updated 5/18/2011 5:46:25 PM ET 2011-05-18T21:46:25

RICHMOND, Va., May 18, 2011 (GLOBE NEWSWIRE) -- Bank of Virginia (Nasdaq:BOVA) ( www.bankofva.com ), announced financial results for the first quarter of 2011.

For the quarter ended March 31, 2011, the Bank reported a net loss of $1.77 million, or ($0.16) per share, compared with a net loss of $358,000 or ($0.08) per share for the quarter ended March 31, 2010. The loss was driven primarily by increases in the provision for losses on impaired loans and credit-related charge-offs. The net interest margin, at 3.12% for first quarter 2011, remained at the same level as for first quarter 2010, reflecting substantial and roughly equal declines in both deposit costs and the yield on earning assets. Net interest income declined $148,000 to $1.46 million for the quarter ended March 31, 2011, compared to $1.61 million for the quarter ended March 31, 2010, as average earning assets declined $19.5 million. On a linked quarter basis, net interest income declined $185,000 in the first quarter of 2011 from the $1.65 million recorded for the quarter ended December 31, 2010.

"While we are disappointed at the need to increase our provision for losses, we believe that our strengthened credit risk management and lending practices and the addition of a talented new senior credit team will result in sustained improvements in the Bank's credit portfolio for years to come," commented Jack Zoeller, Chairman and CEO.

Well Capitalized

The bank remained well-capitalized at March 31, 2011, with a total risk-based capital ratio of 11.6%. This compares to the 10% minimum total risk-based capital requirement to be considered well-capitalized. At March 31, 2011, the Bank's Tier 1 leverage ratio was 7.1% compared with 7.9% at December 31, 2010, which exceeded the well-capitalized threshold of 4.0%. The Bank's tier one capital to risk-weighted assets ratio was 10.3% on March 31, 2011, substantially exceeding the well capitalized threshold of 5.0%. The Bank's total capital declined $1.8 million in the first quarter of 2011 to $15.2 million from $17.0 million at December 31, 2010.

Review of the balance sheet

The Bank's total assets decreased $4.5 million to $204.7 million at March 31, 2011, compared to $209.2 million at December 31, 2010. Net loans declined $9.7 million from $139.7 million at December 31, 2010 to $130.0 million at March 31, 2011. The decline in loan balances was attributable to additional loan charge-offs and increased reserves as well as efforts to reduce the exposure to commercial real estate and construction loans. Net securities available for sale declined $10.9 million to $24.1 million from $35.0 million at December 31, 2010. Offsetting the decreases in loans and securities was an increase of $14.5 million in cash and cash equivalents to $40.2 million at March 31, 2011.

During first quarter 2011, the level of nonperforming assets increased $4.9 million, from $7.5 million at December 31, 2010 to $12.4 million at March 31, 2011 and impaired loans increased $3.1 million, from $22.3 million at December 31, 2010 to $25.4 million at March 31, 2011. The Bank reported net charge offs of $644,000 for the first quarter of 2011 and a $900,000 increase in the allowance for loan losses, from $6.8 million at December 31, 2010 to $7.7 million at March 31, 2011.

The liability side of the balance sheet shows total deposits down moderately to $178.5 million at March 31, 2011, compared to $181.2 million at year end 2010. This decrease is attributable to a strategic decision to target lower cost deposits and reduce deposit balances to align more closely with current loan balances. Total liabilities were $189.5 million and $192.2 million at March 31, 2011 and December 31, 2010, respectively.  

Recent Changes

During the first quarter of 2011, the Bank continued to strengthen its Board and senior management team with the appointment of new, highly qualified directors and senior executives. Hunter R. Hollar, retired CEO of Sandy Spring Bank, and David C. Bushnell, retired senior risk officer of Citigroup, were elected Directors. Another new Director, Todd S. Thompson, former CFO of Citigroup, was elected to the Board in April 2011, subject to regulatory approval. Also in the first quarter, Nancy Corsiglia was elected Chief Financial Officer and subsequently, Roy Barzel was hired as Chief Credit Officer, subject to regulatory approval.

