Access National Declares Dividend, Reports First Quarter Earnings

Fri Apr 18, 2014 1:45pm EDT

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Access National Declares Dividend, Reports First Quarter Earnings

Access National Corporation (NASDAQ: ANCX), parent company for Access National Bank (Bank), reported first quarter 2014 net income of $2.4 million, or $0.23 per share. This represents the Corporation’s 55th consecutive quarterly profit over its 57 quarter history. Consistent with management’s stated objective of a 40%-50% payout ratio against core earnings, the Board of Directors declared a cash dividend of $0.12 per share for holders of record as of May 5, 2014 and payable on May 23, 2014. The increase in routine dividend reflects Management’s favorable performance outlook and comfort with a favorable capital position.

Overall, first quarter 2014 pretax earnings fell when compared to first quarter 2013 pretax earnings by $2.3 million due to the significant decrease in mortgage segment pretax earnings of $2.8 million. Positively offsetting the reduction in mortgage segment pretax earnings was an increase in banking segment pretax earnings of 10% or $383 thousand during the first quarter of 2014 in comparison to the first quarter of 2013. Even with the drastic reduction in volume, the mortgage division was able to reduce its overhead during 2013 to allow for a break-even performance in the first quarter 2014. Pretax earnings were also positively impacted by a $178 thousand reduction in pretax loss of the Wealth Management Segment that resulted in near break-even performance for the first quarter of 2014 when compared to the first quarter of 2013.

Net interest margin for the first quarter 2014 increased to 3.78% from 3.73% for the same period in 2013. On a linked quarter basis, the margin decreased from 3.89% for the three months ended December 31, 2013 due to decreased yields in the investment and loan portfolios.

On a consolidated basis, the Corporation reported annualized return on average assets of 1.10% and 1.66% for the three month periods ended March 31, 2014 and 2013, respectively. Meanwhile, the annualized return on average equity was 10.43% and 15.95% for the three month periods ended March 31, 2014 and 2013, respectively.

Total assets at March 31, 2014 amounted to $926.8 million compared to $847.2 million at December 31, 2013, an overall increase of $79.6 million. Growth in loans held for investment of $29.8 million along with a $36.1 million increase in interest-bearing balances as well as a $9.0 million growth in investment securities accounted for the majority of the increase. The first quarter of 2014 reflected loan growth in all categories of the loans held for investment portfolio. Overall, the portfolio of loans held for investment grew at an annualized rate of 17.35%.

The increase in total deposits at March 31, 2014 of $232.5 million when compared to December 31, 2013 was due mainly to an increase in demand deposits of $39.2 million, an increase in interest-bearing demand deposits of $30.5 million, an increase in savings and money market deposits of $9.2 million, and an increase in Certificate of Deposit Account Registry Service (CDARS) deposits totaling $152.6 million. The deliberate increase in CDARS during the most recent period was to retire the elevated level of short-term borrowings as of December 31, 2013. Management continues to focus on expanding business banking relationships as evidenced by the growth in demand deposits.

Non-performing assets (NPAs) remained stable at $2.5 million at March 31, 2014 as well as December 31, 2013, representing 0.27% and 0.30% of total assets, respectively. The Corporation did not have other real estate owned at March 31, 2014. The allowance for loan losses totaled $13.2 million or 1.84% of total loans held for investment as of March 31, 2014.

Effective February 1, 2014, the Corporation completed the acquisition of accounts from two local wealth management practices that added $167 million of assets under management (AUM) and ended the period with consolidated AUM of $432 million. Leadership of the two acquired practices is being assimilated within the Corporation's current Wealth Management Segment leadership and is expected to remain long-term with the Corporation. In connection with these transactions, the Corporation issued 24,017 shares of restricted stock and recorded $1.5 million of goodwill that is reported under other assets on the consolidated balance sheet. The accounts acquired in these transactions are consistent in geography and style of the Corporation’s existing book of business and target market and are expected to create opportunities for synergistic growth. The Corporation plans to continue efforts on growing the Wealth Management Segment to further enhance the client value proposition and deliver a meaningful and stable source of non-interest income.

