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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

 

October 25, 2018

 

Date of Report

(Date of earliest event reported)

 

Access National Corporation

(Exact name of registrant as specified in its charter)

 

         Virginia         

(State or other

jurisdiction of incorporation)

    000-49929    

(Commission

File Number)

        82-0545425        

(IRS Employer Identification No.)

 

 

 

1800 Robert Fulton Drive, Suite 300, Reston, VA  20191

 

(Address of principal executive offices) (Zip Code)

 

(703) 871-2100

 

(Registrant’s telephone number, including area code)

 

n/a

 

(Former name or former address, if changed since last report.)

 

 

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 (see General Instruction A.2. below):

 

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

 

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

 

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

 

oPre-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 2.02Results of Operations and Financial Condition.

 

Access National Corporation (the “Company” or “Access”) (Nasdaq: ANCX) issued a press release (the “Press Release”) announcing its unaudited financial results on October 25, 2018 for the quarter ended September 30, 2018. A copy of the Press Release detailing the summary results is attached hereto as Exhibit 99.1.

 

Item 8.01Other Events.

 

The Company also announced on October 25, 2018 that its Board of Directors declared a cash dividend of $0.17 per share to shareholders of record as of November 8, 2018, for payment on November 23, 2018.

 

Important Additional Information will be Filed with the SEC

 

This Form 8-K 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 with respect to the proposed acquisition by Union Bankshares Corporation (“Union”) of Access. No offer of securities shall be made except by means of a prospectus meeting the requirements of the Securities Act of 1933, as amended, and no offer to sell or solicitation of an offer to buy shall be made in any jurisdiction in which such offer, solicitation or sale would be unlawful.

 

In connection with the proposed acquisition, Union will file with the U.S. Securities and Exchange Commission (“SEC”) a Registration Statement on Form S-4 that will include a joint proxy statement of Access and Union and a prospectus of Union (the “Joint Proxy/Prospectus”), and each of Access and Union may file with the SEC other relevant documents concerning the proposed transaction. A definitive Joint Proxy/Prospectus will be sent to the shareholders of Access and Union. Investors and shareholders of Access and Union are urged to read carefully and in their entirety the Registration Statement and Joint Proxy/Prospectus when they become available and any other relevant documents filed with the SEC by Access and Union, as well as any amendments or supplements to those documents, because they will contain important information about the proposed transaction.

 

Investors and shareholders may obtain free copies of the Registration Statement and the Joint Proxy/Prospectus (when available) and other documents filed with the SEC by Access and Union through the website maintained by the SEC at www.sec.gov. Free copies of the Registration Statement and the Joint Proxy/Prospectus and other documents filed with the SEC also may be obtained by directing a request by telephone or mail to Access National Corporation, 1800 Robert Fulton Drive, Suite 300, Reston, VA 20191. Attention: Sheila Linton (telephone: (703) 871-2100) or Union Bankshares Corporation, 1051 East Cary Street, Suite 1200, Richmond, Virginia 23219, Attention: Investor Relations (telephone: (804) 633-5031), or by accessing Access’s website at www.accessnationalbank.com under “Investor Relations” or Union’s website at www.bankatunion.com under “Investor Relations.” The information on Access’s and Union’s websites is not, and shall not be deemed to be, a part of this Form 8-K or incorporated into other filings either company makes with the SEC.

 

Participants in the Solicitation

 

Access, Union and their respective directors and certain of their executive officers and employees may be deemed to be participants in the solicitation of proxies from the shareholders of Access or Union in connection with the proposed transaction. Information about the directors and executive officers of Access and their ownership of Access common stock is set forth in the proxy statement for Access’s 2018 annual meeting of shareholders, which was filed with the SEC on April 12, 2018. Information about the directors and executive officers of Union and their ownership of Union common stock is set forth in the proxy statement for Union’s 2018 annual meeting of shareholders, which was filed with the SEC on March 21, 2018. Information regarding the persons who may, under the rules of the SEC, be deemed participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the Joint Proxy/Prospectus and other relevant materials to be filed with the SEC when they become available. Free copies of these documents may be obtained as described above.

 

 

 

 

Forward-Looking Statements

 

Certain statements in this Form 8-K may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, projections, predictions, expectations, or beliefs about future events or results and are not statements of historical fact. Such statements also include statements as to the anticipated impact of the Union acquisition of Access. Such forward-looking statements are based on various assumptions as of the time they are made, and are inherently subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are often accompanied by words that convey projected future events or outcomes such as “expect,” “believe,” “estimate,” “plan,” “project,” “anticipate,” “intend,” “will,” “may,” “view,” “opportunity,” “potential,” or words of similar meaning or other statements concerning opinions or judgment of Access or its management about future events. Although Access believes that its expectations with respect to forward-looking statements are based upon reasonable assumptions within the bounds of its existing knowledge of its business and operations, there can be no assurance that actual results, performance, or achievements of Access will not differ materially from any projected future results, performance, or achievements expressed or implied by such forward-looking statements. Actual future results, performance or achievements may differ materially from historical results or those anticipated depending on a variety of factors, including but not limited to, changes in asset quality and credit risk, changes in interest rates and capital markets, competitive conditions, the businesses of Access and Union may not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected, expected revenue synergies and cost savings from the proposed acquisition may not be fully realized or realized within the expected time frame, revenues following the proposed acquisition may be lower than expected, customer and employee relationships and business operations may be disrupted by the proposed acquisition, the diversion of management time on acquisition-related issues, changes in Union’s share price before closing, risks relating to the potential dilutive effect of shares of Union common stock to be issued in the proposed transaction, the ability to obtain regulatory, shareholder or other approvals or other conditions to closing on a timely basis or at all, the ability to close the proposed acquisition on the expected timeframe, or at all, and that closing may be more difficult, time-consuming or costly than expected, the reaction to the proposed acquisition of the companies’ customers, employees and counterparties, and other risk factors, many of which are beyond the control of Access and Union. We refer you to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of Access’s Annual Report on Form 10-K for the year ended December 31, 2017 and comparable “risk factors” sections of Access’s Quarterly Reports on Form 10-Q and other filings, which have been filed with the SEC and are available on the SEC’s website at www.sec.gov. All of the forward-looking statements made in this Form 8-K are expressly qualified by the cautionary statements contained or referred to herein. The actual results or developments anticipated may not be realized or, even if substantially realized, they may not have the expected consequences to or effects on Access or its business or operations. Readers are cautioned not to rely too heavily on the forward-looking statements contained in this Form 8-K. Forward-looking statements speak only as of the date they are made and Access does not undertake any obligation to update, revise or clarify these forward-looking statements, whether as a result of new information, future events or otherwise.