"We are on the cusp of completing the Bank's transition to a new era of credit risk management, and we want to be appropriately reserved and also prepared for renewed and measured loan growth," said Jack Zoeller, Chairman and CEO.  "As for our deposit strategy, the benefits of our tighter pricing have not yet been fully realized, but we anticipate improved net interest margins later in the year, as our new lending goals begin to be achieved. Overall, we are encouraged by the progress we have made in the face of ongoing challenges in the Central Virginia economic environment," Zoeller continued. 

About Bank of Virginia

Bank of Virginia, a Virginia state chartered bank headquartered in Midlothian, Virginia, currently operates five full-service offices in the counties of Chesterfield and Henrico, Virginia. Bank of Virginia's common stock is traded on the NASDAQ stock market under the quotation symbol "BOVA". Additional investor relations information can be found on the internet at www.bankofva.com . Bank of Virginia is a member of the FDIC and Equal Housing Lender.

DISCLAIMER

This news release may include forward-looking statements. These forward-looking statements are based on current expectations that involve risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may differ materially. These risks include: changes in business or other market conditions; the timely development, production and acceptance of new products and services; the challenge of managing asset/liability levels; the management of credit risk and interest rate risk; the difficulty of keeping expense growth at modest levels while increasing revenues; and other risks detailed from time to time in the Bank's periodic filings with the Board of Governors of the Federal Reserve System, including the Bank's annual report on Form 10-K as filed with the Board of Governors of the Federal Reserve. Pursuant to the Private Securities Litigation Reform Act of 1995, the Bank does not undertake to update forward-looking statements contained within this news release.

BANK OF VIRGINIA
Balance Sheets
 
(dollars in thousands)  March 31,  December 31,
  2011 2010
Assets  (Unaudited)  (Audited)
Cash and due from banks  $ 4,583  $ 25,641
Federal funds sold and interest-bearing deposits with banks  35,624  43
Total cash and cash equivalents  40,207  25,684
Securities available for sale, at fair market value  24,091  34,956
Restricted securities  1,428  1,435
Loans, net of allowance for loan losses of $7,671 and     
$6,832 in 2011 and 2010, respectively  130,027  139,740
Premises and equipment, net  5,625  5,655
Accrued interest receivable  614  774
Other real estate owned, net of valuation allowance  2,173  551
Other assets  542  395
     
Total assets  $ 204,707  $ 209,190
     
Liabilities and Stockholders' Equity    
Deposits    
Non-interest-bearing  $ 15,639  $ 14,506
Savings and interest-bearing demand  28,581  26,489
Time, $100,000 and over  61,898  64,149
Other time  72,393  76,097
Total deposits  178,511  181,241
     
Accrued expenses and other liabilities  982  969
FHLB Borrowings  10,000  10,000
Total liabilities  189,493  192,210
     
Stockholders' Equity    
Preferred stock, $5 par value, 5,000,000 shares authorized, none issued  --   -- 
Common stock, $1 par value, 40,000,000 shares authorized, 11,328,182    
shares issued and outstanding in 2011 and 2010, respectively  11,328  11,328
Additional paid-in capital  24,612  24,611
Retained deficit  (21,044)  (19,277)
Accumulated other comprehensive income  318  318
Total stockholders' equity  15,214  16,980
Total liabilities and stockholders' equity  $ 204,707  $ 209,190
 
BANK OF VIRGINIA
Statements of Operations
For the Three Months Ended March 31, 2011 and 2010
(Unaudited)
     
(in thousands except per share data)    
  March 31, March 31,
  2011 2010
Interest Income:    
Interest and fees on loans  $ 2,078  $ 2,450
Investment securities  283  365
Interest on federal funds sold and interest-bearing deposits  11  2
Total interest income  2,372  2,817
     
Interest Expense:    
 Interest on deposits  800  1,094
 Interest on fed funds purchased and FHLB borrowings  111  114
Total interest expense  911  1,208
Net Interest Income  1,461  1,609
Provision for loan losses  1,483  326
Net interest (loss) income after provision    
 for loan losses  (22)  1,283
     
Non-interest Income:    
Service charges on deposit accounts  45  37
Net gain on available for sale securities  35  94
Other fee income  76  30
Total non-interest income  156  161
     
Non-interest Expense:    
Salaries and employee benefits  946  830
Occupancy expense  170  173
Equipment expense  76  89
Data processing expense  83  110
Marketing expense 38  31
Legal and professional fees  226  207
FDIC insurance assessments  145  150
Other operating expenses  217  212
Total non-interest expenses  1,901  1,802
     
