Virginia | 000-27622 | 54-1796693 | ||
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (IRS Employer Identification No.) |
Date: | August 3, 2018 | HIGHLANDS BANKSHARES, INC. | |
By: | /s/ John H. Gray | ||
John H. Gray | |||
Chief Financial Officer |
Target | 2Q 18 | 1Q 18 | 2Q 17 | |||||
Return on average assets (annualized) | 1.25 | % | 0.63 | % | 0.41 | % | 0.42 | % |
Revenue growth | 5.00 | (2.35 | ) | (2.44 | ) | 5.36 | ||
Net interest margin | 3.75 | 3.84 | 3.78 | 3.42 | ||||
Non-interest income to average assets | 1.00 | 0.68 | 0.73 | 1.08 | ||||
Non-interest expense to average assets | 2.75 | 3.17 | 3.47 | 3.41 | ||||
Efficiency ratio | 55.00 | 77.54 | 84.44 | 84.14 | ||||
Net charge-offs to loans held for investment | 0.30 | 0.03 | 0.12 | 0.09 |
2Q 18 | 1Q 18 | 4Q 17 | 3Q 17 | 2Q 17 | ||||||
Past due loans to loans held for investment | 1.47 | % | 1.47 | % | 0.77 | % | 1.07 | % | 0.89 | % |
Past due loans 30-89 days to loans held for investment | 0.62 | 1.14 | 0.39 | 0.40 | 0.24 | |||||
Past due loans 90 plus days to loans held for investment | 0.84 | 0.33 | 0.38 | 0.67 | 0.65 | |||||
Nonperforming assets to loans held for investment and OREO | 1.38 | 0.86 | 1.02 | 1.24 | 1.32 | |||||
Classified assets to tier 1 capital and allowance for loan loss | 34 | 33 | 31 | 31 | 33 | |||||
Allowance for credit losses to nonperforming loans | 106.90 | 258.97 | 193.80 | 158.09 | 152.15 |
2Q 18 | 1Q 18 | 4Q17 | 3Q17 | 2Q17 | ||||||
Tier 1 leverage ratio | 8.85 | % | 8.51 | % | 8.36 | % | 8.41 | % | 7.98 | % |
Tier 1 risk-based capital ratio | 12.08 | 12.13 | 12.15 | 12.18 | 12.12 | |||||
Total risk-based capital ratio | 13.05 | 13.10 | 13.11 | 13.32 | 13.29 |
Consolidated Income Statements (unaudited) | |||||||||||||||||||
Quarter ended | Percent change compared to | ||||||||||||||||||
(thousands) | June 30, 2018 | March 31, 2018 | June 30, 2017 | Prior quarter | Same quarter of prior year | ||||||||||||||
INTEREST INCOME | |||||||||||||||||||
Loans receivable and fees on loans | $ | 5,276 | $ | 5,315 | $ | 5,002 | (0.7 | )% | 5.5 | % | |||||||||
Investment securities | 438 | 478 | 572 | (8.4 | ) | (23.4 | ) | ||||||||||||
Federal funds sold | 57 | 70 | 74 | (18.6 | ) | (23.0 | ) | ||||||||||||
Total interest income | 5,771 | 5,863 | 5,648 | (1.6 | ) | 2.2 | |||||||||||||
INTEREST EXPENSE | |||||||||||||||||||
Deposits | 463 | 463 | 465 | — | (0.4 | ) | |||||||||||||
Other borrowed funds | 323 | 364 | 601 | (11.3 | ) | (46.3 | ) | ||||||||||||
Total interest expense | 786 | 827 | 1,066 | (5.0 | ) | (26.3 | ) | ||||||||||||
Net interest income | 4,985 | 5,036 | 4,582 | (1.0 | ) | 8.8 | |||||||||||||
Provision for loan losses | 172 | 172 | 35 | — | 391.4 | ||||||||||||||
Net interest income after provision for loan losses | 4,813 | 4,864 | 4,547 | (1.0 | ) | 5.9 | |||||||||||||
NONINTEREST INCOME | |||||||||||||||||||
Mortgage banking income | 52 | 100 | 726 | (48.0 | ) | (92.8 | ) | ||||||||||||
Service charges on deposit accounts | 342 | 337 | 395 | 1.5 | (13.4 | ) | |||||||||||||
Other service charges, commissions and fees | 428 | 419 | 463 | 2.1 | (7.6 | ) | |||||||||||||