 

 

Item 9.01Financial Statements and Exhibits.

 

(a)-          Not applicable.
(b)-          Not applicable.
(c)-          Not applicable.
(d)           Exhibits.

 

Exhibit NumberDescription

 

Exhibit 99.1Press Release, dated October 25, 2018 announcing unaudited financial results for the quarter ended September 30, 2018 and declaration of quarterly dividend.

 

 

 

 

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.

 

 

 

    ACCESS NATIONAL CORPORATION  
    (Registrant)  
       
       
Date: October 25, 2018  By: /s/ Michael W. Clarke  
  Name: Michael W. Clarke  
  Title: President & Chief Executive Officer  

 

 

 

 

 

(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

 

Exhibit 99.1

 

PRESS RELEASE
   

 

CONTACT: Michael W. Clarke FOR IMMEDIATE RELEASE: October 25, 2018
  CEO    
  703-871-2100    

 

Access National Grows Deposits and Loans, Hikes Dividend

 

Reston, Virginia. Access National Corporation (NASDAQ: ANCX) (the “Corporation” or “Access”), parent company for Access National Bank (the “Bank”) and Middleburg Investment Group, reported third quarter 2018 net income of $9.6 million, or $0.46 per diluted share. This represents the Corporation’s 73rd consecutive quarterly profit over its 75 quarter history. Consistent with management’s objective of a 40% dividend payout ratio against level and sustainable earnings, the Board of Directors declared a dividend of $0.17 per share for common shareholders of record as of November 08, 2018 and payable on November 23, 2018. This dividend reflects a $0.01 increase from the prior quarter.

 

Highlights

·For the three month period ended September 30, 2018, net income increased 7.2% compared to the preceding period and 37.2% compared to the same period of the prior year;
·Gross loans held for investment increased $110.1 million (22.2% annualized) during the three-month period to $2.1 billion at September 30, 2018;
·Excluding brokered deposits, customer deposits increased $131.8 million (25.0% annualized) during the three month period ended September 30, 2018 to $2.2 billion;
·Demand deposits of $1.2 billion at September 30, 2018 comprised 52.9% of total deposits, inclusive of $757.9 million of non-interest bearing demand deposits or 33.0% of the deposit portfolio. Non-interest bearing demand deposits increased $38.0 million and $47.2 million during the three month and twelve month periods ended September 30, 2018, respectively; and
·Tangible book value1 per common share was $12.33 at September 30, 2018, an increase of $0.34 from the linked quarter.

 

According to CEO Michael Clarke, “Third quarter 2018 reflects strong performance against our stated strategic growth and profitability measures as customer deposits and loans exceeded a linked quarter growth rate in excess of $200 million per annum. We experienced strong increases in nominal earnings during the period and exceeded our strategic profitability measures with Return on Tangible Common Average Equity (ROTCAE) of 15.20% compared to the target of 13.25%, and Return on Average Assets of 1.30% compared to the target of 1.25%.Mr. Clarke continued, “The announced merger with Union Bankshares Corporation (“Union”) will enable us to further accelerate growth and opportunity in our markets. We are excited about being an important part of the Union team and the combined positioning as Virginia’s regional bank.”

 

On a linked quarter basis, the mortgage segment margins increased while origination volume decreased, resulting in pretax earnings of $1.0 million for the three months ended September 30, 2018 compared to $0.9 million for the linked quarter.

 

During the period, we evaluated the accounting for our low income housing tax credits as well as investments in small business investment company funds (SBICs) and elected to change the policy for these investments. We believe the change better reflects our economic interest in these investments. We believe that the results of this change are immaterial to the results of our operations and they were recorded through the current period as a one-time after-tax gain of $882 thousand or $0.04 per share on a fully diluted basis. This includes $608 thousand ($445 thousand pre-tax credit to income with a $163 thousand credit to income tax provision) related to low income housing tax credits and a $466 thousand pre-tax gain related to equity investments.

 

 

1 Non-GAAP financial information. See “Reconciliation of Non-GAAP Financial Measures” at end of release.

 

 

 

 

The Corporation’s efficiency ratio has improved each quarter during 2018 and is within the stated strategic target threshold of 65% or better at September 30, 2018 at 60.19%.

 

The net interest margin on a fully tax equivalent (non-GAAP) basis remained consistent at 3.67% when comparing third quarter 2018 to the linked quarter. Net purchase mark accretion included in net interest income was $634 thousand for the third quarter 2018 and $781 thousand for the linked quarter. 

 

Gross loans Held for Investment increased $110.1 million during the quarter to $2.1 billion at September 30, 2018. As of September 30, 2018, commercial and industrial loans as well as owner occupied commercial real estate loans combined to account for 49% of the loan portfolio, reflecting the Corporation’s continued focus on lower-middle-market businesses. The Corporation’s priority focus remains on expanding borrowers in these portfolios as a driver of future growth in the loan portfolio, along with related core deposits.

 

Noninterest-bearing deposits at September 30, 2018 were $757.9 million, an increase of $38.0 million compared to the second quarter of 2018. Noninterest-bearing deposits remain the largest and most attractive source of funding for the Corporation, comprising 33% of the deposit portfolio. When combined with interest-bearing demand deposit accounts, total transaction accounts comprise 53% of the total deposit portfolio, reducing reliance of non-core and more price sensitive funding.

