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Cardinal Announces Strong Fourth Quarter Earnings; Loan Quality Remains Excellent

Stocks in this article: CFNL

Cardinal Financial Corporation (NASDAQ: CFNL) (the “Company”) today announced quarterly earnings of $13.0 million, or $0.43 per diluted share, for the period ended December 31, 2012. This is a 58% increase over earnings of $8.2 million, or $0.28 per diluted share, from the fourth quarter of last year. For the year ended December 31, 2012, earnings were $45.3 million, or $1.51 per diluted share, versus $28.0 million, or $0.94 per diluted share, in 2011.

Selected Earnings Highlights

  • For the year ended December 31, 2012, the Company’s performance resulted in a return on average assets of 1.70% and a return on average equity of 16.02%.
  • Asset quality remains excellent. Nonperforming loans remained low at 0.25% of total assets, and net loan charge offs were 0.35% of average loans outstanding. The Company had $0 real estate owned at December 31, 2012, and $0 loans receivable past due 30 days or more and still accruing.
  • Loans held for investment grew 11% to $1.80 billion at December 31, 2012, from $1.63 billion at December 31, 2011.
  • Total deposits grew to $2.24 billion, an increase of 26% compared to December 31, 2011. Demand deposit account balances increased 33% year over year.
  • Mortgage banking net income was approximately $3.6 million for the current quarter versus $231,000 for the year ago quarter and versus $7.0 million for the previous quarter ended September 30, 2012.
  • At December 31, 2012, total assets of the Company were approximately $3.04 billion, an increase of 17% from total assets of $2.60 billion at December 31, 2011.
  • The Company’s tax equivalent net interest margin was 3.57% for the current quarter, a decrease from 3.62% for the previous quarter.
  • All capital ratios exceed the requirements of banking regulators to be considered well-capitalized. Tangible common equity capital (TCE) as a percentage of total assets was 9.40%.

Income Statement Review

Net Interest Income

Compared to the year ago quarter, net interest income for the fourth quarter of 2012 increased 6% to $24.2 million from $22.7 million. Tax equivalent net interest margin for the three months ended December 31, 2012 decreased to 3.57% from 3.88% a year ago and decreased from 3.62% for the third quarter of 2012. Comparing the current quarter to the third quarter of 2012, average loan balances increased $18 million, the average loan yield decreased 0.08%, and the average yield on all earning assets decreased 0.14%. During this same period, the average costs of interest-bearing liabilities decreased 0.10% primarily due to a 0.80% rate reduction in deposit pricing on the Company’s “First Choice” interest checking product that was introduced in early 2012 with a 2.01% rate and raised approximately $180 million of “new money”. The Company saw no decline in balances resulting from this rate decrease.

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