Hampton Roads Bankshares, Inc. (the “Company”) (Nasdaq:HMPR), the
holding company for The Bank of Hampton Roads ("BOHR" or "the
Bank"), today announced net income attributable to common
shareholders of $1.4 million for the three months ended March 31,
2016 as compared to net income for the three months ended March 31,
2015 of $1.3 million.
“The Company made excellent progress in
improving operating results in the first quarter of 2016.
Exclusive of merger-related expenses, income before provision for
income taxes more than doubled to $3.9 million from $1.9 million in
the first quarter of 2015,” said Charles M. Johnston, the Company’s
Chairman and Interim Chief Executive Officer. He added, “The
recently announced merger with Xenith Bankshares, Inc., in addition
to providing important strategic benefits to the Company, is
expected to lead to further improvements in operating results as
anticipated synergies are achieved. The Company also expects
to recognize significant deferred tax benefits after completion of
the transaction, expected in the third quarter of 2016.”
Net Interest Income
Interest income earned from average
interest-earning assets increased $166 thousand in the quarter
ended March 31, 2016, compared to the same period in 2015,
predominantly as a result of the Company's decision in 2015 to
shift its asset mix more towards loans and away from lower yielding
investment securities and overnight funds. Although there was a
decline in period-end loan balances between December 31, 2015 and
March 31, 2016, the Company's overall strategy is to continue to
maximize interest income generated by its various classes of
interest earning assets. Interest expense on average
interest-bearing liabilities declined $59 thousand in the quarter
ended March 31, 2016, compared to the same period in 2015, mainly
due to the Company replacing maturing long term FHLB advances with
lower cost overnight FHLB funds, offset by strategically offered
higher rates on certain deposit products in order to attract
additional deposits. Net interest margin was 3.30% and 3.14% for
the three months ended March 31, 2016 and March 31, 2015,
respectively.
Credit Quality
Management classifies non-performing assets as
those loans on which payments have been delinquent 90 days and are
still accruing interest, nonaccrual loans, and other real estate
owned and repossessed assets. Total non-performing assets
were $42.9 million and $47.9 million at March 31, 2016 and December
31, 2015, respectively. Our non-performing assets ratio,
defined as the ratio of non-performing assets to gross loans plus
loans held for sale plus other real estate owned and repossessed
assets, was 2.71% and 2.98% at March 31, 2016 and December 31,
2015, respectively. At March 31, 2016 and December 31, 2015
there were no loans categorized as 90 days or more past due and
still accruing interest. Loans in nonaccrual status totaled
$34.3 million and $35.5 million at March 31, 2016 and December 31,
2015, respectively. Loans are placed in nonaccrual status when the
collection of principal or interest becomes uncertain, part of the
balance has been charged off and no restructuring has occurred, or
the loans reach 90 days past due, whichever occurs first, unless
there are extenuating circumstances. We had $8.7 million and
$12.4 million of other real estate owned and repossessed assets at
March 31, 2016 and December 31, 2015, respectively. This
decline was mainly due to sales of real estate owned outpacing
foreclosure and repossession activity during the three months ended
March 31, 2016.
The allowance for loan losses was $21.2 million
or 1.40% of outstanding loans as of March 31, 2016 compared with
$23.2 million or 1.50% of outstanding loans as of December 31,
2015. The allowance for loan losses declined $2.0 million, or
8.4%, during the three months ended March 31, 2016 as a result of
charge-offs exceeding recoveries and no corresponding expense
recorded attributable to provision for loan losses during the three
months ended March 31, 2016. This compares to $600 thousand
recorded for the same period in 2015. We did not make any
significant changes to our methodology or model for estimating the
allowance for loan losses during 2016. Management believes it
is likely that it will experience a reduction in recoveries from
previously charged off balances and that the Company will need to
record a provision for loan losses in future quarters in order to
maintain the allowance for loan losses at a prudent level depending
upon future loan growth.
