WashingtonFirst Bankshares, Inc. (“WashingtonFirst” or the
“Company”) (NASDAQ: WFBI), the parent company of WashingtonFirst
Bank, WashingtonFirst Mortgage, and 1st Portfolio Inc., reports net
income of $5.6 million and $15.3 million for the three and nine
months ended September 30, 2017, respectively. This represents
an increase of 12.7% and 15.7% compared to the same periods last
year, respectively. Earnings per share on a fully-diluted basis
were $0.41 and $1.15 per share for the three and nine months ended
September 30, 2017, respectively. On October 2, 2017, the
Company paid its 16th consecutive quarterly cash dividend to its
shareholders.
Core net income for the three and nine months ended
September 30, 2017 was $5.7 million and $16.0 million,
respectively. This represents an increase of 14.6% and 19.6%
compared to the same periods last year, respectively. Core earnings
per share fully diluted basis for the three and nine months ended
September 30, 2017 were $0.43 and $1.20, respectively. Core
net income is calculated as net income adjusted for the after-tax
impact of merger expenses.
Commenting on the Company’s third quarter performance, Shaza
Andersen, the Company's President and CEO, said “Since the
announcement of our decision to merge with Sandy Spring Bancorp in
May 2017, the WashingtonFirst team has worked hard to ensure a
smooth transition for our customers and employees. We never lost
sight of our commitments to deliver exceptional customer service
and enhance shareholder value. I am very pleased to report that
even with the added costs and attention associated with the merger,
we continue to exceed our earnings performance goals."
Net interest margin decreased 8 basis points to 3.45% for the
three months ended September 30, 2017 and increased one basis
point to 3.48% for the nine months ended September 30, 2017,
compared to the same periods in 2016. Return on average
shareholders equity was 10.57% and 10.11% during the three and nine
months ended September 30, 2017, respectively, compared to
10.21% and 9.43% for the same periods last year. Management
attributed this increase to the continued organic growth of the
loan portfolio over the past twelve months. For the three and nine
months ended September 30, 2017 net interest income after
provision for loan losses increased $2.5 million and $7.0 million,
or 17.2% and 16.3%, over the same periods ended September 30,
2016.
For the nine months ended September 30, 2017, total assets
increased 2.6% to $2.1 billion, loans held for investment increased
by $101.1 million, or 6.6%, to $1.6 billion and total deposits
increased $170.5 million, or 11.2%, to $1.7 billion.
About The Company
WashingtonFirst Bankshares, Inc., headquartered in Reston,
Virginia, is the holding company for WashingtonFirst Bank, which
operates 19 full-service banking offices throughout the Washington,
D.C. metropolitan area. In addition, the Company provides wealth
management services through its subsidiary, 1st Portfolio Wealth
Advisors, and mortgage banking services through the Bank's
subsidiary, WashingtonFirst Mortgage Corporation. The Company's
common stock is traded on the NASDAQ Stock Market under the
quotation symbol "WFBI" and is included in the ABA NASDAQ Community
Bank Index and the Russell 2000® index. For more information about
the Company, please visit: www.wfbi.com.
Cautionary Statements About Forward-Looking
Information
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, including statements of the goals, intentions, and
expectations of the Company as to future trends, plans, events,
results of operations and policies and regarding general economic
conditions. Forward-looking information is inherently subject to
risks and uncertainties, and actual results could differ materially
from those currently anticipated due to a number of factors which
include, but are not limited to, factors discussed in our Annual
Report on Form 10-K and in other documents we file with the
Securities and Exchange Commission from time to time. In some
cases, forward-looking statements can be identified by use of words
such as “may,” “will,” “anticipates,” “believes,” “expects,”
“plans,” “estimates,” “potential,” “continue,” “should,” and
similar words or phrases. These statements are based upon the
beliefs of the management of the Company as to the expected outcome
of future events, current and anticipated economic conditions,
nationally and in the Company’s market, and their impact on the
operations, assets and earnings of the Company, interest rates and
interest rate policy, competitive factors, judgments about the
ability of the Company to successfully integrate its operations
following significant transactions including, but not limited to,
mergers and acquisitions, the ability to avoid customer dislocation
during the period leading up to and following such transactions,
and other conditions which by their nature, are not susceptible to
accurate forecast and are subject to significant uncertainty.
