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.

For more information about Cordia Bancorp and Bank of Virginia, visit our websites: www.cordiabancorp.com and www.bankofva.com.

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 Company's periodic filings with the Securities Exchange Commission. Pursuant to the Private Securities Litigation Reform Act of 1995, the Company does not undertake to update forward-looking statements contained within this news release.
Cordia Bancorp          
Consolidated Balance Sheets (unaudited)          
           
  June 30, March 31, Dec. 31, Sept. 30, June 30,
(Dollars in thousands, except per share data) 2014 2014 2013 2013 2013
Assets          
Cash and due from banks  $ 5,332  $ 10,499  $ 5,290  $ 6,893  $ 3,756
Fed funds sold and Interest-bearing deposits   9,843  16,839  8,694  15,889  27,766
Total cash and cash equivalents  15,175  27,338  13,984  22,782  31,522
Securities available for sale, at fair value  45,835  24,464  24,567  29,807  22,105
Securities held to maturity  21,839  14,500  14,753  --  --
Restricted securities  1,525  1,529  1,074  1,071  1,134
           
Loans held for investment:          
Commercial real estate  90,909  85,084  82,602  85,962  80,289
Commercial and industrial  24,605  22,118  21,208  20,388  21,273
Guaranteed student loans  70,624  80,966  55,427  51,293  52,957
Consumer and other  18,147  16,914  14,770  15,146  13,960
Total loans held for investment  204,285  205,082  174,007  172,789  168,479
Less: Allowance for loan losses  (1,407)  (1,504)  (1,489)  (1,517)  (1,562)
Net loans held for investment  202,878  203,578  172,518  171,272  166,917
           
Loans held for sale  --  --  --  --  --
Premises and equipment, net  4,510  4,430  4,464  4,512  4,287
Accrued interest receivable  1,830  2,177  1,655  1,335  1,132
Other real estate owned, net of valuation allowance  1,543  1,543  1,545  1,545  1,768
Other assets  390  697  588  648  655
Total assets  $ 295,525  $ 280,256  $ 235,148  $ 232,972  $ 229,520
           
Liabilities and stockholders' equity          
Non-interest bearing deposits  24,883  21,642  22,845  21,719  21,338
Savings and interest bearing demand deposits  76,044  74,825  60,685  59,546  49,493
Time deposits, $100,000 and greater  93,565  87,559  76,231  75,023  79,795
Other time deposits  50,701  51,002  51,053  52,620  54,732
Total deposits  245,193  235,028  210,814  208,908  205,358
           
Accrued expenses and other liabilities  3,419  12,202  1,047  897  998
FHLB borrowings  20,000  20,000  10,000  10,000  10,000
Total Liabilities  268,612  267,230  221,861  219,805  216,356
           
Preferred stock  --  --  --  --  --
Common stock - voting  50  28  28  28  28
Common stock - nonvoting  14  --  --  --  --
Additional paid-in-capital  32,848  18,672  18,648  18,606  18,579
Retained deficit  (5,559)  (5,289)  (5,005)  (5,011)  (5,219)
Accumulated other comprehensive income  (440)  (385)  (384)  (456)  (224)
Total stockholders' equity  26,913  13,026  13,287  13,167  13,164
Total liabilities and stockholders' equity  $ 295,525  $ 280,256  $ 235,148  $ 232,972  $ 229,520
               
Cordia Bancorp              
Consolidated Statemtents of Income (unaudited)            
               
  Three Months Ended Six Months Ended
  June 30, March 31, Dec. 31, Sept. 30, June 30, June 30, June 30,
(Dollars in thousands, except per share data) 2014 2014 2013 2013 2013 2014 2013
Interest Income              
Interest and fees on loans  $ 2,252  $ 2,149  $ 2,089  $ 2,182  $ 2,516  $ 4,401  $ 5,095
Investment securities  311  207  161  123  72  518  142
Interest on federal funds sold and deposits with banks  9  6  10  19  29  15  44
Total interest income  2,572  2,362  2,260  2,324  2,617  4,934  5,281
               
Interest Expense              
Interest on deposits  441  426  412  415  426  867  818
Interest on FHLB Borrowings  56  41  40  42  41  97  81
Total interest expense  497  467  452  457  467  964  899
               
Net interest income  2,075  1,895  1,808  1,867  2,150  3,970  4,382
Provision for (benefit from) loan losses  209  20  (92)  (23)  7  229  134
Net interest income after provision for loan losses  1,866  1,875  1,900  1,890  2,143  3,741  4,248
               
Non-interest income              
Service charges on deposit accounts  19  26  40  31  29  45  62
Net gain on sale of available for sale securities  --  64  --  --  --  64  --
Other fee income  43  33  46  51  36  76  71
Total non-interest income  62  123  86  82  65  185  133
               
