WashingtonFirst Bankshares Inc. Announces Earnings for the Second Quarter 2013

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WashingtonFirst Bankshares Inc. Announces Earnings for the Second Quarter 2013

RESTON, Va.--(BUSINESS WIRE)-- WashingtonFirst Bankshares Inc. (NAS: WFBI) (the "Company"), the holding company for WashingtonFirst Bank (the "Bank"), today reports unaudited consolidated net income to common shareholders for the three months ended June 30, 2013 of $1.5 million ($0.20 per diluted common share) compared to $0.3 million ($0.10 per diluted common share) for the three months ended June 30, 2012. For the six months ended June 30, 2013, the Company's net income to common shareholders was $2.9 million ($0.38 per diluted common share), compared to $1.0 million ($0.33 per diluted common share) for the six months ended June 30, 2012. The Company's increase in net income in 2013 is primarily the result of the acquisition of Alliance Bankshares Corporation ("Alliance") in December 2012.

Shaza Andersen, President and CEO of the Company, said, "I am pleased to announce a strong second quarter for the Bank in earnings and performance ratios. As we have started to realize the benefits we anticipated from the 2012 acquisition of Alliance Bank, we have seen improvements in our performance ratios and in our earnings per share."

 
For the Three Months EndedFor the Six Months Ended
June 30, 2013 June 30, 2012June 30, 2013 June 30, 2012

Performance Ratios:

Return on average assets (1)0.59%0.28%0.57%0.41%
Return on average shareholders' equity (1)5.89%2.79%5.75%4.15%
Return on average common equity (1)7.09%4.12%6.93%6.15%
Yield on average interest-earning assets (1)4.37%4.92%4.46%4.87%
Rate on average interest-earning liabilities (1)0.89%1.26%0.88%1.29%
Net interest spread (1)3.48%3.66%3.58%3.58%
Net interest margin (1)3.73%4.01%3.83%3.96%
Efficiency ratio66.95%74.53%66.99%66.14%

Per Share Data:

Basic earnings per common share (2)$0.20$0.11$0.38$0.34
Fully diluted earnings per common share (2)$0.20$0.10$0.38$0.33
Weighted average basic shares outstanding (2)7,632,3983,074,3567,594,8473,063,642
Weighted average diluted shares outstanding (2)7,680,0343,132,3727,647,7093,116,504
(1) Annualized.
(2) Retroactively adjusted to reflect the effect of all stock dividends.
 

Return on average assets for the six months ended June 30, 2013 increased by 16 basis points to 0.57 percent, compared to 0.41 percent for the same period in 2012. Additionally, the company has realized improved returns on both average shareholders' equity and average common equity. The decrease in net interest spread and margin in 2013 compared to 2012 is primarily attributable to greater liquidity and accelerated amortization of purchase accounting marks related to certain loans that prepaid in the second quarter of 2013. These loans were acquired in December 2012 and had pricing marks associated with them under purchase accounting guidance. Purchase accounting marks are recognized into income over the life of the loan. Early payoffs create more volatility and can distort the net interest margin, as any unamortized mark is fully amortized upon loan payoff.

Balance Sheet and Capital

As of June 30, 2013 and December 31, 2012, total assets were $1.1 billion. Total loans increased $33.4 million (4.5%) from December 31, 2012 to June 30, 2013. Total deposits decreased $15.1 million (1.6%) from December 31, 2012 to June 30, 2013. This decrease is primarily attributable to management's intention to reduce non-core deposits, including brokered deposits acquired in the acquisition of Alliance in December 2012. Tier 1 capital increased $4.6 million to $109.6 million as of June 30, 2013, compared to $105.0 million as of December 31, 2012.

  
June 30, 2013December 31, 2012

Capital Ratios:

Total risk-based capital ratio13.92%13.77%
Tier 1 risk-based capital ratio12.83%12.71%
Tier 1 leverage ratio10.45%9.97%
Tangible common equity to tangible assets7.36%6.97%

Per Share Capital Data:

Book value per common share (1)$11.34$11.16
Tangible book value per common share (1)$10.82$10.62
Common shares outstanding (1)7,632,3987,500,970
(1) Retroactively adjusted to reflect the effect of all stock dividends.
 

Asset Quality

Non-performing assets totaled $21.4 million as of June 30, 2013, compared to $22.1 million as of December 31, 2012. Net charge-offs were $1.2 million or 0.63 percent of average loans for the three months ended June 30, 2013, compared to $0.9 million or 0.81 percent of average loans for the three months ended June 30, 2012. For the six months ended June 30, 2013 net charge-offs were $2.4 million or 0.63 percent of average loans, compared to $1.3 million or 0.60 percent for the same period in 2012.

  
June 30, 2013December 31, 2012
(dollars in thousands)
Non-accrual loans$10,903$15,615
90+ days past due still accruing2,839
Trouble debt restructurings still accruing5,5753,036
Asset-backed debt securities55106
Other real estate owned2,0683,294
Total non-performing assets$21,440$22,051
 
Allowance for loan losses to total loans0.76%0.83%
Allowance for loan losses to non-accrual loans54.46%40.09%
Allowance for loan losses to non-performing assets27.70%28.39%
Non-performing assets to total assets1.91%1.92%
 

The Company's allowance for loan losses was 0.76 percent of total gross loans as of June 30, 2013, compared to 0.83 percent as of December 31, 2012. Of the $786.5 million in gross loans outstanding as of June 30, 2013, $215.4 million or 27.4 percent were recorded on the books at fair value in conjunction with the acquisition of Alliance in December 2012 and have an aggregate discount on the books of $6.2 million as of June 30, 2013.