Readers are cautioned against placing undue reliance on such
forward-looking statements. The Company assumes no obligation to
revise, update, or clarify forward-looking statements to reflect
events or conditions after the date of this release.
Additional Information About the Merger and Where to Find
It
In connection with the proposed merger transaction, Sandy Spring
Bancorp, Inc. ("Sandy Spring") filed with the Securities and
Exchange Commission ("SEC") on July 19, 2017, and the SEC
declared effective on September 8, 2017, a Registration Statement
on Form S-4 which includes a Joint Proxy Statement of Sandy Spring
and the Company, and a Prospectus of Sandy Spring, as well as other
relevant documents concerning the proposed transaction.
Shareholders are urged to read the Registration Statement and
the Joint Proxy Statement/Prospectus regarding the merger and any
other relevant documents filed with the SEC, as well as any
amendments or supplements to those documents, because they contain
or will contain important information about Sandy Spring, the
Company and the proposed merger.
A free copy of the Joint Proxy Statement/Prospectus, as well as
other filings containing information about Sandy Spring and the
Company, may be obtained at the SEC’s Internet site
(http://www.sec.gov). You will also be able to obtain these
documents, free of charge, from Sandy Spring at
www.sandyspringbank.com under the tab “Investor Relations,” and
then under the heading “SEC Filings” or from the Company by
accessing the Company’s website at www.wfbi.com under the tab
“Investor Relations,” and then selecting “SEC Filings” under the
heading “Documents and Filings.” Alternatively, these documents,
when available, can be obtained free of charge from Sandy Spring
upon written request to Sandy Spring Bancorp, Inc., Corporate
Secretary, 17801 Georgia Avenue, Olney, Maryland 20832 or by
calling (800) 399-5919, or from the Company, upon written request
to WashingtonFirst Bankshares, Inc., Corporate Secretary, 11921
Freedom Drive, Suite 250, Reston, Virginia 20190 or by calling
(703) 840-2410.
WashingtonFirst Bankshares,
Inc.
Consolidated Balance Sheets
(unaudited)
September 30,2017
December 31,2016
September 30,2016
($ in thousands)
Assets:
Cash and cash equivalents: Cash and due from bank balances $ 3,426
$ 3,614 $ 3,262 Federal funds sold 34,523 93,659 127,965 Interest
bearing deposits 100 100 100 Cash and cash
equivalents 38,049 97,373 131,327 Investment securities,
available-for-sale, at fair value 296,827 280,204 238,022
Restricted stock, at cost 11,239 11,726 7,019 Loans held for sale,
at lower of cost or fair value 27,890 32,109 62,847 Loans held for
investment: Loans held for investment, at amortized cost 1,635,645
1,534,543 1,431,371 Allowance for loan losses (14,137 ) (13,582 )
(12,960 ) Total loans held for investment, net of allowance
1,621,508 1,520,961 1,418,411 Premises and equipment, net 6,012
6,955 7,301 Goodwill 11,420 11,420 11,420 Identifiable intangibles
1,417 1,619 1,686 Deferred tax asset, net 8,097 8,944 7,333 Accrued
interest receivable 6,224 5,243 4,406 Other real estate owned 636
1,428 1,969 Bank-owned life insurance 16,676 13,880 13,791 Other
assets 9,481 11,049 11,406 Total Assets $
2,055,476 $ 2,002,911 $ 1,916,938
Liabilities and
Shareholders' Equity:
Liabilities:
Non-interest bearing deposits $ 463,810 $ 381,887 $ 410,833
Interest bearing deposits 1,229,480 1,140,854
1,121,422 Total deposits 1,693,290 1,522,741 1,532,255 Other
borrowings 6,439 5,852 22,479 FHLB advances 97,856 232,097 121,343
Long-term borrowings 32,817 32,638 32,988 Accrued interest payable
1,832 947 1,390 Other liabilities 15,408 15,976
14,503 Total Liabilities 1,847,642 1,810,251 1,724,958
Commitments and contingent liabilities — — —
Shareholders'
Equity:
Common stock: Common Stock Voting, $0.01 par value, 50,000,000
shares authorized, 12,519,656; 10,987,652; and 10,439,289 shares
issued and outstanding, respectively 124 109 104 Common Stock
Non-Voting, $0.01 par value, 10,000,000 shares authorized; 572,835;
1,908,733; and 1,817,842 shares issued and outstanding,
respectively 6 19 18 Additional paid-in capital 180,257 177,924
161,918 Accumulated earnings 28,875 17,187 28,800 Accumulated other
comprehensive income (loss) (1,428 ) (2,579 ) 1,140 Total
Shareholders' Equity 207,834 192,660 191,980
Total Liabilities and Shareholders' Equity $ 2,055,476 $
2,002,911 $ 1,916,938
WashingtonFirst Bankshares,
Inc.
