Non-performing assets (NPAs) increased to $2.9 million or 0.34% of total assets at September 30, 2013, up from $2.7 million or 0.32% of assets at December 31, 2012. The Corporation did not have other real estate owned at September 30, 2013 or December 31, 2012. The allowance for loan losses totaled $13.0 million and $12.5 million or 1.99% and 2.03% of total loans held for investment as of September 30, 2013 and December 31, 2012, respectively.

Book value per common share increased 5.5% at September 30, 2013 to $9.34, from $8.85 at December 31, 2012. The ratio of total equity to total assets for Access National Corporation and its subsidiary bank was 11.39% at September 30, 2013 and continued to exceed standards of being “Well Capitalized” as set forth under banking regulations.

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
                           
    September 30,     December 31,     September 30,
2013 2012 2012
(In Thousands)     (Unaudited)             (Unaudited)
 
ASSETS
 
Cash and due from banks $ 9,556 $ 15,735 $ 13,090
 
Interest-bearing balances and federal funds sold 62,221 22,206 43,360
 
Investment securities:
Available-for-sale, at fair value 72,692 35,759 36,719
Held-to-maturity, at amortized cost (fair value of $15,426, $45,308 and $65,454)   15,856     44,952   64,939
Total investment securities 88,548 80,711 101,658
 
Restricted Stock, at amortized cost 3,834 4,237 2,824
 
Loans held for sale - at fair value 16,376 111,542 84,011
 

Loans held for investment net of allowance for loan losses of $13,025, $12,500 and $12,048, respectively

641,782 604,478 578,571
 
Premises, equipment and land, net 8,401 8,517 8,425
 
Other assets 15,846 16,488 17,409
             
Total assets $ 846,564   $ 863,914 $ 849,348
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
LIABILITIES
Noninterest-bearing deposits $ 215,711 $ 164,161 $ 192,813
 
Savings and interest-bearing deposits 213,304 187,997 193,840
 
Time deposits   246,309     319,338   319,129
 
Total deposits 675,324 671,496 705,782
 
Short-term borrowings 64,030 83,091 26,770
 
Long-term borrowings - - 2,661
 
Subordinated debentures - 6,186 6,186
 
Other liabilities and accrued expenses 10,792 11,874 15,167
             
Total Liabilities   750,146     772,647   756,566
 
SHAREHOLDERS' EQUITY

Common stock $0.835 par value; 60,000,000 authorized; issued and outstanding,10,321,858, 10,317,767 and 10,277,267 shares, respectively

8,619 8,615 8,582
 
Additional paid in capital 16,973 17,155 16,896
 
Retained earnings 72,324 65,404 67,189
 
Accumulated other comprehensive income (loss), net (1,498 ) 93 115
             
Total shareholders' equity   96,418     91,267   92,782
             
Total liabilities and shareholders' equity $ 846,564   $ 863,914 $ 849,348
 
 
Access National Corporation
Consolidated Statement of Operations
                           
    Three Months Ended     Nine Months Ended
September 30, 2013 September 30, 2013     September 30, 2012
(In Thousands Except for Share and Per Share Data)     (unaudited)     (unaudited)
 
INTEREST INCOME
Interest and fees on loans $ 8,262 $ 25,468 $ 25,672

 

Interest on federal funds sold and bank balances 22 76 62
 
Interest on securities   457   1,439   1,791  
Total interest income 8,741 26,983 27,525
 
INTEREST EXPENSE
Interest on deposits 799 2,766 3,512
 
Interest on other borrowings   31   165   434  
Total interest expense   830   2,931   3,946  
Net interest income 7,911 24,052 23,579
 
Provision for loan losses   450   675   1,340  
Net interest income after provision for loan losses 7,461 23,377 22,239
 
NONINTEREST INCOME
Service charges and fees 188 495 487
 
Gain on sale of loans 3,179 18,180 43,161
 
Other Income   1,712   5,271   (5,090 )
Total noninterest income 5,079 23,946 38,558
 