Other operating income | 167 | 226 | 89 | (26.1 | ) | 87.6 | |||||||||||||
Total noninterest income | 989 | 1,082 | 1,673 | (8.6 | ) | (40.9 | ) | ||||||||||||
NONINTEREST EXPENSE | |||||||||||||||||||
Salaries and employee benefits | 2,380 | 2,403 | 2,928 | (1.0 | ) | (18.7 | ) | ||||||||||||
Occupancy and equipment expense | 750 | 731 | 723 | 2.6 | 3.7 | ||||||||||||||
OREO-related expenses | 146 | 131 | 174 | 11.5 | (16.1 | ) | |||||||||||||
Other operating expense | 1,356 | 1,901 | 1,438 | (28.7 | ) | (5.7 | ) | ||||||||||||
Total noninterest expense | 4,632 | 5,166 | 5,263 | (10.3 | ) | (12.0 | ) | ||||||||||||
Income before income taxes | 1,170 | 780 | 957 | 50.0 | 22.3 | ||||||||||||||
Income tax expense | 247 | 170 | 320 | 45.3 | (22.8 | ) | |||||||||||||
Net income | $ | 923 | $ | 610 | $ | 637 | 51.3 | 44.9 | |||||||||||
Net income per common share: | |||||||||||||||||||
Basic | $ | 0.11 | $ | 0.07 | $ | 0.08 | |||||||||||||
Diluted | 0.09 | 0.06 | 0.06 | ||||||||||||||||
Consolidated Income Statements (unaudited) | |||||||||||||
Six months ended June 30, | Percent change | ||||||||||||
(thousands) | 2018 | 2017 | |||||||||||
INTEREST INCOME | |||||||||||||
Loans receivable and fees on loans | $ | 10,591 | $ | 10,051 | 5.4 | % | |||||||
Investment securities | 916 | 1,154 | (20.6 | ) | |||||||||
Federal funds sold | 127 | 124 | 2.4 | ||||||||||
Total interest income | 11,634 | 11,329 | 2.7 | ||||||||||
INTEREST EXPENSE | |||||||||||||
Deposits | 926 | 911 | 1.6 | ||||||||||
Other borrowed funds | 687 | 1,186 | (42.1 | ) | |||||||||
Total interest expense | 1,613 | 2,097 | (23.1 | ) | |||||||||
Net interest income | 10,021 | 9,232 | 8.5 | ||||||||||
Provision for loan losses | 344 | 52 | 561.5 | ||||||||||
Net interest income after provision for loan losses | 9,677 | 9,180 | 5.4 | ||||||||||
NONINTEREST INCOME | |||||||||||||
Mortgage banking income | 152 | 952 | (84.0 | ) | |||||||||
Service charges on deposit accounts | 679 | 792 | (14.3 | ) | |||||||||
Other service charges, commissions and fees | 847 | 961 | (11.9 | ) | |||||||||
Other operating income | 393 | 255 | 54.1 | ||||||||||
Total noninterest income | 2,071 | 2,960 | (30.0 | ) | |||||||||
NONINTEREST EXPENSE | |||||||||||||
Salaries and employee benefits | 4,783 | 5,421 | (11.8 | ) | |||||||||
Occupancy and equipment expense | 1,481 | 1,392 | 6.4 | ||||||||||
OREO-related expenses | 277 | 194 | 42.8 | ||||||||||
Other operating expense | 3,257 | 2,705 | 20.4 | ||||||||||
Total noninterest expense | 9,798 | 9,712 | 0.9 | ||||||||||
Income before income taxes | 1,950 | 2,428 | (19.7 | ) | |||||||||
Income tax expense | 417 | 759 | (45.1 | ) | |||||||||
Net income | $ | 1,533 | $ | 1,669 | (8.1 | ) | |||||||
Net income per common share: | |||||||||||||
Basic | $ | 0.19 | $ | 0.20 | |||||||||
Diluted | 0.15 | 0.16 | |||||||||||
Consolidated Balance Sheets (unaudited) | ||||||||||||||||||
Percent change since | ||||||||||||||||||
(thousands) | June 30, 2018 | March 31, 2018 | June 30, 2017 | Prior quarter | Same quarter of prior year | |||||||||||||
ASSETS | ||||||||||||||||||