About The Company

The Company is the parent company of the Bank, a $1.1 billion bank headquartered in Reston, VA. With 15 offices in the greater Washington, DC metropolitan area, WashingtonFirst is a community oriented bank that provides competitive financial services to local businesses and consumers.

Cautionary Statements About Forward-Looking Information

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements of the goals, intentions, and expectations of the Company as to future trends, plans, events, results of operations and policies and regarding general economic conditions. These forward-looking statements include, but are not limited to, statements about the Company's goals, intentions, earnings and other expectations; estimates of risks and of future costs and benefits; assessments of probable loan and lease losses; assessments of market risk; and statements of the ability to achieve financial and other goals. Additional forward-looking statements are included regarding the merger between the Company and Alliance. In some cases, forward-looking statements can be identified by use of words such as "may," "will," "anticipates," "believes," "expects," "plans," "estimates," "potential," "continue," "should," and similar words or phrases. These statements are based upon the beliefs of the management of the Company as to the expected outcome of future events, current and anticipated economic conditions, nationally and in the Company's market, and their impact on the operations, assets and earnings of the Company, interest rates and interest rate policy, competitive factors, judgments about the ability of the Company to successfully integrate its operations with Alliance, the ability to avoid customer dislocation during the period leading up to and following the merger, and other conditions which by their nature, are not susceptible to accurate forecast and are subject to significant uncertainty. Because of these uncertainties and the assumptions on which this discussion and the forward-looking statements are based, actual future operations and results in the future may differ materially from those indicated herein. Readers are cautioned against placing undue reliance on such forward-looking statements. Past results are not necessarily indicative of future performance. The Company assumes no obligation to revise, update, or clarify forward-looking statements to reflect events or conditions after the date of this release.

Additional documents are available free of charge at the SEC's web site, www.sec.gov and on the Company's website at www.wfbi.com under the tab "About the Bank" and then under the heading "Investor Relations" or by contacting the Company's Investor Relations Department at 11921 Freedom Drive, Suite 250, Reston, VA 20190. You may also read and copy any reports, statements and other information filed with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington DC. Information about the operation of the SEC Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330.

Information about the directors and executive officers of the Company is set forth in the Company's proxy statement dated April 30, 2013 available on the SEC's website at www.sec.gov.

  
WashingtonFirst Bankshares, Inc.
Consolidated Balance Sheets

(unaudited)

 
June 30, 2013December 31, 2012
(in thousands)
Assets:
Cash and cash equivalents:
Cash and due from bank balances$4,941$4,521
Federal funds sold170,433208,476
Interest bearing balances9,717 11,210 
Cash and cash equivalents185,091224,207
Investment securities, available-for-sale, at fair value116,761134,598
Other equity securities2,9253,623
Loans:
Loans held for investment, at amortized cost786,464753,355
Allowance for loan losses(5,938)(6,260)
Total loans, net of allowance780,526747,095
Premises and equipment, net3,4803,519
Intangibles3,9864,029
Deferred tax asset, net12,44911,419
Accrued interest receivable3,3473,424
Other real estate owned2,0683,294
Bank-owned life insurance10,1095,010
Other assets4,317 7,600 
Total Assets$1,125,059 $1,147,818 
Liabilities and Shareholders' Equity:
Liabilities:
Non-interest bearing deposits$270,994$294,439
Interest bearing deposits686,528 678,221 
Total deposits957,522972,660
Other borrowings18,74414,428
FHLB advances30,22140,813
Long-term borrowings9,7689,682
Accrued interest payable5852,012
Other liabilities3,884 6,703 
Total Liabilities1,020,724 1,046,298 
Shareholders' Equity:
Preferred stock:
Series D - 17,796 shares issued and outstanding, 1% dividend8989
Additional paid-in capital - preferred17,70717,707
Common stock:
Common Stock Voting, $0.01 par value, 50,000,000 shares authorized, 6,536,039 and 6,099,629 shares outstanding, respectively6661
Common Stock Non-Voting, $0.01 par value, 10,000,000 shares authorized, 1,096,359 and 1,044,152 shares outstanding, respectively1010
Additional paid-in capital - common85,47380,460
Accumulated earnings2,6693,226
Accumulated other comprehensive loss(1,679)(33)
Total Shareholders' Equity104,335 101,520 
Total Liabilities and Shareholders' Equity$1,125,059 $1,147,818 
 
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WashingtonFirst Bankshares, Inc.
Consolidated Statements of Operations

(unaudited)

 
For the Three Months EndedFor the Six Months Ended
June 30, 2013 June 30, 2012June 30, 2013 June 30, 2012
(in thousands, except per share amounts)
Interest income:
Interest and fees on loans$10,713$6,308$21,612$12,503
Interest and dividends on investments548 385 1,197 769 
Total interest income11,2616,69322,80913,272
Interest expense:
Interest on deposits1,2871,0082,4462,023
Interest on borrowings345 223 718 429 
Total interest expense1,632 1,231 3,164 2,452 
Net interest income9,6295,46219,64510,820
Provision for loan losses975 850 2,075 2,071 
Net interest income after provision for loan losses8,6544,61217,5708,749
Non-interest income:
Service charges on deposit accounts119129250247
Other operating income510 176 873 476 
Total non-interest income6293051,123723
Non-interest expense:
Compensation and employee benefits3,4122,1216,6553,932
Premises and equipment1,4126742,7691,317
Data processing7233911,663732
Professional fees253100663237
Other operating expenses1,068 1,012 2,163 1,416 
Total other expenses6,868 4,298 13,913 7,634 
Income before provision income taxes2,4156194,7801,838
Provision for income taxes865 236 1,777 705 
Net income1,5503833,0031,133