 

Total deposits at September 30, 2018 were $2.3 billion, an increase of $168.1 million from the $2.1 billion at June 30, 2018. The increase in interest-bearing deposits was most pronounced in the savings and interest-bearing deposits category. The Corporation’s strategy places a high priority on the maintenance and expansion of core deposits, particularly transaction accounts. Premium interest rates are targeted to existing high value core depositors and used offensively to acquire new accounts in selective market segments.

 

Short-term borrowings decreased $77.4 million during the three months ended September 30, 2018. This decrease is primarily attributable to the increase in core deposit accounts seen during the quarter.

 

Asset quality remained strong for the quarter. Non-performing assets (“NPAs”) increased to $6.1 million at September 30, 2018 from $6.0 million at June 30, 2018, representing 0.20% and 0.21% of total assets, respectively. Included in the NPA total is $644 thousand in other real estate owned. The allowance for loan loss was $17.3 million and $15.8 million at September 30, 2018 and December 31, 2017, respectively, and represented 0.83% of total loans held for investment at the end of the third quarter 2018.

 

Tangible book value2 per common share increased to $12.33 at September 30, 2018 from $11.52 at December 31, 2017. The tangible common equity ratio for Access National Corporation and its subsidiary bank was 9.09% at September 30, 2018, within the Corporation’s target range of 8.50% to 9.50%.

 

Access National Corporation is the parent company of Access National Bank and Middleburg Investment Group serving Northern and Central Virginia. Additional information is available on our website at www.AccessNationalBank.com. Shares of Access National Corporation are traded on the NASDAQ Global Market under the symbol "ANCX".

 

Access National Corporation will hold a conference call on Friday, October 26, 2018 at 9:00 a.m. Eastern Time during which management will review earnings and performance trends. Callers wishing to participate may call toll-free by dialing (844) 348-3796; international callers wishing to participate may do so by dialing (213) 358-0951.  The conference ID number is 6696465.

 

 

2 Non-GAAP financial information. See “Reconciliation of Non-GAAP Financial Measures” at end of release.

 

 

 

 

Forward-Looking Statements

 

Certain statements in this press release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, projections, predictions, expectations, or beliefs about future events or results and are not statements of historical fact. Such statements also include statements as to the anticipated impact of the acquisition by Union Bankshares Corporation (“Union”) of Access. Such forward-looking statements are based on various assumptions as of the time they are made, and are inherently subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are often accompanied by words that convey projected future events or outcomes such as “expect,” “believe,” “estimate,” “plan,” “project,” “anticipate,” “intend,” “will,” “may,” “view,” “opportunity,” “potential,” or words of similar meaning or other statements concerning opinions or judgment of Access or its management about future events. Although Access believes that its expectations with respect to forward-looking statements are based upon reasonable assumptions within the bounds of its existing knowledge of its business and operations, there can be no assurance that actual results, performance, or achievements of Access will not differ materially from any projected future results, performance, or achievements expressed or implied by such forward-looking statements. Actual future results performance, or achievements may differ materially from historical results or those anticipated depending on a variety of factors, including but not limited to, changes in asset quality and credit risk, changes in interest rates and capital markets, competitive conditions, the businesses of Union and Access may not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected, expected revenue synergies and cost savings from the proposed acquisition may not be fully realized or realized within the expected time frame, revenues following the proposed acquisition may be lower than expected, customer and employee relationships and business operations may be disrupted by the proposed acquisition, the diversion of management time on acquisition-related issues, changes in Union’s share price before closing, risks relating to the potential dilutive effect of shares of Union common stock to be issued in the proposed transaction, the ability to obtain regulatory, shareholder or other approvals or other conditions to closing on a timely basis or at all, the ability to close the proposed acquisition on the expected timeframe, or at all, and that closing may be more difficult, time-consuming or costly than expected, the reaction to the proposed acquisition of the companies’ customers, employees and counterparties, and other risk factors, many of which are beyond the control of Union and Access. We refer you to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of Access’s Annual Report on Form 10-K for the year ended December 31, 2017 and comparable “risk factors” sections of Access’s Quarterly Reports on Form 10-Q and other filings, which have been filed with the SEC and are available on the SEC’s website at www.sec.gov. All of the forward-looking statements made in this press release are expressly qualified by the cautionary statements contained or referred to herein. The actual results or developments anticipated may not be realized or, even if substantially realized, they may not have the expected consequences to or effects on Access or its business or operations. Readers are cautioned not to rely too heavily on the forward-looking statements contained in this press release. Forward-looking statements speak only as of the date they are made and Access does not undertake any obligation to update, revise or clarify these forward-looking statements, whether as a result of new information, future events or otherwise.

 

Important Additional Information will be Filed with the SEC

 

As previously disclosed, Access and Union have entered into an Agreement and Plan of Reorganization pursuant to which Access will merge with and into Union. Union will be the surviving corporation in the merger.

 

This press release 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 with respect to the proposed acquisition by Union of Access. No offer of securities shall be made except by means of a prospectus meeting the requirements of the Securities Act of 1933, as amended, and no offer to sell or solicitation of an offer to buy shall be made in any jurisdiction in which such offer, solicitation or sale would be unlawful.

 

In connection with the proposed acquisition, Union will file with the Securities and Exchange Commission (the “SEC”) a Registration Statement on Form S-4 that will include a joint proxy statement of Access and Union and a prospectus of Union (the “Joint Proxy/Prospectus”), and each of Access and Union may file with the SEC other relevant documents concerning the proposed transaction. A definitive Joint Proxy/Prospectus will be sent to the shareholders of Access and Union. Investors and shareholders of Access and Union are urged to read carefully and in their entirety the Registration Statement and Joint Proxy/Prospectus when they become available and any other relevant documents filed with the SEC by Access and Union, as well as any amendments or supplements to those documents, because they will contain important information about the proposed transaction.