Consolidated Statements of
Income
(unaudited)
For the Three Months Ended For the Nine Months
Ended
September 30,2017
September 30,2016
September 30,2017
September 30,2016
($ in thousands)
Interest and
dividend income:
Interest and fees on loans $ 20,279 $ 17,703 $ 58,930 $ 50,930
Interest and dividends on investments: Taxable 1,373 1,102 3,992
3,272 Tax-exempt 61 25 187 66 Dividends on other equity securities
173 56 530 208 Interest on Federal funds sold and other short-term
investments 82 50 237 186 Total
interest and dividend income 21,968 18,936 63,876 54,662
Interest
expense:
Interest on deposits 3,078 2,232 8,397 6,427 Interest on borrowings
1,159 861 3,436 2,838 Total interest
expense 4,237 3,093 11,833 9,265 Net
interest income 17,731 15,843 52,043 45,397 Provision for loan
losses 375 1,035 2,315 2,640 Net
interest income after provision for loan losses 17,356 14,808
49,728 42,757
Non-interest
income:
Service charges on deposit accounts 51 54 139 214 Earnings on
bank-owned life insurance 105 90 297 270 Gain on sale of other real
estate owned, net — 11 — 11 Gain on sale of loans, net 3,772 6,327
11,022 14,356 Mortgage banking activities 825 1,215 2,694 3,772
Wealth management income 526 467 1,545 1,338 Gain on sale of
available-for-sale investment securities, net — 135 — 1,287 Gain on
debt extinguishment — — 301 — Other operating income 386
367 1,064 689 Total non-interest income 5,665
8,666 17,062 21,937
Non-interest
expense:
Compensation and employee benefits 7,169 7,395 21,737 21,344
Mortgage commission 1,682 2,657 5,092 5,865 Premises and equipment
1,827 1,802 5,390 5,482 Data processing 1,084 1,058 3,254 3,183
Professional fees 337 377 802 1,046 Merger expenses 133 30 665 30
Mortgage loan processing expenses 265 444 782 994 Debt
extinguishment — 155 — 1,199 Other operating expenses 1,795
1,693 5,334 4,504 Total non-interest expense
14,292 15,611 43,056 43,647 Income
before provision for income taxes 8,729 7,863 23,734 21,047
Provision for income taxes 3,162 2,922 8,394
7,784 Net income $ 5,567 $ 4,941 $ 15,340 $ 13,263
Earnings per common share: (1) Basic earnings per common share $
0.43 $ 0.38 $ 1.18 $ 1.03 Diluted earnings per common share $ 0.41
$ 0.37 $ 1.15 $ 1.01
(1) Prior periods adjusted for 5% stock
dividend issued in December 2016
For the Three Months Ended For the Nine Months
Ended
September 30,2017
September 30,2016
September 30,2017
September 30,2016
($ in thousands, except per share data)
Performance
Ratios:
Return on average assets 1.07 % 1.09 % 1.01 % 1.01 % Return on
average shareholders' equity 10.57 % 10.21 % 10.11 % 9.43 % Yield
on average interest-earning assets 4.28 % 4.23 % 4.27 % 4.19 % Rate
on average interest-earning liabilities 1.19 % 1.00 % 1.14 % 1.02 %
Net interest spread 3.09 % 3.22 % 3.13 % 3.17 % Net interest margin
3.45 % 3.53 % 3.48 % 3.47 % Efficiency ratio (1) 61.09 % 63.41 %
62.58 % 64.27 % Net charge-offs to average loans held for
investment (2) 0.08 % 0.18 % 0.15 % 0.19 % Mortgage
origination volume $ 166,337 $ 263,611 $ 480,682 $ 603,174
Assets under management $ 326,989 $ 280,843 $ 326,989 $ 280,843
Per Share
Data: (3)
Basic earnings per common share $ 0.43 $ 0.38 $ 1.18 $ 1.03 Fully
diluted earnings per common share $ 0.41 $ 0.37 $ 1.15 $ 1.01
Weighted average basic shares outstanding 13,082,620 12,865,698
13,037,880 12,846,167 Weighted average diluted shares outstanding
13,325,162 13,109,253 13,332,145 13,078,764
(1)
The efficiency ratio is calculated as
total non-interest expense (less debt extinguishment costs) divided
by the sum of net interest income and total non-interest income
(less gain on sale of AFS securities and gain on debt
extinguishment). This non-GAAP financial measure is presented to
facilitate an understanding of the Company's performance.