Net loss  $ (1,767)  $ (358)
     
Loss per share, basic  $ (0.16)  $ (0.08)
Loss per share, diluted  $ (0.16)  $ (0.08)
     
Weighted Average Shares Outstanding, basic  11,328,182  4,551,866
Weighted Average Shares Outstanding, diluted  11,328,182  4,551,866
 
AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS
(unaudited)  
   
  Three Months Ended Three Months Ended
  March 31, 2011 March 31, 2010  
  Average   Interest  Yield/Rate Average   Interest  Yield/Rate  
  Balance (1) (1) Balance (1) (1)  
Earning Assets:              
Loans (2)  142,940  2,078 5.90%  170,650  2,450 5.82%  
Securities Available for Sale  31,041  283 3.70%  35,572  365 4.16%  
Federal funds sold and interest-bearing balances  15,796  11 0.28%  3,015  2 0.27%  
 Total Earning Assets  189,777  2,372 5.07%  209,237  2,817 5.46%  
Other Assets  25,865      14,250      
Allowance for Loan Losses  (6,905)      (5,249)      
 Total  $ 208,737      $ 218,238      
Interest-Bearing Liabilities:              
Demand Deposits  $ 7,739  $ 6 0.31%  $ 6,542  $ 6 0.37%  
Savings and Money Market  20,020  35 0.71%  24,211  62 1.04%  
Time Deposits  137,895  759 2.23%  145,322  1,026 2.86%  
 Total Deposits  165,654  800 1.96%  176,075  1,094 2.52%  
Federal Funds Purchased and Repurchase Agreements  --  -- 0.00%  41  $ --  0.25%  
FHLB Borrowings  10,000  111 4.50%  10,000  114 4.62%  
 Total Interest-bearing liabilities  175,654  911 2.10%  186,116  1,208 2.63%  
Demand Deposits  14,613      13,791      
Other Liabilities  974      990      
Stockholders' Equity  17,496      17,341      
 Total  $ 208,737      $ 218,238      
Net Interest Income, tax equivalent    $ 1,461      $ 1,609    
Net Interest Rate Spread (3)     2.97%     2.83%  
Net Interest Margin (4)     3.12%     3.12%  
               
(1) There are currently no tax-exempt assets and tax equivalent yields are not presented.  
(2) Non-accrual loans are generally included in average balances outstanding but with no related interest income during the period of non-accrual.  
(3) Represents the difference between the yield on earning assets and cost of funds.  
(4) Represents net interest income divided by average interest earning assets.  
     
  March 31, December 31,
Capital ratios: 2011 2010
Tier 1 leverage 7.1% 7.9%
Tier 1 capital to risk-weighted assets 10.3% 10.9%
Total regulatory capital to risk-weighted assets 11.6% 12.2%
Total equity to total assets 7.4% 8.1%
 
Bank of Virginia 
Quarterly Earnings Summary
(Unaudited)
 
  2011 2010
(dollars in thousands)  March 31 March 31 June 30 Sept 30 Dec 31
     
Interest income  $ 2,372  $ 2,817  $ 2,620  $ 2,755  $ 2,640
Interest expense  911  1,208  1,145  1,105  994
Net interest income  1,461  1,609  1,475  1,650  1,646
Provision for loan losses  1,483  326  162  4,842  3,688
Net interest (loss) income         
 after provision for loan losses  (22)  1,283  1,313  (3,192)  (2,042)
Other income  121  67  75  60  86
Securities gains  35  94  --  15  435
Other expenses  1,901  1,802  1,652  1,771  2,119
Loss income before income taxes  (1,767)  (358)  (264)  (4,888)  (3,640)
Income taxes  --  --  --  --  --
Net loss $ (1,767) $ (358) $ (264) $ (4,888) $ (3,640)
Basic and diluted loss per share $ (0.16) $ (0.08) $ (0.06) $ (1.07) $ (0.60)
           
Weighted-average basic and diluted shares  11,328,182  4,551,866  4,551,866  4,551,866  6,057,714
CONTACT: Jack Zoeller
         Chairman and CEO, 804-763-1333

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