 

Investors and shareholders may obtain free copies of the Registration Statement and the Joint Proxy/Prospectus (when available) and other documents filed with the SEC by Access and Union through the website maintained by the SEC at www.sec.gov. Free copies of the Registration Statement and the Joint Proxy/Prospectus and other documents filed with the SEC also may be obtained by directing a request by telephone or mail to Access National Corporation, 1800 Robert Fulton Drive, Suite 300, Reston, VA 20191. Attention: Sheila Linton (telephone: (703) 871-2100) or Union Bankshares Corporation, 1051 East Cary Street, Suite 1200, Richmond, Virginia 23219, Attention: Investor Relations (telephone: (804) 633-5031), or by accessing Access’s website at www.accessnationalbank.com under “Investor Relations” or Union’s website at www.bankatunion.com under “Investor Relations.” The information on Access’s and Union’s websites is not, and shall not be deemed to be, a part of this Form 8-K or incorporated into other filings either company makes with the SEC.

 

Participants in the Solicitation

 

Access, Union and their respective directors and certain of their executive officers and employees may be deemed to be participants in the solicitation of proxies from the shareholders of Access or Union in connection with the proposed transaction. Information about the directors and executive officers of Access and their ownership of Access Common Stock is set forth in the proxy statement for Access’s 2018 annual meeting of shareholders, which was filed with the SEC on April 12, 2018. Information about the directors and executive officers of Union and their ownership of Union Common Stock is set forth in the proxy statement for Union’s 2018 annual meeting of shareholders, which was filed with the SEC on March 21, 2018. Information regarding the persons who may, under the rules of the SEC, be deemed participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the Joint Proxy/Prospectus and other relevant materials to be filed with the SEC when they become available. Free copies of these documents may be obtained as described above.

 

 

 

  

Access National Corporation
Consolidated Balance Sheet - Unaudited
 

 

   September 30,   June 30,   December 31,   September 30, 
(In Thousands Except for Share and Per Share Data)  2018   2018   2017   2017 
                 
ASSETS                    
                     
Cash and due from banks  $14,062   $17,346   $29,855   $12,774 
                     
Interest-bearing balances and federal funds sold   110,308    105,626    92,458    117,159 
                     
Investment securities:                    
Available-for-sale, at fair value   436,484    421,975    406,067    393,650 
Marketable equity, at fair value   -    1,340    1,379    1,390 
Held-to-maturity, amortized cost (fair value of $16,368, $16,419, $16,379, and $16,416, respectively)   16,314    16,350    15,721    15,778 
Total investment securities   452,798    439,665    423,167    410,818 
                     
Restricted Stock, at amortized cost   21,192    23,742    16,572    14,447 
                     
Loans held for sale - at fair value   36,600    51,365    31,999    26,234 
                     
Loans held for investment
net of allowance for loan losses of $17,349, $16,543, $15,805, and $15,692, respectively
   2,076,921    1,967,646    1,963,104    1,953,968 
                     
Premises, equipment and land, net   27,768    28,082    27,797    26,400 
                     
Goodwill and intangible assets, net   184,028    184,838    185,161    182,156 
                     
Other assets   97,646    102,275    103,781    129,113 
                     
Total assets  $3,021,323   $2,920,585   $2,873,894   $2,873,069 
                     
LIABILITIES AND SHAREHOLDERS' EQUITY                    
                     
LIABILITIES                    
Noninterest-bearing deposits  $757,900   $719,873   $744,960   $710,691 
                     
Interest-bearing demand deposits   481,676    477,329    496,677    490,759 
                     
Savings and interest-bearing deposits   711,262    625,120    623,889    658,799 
                     
Time deposits   344,026    304,398    368,622    425,963 
                     
Total deposits   2,294,864    2,126,720    2,234,148    2,286,212 
                     
Short-term borrowings   212,561    289,934    145,993    79,527 
                     
Long-term borrowings   45,000    45,000    40,000    60,000 
                     
Trust preferred debentures   3,942    3,922    3,883    3,863 
                     
Other liabilities and accrued expenses   23,013    20,727    28,246    23,294 
                     
Total Liabilities   2,579,380    2,486,303    2,452,270    2,452,896 
                     
SHAREHOLDERS' EQUITY                    
Common stock $0.835 par value; 60,000,000 authorized;                    
issued and outstanding, 20,920,262, 20,796,193, 20,534,163, and 20,449,738, respectively   17,468    17,365    17,146    17,076 
                     
Additional paid in capital   317,626    314,367    307,670    305,682 
                     
Retained earnings   115,973    109,690    98,584    98,607 
                     
Accumulated other comprehensive loss, net   (9,124)   (7,140)   (1,776)   (1,192)
                     
Total shareholders' equity   441,943    434,282    421,624    420,173 
                     
Total liabilities and shareholders' equity  $3,021,323   $2,920,585   $2,873,894   $2,873,069 

 

 

 

  

Access National Corporation
Consolidated Statement of Operations - Unaudited
 

 

   Three Months Ended   Nine Months Ended 
(In Thousands Except for Share and Per Share Data)  September 30, 2018   June 30, 2018   September 30, 2017   September 30, 2018   September 30, 2017 
                     
INTEREST INCOME                         
Interest and fees on loans  $25,687   $24,143   $24,306   $73,241   $60,251 
                          
Interest on federal funds sold and bank balances   578    437    394    1,532    746 
                          
Interest and dividends on securities   3,047    2,642    2,992    8,369    7,388 
Total interest income   29,312    27,222    27,692    83,142    68,385 
                          
INTEREST EXPENSE                         
Interest on deposits   3,902    3,017    2,639    9,717    6,560 
                          
Interest on other borrowings   1,345    1,190    459    3,100    1,366 
Total interest expense   5,247    4,207    3,098    12,817    7,926 
Net interest income   24,065    23,015    24,594    70,325    60,459 
                          
Provision for loan losses   700    652    900    2,102    3,200 
Net interest income after provision for loan losses   23,365    22,363    23,694    68,223    57,259 
                          
NONINTEREST INCOME                         
Service charges and fees   485    494    560    1,456    1,509 
                          