(2)
Annualized
(3)
2016 amounts have been adjusted to reflect
the 5% stock dividend paid in December 2016
September 30, 2017 December 31, 2016
September 30, 2016
Capital
Ratios:
Total risk-based capital ratio 14.15 % 13.99 % 14.65 % Tier 1
risk-based capital ratio 11.86 % 11.61 % 12.15 % Common equity tier
1 risk-based capital ratio 11.41 % 11.15 % 11.63 % Tier 1 leverage
ratio 10.00 % 10.14 % 10.33 % Tangible common equity to tangible
assets (1) 9.55 % 9.03 % 9.40 %
Per Share Capital
Data: (2)
Book value per common share $ 15.87 $ 14.94 $ 14.92 Tangible book
value per common share $ 14.89 $ 13.93 $ 13.90 Common shares
outstanding 13,092,491 12,896,385 12,869,523
(1)
This is a non-GAAP financial measure.
Refer to the table below outlining the reconciliation of tangible
common equity to tangible assets.
(2)
September 30, 2016, amounts have been
adjusted to reflect the 5% stock dividend issued in December
2016
Average Balances, Interest Income
and Expense and Average Yield and Rates For the Three Months
Ended September 30, 2017 September 30, 2016 AverageBalance
Income/Expense Yield/Rate (6) AverageBalance Income/Expense
Yield/Rate (6) ($ in thousands) Assets Interest-earning assets:
Loans held for sale $ 34,881 $ 362 4.06 % $ 66,337 $ 635 3.74 %
Loans held for investment (1) $ 1,620,363 $ 19,917 4.81 % $
1,402,087 $ 17,068 4.76 % Investment securities - taxable 291,207
1,373 1.84 % 239,119 1,102 1.80 % Investment securities -
tax-exempt (2) 14,475 90 2.45 % 6,006 30 1.98 % Other equity
securities 13,268 174 5.20 % 5,494 56 4.07 % Interest-bearing
balances 100 — 0.98 % 100 — 0.60 % Federal funds sold 35,863
82 0.90 % 34,806 50 0.57 % Total
interest earning assets 2,010,157 21,998 4.28 % 1,753,949 18,941
4.23 % Non-interest earning assets: Cash and due from banks 3,529
2,849 Premises and equipment 6,268 7,477 Other real estate owned
695 2,121 Other assets (3) 51,806 47,373 Less: allowance for loan
losses (14,101 ) (12,627 ) Total non-interest earning
assets 48,197 47,193 Total Assets $
2,058,354 $ 1,801,142 Liabilities and
Shareholders’ Equity Interest-bearing liabilities: Interest-bearing
demand deposits $ 143,475 $ 96 0.27 % $ 127,801 $ 93 0.29 % Money
market deposit accounts 294,026 705 0.95 % 262,080 395 0.60 %
Savings accounts 198,440 351 0.70 % 228,047 409 0.71 % Time
deposits 587,995 1,926 1.30 % 477,763
1,335 1.11 % Total interest-bearing deposits
1,223,936 3,078 1.00 % 1,095,691 2,232 0.81 % FHLB advances 145,639
604 1.62 % 85,407 318 1.46 % Other borrowings and long-term
borrowings 39,401 556 5.57 % 39,840
543 5.40 % Total interest-bearing liabilities
1,408,976 4,238 1.19 % 1,220,938 3,093 1.01 % Non-interest-bearing
liabilities: Demand deposits 428,254 375,629 Other liabilities
12,179 12,126 Total
non-interest-bearing liabilities 440,433
387,755 Total Liabilities 1,849,409 1,608,693 Shareholders’
Equity 208,945 192,449 Total
Liabilities and Shareholders’ Equity $ 2,058,354 $ 1,801,142
Interest Spread (4) $ 17,760
3.09 % $ 15,848 3.22 % Net Interest Margin (2)(5) 3.45 % 3.53 %
(1)
Includes loans placed on non-accrual
status.