Noninterest Income
Noninterest income for the three months ended
March 31, 2016 declined $373 thousand or 5.1% compared to the same
period in 2015. Noninterest income comprised 27.7% and 29.0%
of total revenue during the three months ended March 31, 2016, and
March 31, 2015, respectively. We define total revenue as the
sum of interest income and noninterest income. Mortgage banking
revenue continued to see healthy growth during the first quarter of
2016, as favorable market interest rates continued to drive demand
for mortgage financing. There were no sales of investment
securities during the first quarter of 2016. The decline in other
noninterest income is mainly driven by one-time loan monitoring
fees related to the marine financing portfolio that benefited the
first quarter of 2015, a decline in rental income related to the
sale of other real estate owned and repossessed assets, and a
decline in income associated with the Company's interest rate swap
program.
Noninterest Expense
Noninterest expense increased by $24 thousand,
or 0.1% in the first quarter of 2016, compared to the same quarter
in 2015. As the Company's credit and risk profile improves,
and legacy legal issues are resolved, professional and consultant
fees and FDIC insurance expense have declined. The decline in
impairment and gains and losses on sales of other real estate owned
and repossessed assets was driven mainly by the year-over-year
decline in the size of this asset portfolio and the timing of the
Company recording impairments. Additionally, in the first
quarter of 2016 the Company incurred merger-related expenses.
Balance Sheet Trends
Assets declined $25.6 million or 1.2% from
December 31, 2015. A major contributor to this decline in
assets was in loans as paydown activity exceeded new loan
originations during the quarter. Loans have declined $20.7
million or 1.3% since December 31, 2015. Most loan categories
experienced some level of decline, except for installment loans,
which grew $7.7 million or 4.8% as marine financing saw healthy
growth in new loan originations. Deposits declined $20.9
million or 1.2% from December 31, 2015. The majority of this
decline was in time deposits, driven mainly by the maturing of a
portion of our national certificates of deposit. We use
short-term and long-term borrowings from various sources including
the FRB discount window, FHLB, and trust preferred
securities. We manage the level of our borrowings to optimize
our earning asset mix while maintaining sufficient liquidity to
meet the daily needs of our customers. Borrowings with the
FHLB declined during the three months ended March 31, 2016 due to a
lower reserve requirement.
Capitalization
Total shareholders’ equity increased $3.0
million or 1.0% to $293.6 million at March 31, 2016, from $290.6
million at December 31, 2015. The Company and the Bank are
subject to regulatory capital guidelines that measure capital
relative to risk-weighted assets and off-balance sheet financial
instruments. As of March 31, 2016, our consolidated
regulatory capital ratios were Common Equity Tier 1 Capital Ratio
of 14.65%, Tier 1 Risk-Based Capital Ratio of 15.11%, Total
Risk-Based Capital Ratio of 16.35%, and Tier 1 Leverage Ratio of
13.05%. As of March 31, 2016, the Company exceeded the
regulatory capital minimums, and BOHR was considered “well
capitalized” under the risk-based capital standards. The
Bank's Common Equity Tier 1 Capital Ratio, Tier 1 Risk-Based
Capital Ratio, Total Risk-Based Capital Ratio, and Tier 1 Leverage
Ratio were as follows: 14.72%, 14.72%, 15.96%, and 12.69%,
respectively.
Xenith Merger
On February 10, 2016, the Company entered into
an Agreement and Plan of Reorganization (the “Merger Agreement”)
with Xenith Bankshares, Inc. (“Xenith”), a Virginia corporation,
the holding company for Xenith Bank. The Merger Agreement provides
that, upon the terms and subject to the conditions set forth
therein, Xenith will merge with and into the Company (the
“Merger”), with the Company as the surviving corporation in the
Merger. Under the terms of the agreement, Xenith shareholders
will receive 4.4 shares of Company common stock for each share of
Xenith common stock. Based on the closing price of the
Company’s common stock on February 10, 2016, the transaction was
valued at approximately $107.2 million. Upon closing, the
Company's shareholders and Xenith shareholders will own
approximately 74% and 26%, respectively, of the stock in the
combined company. The transaction is subject to shareholder and
regulatory approval and is expected to close in the third quarter
of 2016.
