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Section 1: 8-K (FORM 8-K)

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

  

 

FORM 8-K

 

  

CURRENT REPORT

 

Pursuant to Section 13 OR 15(d) of the

Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): April 24, 2017

  

 

Eastern Virginia Bankshares, Inc.

(Exact name of registrant as specified in its charter)

  

 

Virginia   000-23565   54-1866052

(State or other jurisdiction

of incorporation) 

 

(Commission

File Number) 

 

(IRS Employer

Identification No.) 

 

10900 Nuckols Road, Suite 325, Glen Allen, Virginia   23060
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including area code: (804) 443-8400

 

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

x Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ¨

  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

 

Item 2.02 Results of Operations and Financial Condition.

  

On April 24, 2017, Eastern Virginia Bankshares, Inc. (the “Company”) issued a press release (the “Press Release”) announcing the Company’s financial results as of and for the period ended March 31, 2017. A copy of the Press Release is attached hereto as Exhibit 99.1 to this report and is incorporated by reference into this Item 2.02.

 

Item 8.01 Other Events.

 

The Company also announced in the Press Release that its Board of Directors declared a cash dividend of $0.03 per share to holders of record of common stock and Series B Preferred Stock as of May 5, 2017, payable on May 19, 2017. A copy of the Press Release is attached hereto as Exhibit 99.1 to this report and is incorporated by reference into this Item 8.01.

 

The information set forth under Item 2.02 of this Current Report on Form 8-K is incorporated herein by reference.

 

Item 9.01        Financial Statements and Exhibits.

 

(d)   Exhibits.  

 

Exhibit No. Description
   
99.1 Press release dated April 24, 2017.

 

 

 

Signatures 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. 

 

  EASTERN VIRGINIA BANKSHARES, INC.
     
Dated: April 24, 2017    
     
  By: /s/ J. Adam Sothen
    J. Adam Sothen
    Executive Vice President & Chief Financial Officer

 

 

 

  

Exhibit Index

 

Exhibit No.   Description
     
99.1   Press release dated April 24, 2017.

 

 

(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

 

Exhibit 99.1

Eastern Virginia Bankshares, Inc. Releases First Quarter 2017 Results

GLEN ALLEN, Va., April 24, 2017 /PRNewswire/ -- Eastern Virginia Bankshares, Inc. (NASDAQ: EVBS) (the "Company" or "Eastern Virginia"), the one bank holding company of EVB (the "Bank"), reported today its results of operations for the three months ended March 31, 2017.

Performance Summary






Three Months Ended March 31, 

(dollars in thousands, except per share data)


2017


2016

Net income



$                 1,780


$                2,227

Basic and diluted net income per common share


$                   0.10


$                  0.12

Return on average assets (annualized)


0.51%


0.70%

Return on average common shareholders' equity (annualized)


6.52%


8.34%

Net interest margin (tax equivalent basis)(1)


3.66%


3.78%








(1) For more information on the calculation of net interest margin on a tax equivalent basis, see the average balance sheet and net interest margin analysis for the three month periods ended March 31, 2017 and 2016 contained in this release.

The Company's results for the three months ended March 31, 2017 were directly impacted by increases in the average balances of loans, interest-bearing deposits and short-term borrowings. Loan yields decreased 9 basis points for the three months ended March 31, 2017 as compared to the same period in 2016, largely due to intense competition for commercial loans in the Richmond and Tidewater markets. Rates paid on interest-bearing deposits increased 9 basis points primarily due to a promotional rate offered on money market savings accounts.

In connection with the previously disclosed pending merger of equals with Southern National Bancorp of Virginia, Inc. ("Southern National"), the Company incurred $478 thousand in merger and merger related expenses during the three months ended March 31, 2017. Also, as previously disclosed, and related to the Company's continued commitment to drive operating efficiencies and reduce noninterest expenses, during the fourth quarter of 2016 the Company implemented a hiring freeze. In connection with this hiring freeze, through attrition and other job eliminations, the Company reduced the number of its full-time equivalent employees by 27 between December 1, 2016 and March 31, 2017. The Company currently expects this initiative to reduce salaries and employee benefits expense by approximately $1.4 million on an annualized basis.