(2)
Yield and income presented on a fully
taxable equivalent basis using a federal statutory rate of 35
percent.
(3)
Includes intangibles, deferred tax asset,
accrued interest receivable, bank-owned life insurance and other
assets.
(4)
Interest spread is the average yield
earned on earning assets, less the average rate incurred on
interest bearing liabilities.
(5)
Net interest margin is net interest
income, expressed as a percentage of average earning assets.
(6)
Annualized income/expense is used for the
yield/rate.
Average Balances, Interest Income
and Expense and Average Yield and Rates For the Nine Months
Ended September 30, 2017 September 30, 2016 AverageBalance
Income/Expense Yield/Rate (6) AverageBalance Income/Expense
Yield/Rate (6) ($ in thousands)
Assets
Interest-earning
assets:
Loans held for sale $ 30,198 $ 935 4.08 % $ 47,067 $ 1,363 3.80 %
Loans held for investment (1) $ 1,593,745 $ 57,995 4.80 % $
1,367,222 $ 49,567 4.76 % Investment securities - taxable 283,258
3,992 1.86 % 246,686 3,272 1.74 % Investment securities -
tax-exempt (2) 14,482 278 2.53 % 4,644 81 2.27 % Other equity
securities 13,799 530 5.14 % 6,115 208 4.55 % Interest-bearing
balances 100 1 0.85 % 81 1 1.98 % Federal funds sold 38,072
236 0.83 % 44,005 185 0.56 %
Total interest earning assets 1,973,654 63,967 4.27 % 1,715,820
54,677 4.19 %
Non-interest earning
assets:
Cash and due from banks 3,366 2,515 Premises and equipment 6,620
7,607 Other real estate owned 856 1,534 Other assets (3) 51,611
47,375 Less: allowance for loan losses (14,206 )
(12,399 ) Total non-interest earning assets 48,247
46,632 Total Assets $ 2,021,901 $ 1,762,452
Liabilities and
Shareholders’ Equity
Interest-bearing
liabilities:
Interest-bearing demand deposits $ 139,133 $ 319 0.31 % $ 122,218 $
269 0.29 % Money market deposit accounts 276,393 1,793 0.87 %
275,039 1,226 0.60 % Savings accounts 202,843 1,072 0.71 % 205,095
1,090 0.71 % Time deposits 565,703 5,213 1.23
% 467,384 3,842 1.10 % Total interest-bearing
deposits 1,184,072 8,397 0.95 % 1,069,736 6,427 0.80 % FHLB
advances 164,870 1,789 1.43 % 103,783 1,216 1.54 % Other borrowings
and long-term borrowings 39,412 1,647 5.57 %
39,284 1,622 5.49 % Total interest-bearing
liabilities 1,388,354 11,833 1.14 % 1,212,803 9,265 1.02 %
Non-interest-bearing
liabilities:
Demand deposits 418,201 348,836 Other liabilities 12,429
12,885 Total non-interest-bearing liabilities
430,630 361,721 Total Liabilities
1,818,984 1,574,524 Shareholders’ Equity 202,917
187,928 Total Liabilities and Shareholders’ Equity $
2,021,901 $ 1,762,452
Interest Spread (4) $ 52,134 3.13 % $ 45,412 3.17 % Net Interest
Margin (2)(5) 3.48 % 3.47 %
(1)
Includes loans placed on non-accrual
status.
(2)
Yield and income presented on a fully
taxable equivalent basis using a federal statutory rate of 35
percent.
(3)
Includes intangibles, deferred tax asset,
accrued interest receivable, bank-owned life insurance and other
assets.
(4)
Interest spread is the average yield
earned on earning assets, less the average rate incurred on
interest bearing liabilities.
(5)
Net interest margin is net interest
income, expressed as a percentage of average earning assets.
(6)
Annualized income/expense is used for the
yield/rate.