Non-interest expense              
Salaries and employee benefits  1,150 1,406 1,066 991 974  2,556 2,159
Professional services  125  106  161  67  211  231  273
Occupancy  120  151  138  137  145  271  290
Data processing and communictions  151  142  139  140  144  293  269
FDIC assessment and bank fees  93  94  97  102  114  187  234
Bank franchise taxes  27  29  14  14  20  56  46
Loan expenses  210  126  76  81  102  336  117
Other real estate expenses  17  5  16  5  12  22  28
Gain on sale of OREO  65  75  75  30  64  140  133
Supplies and equipment  44  41  40  42  42  85  84
Insurance  24  16  32  34  38  40  72
Marketing and business development  9  6  32  19  15  15  37
Other  163  85  95  102  66  248  157
Total non-interest expense  2,198  2,282  1,981  1,764  1,947  4,480  3,899
               
Consolidated net income (loss) before non-controlling interest  (270)  (284)  5  208  261  (554)  482
Net income (loss)  (270)  (284)  5  208  261  (554)  482
               
Earnings per share, basic and diluted  $ (0.09)  $ (0.10)  $ --   $ 0.07  $ 0.09  $ (0.19)  $ 0.20
Weighted average shares outstanding, basic  3,017,772  2,776,992  2,773,320  2,768,484  2,764,090  2,898,047  2,431,019
Weighted average shares outstanding, diluted  3,017,772  2,776,992  2,788,302  2,777,840  2,775,802  2,898,047  2,444,923
               
Cordia Bancorp              
Consolidated Financial Highlights (unaudited)          
  As of and for the Three Months Ended Six Months Ended
  June 30, March 31, Dec. 31, Sept. 30, June 30, June 30, June 30,
(Dollars in thousands, except per share data) 2014 2014 2013 2013 2013 2014 2013
Results of Operations              
Interest income  $ 2,572  $ 2,362  $ 2,260  $ 2,324  $ 2,617  $ 4,934  $ 5,281
Interest expense  497  467  452  457  467  964  899
Net interest income  2,075  1,895  1,808  1,867  2,150  3,970  4,382
Provision (benefit) for loan losses  209  20  (92)  (23)  7  229  134
Net interest income after provision for loan losses  1,866  1,875  1,900  1,890  2,143  3,741  4,248
Non-interest income  62  123  86  82  65  185  133
Non-interest expense  2,198  2,282  1,981  1,764  1,947  4,480  3,899
Net income  $ (270)  $ (284)  $ 5  $ 208  $ 261  $ (554)  $ 482
               
Earnings per share, basics and diluted  $ (0.09)  $ (0.10)  $ --   $ 0.07  $ 0.09  $ (0.19)  $ 0.20
Weighted average shares outstanding, basic  3,017,772  2,776,992  2,773,320  2,768,484  2,764,090  2,898,047  2,431,019
Weighted average shares outstanding, diluted  3,017,772  2,776,992  2,788,302  2,777,840  2,775,802  2,898,047  2,444,923
               
Performance Ratios              
Return on average assets -0.38% -0.47% 0.01% 0.35% 0.41% -0.42% 0.41%
Return on average equity -4.20% -8.52% 0.15% 6.39% 7.88% -5.66% 7.63%
Return on average tangible equity -4.22% -8.61% 0.15% 6.46% 7.97% -5.70% 7.73%
Efficiency ratio 102.85% 113.08% 104.59% 90.51% 87.90% 107.82% 86.36%
               
Yields and Rates              
Yield on loans 4.39% 4.88% 4.82% 5.11% 5.55% 4.60% 6.03%
Yield on securities 2.27% 2.08% 2.14% 1.79% 1.70% 2.19% 1.63%
Yield on interest earning assets 3.77% 4.16% 4.13% 4.09% 4.23% 3.94% 4.63%
Cost of interest bearing deposits 0.82% 0.88% 0.89% 0.88% 0.82% 0.85% 0.86%
Cost of total deposits 0.74% 0.79% 0.80% 0.79% 0.75% 0.76% 0.78%
Cost of borrowings 1.12% 1.62% 1.60% 1.68% 1.64% 1.29% 1.62%
Cost of interest bearing liabilities 0.84% 0.92% 0.93% 0.92% 0.86% 0.88% 0.90%
Interest rate spread 2.93% 3.25% 3.21% 3.17% 3.38% 3.06% 3.73%
Net interest margin 3.05% 3.34% 3.30% 3.29% 3.49% 3.19% 3.87%
               
Capital              
Total equity to total assets 9.11% 4.65% 5.65% 5.65% 5.74% 9.11% 5.74%
Tangible equity to total assets 9.07% 4.60% 5.59% 5.59% 5.67% 9.07% 5.67%
Book value per share  4.14  4.67  4.77  4.74  4.76  4.14  4.76
Tangible book value per share  4.12  4.63  4.72  4.69  4.71  4.12  4.71
Common shares outstanding  6,505,781  2,788,302  2,788,302  2,775,802  2,764,090  6,505,781  2,764,090
               