Gain on sale of loans   4,465    4,196    5,594    11,453    14,985 
                          
Other Income   2,494    4,400    2,369    11,020    6,917 
Total noninterest income   7,444    9,090    8,523    23,929    23,411 
                          
NONINTEREST EXPENSE                         
Salaries and benefits   11,113    12,529    11,100    35,370    31,800 
                          
Occupancy and equipment   2,000    1,640    3,019    5,881    5,820 
                          
Other operating expense   5,853    6,257    8,674    18,115    23,594 
Total noninterest expense   18,966    20,426    22,793    59,366    61,214 
Income before income tax   11,843    11,027    9,424    32,786    19,456 
                          
Income tax expense   2,233    2,065    2,422    6,128    6,001 
NET INCOME   9,610    8,962    7,002    26,658    13,455 
                          
Earnings per common share:                         
Basic  $0.46   $0.43   $0.34   $1.28   $0.77 
Diluted  $0.46   $0.43   $0.34   $1.28   $0.77 
                          
Average outstanding shares:                         
Basic   20,847,319    20,736,727    20,409,696    20,734,621    17,156,521 
Diluted   20,925,247    20,822,853    20,508,875    20,821,096    17,273,367 

 

 

 

  

Performance and Capital Ratios - Unaudited
 

 

   Three Months   Three Months   Three Months   Three Months   Nine Months   Nine Months   Twelve Months 
   Ended   Ended   Ended   Ended   Ended   Ended   Ended 
   September 30,   June 30,   March 31,   September 30,   September 30,   September 30,   December 31, 
(Dollars In Thousands)  2018   2018   2018   2017   2018   2017   2017 
                             
Return on average assets (annualized)   1.30%   1.26%   1.13%   0.96%   1.23%   0.75%   0.67%
Return on average tangible equity (annualized) (1)   15.20%   14.73%   13.57%   11.47%   14.52%   9.33%   8.15%
Net interest margin - fully tax equivalent basis (1)   3.67%   3.67%   3.70%   3.86%   3.68%   3.91%   3.88%
Net interest margin   3.62%   3.62%   3.65%   3.76%   3.63%   3.84%   3.81%
Cost of funds   1.17%   0.98%   0.79%   0.70%   0.98%   0.73%   0.73%
Access National Bank efficiency ratio (2)   53.14%   57.36%   59.65%   57.56%   56.45%   57.41%   55.72%
Access National Corporation efficiency ratio (2)   60.19%   63.62%   65.19%   68.82%   62.99%   72.99%   69.61%
Total average equity to earning assets   16.47%   16.86%   16.59%   16.00%   16.64%   18.10%   14.82%
Tangible common equity ratio (1)   9.09%   9.12%   9.10%   8.85%   9.09%   8.85%   8.79%
                                    
Averages                                   
Assets  $2,953,987   $2,848,307   $2,856,201   $2,922,105   $2,886,998   $2,396,103   $2,453,894 
Loans held for investment, gross   2,038,292    1,935,422    1,950,077    2,002,842    1,974,914    1,614,893    1,704,040 
Loans held for sale   36,672    41,515    21,257    28,734    33,205    27,165    27,881 
Interest-bearing deposits & federal funds sold   110,140    110,800    136,969    136,222    119,205    105,360    104,566 
Investment securities   461,708    444,779    434,003    437,628    446,932    343,360    362,614 
Earning assets   2,656,213    2,541,454    2,548,836    2,617,443    2,582,555    2,101,947    2,212,020 
Interest-bearing deposits   1,502,982    1,440,998    1,517,030    1,566,286    1,486,956    1,257,364    1,327,262 
Total deposits   2,201,473    2,114,617    2,215,222    2,277,760    2,177,107    1,810,139    1,922,249 
Repurchase agreements & federal funds purchased   50,135    56,693    57,344    58,149    54,698    46,209    48,378 
FHLB short term borrowings   193,784    180,348    91,002    59,697    155,421    67,774    67,907 
FHLB long-term borrowings   45,000    42,088    40,000    82,790    42,381    73,040    66,329 
Trust Preferred debt   3,930    3,911    3,891    3,029    3,911    2,289    2,691 
Equity   437,398    428,590    422,780    418,678    429,642    380,378    327,738 
Tangible equity (1)  $252,864   $243,232   $238,381   $243,974   $244,868   $192,150   $202,408 
                                    
Allowance for loan losses  $17,349   $16,543   $15,928   $15,692   $17,349   $15,692   $15,805 
Allowance for loan losses/loans held for investment   0.83%   0.83%   0.83%   0.80%   0.83%   0.80%   0.80%
Remaining purchase marks on performing loans  $8,838   $9,615   $10,415   $12,444   $8,838   $12,444   $11,241 
Purchased credit impaired loans  $4,509   $4,632   $4,702   $5,184   $4,509   $5,184   $4,969 
Remaining purchase marks on credit impaired loans  $1,592   $1,720   $1,749   $694   $1,592   $694   $1,175 
Total NPA  $6,106   $6,049   $7,453   $7,817   $6,106   $7,817   $5,270 
NPA to total assets   0.20%   0.21%   0.26%   0.27%   0.20%   0.27%   0.18%
                                    
Mortgage loan originations and brokered loans  $85,087   $123,157   $84,411   $107,706   $292,655   $319,164   $432,678 
Gain on sale of mortgage loans net hedging activity  $4,137   $4,251   $3,273   $5,371   $11,661   $14,208   $19,192 
Allowance for losses on mortgage loans sold  $953   $953   $953   $987   $953   $987   $953 
                                    
Wealth Services segment - assets under management  $2,012,526   $1,949,992   $1,942,526   $1,935,780   $2,012,526   $1,935,780   $1,955,720 
                                    
Book value per common share  $21.13   $20.88   $20.62   $20.55   $21.13   $20.55   $20.53 
                                    
Tangible book value per common share (1)  $12.33   $11.99   $11.65   $11.64   $12.33   $11.64   $11.52 

 

 

(1) Non-GAAP financial information. See "Reconciliation of Non-GAAP Financial Measures" at end of release.