NONINTEREST EXPENSE
Salaries and benefits 5,672 20,540 23,826
 
Occupancy and equipment 641 1,961 1,941
 
Other operating expense   2,324   9,324   16,471  
Total noninterest expense   8,637   31,825   42,238  
Income before income tax 3,903 15,498 18,559
 
Income tax expense   1,098   5,485   7,099  
NET INCOME   2,805   10,013   11,460  
 
Earnings per common share:
Basic $ 0.27 $ 0.97 $ 1.12  
Diluted $ 0.27 $ 0.96 $ 1.11  
 
Average outstanding shares:
Basic 10,306,865 10,312,017 10,236,472
Diluted 10,389,064 10,402,178 10,350,833
                           
 
Performance and Capital Ratios
 
    Three Months     Nine Months     Nine Months     Twelve Months
Ended Ended Ended Ended
September 30, September 30, September 30, December 31,
(Dollars In Thousands)     2013     2013     2012     2012
 
Return on average assets (annualized) 1.35 % 1.56 % 1.86 % 2.15 %
Return on average equity (annualized) 11.87 % 14.22 % 17.19 % 19.68 %
Net interest margin 3.88 % 3.83 % 3.95 % 3.94 %
Efficiency ratio - Bank only 48.02 % 50.78 % 53.03 % 51.71 %
Total average equity to earning assets 11.59 % 11.22 % 11.16 % 11.24 %
 
Averages
Assets $ 831,087 $ 856,483 $ 820,292 $ 826,233
Loans held for investment 655,162 642,543 578,014 583,724
Loans held for sale 26,335 50,128 74,929 78,543
Interest-bearing deposits & federal funds sold 39,337 45,456 36,108 33,272
Investment securities 92,572 97,707 107,684 105,520
Earning assets 815,827 836,767 796,596 800,917
Interest-bearing deposits 452,852 512,009 532,692 526,346
Total deposits 653,733 699,076 669,306 672,693
Repurchase agreements & federal funds purchased 23,378 25,652 26,717 26,744
Commercial paper & other short term borrowings 50,269 28,379 12,841 14,748
Long-term borrowings - - 9,835 9,201
Equity $ 94,536 $ 93,876 $ 88,897 $ 90,047
 
Banking segment - income before taxes $ 4,368 $ 12,393 $ 10,478 $ 14,730
Mortgage segment - income before taxes $ (50 ) $ 4,645 $ 9,865 $ 15,656
Other segments - income before taxes $ (415 ) $ (1,540 ) $ (1,784 ) $ (1,955 )
Mortgage loan originations and brokered loans $ 103,114 $ 492,221 $ 807,952 $ 1,130,089
Allowance for losses on mortgage loans sold $ 4,645 $ 4,645 $ 4,802 $ 4,376
 
Book value per common share $ 9.34 $ 9.34 $ 9.03 $ 8.85
                                         
               
Composition of Loan Portfolio
                         
      September 30, 2013     December 31, 2012
(Dollars In Thousands)     Amount    

Percentage of

Total

    Amount    

Percentage of

Total

 
Commercial real estate-owner occupied $ 191,929 29.31 % $ 182,655 29.60 %
Commercial real estate-non owner occupied 95,011 14.51 107,213 17.38
Residential real estate 166,600 25.44 144,521 23.43
Commercial 160,085 24.45 149,389 24.21
Real estate construction 36,256 5.54 30,038 4.87
Consumer   4,926     0.75     3,162     0.51  
Total loans $ 654,807 100.00 % $ 616,978 100.00 %
Less allowance for loan losses   13,025   12,500
$ 641,782 $ 604,478
                             
               
Composition of Deposits
                         
      September 30, 2013     December 31, 2012
(Dollars In Thousands)     Amount    

Percentage of

Total

    Amount    

Percentage of

Total

 
Demand deposits $ 215,711 31.95 % $ 164,161 24.45 %
Interest-bearing demand deposits 91,090 13.49 71,015 10.58
Savings and money market 121,793 18.03 116,554 17.36
CDARS-reciprocal time deposits 127,840 18.93 170,835 25.44
Brokered deposits 15,064 2.23 29,277 4.35
Time deposits   103,826     15.37         119,654     17.82  
Total Deposits $ 675,324     100.00 %     $ 671,496     100.00 %
 