Average Balances              
Loans  205,104  176,161  173,536  170,969  181,373  191,451  168,928
Securities  54,904  39,747  30,156  27,509  16,922  47,367  17,410
Earning assets  272,733  226,968  218,707  227,110  247,283  250,715  228,170
Total assets  286,525  241,660  231,435  235,067  254,765  264,216  235,273
Interest bearing deposits  215,856  193,946  184,920  188,526  208,433  204,959  189,713
Total deposits  238,416  215,721  206,981  210,395  228,571  227,130  209,049
FHLB borrowings  20,000  10,111  10,000  10,000  10,000  15,083  10,000
Interest bearing liabilities  235,856  204,057  194,920  198,526  218,433  220,042  199,713
Total equity  25,727  13,332  13,266  13,027  13,254  19,564  12,639
Tangible equity  25,601  13,196  13,123  12,875  13,093  19,434  12,473
               
Asset Quality              
Net charge-offs  306  5  (65)  22  28  311  689
Net charge-off rate 0.60% 0.01% -0.15% 0.05% 0.06% 0.16% 0.41%
Non-performing loans  2,572  3,225  3,934  4,054  3,980  2,572  3,980
Non-performing assets  4,115  4,768  5,479  5,599  5,748  4,115  5,748
Allowance for loan losses  1,407  1,504  1,489  1,517  1,562  1,407  1,562
Non-performing loans as a % of total loans held for investment 1.26% 1.57% 2.26% 2.35% 2.36% 1.26% 1.94%
Non-performing assets as a % of total assets 1.39% 1.70% 2.33% 2.40% 2.50% 1.39% 2.05%
Allowance for loan losses as a % of total loans held for investment 0.69% 0.73% 0.86% 0.88% 0.93% 0.69% 0.76%
Allowance for loan losses as a % of non-performing loans 54.70% 46.64% 37.85% 37.42% 39.25% 54.70% 39.25%
 
Cordia Bancorp
GAAP to Non-GAAP Reconciliations (unaudited)
               
The table below shows the computations of tangible equity and tangible assets and certain related ratios, all of which are considered to be non-GAAP financial measures. The tangible equity to tangible assets ratio has become a focus of some investors and management believes this ratio may assist in analyzing the Corporation's capital position, absent the effects of intangible assets. These non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation, or as substitute for analysis of results reported under GAAP. Because not all companies use identical calculations, the non-GAAP measures presented in the following table may not be comparable to those reported by other companies.
               
  As of and for the Three Months Ended Six Months Ended
  June 30, March 31,  Dec. 31, Sept. 30, June 30, June 30,
(Dollars in thousands, except per share data) 2014 2014 2013 2013 2013 2014 2013
Tangible Equity and Tangible Assets (Period End)              
Total shareholders' equity (GAAP)  $ 26,913  $ 13,026  $ 13,287  $ 13,167  $ 13,164  $ 26,913  $ 13,164
Less: intangible assets  121  130  139  148  157  121  157
Tangible Equity (non-GAAP)  $ 26,792  $ 12,896  $ 13,148  $ 13,019  $ 13,007  $ 26,792  $ 13,007
             --  --
Total assets (GAAP)  $ 295,525  $ 280,256  $ 235,148  $ 232,972  $ 229,520  $ 295,525  $ 229,520
Less: intangible assets  121  130  139  148  157  121  157
Tangible assets (non-GAAP)  $ 295,404  $ 280,126  $ 235,009  $ 232,824  $ 229,363  $ 295,404  $ 229,363
             --  --
Total equity to total assets (GAAP) 9.11% 4.65% 5.65% 5.65% 5.74% 9.11% 5.74%
Book value per share (GAAP)  $ 4.14  $ 4.67  $ 4.77  $ 4.74  $ 4.76  $ 4.14  $ 4.76
Tangible equity to tangible assets (non-GAAP) 9.07% 4.60% 5.59% 5.59% 5.67% 9.07% 5.67%
Tangible book value per share (non-GAAP)  $ 4.12  $ 4.63  $ 4.72  $ 4.69  $ 4.71  $ 4.12  $ 4.71
               
               
Tangible Equity and Tangible Assets (Average)              
Total shareholders' equity (GAAP)  25,727  13,332  13,266  13,027  13,254  19,564  12,639
Less: intangible assets  126  136  144  153  162  130  166
Tangible Equity (non-GAAP)  $ 25,601  $ 13,196  $ 13,123  $ 12,875  $ 13,093  $ 19,434  $ 12,473
               
Total assets (GAAP)  286,525  241,660  231,435  235,067  254,765  264,216  235,273
Less: intangible assets  126  136  144  153  162  130  166
Tangible assets (non-GAAP)  $ 286,399  $ 241,524  $ 231,292  $ 234,915  $ 254,604  $ 264,086  $ 235,107
               
Total equity to total assets (GAAP) 8.98% 5.52% 5.73% 5.54% 5.20% 7.40% 5.37%
Book value per share (GAAP)  $ 3.95  $ 4.78  $ 4.76  $ 4.69  $ 4.80  $ 3.01  $ 4.57
Tangible equity to tangible assets (non-GAAP) 8.94% 5.46% 5.67% 5.48% 5.14% 7.36% 5.31%
Tangible book value per share (non-GAAP)  $ 3.94  $ 4.73  $ 4.71  $ 4.64  $ 4.74  $ 2.99  $ 4.51
CONTACT: Mark Severson,         CFO, Cordia Bancorp Inc         804-763-1322

Cordia Bancorp

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