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Cardinal Announces Second Quarter Earnings; Loans Grow 21%; Asset Quality Remains Strong

Stocks in this article: CFNL

Cardinal Financial Corporation (NASDAQ: CFNL) (the “Company”) today announced quarterly earnings of $10.2 million, or $0.34 per diluted share, for the period ended June 30, 2012. This is a 72% increase over earnings of $5.9 million, or $0.20 per diluted share, from the second quarter of last year. On a year-to-date basis, earnings were $17.8 million, or $0.59 per diluted share through June 30, 2012, versus $11.1 million, or $0.37 per diluted share, in 2011.

Selected Highlights

  • At June 30, 2012, total assets of the Company were $2.7 billion, an increase of 25% from total assets of $2.2 billion at June 30, 2011.
  • Loans held for investment grew to $1.75 billion, an increase of $303 million, or 21%, compared to June 30, 2011.
  • Asset quality continues to be strong. Nonperforming loans remained low at 0.43% of total assets, and annualized net loan charge offs were 0.41% of average loans outstanding. Real estate owned increased slightly to $3.1 million from $2.5 million at March 31, 2012 , and the Company currently has no loans receivable past due 90 days or more.
  • Total deposits grew to $1.99 billion, an increase of 37% compared to June 30, 2011; demand deposit account balances increased 32% year over year.
  • The results of our mortgage banking operations were exceptional, contributing net income of $4.4 million for the current quarter as the Company was positively impacted by mortgage rates remaining near record lows, leading to a continuation of strong refinance activity and an increase in local home buying.
  • The Company’s tax equivalent net interest margin decreased to 3.57% for the current quarter, down from 3.71% for the previous quarter and 3.84% for the year ago quarter.
  • All capital ratios substantially exceed the requirements of banking regulators to be considered well-capitalized. Tangible common equity capital (TCE) as a percentage of total assets was 9.32%.

Income Statement Review

Net Interest Income

Compared to the year ago quarter, net interest income for the second quarter of 2012 increased 15% to $21.4 million from $18.7 million. Tax equivalent net interest margin for the three months ended June 30, 2012 decreased to 3.57% from 3.84% a year ago and from 3.71% for the first quarter of 2012. Comparing the current quarter to the first quarter of 2012, average loan balances increased $45 million, the average loan yield decreased 0.05%, the average yield on all earning assets decreased 0.13% and the average costs of interest-bearing liabilities increased 0.03%. The yield on earning assets decreased as the Company’s average short term investments increased $70.6 million in anticipation of upcoming funding requirements associated with its mortgage banking activities. Interest bearing liability rates increased primarily due to the success of the Company’s high yield “First Choice” checking campaign that began early in 2012. This promotion attracted approximately 2,200 new accounts and over $173 million in deposits.

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