In announcing these results, Joe A. Shearin, President and Chief Executive Officer commented, "I am pleased with our Company's growth and profitability for the first quarter of 2017. During the first quarter of 2017, we generated loan growth of 3.7% as compared to 17.9% over the trailing twelve months, which again outpaced our internal targets. Net income decreased by 20.1% during the first quarter of 2017 as compared to the same period of 2016 and was primarily driven by a lower net interest margin, higher current period expenses, including those related to our pending merger with Southern National, and partially offset by higher net interest income. The lower net interest margin was driven by lower yields on loans and higher costs on interest-bearing deposits, while the overall increase in net interest income was primarily due to our strong loan growth. Current period expenses included $478 thousand related to our pending merger with Southern National, $165 thousand in severance costs associated with our hiring freeze and job eliminations, and a $194 thousand loss on the sale of one other real estate owned property. Excluding these non-recurring expenses, our overall profitability for the first quarter of 2017 improved when compared to the same period of 2016."

Shearin continued, "We continue to be very excited and focused on our pending merger of equals with Southern National and the combination of EVB with Southern National's wholly owned subsidiary Sonabank. Both banks are working diligently to incorporate best practices and processes, and making great progress towards creating an outstanding organizational structure and strong banking franchise. To date we have received all necessary regulatory approvals to proceed with the merger, and earlier this month Southern National filed a registration statement on Form S-4 with the SEC, which included a joint proxy statement and a preliminary prospectus. We are very excited about the future prospects and synergies of our combined organization and look forward to maximizing the potential of this combined franchise. I am also pleased to announce that the Board of Directors declared another cash dividend of $0.03 per share of common stock and Series B Preferred Stock payable on May 19, 2017 to shareholders of record as of May 5, 2017."

For the three months ended March 31, 2017, the following were significant factors in the Company's reported results:

Operations Analysis

The following table presents average balances of assets and liabilities, the average yields earned on such assets (on a tax equivalent basis) and rates paid on such liabilities, and the net interest margin for the three months ended March 31, 2017 and 2016:

Average Balance Sheet and Net Interest Margin Analysis




(dollars in thousands)



Three Months Ended March 31, 


2017


2016


Average


Income/

Yield/


Average


Income/

Yield/


Balance


Expense

Rate (1)


Balance


Expense

Rate (1)

Assets:










Securities










  Taxable

$      243,169


$         1,377

2.30%


$     251,217


$         1,506

2.41%

  Restricted securities

10,590


138

5.28%


8,984


115

5.15%

  Tax exempt (2)

7,479


74

4.03%


10,508


100

3.84%

   Total securities

261,238


1,589

2.47%


270,709


1,721

2.56%

Interest bearing deposits in other banks

20,600


27

0.53%


8,321


10

0.48%

Federal funds sold

1,473


2

0.55%


142


-

0.00%

Loans, net of unearned income (3)

1,042,747


12,417

4.83%


895,742


10,953

4.92%

     Total earning assets

1,326,058


14,035

4.29%


1,174,914


12,684

4.34%

Less allowance for loan losses

(11,357)





(11,221)




Total non-earning assets

103,871





111,556




Total assets

$   1,418,572





$  1,275,249














Liabilities & Shareholders' Equity:










Interest-bearing deposits










  Checking

$      305,288


$            295

0.39%


$     303,348


$            276

0.37%

  Savings

109,696


51

0.19%


99,422


41

0.17%

  Money market savings

220,396


409

0.75%


164,539


196

0.48%

  Time deposits

248,277


599

0.98%


241,798


558

0.93%

     Total interest-bearing deposits

883,657


1,354

0.62%


809,107


1,071

0.53%

Federal funds purchased and repurchase










     agreements

4,737


6

0.51%


5,530


7

0.51%

Short-term borrowings

150,675


257

0.69%


114,696


122

0.43%

Junior subordinated debt

10,310


99

3.89%


10,310


88

3.43%

Senior subordinated debt

19,136


351

7.44%


19,033


351

7.42%

     Total interest-bearing liabilities

1,068,515


2,067

0.78%


958,676


1,639

0.69%

Noninterest-bearing liabilities










  Demand deposits

208,944





180,038




  Other liabilities

8,766





7,591




     Total liabilities

1,286,225





1,146,305




Shareholders' equity

132,347





128,944




 Total liabilities and shareholders' equity 

$   1,418,572





$  1,275,249














Net interest income (2)



$       11,968





$       11,045












Interest rate spread (2)(4)




3.51%





3.65%

Interest expense as a percent of










   average earning assets




0.63%





0.56%

Net interest margin (2)(5)




3.66%





3.78%











Notes:










(1) Yields are annualized and based on average daily balances.