(2) Efficiency ratio is non-interest expense divided by the sum of net interest income and non-interest income.

 

 

 

 

Composition of Loan Portfolio - Unaudited
 

 

   September 30, 2018   June 30, 2018   March 31, 2018   December 31, 2017   September 30, 2017 
(Dollars In Thousands)  Amount   Percentage of
Total
   Amount   Percentage
of Total
   Amount   Percentage of
Total
   Amount   Percentage of
Total
   Amount   Percentage of
Total
 
                                         
Commercial real estate  - owner occupied  $525,047    25.07%  $478,928    24.13%  $462,298    24.02%  $467,082    23.60%  $443,128    22.50%
Commercial real estate - non-owner occupied   467,495    22.32    457,940    23.08    419,139    21.77    436,083    22.04    435,181    22.09 
Residential real estate   459,989    21.96    460,269    23.20    476,366    24.75    489,669    24.74    512,621    26.03 
Commercial   507,269    24.22    464,270    23.40    437,287    22.72    463,652    23.43    449,450    22.82 
Real estate construction   113,790    5.43    99,164    5.00    104,528    5.43    97,481    4.93    104,193    5.29 
Consumer   20,680    1.00    23,618    1.19    25,293    1.31    24,942    1.26    25,087    1.27 
Total loans  $2,094,270    100.00%  $1,984,189    100.00   $1,924,911    100.00%  $1,978,909    100.00%  $1,969,660    100.00%
Less allowance for loan losses   17,349         16,543         15,928         15,805         15,692      
   $2,076,921        $1,967,646        $1,908,983        $1,963,104        $1,953,968      

 

Composition of Deposits - Unaudited
 

 

   September 30, 2018   June 30, 2018   March 31, 2018   December 31, 2017   September 30, 2017 
(Dollars In Thousands)  Amount   Percentage
of Total
   Amount   Percentage of
Total
   Amount   Percentage
of Total
   Amount   Percentage of
Total
   Amount   Percentage of
Total
 
                                         
Demand deposits  $757,900    33.03%  $719,873    33.85%  $706,128    32.14%  $744,960    33.34%  $710,691    31.09%
Interest-bearing demand deposits   455,769    19.86    462,355    21.74    501,745    22.84    486,621    21.78    480,620    21.02 
Savings and money market   670,497    29.22    585,673    27.54    616,879    28.08    580,827    26.00    616,596    26.97 
CDARS time deposits   17,050    0.74    13,666    0.64    17,247    0.78    21,582    0.97    37,836    1.65 
CDARS/ICS non-maturity deposits   66,604    2.90    53,233    2.50    50,233    2.29    48,011    2.15    47,219    2.07 
Brokered deposits   53,900    2.35    17,590    0.83    23,244    1.06    51,028    2.28    71,090    3.11 
Time deposits   273,144    11.90    274,330    12.90    281,452    12.81    301,119    13.48    322,160    14.09 
Total Deposits  $2,294,864    100.00%  $2,126,720    100.00%  $2,196,928    100.00%  $2,234,148    100.00%  $2,286,212    100.00%

 

 

 

  

Yield on Average Earning Assets and Rates on Average Interest-Bearing Liabilities

Three Months Ended - Unaudited

 

   September 30, 2018   June 30, 2018   September 30, 2017 
   Average   Income /   Yield /   Average   Income /   Yield /   Average   Income /   Yield / 
(Dollars In Thousands)  Balance   Expense   Rate   Balance   Expense   Rate   Balance   Expense   Rate 
                                     
Assets:                                             
Interest-earning assets:                                             
Securities  $471,109   $3,047    2.59%  $453,717   $2,642    2.33%  $449,645   $2,992    2.66%
Loans held for sale   36,672    450    4.91%   41,515    477    4.59%   28,734    299    4.16%
Loans(1)   2,038,292    25,237    4.95%   1,935,422    23,666    4.89%   2,002,842    24,007    4.79%
Interest-bearing balances and federal funds sold   110,140    578    2.10%   110,800    437    1.59%   136,222    394    1.16%
Total interest-earning assets   2,656,213    29,312    4.41%   2,541,454    27,222    4.28%   2,617,443    27,692    4.23%
Noninterest-earning assets:                                             
Cash and due from banks   15,050              15,953              36,260           
Premises, land and equipment   27,996              28,087              30,382           
Other assets   271,592              279,127              253,424           
Less: allowance for loan losses   (16,864)             (16,314)             (15,404)          
Total noninterest-earning assets   297,774              306,853              304,662           
Total Assets  $2,953,987             $2,848,307             $2,922,105           
                                              
Liabilities and Shareholders' Equity:                                             
Interest-bearing deposits:                                             
Interest-bearing demand deposits  $494,436   $797    0.64%  $490,619   $680    0.55%  $483,370   $412    0.34%
Money market deposit accounts   507,888    1,483    1.17%   466,538    1,047    0.90%   435,241    821    0.75%
Savings accounts   165,937    242    0.58%   174,392    233    0.53%   199,109    90    0.18%
Time deposits   334,721    1,380    1.65%   309,449    1,057    1.37%   448,566    1,316    1.17%
Total interest-bearing deposits   1,502,982    3,902    1.04%   1,440,998    3,017    0.84%   1,566,286    2,639    0.67%
Borrowings:                                             
FHLB short-term borrowings   193,784    976    2.01%   180,348    866    1.92%   59,697    207    1.39%
Securities sold under agreements to repurchase and federal funds purchased   50,135    13    0.10%   56,693    14    0.10%   58,149    16    0.11%
Subordinated debentures   3,930    87    8.81%   3,911    84    8.63%   3,029    35    4.62%
FHLB long-term borrowings   45,000    269    2.39%   42,088    226    2.14%   82,790    201    0.97%
Total borrowings   292,849    1,345    1.84%   283,040    1,190    1.68%   203,665    459    0.90%
Total interest-bearing deposits and borrowings   1,795,831    5,247    1.17%   1,724,038    4,207    0.98%   1,769,951    3,098    0.70%
Noninterest-bearing liabilities:                                             
Demand deposits   698,491              673,619              711,474           
Other liabilities   22,267              22,060              22,002           
Total liabilities   2,516,589              2,419,717              2,503,427           
Shareholders' Equity   437,398              428,590              418,678           
Total Liabilities and Shareholders' Equity  $2,953,987             $2,848,307             $2,922,105           
                                              
Interest Spread(2)             3.25%             3.30%             3.53%
                                              
Net Interest Margin(3)       $24,065    3.62%       $23,015    3.62%       $24,594    3.76%

 

 

(1) Loans placed on nonaccrual status are included in loan balances.