Cash and due from banks | $ | 23,007 | $ | 22,626 | $ | 18,890 | 1.7 | % | 21.8 | % | ||||||||
Federal funds sold | 963 | 18,276 | 25,823 | (94.7 | ) | (96.3 | ) | |||||||||||
Total cash and cash equivalents | 23,970 | 40,902 | 44,713 | (41.4 | ) | (46.4 | ) | |||||||||||
Investment securities | 73,553 | 76,933 | 98,444 | (4.4 | ) | (25.3 | ) | |||||||||||
Loans held for sale | 1,424 | 1,795 | 5,912 | (20.7 | ) | (75.9 | ) | |||||||||||
Loans held for investment | 441,460 | 431,266 | 420,230 | 2.4 | 5.1 | |||||||||||||
Allowance for loan losses | (4,138 | ) | (4,000 | ) | (4,671 | ) | 3.5 | (11.4 | ) | |||||||||
Net loans | 437,322 | 427,266 | 415,559 | 2.4 | 5.2 | |||||||||||||
Premises and equipment, net | 17,879 | 18,138 | 17,919 | (1.4 | ) | (0.2 | ) | |||||||||||
Real estate held for sale | 992 | 1,370 | 1,430 | (27.6 | ) | (30.6 | ) | |||||||||||
Deferred tax assets | 7,152 | 7,263 | 12,017 | (1.5 | ) | (40.5 | ) | |||||||||||
Interest receivable | 1,728 | 1,777 | 1,501 | (2.8 | ) | 15.1 | ||||||||||||
Bank-owned life insurance | 14,835 | 14,768 | 14,502 | 0.5 | 2.3 | |||||||||||||
Other real estate owned | 2,233 | 2,169 | 2,516 | 3.0 | (11.2 | ) | ||||||||||||
Other assets | 2,517 | 3,148 | 2,380 | (20.0 | ) | 5.8 | ||||||||||||
Total assets | $ | 583,605 | $ | 595,529 | $ | 616,893 | (2.0 | ) | (5.4 | ) | ||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||||
LIABILITIES | ||||||||||||||||||
Deposits: | ||||||||||||||||||
Non-interest bearing | $ | 155,337 | $ | 157,907 | $ | 144,945 | (1.6 | ) | 7.2 | % | ||||||||
Interest bearing | 342,979 | 352,091 | 351,954 | (2.6 | ) | (2.6 | ) | |||||||||||
Total deposits | 498,316 | 509,998 | 496,899 | (2.3 | ) | 0.3 | ||||||||||||
Short-term borrowings | — | — | 22,500 | — | (100.0 | ) | ||||||||||||
Long-term debt | 30,120 | 30,133 | 40,172 | — | (25.0 | ) | ||||||||||||
Other liabilities | 1,008 | 1,954 | 1,368 | (48.4 | ) | (26.3 | ) | |||||||||||
Total liabilities | 529,444 | 542,085 | 560,939 | (2.3 | ) | (5.6 | ) | |||||||||||
STOCKHOLDERS' EQUITY | ||||||||||||||||||
Common stock | 5,124 | 5,124 | 5,124 | — | — | |||||||||||||
Preferred stock | 4,184 | 4,184 | 4,184 | — | — | |||||||||||||
Additional paid-in capital | 19,224 | 19,169 | 19,002 | 0.3 | 1.2 | |||||||||||||
Retained earnings | 28,072 | 27,146 | 28,454 | 3.4 | (1.3 | ) | ||||||||||||
Accumulated other comprehensive income | (2,443 | ) | (2,179 | ) | (810 | ) | 12.1 | 201.6 | ||||||||||
Total stockholders' equity | 54,161 | 53,444 | 55,954 | 1.3 | (3.2 | ) | ||||||||||||
Total liabilities and stockholders' equity | $ | 583,605 | $ | 595,529 | $ | 616,893 | (2.0 | ) | (5.4 | ) | ||||||||
Quarterly Rate Volume Variance Analysis | ||||||||||||||||||||||||||
2Q 2018 | 1Q 2018 | 2Q 2017 | ||||||||||||||||||||||||
(dollars in thousands) | Average balance | Interest income/ expense | Yield/ Rate | Average balance | Interest income/ expense | Yield/ Rate | Average balance | Interest income/ expense | Yield/ Rate | |||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||||
Loans (incl loans HFS) | $ | 433,961 | $ | 5,276 | 4.87 | % | $ | 431,812 | $ | 5,315 | 4.92 | % | $ | 410,977 | $ | 5,002 | 4.95 | % | ||||||||