Caution About Forward-Looking
Statements
Certain statements made in this press release
may constitute "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are statements that include projections,
predictions, expectations, or beliefs about events or results or
otherwise are not statements of historical facts, including
statements about future trends and strategies. These include
statements as to the anticipated benefits of the proposed merger
with Xenith Bankshares, Inc., including future financial and
operating results, cost savings and enhanced revenues that may be
realized from the merger as well as other statements of
expectations regarding the merger and any other statements
regarding future results or expectations. Although the
Company believes that its expectations with respect to such
forward-looking statements are based upon reasonable assumptions
within the bounds of its existing knowledge of its business and
operations, there can be no assurance that actual results,
performance or achievements of the Company will not differ
materially from those expressed or implied by such forward-looking
statements. Factors that could cause actual events or results
to differ significantly from those described in the forward-looking
statements include, but are not limited to, the ability to close
the proposed merger on the expected terms and schedule;
difficulties and delays in integrating the Company’s and Xenith’s
businesses; the ability to realize cost savings and other benefits
of the proposed merger; business disruption during the pendency of
or following the proposed merger; the inability to realize deferred
tax assets within expected time frames or at all; and other factors
described in the cautionary language included under the headings
"Risk Factors" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
2015 and other filings made with the SEC.
About Hampton Roads
BanksharesHampton Roads Bankshares, Inc. is a bank holding
company headquartered in Virginia Beach, Virginia. The Company’s
primary subsidiary is BOHR. BOHR engages in general community
and commercial banking business, targeting the needs of individuals
and small- to medium-sized businesses in our primary service
areas. Currently, BOHR operates 17 full-service offices in
the Hampton Roads region of southeastern Virginia, 10 full-service
offices throughout Richmond, Virginia and the Northeastern and
Research Triangle regions of North Carolina that do business as
Gateway Bank and 7 full-service offices on the Eastern Shore of
Virginia and in Maryland and 3 loan production offices in Maryland
and Delaware that do business as Shore Bank. Through various
divisions, BOHR also offers mortgage banking and marine financing.
Shares of the Company’s common stock are traded on the NASDAQ
Global Select Market under the symbol “HMPR.” Additional
information about the Company and its subsidiaries can be found at