Book value per common share increased from $8.79 at December 31, 2013 to $9.00 at March 31, 2014. The ratio of total equity to total assets for Access National Corporation and its subsidiary bank was 10.10% at March 31, 2014 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
             
March 31, December 31, March 31,
2014 2013 2013
(In Thousands Except for Share and Per Share Data)   (Unaudited)       (Unaudited)
 
ASSETS
 
Cash and due from banks $ 10,816 $ 8,117 $ 8,780
 
Interest-bearing balances and federal funds sold 51,354 15,302 43,241
 
Investment securities:
Available-for-sale, at fair value 90,595 76,552 68,538

Held-to-maturity, at amortized cost (fair value of $10,938, $15,659 and $31,096)

  11,273     16,277     30,854  
Total investment securities 101,868 92,829 99,392
 
Restricted Stock, at amortized cost 1,761 8,559 2,034
 
Loans held for sale - at fair value 27,217 24,353 69,587
 
Loans held for investment

net of allowance for loan losses of $13,171, $13,136 and $12,860, respectively

703,686 673,919 626,836
 
Premises, equipment and land, net 8,368 8,389 8,539
 
Other assets 21,730 15,714 17,952
     
Total assets $ 926,800   $ 847,182   $ 876,361  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
LIABILITIES
Noninterest-bearing deposits $ 229,059 $ 189,908 $ 184,785
 
Savings and interest-bearing deposits 239,795 200,196 187,223
 
Time deposits   336,570     182,868     361,159  
 
Total deposits 805,424 572,972 733,167
 
Short-term borrowings 17,646 172,855 32,258
 
Subordinated debentures - - 6,186
 
Other liabilities and accrued expenses 10,153 10,221 10,777
     
Total Liabilities   833,223     756,048     782,388  
 
SHAREHOLDERS' EQUITY

Common stock $0.835 par value; 60,000,000 authorized; issued and outstanding, 10,402,324, 10,369,420 and 10,329,104 shares, respectively

8,686 8,659 8,625
 
Additional paid in capital 17,814 17,320 17,270
 
Retained earnings 68,392 67,121 68,159
 
Accumulated other comprehensive income (loss), net (1,315 ) (1,966 ) (81 )
     
Total shareholders' equity   93,577     91,134     93,973  
     
Total liabilities and shareholders' equity $ 926,800   $ 847,182   $ 876,361  
 
 
Access National Corporation
Consolidated Statement of Operations
 
  Three Months Ended
March 31, 2014   March 31, 2013
(In Thousands Except for Share and Per Share Data)   (unaudited)   (unaudited)
 
INTEREST INCOME
Interest and fees on loans $ 8,459 $ 8,596
 
Interest on federal funds sold and bank balances 18 25
 
Interest on securities   468   535
Total interest income 8,945 9,156
 
INTEREST EXPENSE
Interest on deposits 728 1,001
 
Interest on other borrowings   76   66
Total interest expense   804   1,067
Net interest income 8,141 8,089
 
Provision for loan losses   -   225
Net interest income after provision for loan losses 8,141 7,864
 
NONINTEREST INCOME
Service charges and fees 177 169
 
Gain on sale of loans 1,728 7,881
 
Other Income   1,351   2,794
Total noninterest income 3,256 10,844
 
NONINTEREST EXPENSE
Salaries and benefits 4,887 8,069
 
Occupancy and equipment 707 704
 
Other operating expense   2,063   3,882
Total noninterest expense   7,657   12,655
Income before income tax 3,740 6,053
 
Income tax expense   1,326   2,369
NET INCOME   2,414   3,684
 
Earnings per common share:
Basic $ 0.23 $ 0.36
Diluted $ 0.23 $ 0.35
 
Average outstanding shares:
Basic 10,391,080 10,322,623
Diluted 10,447,085 10,437,600
         
 
       
Performance and Capital Ratios
 
                 
Three Months Three Months Twelve Months Twelve Months
Ended Ended Ended Ended
March 31, March 31, December 31, December 31,
(Dollars In Thousands Except for Share and Per Share Data)   2014   2013   2013   2012
 