                   
Asset Quality Trend Profile
                                                   
Nine Months Six Months Three Months Twelve Months Nine Months
Ended Ended Ended Ended Ended
(Dollars In Thousands)     September 30, 2013     June 30, 2013     March 31, 2013     December 31, 2012     September 30, 2012
 
Total assets $ 846,564 $ 841,683 $ 876,361 $ 863,914 $ 849,348
Total loans held for investment $ 654,807 $ 641,464 $ 639,696 $ 616,978 $ 590,619
 
Allowance for loan losses - beginning balance $ 12,500 $ 12,500 $ 12,500 $ 11,738 $ 11,738
Charge offs (476 ) - - (2,165 ) (1,829 )
Recoveries   326         282         135         1,412         799  
Net charge offs (150 ) 282 135 (753 ) (1,030 )
Provision for loan losses   675         225         225         1,515         1,340  
Allowance for loan losses - ending balance $ 13,025       $ 13,007       $ 12,860       $ 12,500       $ 12,048  
 
Allowance for loan losses/loans held for investment 1.99 % 2.03 % 2.01 % 2.03 % 2.04 %
 
Delinquent 30 - 90 days $ - $ 1,070 $ 671 $ - $ -
Percentage of loans delinquent 0.00 % 0.17 % 0.10 % 0.00 % 0.00 %
 
Non-accrual loans $ 2,902 $ 2,299 $ 1,738 $ 2,743 $ 3,626
OREO $ - $ - $ - $ - $ -
Total NPA $ 2,902 $ 2,299 $ 1,738 $ 2,743 $ 3,626
NPA to total assets 0.34 % 0.27 % 0.20 % 0.32 % 0.43 %
Allowance for loan losses/NPA 448.83 % 565.77 % 739.93 % 455.71 % 332.27 %
 
OREO Expense $ 40 $ 40 $ 39 $ 6 $ 1
Gain on Sale of OREO $ -       $ -       $ -       $ -       $ -  
OREO expense net $ 40       $ 40       $ 39       $ 6       $ 1  
 
Allowance for losses on mortgage loans sold $ 4,645 $ 4,645 $ 4,475 $ 4,376 $ 4,802
Provision for losses on mortgage loans sold $ 388 $ 388 $ 218 $ 2,510 $ 2,186
                                                   
   
Yield on Average Earning Assets and Rates on Average Interest-Bearing Liabilities
Three Months Ended
                   
      September 30, 2013     September 30, 2012
Average Income / Yield / Average Income / Yield /
      Balance     Expense     Rate     Balance     Expense     Rate
(Dollars In Thousands)
Assets:
Interest earning assets:
Securities $ 94,993 $ 457 1.92 % $ 104,901 $ 528 2.01 %
Loans held for sale 26,335 264 4.01 % 87,355 818 3.75 %
Loans(1) 655,162 7,998 4.88 % 586,060 7,814 5.33 %
Interest-bearing balances and federal funds sold   39,337         22       0.22 %   30,303         12     0.16 %
Total interest earning assets 815,827 8,741 4.29 % 808,619 9,172 4.54 %
Noninterest earning assets:
Cash and due from banks 8,602 12,110
Premises, land and equipment 8,433 8,486
Other assets 11,258 18,018
Less: allowance for loan losses   (13,033 )   (12,103 )
Total noninterest earning assets   15,260     26,511  
Total Assets $ 831,087   $ 835,130  
 