www.hamptonroadsbanksharesinc.com.
Hampton Roads
Bankshares, Inc. |
|
|
|
|
|
|
Financial
Highlights |
|
|
|
|
|
|
(in thousands) |
|
March
31, |
|
December
31, |
(unaudited) |
|
2016 |
|
2015 |
Assets: |
|
|
|
|
|
|
Cash and due from banks |
|
$ |
|
17,356 |
|
|
$ |
|
17,031 |
|
Interest-bearing deposits in other
banks |
|
|
|
721 |
|
|
|
|
691 |
|
Overnight funds sold and due from
Federal Reserve Bank |
|
|
|
43,855 |
|
|
|
|
46,024 |
|
Investment securities available for
sale, at fair value |
|
|
|
199,116 |
|
|
|
|
198,174 |
|
Restricted equity securities, at
cost |
|
|
|
12,007 |
|
|
|
|
9,830 |
|
|
|
|
|
|
|
|
|
|
|
Loans held for sale |
|
|
|
51,306 |
|
|
|
|
56,486 |
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
|
|
1,520,844 |
|
|
|
|
1,541,502 |
|
Allowance for loan losses |
|
|
|
(21,228 |
) |
|
|
|
(23,184 |
) |
Net loans |
|
|
|
1,499,616 |
|
|
|
|
1,518,318 |
|
Premises and equipment, net |
|
|
|
50,885 |
|
|
|
|
52,245 |
|
Interest receivable |
|
|
|
4,305 |
|
|
|
|
4,116 |
|
Other real estate owned and
repossessed assets, |
|
|
|
|
|
|
|
|
|
net of valuation allowance |
|
|
|
8,661 |
|
|
|
|
12,409 |
|
Net deferred tax assets, net of
valuation allowance |
|
|
|
90,723 |
|
|
|
|
92,142 |
|
Bank-owned life insurance |
|
|
|
51,044 |
|
|
|
|
50,695 |
|
Other assets |
|
|
|
10,778 |
|
|
|
|
7,779 |
|
Totals assets |
|
$ |
|
2,040,373 |
|
|
$ |
|
2,065,940 |
|
Liabilities and
Shareholders' Equity: |
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
Noninterest-bearing demand |
|
$ |
|
291,770 |
|
|
$ |
|
298,351 |
|
Interest-bearing: |
|
|
|
|
|
|
Demand |
|
|
|
696,751 |
|
|
|
|
693,413 |
|
Savings |
|
|
|
63,971 |
|
|
|
|
61,023 |
|
Time deposits: |
|
|
|
|
|
|
|
|
|
Less than $100 |
|
|
|
337,804 |
|
|
|
|
343,031 |
|
$100 or more |
|
|
|
293,962 |
|
|
|
|
309,327 |
|
Total deposits |
|
|
|
1,684,258 |
|
|
|
|
1,705,145 |
|
Federal Home Loan Bank
borrowings |
|
|
|
11,000 |
|
|
|
|
25,000 |
|
Other borrowings |
|
|
|
29,811 |
|
|
|
|
29,689 |
|
Interest payable |
|
|
|
481 |
|
|
|
|
463 |
|
Other liabilities |
|
|
|
21,204 |
|
|
|
|
15,022 |
|
Total
liabilities |
|
|
|
1,746,754 |
|
|
|
|
1,775,319 |
|
Shareholders' equity: |
|
|
|
|
|
|
|
|
|
Common stock |
|
|
|
1,713 |
|
|
|
|
1,711 |
|
Capital surplus |
|
|
|
590,790 |
|
|
|
|
590,417 |
|
Accumulated deficit |
|
|
|
(301,198 |
) |
|
|
|
(302,580 |
) |
Accumulated other comprehensive
income, net of tax |
|
|
|
1,768 |
|
|
|
|
560 |
|
Total shareholders' equity before
non-controlling interest |
|
|
|
293,073 |
|
|
|
|
290,108 |
|
Non-controlling interest |
|
|
|
546 |
|
|
|
|
513 |
|
Total shareholders'
equity |
|
|
|
293,619 |
|
|
|
|
290,621 |
|
Total liabilities and
shareholders' equity |
|
$ |
|
2,040,373 |
|
|
$ |
|
2,065,940 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing
Assets at Period-End: |
|
|
|
|
|
|
|
|
|
Loans 90 days past due
and still accruing interest |
|
$ |
|
|
— |
|
|
$ |
— |
|