Return on average assets (annualized) 1.10 % 1.66 % 1.55 % 2.15 %
Return on average equity (annualized) 10.43 % 15.95 % 14.00 % 19.68 %
Net interest margin 3.78 % 3.73 % 3.85 % 3.94 %
Efficiency ratio - Bank only 50.98 % 53.22 % 49.50 % 51.71 %
Total average equity to earning assets 10.75 % 10.66 % 11.28 % 11.24 %
 
Averages
Assets $ 879,984 $ 888,589 $ 854,572 $ 826,233
Loans held for investment 698,429 626,504 648,744 583,724
Loans held for sale 18,708 74,768 42,667 78,543
Interest-bearing deposits & federal funds sold 39,251 58,935 46,217 33,272
Investment securities 102,398 106,644 97,260 105,520
Earning assets 861,170 866,906 836,129 800,917
Interest-bearing deposits 441,757 575,786 485,860 526,346
Total deposits 638,211 744,843 678,531 672,693
Repurchase agreements & federal funds purchased 23,374 30,389 25,524 26,744
Commercial paper & other short term borrowings 115,944 5,056 43,077 14,748
Long-term borrowings - 6,186 3,135 9,201
Equity $ 92,593 $ 92,397 $ 94,352 $ 90,047
 
Banking segment - income before taxes $ 4,181 $ 3,798 $ 17,330 $ 14,730
Mortgage segment - income before taxes $ 3 $ 2,808 $ 4,879 $ 15,656
Wealth Management segment - loss before taxes $ (8 ) $ (186 ) $ (751 ) $ (838 )
Other segments - income before taxes $ (436 ) $ (367 ) $ (1,017 ) $ (1,117 )
Mortgage loan originations and brokered loans $ 70,570 $ 217,680 $ 574,951 $ 1,130,089
Gain on sale of mortgage loans net hedging activity $ 2,293 $ 10,367 $ 24,669 $ 50,161
Allowance for losses on mortgage loans sold $ 4,645 $ 4,475 $ 4,645 $ 4,376
Wealth Management segment - assets under management $ 432,000 $ 183,000 $ 257,000 $ 190,000
 
Book value per common share $ 9.00 $ 9.10 $ 8.79 $ 8.85
                 
 
 
Composition of Loan Portfolio  
         
    March 31, 2014   December 31, 2013
(Dollars In Thousands)

 

 

Percentage of

 

 

  Percentage of
   

Amount

 

Total

 

Amount

  Total
 
Commercial real estate - owner occupied $ 204,725 28.56 % $ 196,804 28.65 %
Commercial real estate - non-owner occupied 93,366 13.02 90,676 13.20
Residential real estate 176,914 24.68 173,639 25.27
Commercial 192,890 26.91 182,220 26.52
Real estate construction 42,766 5.97 38,842 5.65
Consumer   6,196   0.86     4,874   0.71  
Total loans $ 716,857 100.00 % $ 687,055 100.00 %
Less allowance for loan losses   13,171   13,136
$ 703,686 $ 673,919
                     
 
 
Composition of Deposits        
                     
    March 31, 2014   December 31, 2013
(Dollars In Thousands) Percentage of Percentage of
    Amount   Total   Amount   Total
 
Demand deposits $ 229,059 28.44 % $ 189,908 33.14 %
Interest-bearing demand deposits 116,195 14.43 85,735 14.96
Savings and money market 123,358 15.32 114,169 19.93
CDARS-time deposits 200,142 24.85 47,535 8.30
Brokered deposits 13,709 1.69 14,103 2.46
Time deposits   122,961   15.27       121,522   21.21  
Total Deposits $ 805,424   100.00 %   $ 572,972   100.00 %
                     
 
         
Asset Quality Trend Profile
                     
Three Months Twelve Months Nine Months Six Months Three Months
Ended Ended Ended Ended Ended
(Dollars In Thousands)   March 31, 2014   December 31, 2013   September 30, 2013   June 30, 2013   March 31, 2013
 
Total assets $ 926,800 $ 847,182 $ 846,564 $ 841,683 $ 876,361
Total loans held for investment $ 716,857 $ 687,055 $ 654,807 $ 641,464 $ 639,696
 