(2) Interest spread is the average yield earned on earning assets, less the average rate incurred on interest-bearing liabilities.

(3) Net interest margin is net interest income, expressed as a percentage of average earning assets.

 

 

 

  

Yield on Average Earning Assets and Rates on Average Interest-Bearing Liabilities  
 Nine Months Ended - Unaudited  
   

 

   September 30, 2018   September 30, 2017 
   Average   Income /   Yield /   Average   Income /   Yield / 
(Dollars In Thousands)  Balance   Expense   Rate   Balance   Expense   Rate 
                         
Assets:                              
Interest-earning assets:                              
Securities  $455,231   $8,369    2.45%  $354,529   $7,388    2.78%
Loans held for sale   33,205    1,154    4.63%   27,165    846    4.15%
Loans(1)   1,974,914    72,087    4.87%   1,614,893    59,405    4.90%
Interest-bearing balances and federal funds sold   119,205    1,532    1.71%   105,360    746    0.94%
Total interest-earning assets   2,582,555    83,142    4.29%   2,101,947    68,385    4.34%
Noninterest-earning assets:                              
Cash and due from banks   16,409              21,552           
Premises, land and equipment   28,138              21,692           
Other assets   276,307              265,578           
Less: allowance for loan losses   (16,411)             (14,666)          
Total noninterest-earning assets   304,442              294,156           
Total Assets  $2,886,998             $2,396,103           
                               
Liabilities and Shareholders' Equity:                              
Interest-bearing deposits:                              
Interest-bearing demand deposits  $495,862   $2,067    0.56%  $352,647   $910    0.34%
Money market deposit accounts   489,764    3,460    0.94%   352,525    1,644    0.62%
Savings accounts   171,256    684    0.53%   146,773    392    0.36%
Time deposits   330,074    3,506    1.42%   405,419    3,614    1.19%
Total interest-bearing deposits   1,486,956    9,717    0.87%   1,257,364    6,560    0.70%
Borrowings:                              
FHLB short-term borrowings   155,421    2,192    1.88%   67,774    593    1.17%
Securities sold under agreements to repurchase and federal funds purchased   54,698    41    0.10%   46,209    58    0.17%
Subordinated debentures   3,911    246    8.37%   2,289    146    8.50%
FHLB long-term borrowings   42,381    621    1.95%   73,040    569    1.04%
Total borrowings   256,412    3,100    1.61%   189,312    1,366    0.96%
Total interest-bearing deposits and borrowings   1,743,367    12,817    0.98%   1,446,676    7,926    0.73%
Noninterest-bearing liabilities:                              
Demand deposits   690,151              552,775           
Other liabilities   23,838              16,274           
Total liabilities   2,457,356              2,015,725           
Shareholders' Equity   429,642              380,378           
Total Liabilities and Shareholders' Equity  $2,886,998             $2,396,103           
                               
Interest Spread(2)             3.31%             3.61%
                               
Net Interest Margin(3)       $70,325    3.63%       $60,459    3.84%

 

 

(1) Loans placed on nonaccrual status are included in loan balances.

(2) Interest spread is the average yield earned on earning assets, less the average rate incurred on interest-bearing liabilities.

(3) Net interest margin is net interest income, expressed as a percentage of average earning assets.

 

 

 

 

Segment Reporting - Unaudited

 

Three Months Ended  Commercial   Mortgage   Trust & Wealth           Consolidated 
September 30, 2018  Banking   Banking   Management   Other   Eliminations   Totals 
   (In Thousands) 
Revenues:                              
Interest income  $28,957   $450   $4   $10   $(109)  $29,312 
Gain on sale of loans   -    4,465    -    -    -    4,465 
Other revenues   2,152    (743)   1,688    219    (337)   2,979 
Total revenues   31,109    4,172    1,692    229    (446)   36,756 
                               
Expenses:                              
Interest expense   5,169    41    -    146    (109)   5,247 
Salaries and employee benefits   7,800    2,284    979    -    50    11,113 
Other expenses   6,684    819    552    885    (387)   8,553 
Total operating expenses   19,653    3,144    1,531    1,031    (446)   24,913 
                               
Income (loss) before income taxes  $11,456   $1,027   $161   $(802)  $-   $11,843 
                               
Total assets  $2,978,843   $38,763   $13,166   $26,808   $(36,257)  $3,021,323 

 

Three Months Ended  Commercial   Mortgage   Trust & Wealth           Consolidated 
June 30, 2018  Banking   Banking   Management   Other   Eliminations   Totals 
   (In Thousands) 
Revenues:                              
Interest income  $26,841   $477   $3   $6   $(105)  $27,222 
Gain on sale of loans   -    4,196    -    -    -    4,196 
Other revenues   1,634    373    2,726    491    (330)   4,894 
Total revenues   28,475    5,046    2,729    497    (435)   36,312 
                               
Expenses:                              
Interest expense   4,130    39    -    143    (105)   4,207 
Salaries and employee benefits   8,324    3,130    1,075    -    -    12,529 
Other expenses   6,292    971    660    956    (330)   8,549 
Total operating expenses   18,746    4,140    1,735    1,099    (435)   25,285 
                               
Income (loss) before income taxes  $9,729   $906   $994   $(602)  $-   $11,027 
                               
Total assets  $2,871,045   $40,293   $12,301   $23,435   $(26,489)  $2,920,585 

 