Nonaccrual loans,
including nonaccrual impaired loans |
|
|
|
|
34,253 |
|
|
|
35,512 |
|
Other real estate owned
and repossessed assets |
|
|
|
|
8,661 |
|
|
|
12,409 |
|
Total non-performing
assets |
|
$ |
|
42,914 |
|
|
$ |
|
47,921 |
|
|
|
|
|
|
|
|
Composition of
Loan Portfolio at Period-End: |
|
|
|
|
|
|
Commercial and
Industrial |
|
$ |
|
224,011 |
|
|
$ |
|
233,319 |
|
Construction |
|
|
|
139,593 |
|
|
|
|
141,208 |
|
Real estate -
commercial mortgage |
|
|
|
642,345 |
|
|
|
|
655,895 |
|
Real estate -
residential mortgage |
|
|
|
345,632 |
|
|
|
|
349,758 |
|
Installment |
|
|
|
169,643 |
|
|
|
|
161,918 |
|
Deferred loan fees and
related costs |
|
|
|
(380 |
) |
|
|
|
(596 |
) |
Total loans |
|
$ |
|
1,520,844 |
|
|
$ |
|
1,541,502 |
|
|
|
|
|
|
|
|
|
|
|
|
Hampton Roads
Bankshares, Inc. |
|
|
|
|
|
|
Financial
Highlights |
|
|
|
|
|
|
(in thousands, except
share and per share data) |
|
Three
Months Ended |
(unaudited) |
|
March
31, |
|
March
31, |
|
|
2016 |
|
2015 |
Interest
Income: |
|
|
|
|
|
|
Loans, including fees |
|
$ |
16,732 |
|
|
$ |
16,159 |
Investment securities |
|
|
1,350 |
|
|
|
1,742 |
Overnight funds sold and due from
FRB |
|
|
44 |
|
|
|
59 |
Total interest income |
|
|
18,126 |
|
|
|
17,960 |
Interest
Expense: |
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
Demand |
|
|
839 |
|
|
|
674 |
Savings |
|
|
16 |
|
|
|
10 |
Time deposits: |
|
|
|
|
|
|
Less than $100 |
|
|
953 |
|
|
|
909 |
$100 or more |
|
|
911 |
|
|
|
934 |
Interest on deposits |
|
|
2,719 |
|
|
|
2,527 |
Federal Home Loan Bank
borrowings |
|
|
18 |
|
|
|
324 |
Other borrowings |
|
|
473 |
|
|
|
418 |
Total interest expense |
|
|
3,210 |
|
|
|
3,269 |
Net interest income |
|
|
14,916 |
|
|
|
14,691 |
Provision for loan losses |
|
|
|
— |
|
|
|
|
600 |
Net interest income after provision
for loan losses |
|
|
14,916 |
|
|
|
14,091 |
Noninterest
Income: |
|
|
|
|
|
|
Mortgage banking revenue |
|
|
4,439 |
|
|
|
4,223 |
Service charges on deposit
accounts |
|
|
1,139 |
|
|
|
1,142 |
Income from bank-owned life
insurance |
|
|
349 |
|
|
|
349 |
Gain on sale of investment
securities available for sale |
|
|
|
— |
|
|
|
112 |
Visa check card income |
|
|
641 |
|
|
|
641 |
Other |
|
|
384 |
|
|
|
858 |
Total noninterest income |
|
|
6,952 |
|
|
|
7,325 |
Noninterest
Expense: |
|
|
|
|
|
|
Salaries and employee benefits |
|
|
10,781 |
|
|
|
10,667 |
Professional and consultant
fees |
|
|
634 |
|
|
|
808 |
Occupancy |
|
|
1,623 |
|
|
|
1,629 |
FDIC insurance |
|
|
414 |
|
|
|
624 |
Data processing |
|
|
1,308 |
|
|
|
1,431 |
Problem loan and repossessed asset
costs |
|
|
101 |
|
|
|
120 |
Impairments and gains and losses on
sales of other real estate owned and repossessed assets, net |
|
|
(177 |
) |
|
|
858 |
Impairments and gains and losses on
sale of premises and equipment, net |
|
|
|
— |
|
|
|
14 |
Equipment |
|
|
305 |
|
|
|
350 |
Directors' and regional board
fees |
|
|
246 |
|