Liabilities and Shareholders' Equity:
Interest-bearing deposits:
Interest-bearing demand deposits $ 74,105 $ 38 0.21 % $ 70,637 $ 35 0.20 %
Money market deposit accounts 118,330 59 0.20 % 118,330 115 0.39 %
Savings accounts 2,341 1 0.17 % 2,600 1 0.15 %
Time deposits   258,076         701       1.09 %   337,519         938     1.11 %
Total interest-bearing deposits 452,852 799 0.71 % 529,086 1,089 0.82 %
Borrowings:
FHLB Advances 50,000 27 0.22 % 5,557 11 0.79 %
Securities sold under agreements to repurchase and federal funds purchased 23,378 7 0.12 % 26,946 9 0.13 %
Other short-term borrowings - - 0.00 % - - 0.00 %
FHLB Long-term borrowings - - 0.00 % 2,949 28 3.80 %
FDIC Term Note - - 0.00 % - - 0.00 %
Subordinated Debentures   269         (3 )     -4.46 %   6,186         56     3.62 %
Total borrowings   73,647         31       0.17 %   41,638         104     1.00 %
Total interest-bearing deposits and borrowings 526,499 830 0.63 % 570,724 1,193 0.84 %
Noninterest-bearing liabilities:
Demand deposits 200,881 160,787
Other liabilities   9,171     11,413  
Total liabilities 736,551 742,924
Shareholders' Equity   94,536     92,206  
Total Liabilities and Shareholders' Equity: $ 831,087   $ 835,130  
 
Interest Spread(2) 3.66 % 3.70 %
 
Net Interest Margin(3) $ 7,911       3.88 % $ 7,979     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.

   
Yield on Average Earning Assets and Rates on Average Interest-Bearing Liabilities
Nine Months Ended
                   
      September 30, 2013     September 30, 2012
Average Income / Yield / Average Income / Yield /
      Balance     Expense     Rate     Balance     Expense     Rate
(Dollars In Thousands)
Assets:
Interest earning assets:
Securities $ 98,640 $ 1,439 1.95 % $ 107,545 $ 1,791 2.22 %
Loans held for sale 50,128 1,308 3.48 % 74,929 2,179 3.88 %
Loans(1) 642,543 24,160 5.01 % 578,014 23,493 5.42 %
Interest-bearing balances and federal funds sold   45,456         76     0.22 %   36,108         62     0.23 %
Total interest earning assets 836,767 26,983 4.30 % 796,596 27,525 4.61 %
Noninterest earning assets:
Cash and due from banks 10,629 10,159
Premises, land and equipment 8,491 8,563
Other assets 13,456 16,926
Less: allowance for loan losses   (12,860 )   (11,952 )
Total noninterest earning assets   19,716     23,696  
Total Assets $ 856,483   $ 820,292  
 
Liabilities and Shareholders' Equity:
Interest-bearing deposits:
Interest-bearing demand deposits $ 73,751 $ 105 0.19 % $ 65,805 $ 126 0.26 %
Money market deposit accounts 119,906 221 0.25 % 122,543 385 0.42 %
Savings accounts 2,428 3 0.16 % 2,612 3 0.15 %
Time deposits   315,924         2,437     1.03 %   341,732         2,998     1.17 %
Total interest-bearing deposits 512,009 2,766 0.72 % 532,692 3,512 0.88 %
Borrowings:
FHLB Advances 24,187 42 0.23 % 8,023 39 0.65 %
Securities sold under agreements to repurchase and federal funds purchased 25,652 20 0.10 % 26,717 28 0.14 %
Other short-term borrowings - - 0.00 % - - 0.00 %
FHLB Long-term borrowings - - 0.00 % 3,649 100 3.65 %
FDIC Term Note - - 0.00 % 4,818 98 2.71 %
Subordinated Debentures   4,192         103     3.28 %   6,186         169     3.64 %
Total borrowings   54,031         165     0.41 %   49,393         434     1.17 %
Total interest-bearing deposits and borrowings 566,040 2,931 0.69 % 582,085 3,946 0.90 %
Noninterest-bearing liabilities:
Demand deposits 187,067 136,614
Other liabilities   9,500     12,696  
Total liabilities 762,607 731,395
Shareholders' Equity   93,876     88,897  
Total Liabilities and Shareholders' Equity: $ 856,483   $ 820,292  
 
Interest Spread(2) 3.61 % 3.70 %
 
Net Interest Margin(3) $ 24,052     3.83 % $ 23,579     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
Michael Clarke, 703-871-2100

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