(2) Income and yields are reported on a tax equivalent basis assuming a federal tax rate of 34%, with a


      $22 adjustment for 2017 and a $30 adjustment in 2016.




(3) Nonaccrual loans have been included in the computations of average loan balances.


(4) Interest rate spread is the average yield on earning assets, calculated on a fully taxable basis, less the average


      rate incurred on interest-bearing liabilities.




(5) Net interest margin is the net interest income, calculated on a fully taxable basis, expressed as a percentage


     of average earning assets.




Interest Income and Expense

Net interest income and net interest margin

Net interest income in the first quarter of 2017 increased $931 thousand, or 8.5%, when compared to the first quarter of 2016. The Company's net interest margin (tax equivalent basis) decreased to 3.66%, representing a decrease of 12 basis points for the three months ended March 31, 2017 as compared to the same period in 2016. The decrease in the net interest margin (tax equivalent basis) was primarily due to a decrease in the yield earned on average loans, higher average balances of and rates paid on interest-bearing liabilities and a decrease in average balances of and yields earned on investment securities. These margin pressures were offset by increases in average loan balances. Total interest and dividend income increased 10.7% for the three months ended March 31, 2017 while total interest expense increased 26.1%, both as compared to the same period in 2016. The most significant factors impacting net interest income during the three month period ended March 31, 2017 were as follows:

Positive Impact:

Negative Impacts:

Loans

Average loan balances increased $147.0 million for the three months ended March 31, 2017, as compared to the same period in 2016, primarily due to organic loan growth and the purchase of $32.3 million in performing commercial, student and consumer loans between March 2016 and March 2017. Loan growth during the three months ended March 31, 2017 outpaced our internal targets. However, loan growth in our rural markets, especially with respect to consumer loans, remains weak while competition for commercial loans, especially in the Richmond and Tidewater markets, has been and we expect will continue to be intense given the historically low rate environment. Total average loans were 78.6% of total average interest-earning assets for the three months ended March 31, 2017, compared to 76.2% for the three months ended March 31, 2016.

Investment securities

Average total investment securities balances decreased by $9.5 million, or 3.5%, during the three months ended March 31, 2017, as compared to the same period in 2016. This decline was the result of management of the investment securities portfolio in light of the Company's liquidity needs, with proceeds provided by sales and pay downs of investment securities used primarily to fund loan growth, and unrealized losses on the available for sale investment securities portfolio. The Company remains committed to its long-term target of managing the investment securities portfolio to comprise 20% of the Company's total assets.

Interest-bearing deposits

Average total interest-bearing deposit balances and rates paid increased for the three months ended March 31, 2017, as compared to the same period in 2016, primarily due to the Bank offering a promotional rate on money market saving accounts and an increase in brokered and other time deposits obtained through a non-brokered listing service.

Borrowings

Average total borrowings increased for the three months ended March 31, 2017, as compared to the same period in 2016, primarily due to increased short-term borrowings. Average short-term borrowings increased for the three months ended March 31, 2017, as compared to the same period in 2016, due to additional FHLB advances taken to fund loan growth.

Noninterest Income

The following table depicts the components of noninterest income for the three months ended March 31, 2017 and 2016:



Three Months Ended March 31, 





(dollars in thousands)


2017


2016


Change $


Change %

Service charges and fees on deposit accounts


$                   743


$                    739


$                      4


0.5%

Debit card/ATM fees


417


397


20


5.0%

Gain on sale of available for sale securities, net


2


65


(63)


-96.9%

Gain (loss) on sale of bank premises and equipment


8


(4)


12


300.0%

Earnings on bank owned life insurance policies


150


159


(9)


-5.7%

Other operating income


242


195


47


24.1%

Total noninterest income


$                1,562


$                 1,551


$                    11


0.7%

Key changes in the components of noninterest income for the three months ended March 31, 2017, as compared to the same period in 2016, are discussed below:

Noninterest Expense

The following table depicts the components of noninterest expense for the three months ended March 31, 2017 and 2016:





Three Months Ended March 31, 





(dollars in thousands)



2017


2016


Change $


Change %

Salaries and employee benefits


$                 5,790


$                5,248


$                    542


10.3%

Occupancy and equipment expenses


1,476


1,430


46


3.2%

Telephone




263


208


55


26.4%

FDIC expense



198


203


(5)


-2.5%

Consultant fees



155


222


(67)