Allowance for loan losses - beginning balance $ 13,136 $ 12,500 $ 12,500 $ 12,500 $ 12,500
Charge offs (16 ) (541 ) (476 ) - -
Recoveries   51       502       326       282       135  
Net charge offs 35 (39 ) (150 ) 282 135
Provision for loan losses   -       675       675       225       225  
Allowance for loan losses - ending balance $ 13,171     $ 13,136     $ 13,025     $ 13,007     $ 12,860  
 
Allowance for loan losses/loans held for investment 1.84 % 1.91 % 1.99 % 2.03 % 2.01 %
 
Delinquent 30 - 90 days $ - $ - $ - $ 1,070 $ 671
Percentage of loans delinquent 0.00 % 0.00 % 0.00 % 0.17 % 0.10 %
 
Non-accrual loans $ 2,510 $ 2,535 $ 2,902 $ 2,299 $ 1,738
OREO $ -     $ -     $ -     $ -     $ -  
Total NPA $ 2,510     $ 2,535     $ 2,902     $ 2,299     $ 1,738  
 
NPA to total assets 0.27 % 0.30 % 0.34 % 0.27 % 0.20 %
Allowance for loan losses/NPA 524.74 % 518.19 % 448.83 % 565.77 % 739.93 %
 
OREO Expense $ - $ 40 $ 40 $ 40 $ 39
Gain on Sale of OREO $ -     $ -     $ -     $ -     $ -  
OREO expense net $ -     $ 40     $ 40     $ 40     $ 39  
 
Allowance for losses on mortgage loans sold $ 4,645 $ 4,645 $ 4,645 $ 4,645 $ 4,475
Provision for losses on mortgage loans sold $ - $ 388 $ 388 $ 388 $ 218
 
 
Yield on Average Earning Assets and Rates on Average Interest-Bearing Liabilities
Three Months Ended
             
                           
    March 31, 2014     March 31, 2013
Average Income / Yield / Average Income / Yield /
(Dollars In Thousands)   Balance   Expense   Rate     Balance   Expense   Rate
 
Assets:
Interest-earning assets:
Securities $ 104,782 $ 468 1.79 % $ 106,697 $ 535 2.00 %
Loans held for sale 18,708 202 4.32 % 74,768 614 3.28 %
Loans(1) 698,429 8,257 4.73 % 626,504 7,982 5.10 %
Interest-bearing balances and federal funds sold   39,251       18   0.18 %   58,937       25   0.17 %
Total interest-earning assets 861,170 8,945 4.15 % 866,906 9,156 4.22 %
Noninterest-earning assets:
Cash and due from banks 7,609 11,386
Premises, land and equipment 8,379 8,544
Other assets 16,007 14,361
Less: allowance for loan losses   (13,181 )   (12,608 )
Total noninterest-earning assets   18,814     21,683  
Total Assets $ 879,984   $ 888,589  
 
Liabilities and Shareholders' Equity:
Interest-bearing deposits:
Interest-bearing demand deposits $ 105,816 58 0.22 % $ 85,053 42 0.20 %
Money market deposit accounts 114,119 57 0.20 % 118,927 89 0.30 %
Savings accounts 2,868 2 0.28 % 2,444 1 0.14 %
Time deposits   218,954       611   1.12 %   369,362       869   0.94 %
Total interest-bearing deposits 441,757 728 0.66 % 575,786 1,001 0.70 %
Borrowings:
FHLB Advances 115,944 70 0.24 % 5,056 4 0.32 %
Securities sold under agreements to repurchase and federal funds purchased 23,374 6 0.10 % 30,389 9 0.11 %
Subordinated Debentures   -       -   0.00 %   6,186       53   3.43 %
Total borrowings   139,318       76   0.22 %   41,631       66   0.63 %
Total interest-bearing deposits and borrowings 581,075 804 0.55 % 617,417 1,067 0.69 %
Noninterest-bearing liabilities:
Demand deposits 196,454 169,056
Other liabilities   9,861     9,719  
Total liabilities 787,390 796,192
Shareholders' Equity   92,594     92,397  
Total Liabilities and Shareholders' Equity: $ 879,984   $ 888,589  
 
Interest Spread(2) 3.60 % 3.53 %
 
Net Interest Margin(3) $ 8,141   3.78 % $ 8,089   3.73 %
                           
 

(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