Composition of
Loans Held for Investment
September 30, 2017 December 31, 2016
September 30, 2016 ($ in thousands) Construction and development $
269,981 $ 288,193 $ 272,171 Commercial real estate- owner occupied
259,963 231,414 224,343 Commercial real estate- non-owner occupied
603,147 557,846 484,677 Residential real estate 315,423
287,250 279,442 Real estate
loans 1,448,514 1,364,703 1,260,633 Commercial and industrial
182,830 165,172 166,145 Consumer 4,301 4,668
4,593 Total loans 1,635,645 1,534,543
1,431,371 Less: allowance for loan losses 14,137
13,582 12,960 Net loans $ 1,621,508
$ 1,520,961 $ 1,418,411
Composition of Deposits
September 30, 2017 December 31, 2016
September 30, 2016 ($ in thousands) Demand deposit accounts $
463,810 $ 381,887 $ 410,833 NOW accounts 153,592 134,938 136,319
Money market accounts 284,787 270,794 290,750 Savings accounts
201,387 209,961 216,552 Time deposits up to $250,000 407,200
386,095 335,780 Time deposits over $250,000 182,514
139,066 142,021 Total deposits $
1,693,290 $ 1,522,741 $ 1,532,255
Allowance and Asset Quality Ratios
Allowance
for loan losses to loans held for investment 0.86 % 0.89 % 0.91 %
Adjusted allowance for loan losses to loans held for investment (1)
1.04 % 1.11 % 1.17 % Allowance for loan losses to non-accrual loans
143.12 % 236.37 % 220.15 % Allowance for loan losses to
non-performing assets 57.89 % 159.10 % 117.39 % Non-performing
assets to total assets 1.19 % 0.43 % 0.58 %
(1) This is a non-GAAP financial measure.
Refer to the table below outlining the reconciliation of GAAP
Allowance Ratio to Adjusted Allowance Ratio.
Non-Performing Assets
September 30, 2017
December 31, 2016 September 30, 2016 ($ in thousands) Non-accrual
loans $ 9,878 $ 5,746 $ 5,887 90+ days still accruing 12,676 2 —
Trouble debt restructurings still accruing 1,231 1,361 3,184 Other
real estate owned 636 1,428
1,969 Total non-performing assets $ 24,421 $ 8,537
$ 11,040
Reconciliation of Net
Income to Core Net Income (1) For the Three
Months Ended For the Nine Months Ended
September 30, 2017
September 30, 2016
September 30, 2017
September 30, 2016
($ in thousands) Net Income $ 5,567 $ 4,941 $ 15,340 13,263 Add:
Merger Expenses 133 30 665 30 Less: Estimated Tax Effect (16 ) (11
) (114 ) (11 ) Core Net Income $ 5,684 $ 4,960 $
15,891 $ 13,282
(1)
Core net income is calculated as net
income adjusted for the after-tax impact of merger expenses and is
a non-GAAP financial measure that is presented to facilitate a
comparison of the Company's earnings without merger expenses. This
table provides a reconciliation between GAAP Net Income amounts and
this non-GAAP financial measure.
Reconciliation of Tangible Common Equity to
Tangible Assets Ratio (1) September 30, 2017
December 31, 2016 September 30, 2016 ($ in thousands)
Tangible Common
Equity:
Common Stock Voting $ 123 $ 109 $ 104 Common Stock Non-Voting 7 19
18 Additional paid-in capital - common 180,257 177,924 161,918
Accumulated earnings 28,875 17,187 28,800 Accumulated other
comprehensive income (loss) (1,428 ) (2,579 ) 1,140 Total
Common Equity $ 207,834 $ 192,660 $ 191,980
Less
Intangibles:
Goodwill 11,420 11,420 11,420 Identifiable intangibles 1,417
1,619 1,686 Total Intangibles 12,837 13,039
13,106 Tangible Common Equity $ 194,997
$ 179,621 $ 178,874
Tangible
Assets:
Total Assets $ 2,055,476 $ 2,002,911 $ 1,916,938
Less
Intangibles:
Goodwill 11,420 11,420 11,420 Identifiable intangibles 1,417
1,619 1,686 Total Intangibles 12,837 13,039
13,106 Tangible Assets $ 2,042,639 $
1,989,872 $ 1,903,832 Tangible Common Equity
to Tangible Assets (1) 9.55 % 9.03 % 9.40 %
(1)
Tangible common equity to tangible assets
ratio is a non-GAAP financial measure that is presented to
facilitate an understanding of the Company's capital structure.