Investments | 75,477 | 438 | 2.32 | % | 80,257 | 478 | 2.38 | % | 99,027 | 572 | 2.35 | % | ||||||||||||||
Fed funds sold and other investments | 10,090 | 57 | 2.23 | % | 18,926 | 70 | 1.48 | % | 29,129 | 74 | 0.69 | % | ||||||||||||||
Total interest-earning assets | 519,528 | 5,771 | 4.45 | % | 530,995 | 5,863 | 4.41 | % | 539,133 | 5,648 | 4.24 | % | ||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||||
Deposits | 350,094 | 463 | 0.53 | % | 352,706 | 463 | 0.53 | % | 354,074 | 465 | 0.51 | % | ||||||||||||||
FHLB borrowings | 30,133 | 323 | 4.30 | % | 36,033 | 364 | 4.10 | % | 67,693 | 601 | 3.50 | % | ||||||||||||||
Total interest-bearing liabilities | 380,227 | 786 | 0.83 | % | 388,739 | 827 | 0.86 | % | 421,767 | 1,066 | 0.99 | % | ||||||||||||||
Net interest income | 4,985 | 5,036 | 4,582 | |||||||||||||||||||||||
Interest rate spread | 3.62 | % | 3.55 | % | 3.25 | % | ||||||||||||||||||||
Net yield on interest-earning assets | 3.84 | % | 3.78 | % | 3.42 | % |
Profitability Ratios, Asset Quality and Capital (unaudited) | ||||||||||||
Quarter ended | ||||||||||||
(dollars in thousands) | June 30, 2018 | March 31, 2018 | June 30, 2017 | |||||||||
Profitability Ratios (current quarter, annualized) | ||||||||||||
Net interest margin | 3.84 | % | 3.78 | % | 3.42 | % | ||||||
Annualized return on average assets | 0.63 | 0.41 | 0.42 | |||||||||
Annualized return on average equity | 6.89 | 4.49 | 4.68 | |||||||||
Efficiency ratio | 77.54 | 84.44 | 84.14 | |||||||||
June 30, 2018 | March 31, 2018 | June 30, 2017 | ||||||||||
Asset Quality | ||||||||||||
Loans 90 days past due and still accruing | $ | — | $ | — | $ | — | ||||||
Non-accrual loans | 3,871 | 1,545 | 3,070 | |||||||||
Total non-performing loans | 3,871 | 1,545 | 3,070 | |||||||||
Other real estate owned | 2,233 | 2,169 | 2,516 | |||||||||
Total non-performing assets | $ | 6,104 | $ | 3,714 | $ | 5,586 | ||||||
Ratios: | ||||||||||||
Non-performing loans to loans held for investment | 0.88 | % | 0.36 | % | 0.73 | % | ||||||
Non-performing assets to loans held for investment and OREO | 1.38 | 0.86 | 1.32 | |||||||||
Allowance for credit losses to loans held for investment | 0.94 | 0.93 | 1.11 | |||||||||
Allowance for credit losses to non-performing loans | 106.90 | 258.97 | 152.15 | |||||||||
Past due loans to loans held for investment | 1.47 | 1.47 | 0.89 | |||||||||
Annualized net charge-offs (recoveries) to period-end loans held for investment | 0.03 | 0.12 | 0.09 | |||||||||
Capital | ||||||||||||
Common shares outstanding | 8,199 | 8,199 | 8,199 | |||||||||
Preferred shares outstanding | 2,092 | 2,092 | 2,092 | |||||||||
Book value per share: | ||||||||||||
Common | $ | 5.76 | $ | 5.67 | $ | 5.98 | ||||||
Combined common and preferred | 5.26 | 5.19 | 5.44 | |||||||||
Ratios (Bank only) | ||||||||||||
Tier 1 leverage ratio | 8.85 | % | 8.51 | % | 7.98 | % | ||||||
Tier 1 risk-based capital ratio | 12.08 | 12.13 | 12.12 | |||||||||
Total risk-based capital ratio | 13.05 | 13.10 | 13.29 | |||||||||
Common equity tier 1 ratio | 12.08 | 12.13 | 12.12 | |||||||||