Virginia | 000-27622 | 54-1796693 | ||
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (IRS Employer Identification No.) |
Date: | February 13, 2019 | HIGHLANDS BANKSHARES, INC. | |
By: | /s/ John H. Gray | ||
John H. Gray | |||
Chief Financial Officer |
Target | 4Q 18 | 3Q 18 | 4Q 17 | |
Return on average assets (annualized) | 1.25% | 0.64% | 0.74% | NM |
Revenue growth | 5.00% | 3.10% | 5.22% | -2.03% |
Net interest margin | 3.75% | 3.95% | 3.97% | 3.70% |
Noninterest income to assets | 1.00% | 0.76% | 0.72% | 0.94% |
Noninterest expense to assets | 2.75% | 3.42% | 3.17% | 3.34% |
Efficiency ratio | 55.00% | 78.27% | 74.90% | 79.19% |
Net charge-offs to total loans (annualized) | 0.30% | 0.04% | 0.10% | 0.73% |
NM - not meaningful |
4Q 18 | 3Q 18 | 2Q 18 | 1Q 18 | 4Q 17 | |
Past due loans to end of period loans | 1.51% | 1.42% | 1.47% | 1.47% | 0.77% |
Past due loans 30-89 days to end of period loans | 0.70 | 0.83 | 0.62 | 1.14 | 0.39 |
Past due loans 90 plus days to end of period loans | 0.81 | 0.59 | 0.84 | 0.33 | 0.38 |
Nonperforming assets to loans and OREO | 1.81 | 1.49 | 1.38 | 0.86 | 1.02 |
Classified assets to tier 1 capital | 38 | 35 | 34 | 33 | 31 |
Allowance for credit losses to nonperforming loans | 73.88 | 93.29 | 106.90 | 258.97 | 193.80 |
Quarterly Consolidated Income Statements (unaudited) | |||||||||||||||||
Quarter ended | Percent change compared to | ||||||||||||||||
(thousands) | December 31, 2018 | September 30, 2018 | December 31, 2017 | Prior quarter | Same quarter of prior year | ||||||||||||
INTEREST INCOME | |||||||||||||||||
Loans receivable and fees on loans | $ | 5,787 | $ | 5,558 | $ | 5,169 | 4.1% | 12.0% | |||||||||
Investment securities | 457 | 434 | 473 | 5.3% | -3.4% | ||||||||||||
Federal funds sold | 106 | 17 | 35 | 523.5% | 202.9% | ||||||||||||
Total interest income | 6,350 | 6,009 | 5,677 | 5.7% | 11.9% | ||||||||||||
INTEREST EXPENSE | |||||||||||||||||
Deposits | 668 | 497 | 465 | 34.4% | 43.7% | ||||||||||||
Other borrowed funds | 336 | 294 | 330 | 14.3% | 1.8% | ||||||||||||
Total interest expense | 1,004 | 791 | 795 | 26.9% | 26.3% | ||||||||||||
Net interest income | 5,346 | 5,218 | 4,882 | 2.5% | 9.5% | ||||||||||||
Provision for loan losses | 196 | 198 | 49 | -1.0% | 300.0% | ||||||||||||
Net interest income after provision for loan losses | 5,150 | 5,020 | 4,833 | 2.6% | 6.6% | ||||||||||||
NONINTEREST INCOME | |||||||||||||||||
Mortgage banking income | 47 | 116 | 335 | -59.5% | -86.0% | ||||||||||||
Securities gains, net | 0 | 0 | 13 | 0.0% | -100.0% | ||||||||||||
Service charges on deposit accounts | 396 | 396 | 384 | 0.0% | 3.1% | ||||||||||||
Other service charges, commissions and fees | 376 | 404 | 441 | -6.9% | -14.7% | ||||||||||||
Other operating income | 309 | 152 | 216 | 103.3% | 43.1% | ||||||||||||
Total noninterest income | 1,128 | 1,068 | 1,389 | 5.6% | -18.8% | ||||||||||||
NONINTEREST EXPENSE | |||||||||||||||||
Salaries and employee benefits | 2,518 | 2,347 | 2,814 | 7.3% | -10.5% | ||||||||||||
Occupancy and equipment expense | 570 | 607 | 581 | -6.1% | -1.9% | ||||||||||||
OREO-related expenses | 54 | 89 | 0 | -39.3% | 0.0% | ||||||||||||
Other operating expense | 1,925 | 1,665 | 1,533 | 15.6% | 25.6% | ||||||||||||
Total noninterest expense | 5,067 | 4,708 | 4,928 | 7.6% | 2.8% | ||||||||||||
Income before income taxes | 1,211 | 1,380 | 1,294 | -12.2% | -6.4% | ||||||||||||