This table provides a reconciliation between certain GAAP amounts
and this non-GAAP financial measure.
Reconciliation of GAAP Allowance Ratio to Adjusted
Allowance Ratio (1) September 30, 2017
December 31, 2016 September 30, 2016 ($ in thousands) GAAP
allowance for loan losses $ 14,137 $ 13,582 $ 12,960 GAAP loans
held for investment, at amortized cost 1,635,644 1,534,543
1,431,371 GAAP allowance for loan losses to total loans held
for investment 0.86 % 0.89 % 0.91 % GAAP allowance for loan
losses $ 14,137 $ 13,582 $ 12,960 Plus: Credit purchase accounting
marks 2,903 3,537 3,784 Adjusted allowance for
loan losses $ 17,040 $ 17,119 $ 16,744
GAAP loans held for investment, at amortized cost $ 1,635,644 $
1,534,543 $ 1,431,371 Plus: Credit purchase accounting marks 2,903
3,537 3,784 Adjusted loans held for
investment, at amortized cost $ 1,638,547 $ 1,538,080
$ 1,435,155 Adjusted allowance for loan losses to
total loans held for investment (1) 1.04 % 1.11 % 1.17 %
(1)
This is a non-GAAP financial measure.
Credit purchase accounting marks are GAAP marks under purchase
accounting guidance.
Segment Reporting - 2017 (QTD) As of
and for the Three Months Ended September 30, 2017 Commercial
Mortgage Wealth Consolidated Bank Bank
Management
Other (1)
Totals ($ in thousands) Interest and dividend income $ 21,606 $ 362
$ — $ — $ 21,968 Interest expense 3,686 — —
551 4,237 Net interest income 17,920 362 — (551 ) 17,731
Provision for loan losses 375 — — — 375
Net interest income after provision for loan losses 17,545 362 —
(551 ) 17,356 Non-interest income 535 4,598 533 (1 ) 5,665
Compensation and employee benefits 5,043 1,599 260 267 7,169
Mortgage commission — 1,682 — — 1,682 Premises and equipment 1,586
167 32 42 1,827 Data processing 1,014 56 14 — 1,084 Professional
fees 231 13 3 90 337 Merger expenses — — — 133 133 Mortgage loan
processing expenses — 265 — — 265 Other operating expenses 1,424
275 60 36 1,795 Income/(loss) before
provision for income taxes $ 8,782 $ 903 $ 164
$ (1,120 ) $ 8,729 Total assets $ 2,008,137 $ 41,844
$ 3,880 $ 1,615 $ 2,055,476
(1)
Includes parent company and intercompany
eliminations
Segment Reporting - 2016 (QTD) As of
and for the Three Months Ended September 30, 2016 Commercial
Mortgage Wealth Consolidated Bank Bank
Management
Other (1)
Totals ($ in thousands) Interest and dividend income $ 18,301 $ 635
$ — $ — $ 18,936 Interest expense 2,560 — —
533 3,093 Net interest income 15,741 635 — (533 ) 15,843
Provision for loan losses 1,035 — — —
1,035 Net interest income after provision for loan losses 14,706
635 — (533 ) 14,808 Non-interest income 601 7,535 467 63
8,666 Compensation and employee benefits 4,839 2,090 241 225 7,395
Mortgage commission — 2,657 — — 2,657 Premises and equipment 1,561
169 32 40 1,802 Data processing 981 74 3 — 1,058 Professional fees
266 29 2 80 377 Merger expenses 30 — — — 30 Mortgage loan
processing expenses — 444 — — 444 Debt extinguishment 155 — — — 155
Other operating expenses 1,259 300 65 69
1,693 Income/(loss) before provision for income taxes $
6,216 $ 2,407 $ 124 $ (884 ) $ 7,863
Total assets $ 1,828,543 $ 83,644 $ 3,604 $
1,147 $ 1,916,938
(1)
Includes parent company and intercompany
eliminations
Additional Discussion and Analysis
Consolidated net income for the three and nine months ended
September 30, 2017, was $5.6 million and $15.3 million,
respectively, representing increases of $0.6 million and $2.1
million, or 12.7% and 15.7%, respectively, over the $4.9 million
and $13.3 million earned during the three and nine months ended
September 30, 2016, respectively. Net income per diluted
common share for the three and nine months ended September 30,
2017 was $0.41 and $1.15, respectively, representing increases of
10.8% and 13.9%, respectively, over the $0.37 and $1.01 per diluted
common share earning during the three and nine months ended
September 30, 2016, respectively.