-30.2%

Collection, repossession and other real estate owned


211


165


46


27.9%

Marketing and advertising


233


461


(228)


-49.5%

Loss on sale of other real estate owned


233


1


232


23200.0%

Impairment losses on other real estate owned


31


-


31


100.0%

Merger and merger related expenses


478


-


478


100.0%

Other operating expenses


1,761


1,481


280


18.9%

Total noninterest expenses


$               10,829


$                9,419


$                 1,410


15.0%

Key changes in the components of noninterest expense for the three months ended March 31, 2017, as compared to the same period in 2016, are discussed below:

Balance Sheet and Asset Quality

Balance Sheet

Key balance sheet components as of March 31, 2017 and December 31, 2016 are as follows:



March 31, 


December 31, 





(dollars in thousands)


2017


2016


Change $


Change %

Total assets


$    1,446,601


$    1,398,593


$       48,008


3.4%

Cash and due from banks


4,797


4,997


(200)


-4.0%

Interest bearing deposits with banks


16,648


11,919


4,729


39.7%

Securities available for sale, at fair value


230,593


219,632


10,961


5.0%

Securities held to maturity, at carrying value


26,230


27,956


(1,726)


-6.2%

Loans, net of unearned income


1,071,456


1,033,231


38,225


3.7%

Total deposits


1,146,655


1,051,361


95,294


9.1%

Total borrowings


158,811


208,225


(49,414)


-23.7%

Total shareholders' equity


132,943


131,200


1,743


1.3%

Key balance sheet components as of March 31, 2017 and 2016 are as follows:



March 31, 


March 31, 





(dollars in thousands)


2017


2016


Change $


Change %

Total assets


$    1,446,601


$    1,286,185


$     160,416


12.5%

Cash and due from banks


4,797


12,333


(7,536)


-61.1%

Interest bearing deposits with banks


16,648


3,067


13,581


442.8%

Securities available for sale, at fair value


230,593


236,496


(5,903)


-2.5%

Securities held to maturity, at carrying value


26,230


29,472


(3,242)


-11.0%

Loans, net of unearned income


1,071,456


908,950


162,506


17.9%

Total deposits


1,146,655


998,880


147,775


14.8%

Total borrowings


158,811


149,925


8,886


5.9%

Total shareholders' equity


132,943


130,514


2,429


1.9%

Asset Quality

The asset quality measures depicted below continue to reflect the Company's efforts to prudently charge-off loans as losses are identified and maintain an appropriate allowance for loan losses.

The following table depicts the net charge-off activity for the three months ended March 31, 2017 and 2016:



Three Months Ended March 31, 

 (dollars in thousands) 


2017


2016

Net charge-offs


$               318


$               408

Net charge-offs to average loans (annualized)


0.12%


0.18%

The following table depicts the level of the allowance for loan losses as of the dates presented:



March 31, 


December 31, 


March 31, 

 (dollars in thousands) 


2017


2016


2016

Allowance for loan losses


$               10,952


$                11,270


$                10,936

Allowance for loan losses to period end loans


1.02%


1.09%


1.20%

Allowance for loan losses to nonaccrual loans


195.37%


217.53%


165.31%

Allowance for loan losses to nonperforming loans


159.24%


172.80%


141.25%

The following table depicts the level of nonperforming assets as of the dates presented:



March 31, 


December 31, 


March 31, 

 (dollars in thousands) 


2017


2016


2016

Nonaccrual loans


$                 5,606


$            5,181


$                 6,616

Loans past due 90 days and accruing interest


1,272


1,341


1,127

  Total nonperforming loans


$                 6,878


$            6,522


$                 7,743

Other real estate owned ("OREO")


1,631


2,656


898

  Total nonperforming assets


$                 8,509


$            9,178


$                 8,641








Nonperforming assets to total loans and OREO


0.79%


0.89%


0.95%

The following tables present the change in the balances of OREO and nonaccrual loans for the three months ended March 31, 2017:

OREO:





Nonaccrual Loans:











(dollars in thousands)





(dollars in thousands)


Balance at December 31, 2016



$   2,656


Balance at December 31, 2016

$        5,181

Transfers from loans



525


Loans returned to accrual status

(1,494)

Capitalized costs



13


Net principal curtailments

(1,597)

Sales proceeds



(1,299)


Charge-offs


(277)

Impairment losses on valuation adjustments



(31)


Loan collateral moved to OREO

(365)

Loss on disposition



(233)