Income tax expense | 243 | 289 | 4,381 | -15.9% | NM | ||||||||||||
Net income (loss) | $ | 968 | $ | 1,091 | $ | (3,087 | ) | -11.3% | NM | ||||||||
Net income (loss) per common share: | |||||||||||||||||
Basic | $0.12 | $0.13 | $ | (0.38 | ) | ||||||||||||
Diluted | 0.09 | 0.11 | (0.38) | ||||||||||||||
NM - variance calculation is not meaningful. |
Consolidated Income Statements (unaudited) | ||||||
Year ended December 31, | Percent change | |||||
(thousands, except per share information) | 2018 | 2017 | ||||
INTEREST INCOME | ||||||
Loans receivable and fees on loans | $ 21,936 | $ 20,427 | 7.4% | |||
Investment securities | 1,807 | 2,148 | -15.9% | |||
Federal funds sold | 250 | 192 | 30.2% | |||
Total interest income | 23,993 | 22,767 | 5.4% | |||
INTEREST EXPENSE | ||||||
Deposits | 2,091 | 1,854 | 12.8% | |||
Other borrowed funds | 1,317 | 1,985 | -33.7% | |||
Total interest expense | 3,408 | 3,839 | -11.2% | |||
Net interest income | 20,585 | 18,928 | 8.8% | |||
Provision for loan losses | 738 | 120 | 515.0% | |||
Net interest income after provision for loan losses | 19,847 | 18,808 | 5.5% | |||
NONINTEREST INCOME | ||||||
Mortgage banking income | 315 | 1,942 | -83.8% | |||
Securities gains, net | 0 | 19 | 0 | |||
Service charges on deposit accounts | 1,471 | 1,568 | -6.2% | |||
Other service charges, commissions and fees | 1,627 | 1,881 | -13.5% | |||
Other operating income | 854 | 626 | 36.4% | |||
Total noninterest income | 4,267 | 6,036 | -29.3% | |||
NONINTEREST EXPENSE | ||||||
Salaries and employee benefits | 9,648 | 10,858 | -11.1% | |||
Occupancy and equipment expense | 2,658 | 2,614 | 1.7% | |||
OREO-related expenses | 420 | 301 | 39.5% | |||
Other operating expense | 6,847 | 5,814 | 17.8% | |||
Total noninterest expense | 19,573 | 19,587 | -0.1% | |||
Income (loss) before income taxes | 4,541 | 5,257 | -13.6% | |||
Income tax expense | 949 | 5,694 | -83.3% | |||
Net income (loss) | $ 3,592 | $ (437) | NM | |||
Net income (loss) per common share: | ||||||
Basic | $0.44 | ($0.05) | ||||
Diluted | 0.35 | (0.05) | ||||
NM - variance calculation is not meaningful. |
Consolidated Balance Sheets (unaudited) | ||||||||||||||||
Percent change since | ||||||||||||||||
(thousands) | December 31, 2018 | September 30, 2018 | December 31, 2017 | Prior quarter | Same quarter of prior year | |||||||||||
ASSETS | ||||||||||||||||
Cash and due from banks | $ 19,533 | $ 23,258 | $ | 15,179 | -16.0% | 28.7% | ||||||||||
Federal funds sold | 10,101 | 791 | 15,618 | 1177.0% | -35.3% | |||||||||||
Total cash and cash equivalents | 29,634 | 24,049 | 30,797 | 23.2% | -3.8% | |||||||||||
Investment securities | 71,405 | 73,348 | 81,643 | -2.6% | -12.5% | |||||||||||
Loans held for sale | 697 | 1,614 | 4,808 | -56.8% | -85.5% | |||||||||||
Loans held for investment | 448,121 | 452,566 | 431,574 | -1.0% | 3.8% | |||||||||||
Allowance for loan losses | (4,373) | (4,226) | (3,954) | 3.5% | 10.6% | |||||||||||
Net loans held for investment | 443,748 | 448,340 | 427,620 | -1.0% | 3.8% | |||||||||||
Premises and equipment, net | 17,447 | 17,687 | 18,332 | -1.4% | -4.8% | |||||||||||
Real estate held for sale | 817 | 817 | 1,430 | 0.0% | -42.9% | |||||||||||
Deferred tax assets | 6,526 | 6,984 | 7,161 | -6.6% | -8.9% | |||||||||||
Interest receivable | 1,617 | 1,904 | 1,987 | -15.1% | -18.6% | |||||||||||
Bank-owned life insurance | 15,022 | 14,940 | 14,679 | 0.5% | 2.3% | |||||||||||
Other real estate owned | 2,212 | 2,242 | 2,350 | -1.3% | -5.9% | |||||||||||