As of September 30, 2017, total assets were $2.1 billion,
compared to $2.0 billion as of December 31, 2016, and $1.9
billion as of September 30, 2016. During the nine months ended
September 30, 2017, total loans held for investment increased
$101.1 million or 6.6% to $1.6 billion. This increase is
attributable to organic loan growth from our existing lending team.
During the nine months ended September 30, 2017, total
deposits increased $170.5 million or 11.2% to $1.7 billion. The
increase in deposits is primarily attributable to deposit growth in
our branch network and commercial customers.
The net interest margin was 3.45% and 3.48% for the three and
nine months ended September 30, 2017, respectively, compared
to 3.53% and 3.47% for the same periods in 2016. The decrease is
primarily attributable to increases in market rates on deposits. On
a linked quarter basis, our net interest margin decreased from
3.51% for the three months ended June 30, 2017, to 3.45% for
the three months ended September 30, 2017. The Company remains
focused on its pricing discipline on both sides of the balance
sheet and on all factors contributing to net income.
The adjusted allowance for loan losses to adjusted total loans
held for investment, which includes credit purchase accounting
marks, was 1.04% as of September 30, 2017, compared to 1.17%
as of September 30, 2016. This decrease is attributable to net
charge-offs of $0.3 million, which had been substantially reserved
for previously, and credit mark accretion. A reconciliation of the
allowance for loan losses and related ratios to the adjusted
allowance for loan losses and related ratios is included herein.
Since December 31, 2016, non-performing assets have increased by
$15.9 million primarily due to the default of two commercial real
estate loans, related to a common guarantor, totaling $13.1
million. As a result, the ratio of non-performing assets to total
assets increased to 1.19% as of September 30, 2017, compared
to 0.58% as of September 30, 2016. Of the $13.1 million
increase in non-performing loans, $10.5 million was over 90 days
past due and still accruing interest as of September 30, 2017.
The Company is pursuing collection efforts on this loan which
remains on accrual as management believes the collateral to be of
sufficient value to protect the Company against loss and tenant
rent payments being collected that are sufficient to service the
loan.
Non-interest income for the three and nine months ended
September 30, 2017, was $5.7 million and $17.1 million,
respectively, each representing a decrease of $3.0 million and $4.9
million compared to the $8.7 million and $21.9 million of
non-interest income for the three and nine month periods ended
September 30, 2016, respectively. Non-interest income was
negatively impacted by higher interest rates which resulted in
lower mortgage origination volume during the first nine months of
2017, compared to the same period last year. During the three and
nine months ended September 30, 2017, the mortgage subsidiary
originated $166.3 million and $480.7 million in total mortgage loan
volume, a slight decrease from the $263.6 million and $603.2
million in total mortgage volume originated during the three and
nine months ended September 30, 2016, respectively. As of
September 30, 2017, the Company's wealth management business
unit had $327.0 million in assets under management, an increase of
16.4% over the same period last year. The Company did not sell any
investment securities during 2017; however, during the three and
nine months ended September 30, 2016, the Company sold
investment securities resulting in $0.1 million and $1.3 million,
respectively, of gains on the sale of investments.
Non-interest expense decreased during the three months ended
September 30, 2017, by $1.3 million, and decreased during the
nine months ended September 30, 2017, by $0.6 million compared
to the same periods ended September 30, 2016, primarily as a
result of $0.4 million in lower compensation and employee benefits
incurred during the first nine months of 2017.
During the nine months ended September 30, 2017, total
shareholders’ equity increased $15.2 million, or 7.9%, to $207.8
million due primarily to earnings and additional paid in capital
from the exercise of stock options offset by dividends of $2.7
million and changes in accumulated other comprehensive loss.
Tangible book value per common share increased to $14.89 as of
September 30, 2017, compared to $13.90 as of
September 30, 2016. The Company remains "well-capitalized"
under the regulatory framework.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171019006439/en/
WashingtonFirst Bankshares Inc.Matthew R. Johnson,
703-840-2410Executive Vice President & Chief Financial
OfficerMJohnson@wfbi.com
Washingtonfirst Bankshares (NASDAQ:WFBI)
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