Three Months Ended  Commercial   Mortgage   Trust & Wealth           Consolidated 
September 30, 2017  Banking   Banking   Management   Other   Eliminations   Totals 
   (In Thousands) 
Revenues:                              
Interest income  $27,429   $299   $4   $5   $(45)  $27,692 
Gain on sale of loans   -    5,594    -    -    -    5,594 
Other revenues   1,977    (740)   1,617    312    (237)   2,929 
Total revenues   29,406    5,153    1,621    317    (282)   36,215 
                               
Expenses:                              
Interest expense   3,072    (25)   -    96    (45)   3,098 
Salaries and employee benefits   7,334    2,898    868    -    -    11,100 
Other expenses   8,724    1,149    1,850    1,107    (237)   12,593 
Total operating expenses   19,130    4,022    2,718    1,203    (282)   26,791 
                               
Income (loss) before income taxes  $10,276   $1,131   $(1,097)  $(886)  $-   $9,424 
                               
Total assets  $2,810,037   $26,485   $41,002   $19,756   $(24,211)  $2,873,069 

 

 

 

  

Segment Reporting - Unaudited

 

Nine Months Ended  Commercial   Mortgage   Trust & Wealth           Consolidated 
September 30, 2018  Banking   Banking   Management   Other   Eliminations   Totals 
     
Revenues:                              
Interest income  $82,085   $1,154   $9   $22   $(128)  $83,142 
Gain on sale of loans   -    11,453    -    -    -    11,453 
Other revenues   5,291    899    6,155    1,128    (997)   12,476 
Total revenues   87,376    13,506    6,164    1,150    (1,125)   107,071 
                               
Expenses:                              
Interest expense   12,593    (72)   -    424    (128)   12,817 
Salaries and employee benefits   24,052    8,291    3,002    -    25    35,370 
Other expenses   20,261    2,496    1,694    2,669    (1,022)   26,098 
Total operating expenses   56,906    10,715    4,696    3,093    (1,125)   74,285 
                               
Income (loss) before income taxes  $30,470   $2,791   $1,468   $(1,943)  $-   $32,786 
                               
Total assets  $2,978,843   $38,763   $13,166   $26,808   $(36,257)  $3,021,323 

 

Nine Months Ended  Commercial   Mortgage   Trust & Wealth           Consolidated 
September 30, 2017  Banking   Banking   Management   Other   Eliminations   Totals 
     
Revenues:                              
Interest income  $67,740   $846   $7   $17   $(225)  $68,385 
Gain on sale of loans   -    14,985    -    -    -    14,985 
Other revenues   4,445    (306)   4,195    975    (883)   8,426 
Total revenues   72,185    15,525    4,202    992    (1,108)   91,796 
                               
Expenses:                              
Interest expense   7,796    18    -    337    (225)   7,926 
Salaries and employee benefits   19,992    9,122    2,686    -    -    31,800 
Other expenses   20,173    3,246    2,541    7,537    (883)   32,614 
Total operating expenses   47,961    12,386    5,227    7,874    (1,108)   72,340 
                               
Income (loss) before income taxes  $24,224   $3,139   $(1,025)  $(6,882)  $-   $19,456 
                               
Total assets  $2,810,037   $26,485   $41,002   $19,756   $(24,211)  $2,873,069 

 

 

 

 

Reconciliation of Non-GAAP Financial Measures - Unaudited

 

The press release contains certain financial information determined by methods other than in accordance with generally accepted accounting policies in the United States (GAAP). These non-GAAP financial measures are “tangible book value per common shares”, “tangible common equity ratio”, and “net interest margin on a fully tax equivalent basis.” This non-GAAP disclosure has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of the Corporation’s results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies. Management uses these non-GAAP measures in its analysis of our performance because it believes these measures are material and will be used as a measure of our performance by investors.

 

   Three Months   Three Months   Three Months   Three Months   Nine Months   Nine Months   Twelve Months 
   Ended   Ended   Ended   Ended   Ended   Ended   Ended 
   September 30,   June 30,   March 31,   September 30,   September 30,   September 30,   December 31, 
(Dollars In Thousands)  2018   2018   2018   2017   2018   2017   2017 
                             
Book value per common share  $21.13   $20.88   $20.62   $20.55   $21.13   $20.55   $20.53 
Effect of intangible assets  $(8.80)  $(8.89)  $(8.97)  $(8.91)  $(8.80)  $(8.91)  $(9.01)
Tangible book value per common share  $12.33   $11.99   $11.65   $11.64   $12.33   $11.64   $11.52 
                                    
                                    
Common equity ratio   14.63%   14.87%   15.06%   14.62%   14.63%   14.62%   14.68%
Effect of intangible assets   -5.54%   -5.75%   -5.96%   -5.77%   -5.54%   -5.77%   -5.89%
Tangible common equity ratio   9.09%   9.12%   9.10%   8.85%   9.09%   8.85%   8.79%
                                    
Net interest margin   3.62%   3.62%   3.65%   3.76%   3.63%   3.84%   3.81%
Effect of tax exempt securities and loans   0.05%   0.05%   0.05%   0.10%   0.05%   0.07%   0.07%
Net interest margin - fully tax equivalent basis   3.67%   3.67%   3.70%   3.86%   3.68%   3.91%   3.88%
                                    
Return on average equity   8.79%   8.36%   7.65%   6.68%   8.27%   4.71%   5.03%
Effect of intangible assets   6.41%   6.37%   5.92%   4.79%   6.25%   4.62%   3.12%
Return on average tangible equity   15.20%   14.73%   13.57%   11.47%   14.52%   9.33%   8.15%
                                    
Average equity  $437,398   $428,590   $422,780   $418,678   $429,642   $380,378   $327,738 
Effect of average intangible assets  $184,534   $185,358   $184,399   $174,704   $184,774   $188,228   $125,330 
Average tangible equity  $252,864   $243,232   $238,381   $243,974   $244,868   $192,150   $202,408 

 

 

 

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