Loans placed on nonaccrual during period

4,158

Balance at March 31, 2017



$   1,631


Balance at March 31, 2017

$        5,606

In general, the modification or restructuring of a loan constitutes a troubled debt restructuring ("TDR") when we grant a concession to a borrower experiencing financial difficulty. The following table depicts the balances of TDRs as of the dates presented:



March 31, 


December 31, 


March 31, 

(dollars in thousands)


2017


2016


2016

Performing TDRs


$                      10,669


$                      10,441


$                      15,158

Nonperforming TDRs*


1,848


2,209


1,209

  Total TDRs


$                      12,517


$                      12,650


$                      16,367








*  Included in nonaccrual loans.  







Forward Looking Statements

Certain statements contained in this release that are not historical facts may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"), as amended. In addition, certain statements may be contained in the Company's future filings with the Securities and Exchange Commission (the "SEC"), in press releases, and in oral and written statements made by or with the approval of the Company that are not statements of historical fact and constitute forward-looking statements within the meaning of the Exchange Act. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, expenses, income or loss, income or loss per share, the payment or nonpayment of dividends, capital structure and other financial items; (ii) statements of plans, objectives and expectations of the Company or its management or Board of Directors, including those relating to products or services, the performance of portions of the Company's asset portfolio, employee initiatives and the anticipated financial impact of those initiatives, and the payment of dividends; (iii) statements of future financial performance and economic conditions; (iv) statements regarding the adequacy of the allowance for loan losses; (v) statements regarding the Company's liquidity; (vi) statements of management's expectations regarding future trends in interest rates, real estate values, business opportunities and economic conditions generally and in the Company's markets; (vii) statements regarding future asset quality, including expected levels of charge-offs; (viii) statements regarding potential changes to laws, regulations or administrative guidance; (ix) statements regarding strategic initiatives of the Company or the Bank and the results of these initiatives, including the pending merger (the "Merger") of the Company and Southern National, and the Company's initiative to reduce salaries and employee benefits expenses; and (x) statements of assumptions underlying such statements. Words such as "believes," "anticipates," "expects," "intends," "targeted," "continue," "remain," "will," "should," "may" and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.

Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those in such statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:

Although the Company believes that its expectations with respect to the forward-looking statements are based upon reliable assumptions and projections within the bounds of its knowledge of its business and operations, there can be no assurance that actual results, performance, actions or achievements of the Company will not differ materially from any future results, performance, actions or achievements expressed or implied by such forward-looking statements. Readers should not place undue reliance on such statements, which speak only as of the date of this report. The Company does not undertake any steps to update any forward-looking statement that may be made from time to time by it or on its behalf. For additional information on risk factors that could affect the Company's forward-looking statements, see the Company's Annual Report on Form 10-K for the year ended December 31, 2016 and other reports filed with the SEC.

Additional Information About the Merger and Where to Find It

Investors are urged to review carefully and consider all public filings by Southern National and Eastern Virginia with the SEC, including but not limited to their Annual Reports on Form 10-K, their proxy statements, their Quarterly Reports on Form 10-Q, and their Current Reports on Form 8-K. The documents filed with the SEC may be obtained free of charge at the SEC's website at www.sec.gov. The documents filed by Southern National with the SEC may also be obtained free of charge at Southern National's website at www.sonabank.com or by requesting them in writing to Southern National Bancorp of Virginia, Inc., 6830 Old Dominion Drive, McLean, Virginia 22101, Attention: Investor Relations. The documents filed by Eastern Virginia with the SEC may also be obtained free of charge at Eastern Virginia's website at www.evb.org or by requesting them in writing to Eastern Virginia Bankshares, Inc., 10900 Nuckols Road, Suite 325, Glen Allen, Virginia 23060, Attention: Investor Relations.

In connection with the proposed transaction, Southern National filed a registration statement on Form S-4 with the SEC on April 5, 2017 which included a joint proxy statement of Southern National and Eastern Virginia and a preliminary prospectus of Southern National. A definitive joint proxy statement/prospectus will be sent to the shareholders of each company seeking the required shareholder approvals. This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. Before making any voting or investment decision, investors and security holders of Southern National and Eastern Virginia are urged to read carefully the entire registration statement and joint proxy statement/prospectus when they become available, including any amendments thereto, because they will contain important information about the proposed transaction. Free copies of these documents may be obtained as described above.