Other assets | 2,816 | 1,684 | 3,290 | 67.2% | -14.4% | |||||||||||
Total assets | $ | 591,941 | $ | 593,609 | $ | 594,097 | -0.3% | -0.4% | ||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||
LIABILITIES | ||||||||||||||||
Deposits: | ||||||||||||||||
Noninterest bearing | $ 156,408 | $ 154,196 | $ | 148,633 | 1.4% | 5.2% | ||||||||||
Interest bearing | 346,408 | 340,410 | 350,150 | 1.8% | -1.1% | |||||||||||
Total deposits | 502,816 | 494,606 | 498,783 | 1.7% | 0.8% | |||||||||||
Short-term borrowings | 29,973 | 42,107 | 10,000 | -28.8% | 199.7% | |||||||||||
Long-term debt | 120 | 120 | 30,146 | 0.0% | -99.6% | |||||||||||
Other liabilities | 2,391 | 1,937 | 1,364 | 23.4% | 75.3% | |||||||||||
Total liabilities | 535,300 | 538,770 | 540,293 | -0.6% | -0.9% | |||||||||||
STOCKHOLDERS' EQUITY | ||||||||||||||||
Common stock | 5,156 | 5,156 | 5,124 | 0.0% | 0.6% | |||||||||||
Preferred stock | 4,184 | 4,184 | 4,184 | 0.0% | 0.0% | |||||||||||
Additional paid-in capital | 19,277 | 19,246 | 19,113 | 0.2% | 0.9% | |||||||||||
Retained earnings | 30,100 | 29,163 | 26,539 | 3.2% | 13.4% | |||||||||||
Accumulated other comprehensive income | (2,076) | (2,910) | (1,156) | -28.7% | 79.6% | |||||||||||
Total stockholders' equity | 56,641 | 54,839 | 53,804 | 3.3% | 5.3% | |||||||||||
Total liabilities and stockholders' equity | $ | 591,941 | $ | 593,609 | $ | 594,097 | -0.3% | -0.4% |
Profitability Ratios, Asset Quality and Capital (unaudited) | |||||||||
Quarter ended | |||||||||
(dollars in thousands) | December 31, 2018 | September 30, 2018 | December 31, 2017 | ||||||
Profitability Ratios (current quarter, annualized) | |||||||||
Net interest margin | 3.95% | 3.97% | 3.70% | ||||||
Annualized return (loss) on average assets | 0.64 | 0.74 | (0.02) | ||||||
Annualized return (loss) on average equity | 6.95 | 7.94 | (0.22) | ||||||
Efficiency ratio | 78.27% | 74.90 | 79.19 | ||||||
December 31, 2018 | September 30, 2018 | December 31, 2017 | |||||||
Asset Quality | |||||||||
Loans 90 days past due and still accruing | $ - | $ - | $ | 26 | |||||
Non-accrual loans | 5,920 | 4,530 | 2,064 | ||||||
Total non-performing loans | 5,920 | 4,530 | 2,090 | ||||||
Other real estate owned | 2,212 | 2,242 | 2,350 | ||||||
Total non-performing assets | $ 8,132 | $ 6,772 | $ 4,440 | ||||||
Ratios: | |||||||||
Non-performing loans to loans held for investment | 1.32% | 1.00% | 0.48% | ||||||
Non-performing assets to loans held for investment and OREO | 1.81 | 1.49 | 1.02 | ||||||
Allowance for credit losses to loans held for investment | 0.98 | 0.93 | 0.94 | ||||||
Allowance for credit losses to non-performing loans | 73.87 | 93.29 | 193.83 | ||||||
Past-due loans to loans held for investment | 1.51 | 1.42 | 0.77 | ||||||
Annualized net charge-offs (recoveries)to period-end loans held for investment | 0.04 | 0.10 | 0.73 | ||||||
Capital | |||||||||
Common shares outstanding | 8,251 | 8,249 | 8,199 | ||||||
Preferred shares outstanding | 2,092 | 2,092 | 2,092 | ||||||
Book value per share: | |||||||||
Common | $ 6.02 | $ 5.82 | $ 5.72 | ||||||
Combined common and preferred | 5.48 | 5.31 | 5.23 | ||||||
Ratios (Bank only): | |||||||||
Tier 1 leverage ratio | 9.14% | 9.14% | 8.36% | ||||||
Tier 1 risk-based capital ratio | 12.26 | 12.30 | 12.15 | ||||||
Total risk-based capital ratio | 13.25 | 13.28 | 13.11 | ||||||
Common equity tier 1 ratio | 12.26 | 12.30 | 12.15 |