|
|
302 |
Advertising and marketing |
|
|
270 |
|
|
|
260 |
Merger-related expenses |
|
|
1,568 |
|
|
|
|
— |
Other |
|
|
2,458 |
|
|
|
2,444 |
Total noninterest expense |
|
|
19,531 |
|
|
|
19,507 |
Income before provision
for income taxes |
|
|
2,337 |
|
|
|
1,909 |
Provision for income
taxes - current |
|
|
15 |
|
|
|
40 |
Provision for income
taxes - deferred |
|
|
734 |
|
|
|
|
— |
Net income |
|
|
1,588 |
|
|
|
1,869 |
Net income attributable
to non-controlling interest |
|
|
206 |
|
|
|
534 |
Net income attributable
to Hampton Roads Bankshares, Inc. |
|
$ |
1,382 |
|
|
$ |
1,335 |
|
|
|
|
|
|
|
Per
Share: |
|
|
|
|
|
|
Basic and diluted
income per share |
|
$ |
0.01 |
|
|
$ |
0.01 |
Basic weighted average
shares outstanding |
|
|
171,915,889 |
|
|
|
170,948,437 |
Effect of dilutive
shares and warrant |
|
|
819,840 |
|
|
|
1,263,347 |
Diluted weighted
average shares outstanding |
|
|
172,735,729 |
|
|
|
172,211,784 |
|
|
|
|
|
|
|
|
Hampton Roads
Bankshares, Inc. |
|
|
|
|
|
|
Financial
Highlights |
|
|
|
|
|
|
(in thousands, except
share and per share data) |
|
Three
Months Ended |
(unaudited) |
|
March
31, |
|
March
31, |
Daily
Averages: |
|
2016 |
|
2015 |
Total assets |
|
$ |
2,034,948 |
|
|
$ |
2,034,447 |
|
Gross loans (excludes
loans held for sale) |
|
|
1,520,058 |
|
|
|
1,489,010 |
|
Investment and
restricted equity securities |
|
|
209,932 |
|
|
|
267,303 |
|
Total deposits |
|
|
1,681,744 |
|
|
|
1,629,309 |
|
Total borrowings |
|
|
41,473 |
|
|
|
181,831 |
|
Shareholders' equity
* |
|
|
294,239 |
|
|
|
200,290 |
|
Interest-earning
assets |
|
|
1,820,574 |
|
|
|
1,898,475 |
|
Interest-bearing
liabilities |
|
|
1,435,378 |
|
|
|
1,543,732 |
|
|
|
|
|
|
|
|
Financial
Ratios: |
|
|
|
|
|
|
Return on average
assets |
|
|
0.27 |
% |
|
|
0.26 |
% |
Return on average
equity * |
|
|
1.89 |
% |
|
|
2.70 |
% |
Net interest
margin |
|
|
3.30 |
% |
|
|
3.14 |
% |
Efficiency ratio |
|
|
89.31 |
% |
|
|
89.06 |
% |
|
|
|
|
|
|
|
Allowance for
Loan Losses: |
|
|
|
|
|
|
Beginning balance |
|
$ |
23,184 |
|
|
$ |
27,050 |
|
Provision for
losses |
|
|
— |
|
|
|
600 |
|
Charge-offs |
|
|
(2,765 |
) |
|
|
(450 |
) |
Recoveries |
|
|
809 |
|
|
|
977 |
|
Ending balance |
|
$ |
21,228 |
|
|
$ |
28,177 |
|
|
|
|
|
|
|
|
Asset Quality
Ratios: |
|
|
|
|
|
|
Annualized net
charge-offs to average loans |
|
|
0.50 |
% |
|
|
-0.14 |
% |
Non-performing loans to
total loans |
|
|
2.25 |
% |
|
|
1.49 |
% |
Non-performing assets
ratio |
|
|
2.71 |
% |
|
|
2.54 |
% |
Allowance for loan
losses to total loans |
|
|
1.40 |
% |
|
|
1.84 |
% |
|
|
|
|
|
|
|
* Equity
amounts exclude non-controlling interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
Contact:
Thomas B. Dix III
Chief Financial Officer
(757) 217-1000
Xenith Bankshares, Inc. NEW (NASDAQ:XBKS)
Historical Stock Chart
From Jun 2024 to Jul 2024
Xenith Bankshares, Inc. NEW (NASDAQ:XBKS)
Historical Stock Chart
From Jul 2023 to Jul 2024