Southern National, Eastern Virginia, and certain of their directors and executive officers may be deemed participants in the solicitation of proxies from Southern National and Eastern Virginia shareholders in connection with the proposed transaction. Information about the directors and officers of Southern National and their ownership of Southern National common stock is set forth in the definitive proxy statement for Southern National's 2016 annual meeting of shareholders, as previously filed with the SEC on March 21, 2016. Information about the directors and officers of Eastern Virginia and their ownership of Eastern Virginia common stock is set forth in the definitive proxy statement for Eastern Virginia's 2016 annual meeting of shareholders, as previously filed with the SEC on April 21, 2016. Investors may obtain additional information regarding the interests of such participants by reading the registration statement and the joint proxy statement/prospectus when they become available. Free copies of these documents may be obtained as described above.

Contact: R. Roderick Porter, President

Contact: Joe A. Shearin, President & CEO

Phone: 202-464-1130 ext. 2406

Phone: 804-528-4752

Southern National Bancorp of Virginia Inc.

Eastern Virginia Bankshares, Inc.

NASDAQ Symbol SONA

NASDAQ Symbol EVBS

Website: www.sonabank.com

Website: www.evb.org





Eastern Virginia Bankshares, Inc.  

Contact: Adam Sothen

10900 Nuckols Road, Suite 325  

Chief Financial Officer

Glen Allen, VA 23060  

Voice: (804) 528-4753


Fax: (804) 270-1215


Selected Financial Information





 (dollars in thousands, except per share data) 


Three Months Ended March 31, 

Statements of Income


2017


2016

Interest and dividend income 


$             14,013


$          12,654

Interest expense


2,067


1,639

   Net interest income


11,946


11,015

Provision for loan losses


-


17

   Net interest income after provision for loan losses


11,946


10,998






Service charges and fees on deposit accounts


743


739

Debit card/ATM fees


417


397

Gain on sale of available for sale securities, net


2


65

Gain (loss) on sale of bank premises and equipment


8


(4)

Earnings on bank owned life insurance policies


150


159

Other operating income


242


195

Noninterest income


1,562


1,551






Salaries and employee benefits


5,790


5,248

Occupancy and equipment expenses


1,476


1,430

Telephone


263


208

FDIC expense


198


203

Consultant fees


155


222

Collection, repossession and other real estate owned


211


165

Marketing and advertising


233


461

Loss on sale of other real estate owned


233


1

Impairment losses on other real estate owned


31


-

Merger and merger related expenses


478


-

Other operating expenses


1,761


1,481

Noninterest expenses


10,829


9,419






Income before income taxes


2,679


3,130

Income tax expense


899


903

   Net income 


$               1,780


$            2,227

Net income per common share: basic and diluted


$                 0.10


$              0.12

Selected Financial Information





 (dollars in thousands, except per share data) 


Three Months Ended March 31, 

Selected Ratios


2017


2016

Return on average assets (annualized)


0.51%


0.70%

Return on average common shareholders' equity (annualized)


6.52%


8.34%

Net interest margin (tax equivalent basis)


3.66%


3.78%

Period End Balances





Investment securities


$           266,380


$        275,013

Loans, net of unearned income


1,071,456


908,950

Total assets


1,446,601


1,286,185

Total deposits


1,146,655


998,880

Total borrowings


158,811


149,925

Total shareholders' equity


132,943


130,514

Book value per common share


8.59


8.44

Average Balances





Investment securities


$           261,238


$        270,709

Loans, net of unearned income


1,042,747


895,742

Total earning assets


1,326,058


1,174,914

Total assets


1,418,572


1,275,249

Total deposits


1,092,601


989,145

Total borrowings


184,858


149,569

Total shareholders' equity


132,347


128,944

Asset Quality at Period End





Allowance for loan losses


$             10,952


$          10,936

Nonperforming assets


8,509


8,641

Net charge-offs


318


408

Net charge-offs to average loans (annualized)


0.12%


0.18%

Allowance for loan losses to period end loans


1.02%


1.20%

Allowance for loan losses to nonaccrual loans


195.37%


165.31%

Allowance for loan losses to nonperforming loans


159.24%


141.25%

Nonperforming assets to total assets


0.59%


0.67%

Nonperforming assets to total loans and other real estate owned

0.79%


0.95%

Other Information





Number of common shares outstanding - period end


13,112,393


13,093,135

Average common shares outstanding - basic


13,116,554


13,035,249

Average common shares outstanding - diluted


18,356,746


18,275,441



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