ROANOKE, Va., Aug. 1, 2014 (GLOBE NEWSWIRE) -- Valley Financial Corporation (Nasdaq:VYFC) announced today its consolidated financial results for the second quarter of 2014 and reported net income available to common shareholders for the three months ended June 30, 2014 of $1,744,000, a 1% increase as compared to $1,730,000 for the prior year's second quarter. Diluted earnings per share increased 3% to $0.36 as compared to $0.35 for the second quarter of 2013. The Company's earnings for the three months ended June 30, 2014 produced an annualized return on average total assets of 0.81% and an annualized return on average shareholders' equity of 12.43% as compared to 0.97% and 12.13%, respectively, for the prior year's quarter. In comparison to the linked quarter, net income available to common shareholders increased $228,000 or 15.0%, while diluted earnings per share increased $0.05 or 16.1%.
Select highlights for the second quarter include:
- Net income to common shareholders of $1,744,000 and $0.36 per diluted share, producing an annualized return on average total assets of 0.81% and an annualized return on average shareholders' equity of 12.43%.
- Tax-equivalent net interest income of $7,092,000, an $85,000 or 1% increase when compared to first quarter of 2014 and a $265,000 or 4% increase when compared to the prior year's quarter.
- Due to the Company's full redemption of TARP during 2013, preferred dividends paid were $0 for the second quarter of 2014 as compared to $198,000 during the same period last year.
- Year-to-date, the Company has achieved an after-tax savings of $228,000, or $0.05 per diluted share, when comparing the $425,000 of preferred dividend payments made during the first six months of 2013 to the Company's 2014 subordinated debt after tax expense of $197,000.
- Nonperforming assets ("NPAs") decreased 25% or $6,309,000, from $25,324,000 at March 31, 2014 to $19,015,000 at June 30, 2014. This resulted in a 78 basis point reduction in the Company's NPAs as a percentage of total assets, from 2.92% at March 31, 2014 to 2.14% at June 30, 2014. In comparison to June 30, 2013, NPAs decreased $11,586,000, or 38%.
- The Company's Allowance for Loan and Lease Losses ("ALLL") to total loans remained constant at 1.10% in comparison to March 31, 2014 and declined 35 basis points from the 1.45% reported one year earlier. The Company did record a $1,039,000 provision expense during the quarter primarily due to loan growth as well as the deterioration of one large credit relationship.
- On May 30, 2014, the Company transferred all of its investment and mortgage-backed securities classified as held-to-maturity ($21.5 million) to available-for-sale. Based on changes in the current rate environment, management elected this change in an effort to more effectively manage the investment portfolio, including subsequently selling some securities that were formerly classified as held to maturity. The Company recognized a gain on the sale of the securities totaling $712,000 during the second quarter.
- Loan growth continued in the second quarter with an increase in average gross loans outstanding of $43,252,000 or 8% from the same period last year and $13,067,000 or 2% in comparison to the linked quarter (an annualized growth rate of 9%).
- The Company experienced an annualized average deposit growth rate of 12%, with an increase of $20,736,000 or 3% in comparison to the linked quarter. Average deposits grew $40,126,000 or 6% in comparison to June 30, 2013.
For the six-month period ending June 30, 2014, the Company earned net income available to common shareholders of $3,260,000, an increase of $64,000 as compared to $3,196,000 earned during the same period last year. Fully-diluted earnings per share for the six-month period ending June 30, 2014 were $0.67 compared to $0.65 for the prior year, an increase of 3%. The year-to-date earnings produced an annualized return on average earning assets of 0.77% and an annualized return on average shareholders' equity of 11.85% as compared to 0.93% and 11.44% respectively for the prior year.