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Cordia Bancorp Inc. Reports Second Quarter Loss Driven By Asset Growth Costs

MIDLOTHIAN, Va., Aug. 6, 2014 (GLOBE NEWSWIRE) -- Cordia Bancorp Inc. ("Cordia") (Nasdaq:BVA), parent company of Bank of Virginia, reported a net loss of $270,000 or $(0.09) per share for the second quarter of 2014, compared to net income of $261,000 or $0.09 per share for the second quarter of 2013. For the first six months of 2014, the net loss was $544,000 or $(0.19) per share compared to net income of $482,000 or $0.20 per share for the same period of 2013.

Highlights for the first six months of 2014

  • $15.4 million capital raise completed in April 2014
  • 26% growth in total assets
  • 72% growth in investment securities
  • 17% growth in loans held for investments
  • 16% growth in deposits
  • 14% increase in employees
  • Nonperforming assets decreased to 1.4% of total assets
  • Conversion of Cordia's recently issued preferred stock into approximately 3,629,871 shares of voting and nonvoting common stock

Chief Executive Officer Jack Zoeller stated, "With the $15.4 million capital raise completed, we are turning our focus to building the infrastructure to solidly grow the company. We have added significantly to our securities and student loan portfolios and have experienced strong commercial loan growth volume over the past few months. In addition, we recruited three experienced officers who will give an added boost to our asset originations in future periods."

Mr. Zoeller continued, "To help fund our growth, we opened two new branch office locations in the Richmond metro market last month. Although our additional lenders and branches will slightly constrain profitability in the short term, they are an important part of our strategy to build sustained core profitability in 2015 and beyond."

Balance Sheet Activity

  • Asset Growth. Total assets were $295.5 million at June 30, 2014, compared to $235.1 million at December 31, 2013. During the first six months of 2014 organic loans increased a net $15.3 million while student loans, 98% guaranteed by the U.S. Department of Education, increased a net $15.2 million. In addition, investment securities increased $28.3 miillion.
  • Deposit Growth and Mix. Total deposits increased 16% to $245.2 million at June 30, 2014, compared to $210.8 million at December 31, 2013. Non-interest bearing deposits increased 9% while interest bearing deposits increased over 17% during the six month ended June 30, 2014. 
  • Asset Quality. Asset quality continued to improve, with total non-performing assets decreasing to $4.1 million, or 1.4% of total assets, at June 30, 2014, from $5.5 million, or 2.3% of assets, at December 31, 2013. There were no delinquencies in the Company's accruing organic loan portfolio at June 30, 2014.   
  • Tangible Book Value. Tangible book value per share was $4.12 at June 30, 2014.  

Operating Results

Three months ended June 30, 2014 compared to the three months ended June 30, 2013

  • The net loss for the quarter ended June 30, 2014 was $270,000 compared to net income of $261,000 for the prior year second quarter. 
  • Net interest income was $2.07 million for the second quarter of 2014, compared to $2.15 million for the second quarter of 2013. 
  • Net interest margin was 3.05% and 3.49% for the second quarter of 2014 and 2013, respectively. Adjusting for the impact of purchase accounting, net interest margin increased to 2.95% from 2.84%, or 11 basis points, from the 2013 period. 
  • The provision for loan losses was $209,000 in the second quarter of 2014 compared to $7,000 in the prior year quarter.
  • Noninterest expense increased to $2.2 million for the second quarter of 2014, compared to $1.9 million for the second quarter of 2013. The increase in noninterest expense was primarily due to an increase in salaries and benefits of $176,000 resulting from staff additions and $108,000 in loan expenses.

Six months ended June 30, 2014 compared to the six months ended June 30, 2013

  • The net loss for the first six months of 2014 was $544,000 compared to net income of $482,000 for the first six months of 2013. 
  • Net interest income was $3.97 million for the 2014 period, compared to $4.38 million for the 2013 period. 
  • Net interest margin for the 2014 period was 3.19% compared to 3.87% for the 2013 period. Adjusting for the impact of purchase accounting, net interest margin increased to 3.06% from 2.86%, or 20 basis points, from the 2013 period. 
  • Noninterest income was $185,000 for the 2014 period, compared to $133,000 for the 2013 period. The increase was driven by a net gain on the sale of available for sale securities of $64,000 in the first quarter of 2014.
  • Noninterest expense increased to $4.5 million for the 2014 period, compared to $3.9 million for the 2014 period. The increase in noninterest expense was primarily due to a one-time accrual of incentive compensation recorded in 2014 and an increase in servicing fees due to the growth of the student loan portfolio.

About Cordia Bancorp

Cordia Bancorp Inc. is a public bank holding company founded in 2009 seeking to invest in undervalued community banks and pursue organic and strategic growth in the Mid-Atlantic banking market. Substantially all of the assets of Cordia consist of its investment in Bank of Virginia. Bank of Virginia provides retail banking services to individuals and commercial customers through four full-service and two ATM-only banking locations in the greater Richmond market, including Chesterfield and Henrico Counties and Colonial Heights, Virginia.

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